JX Energy Ltd. - Proxy Solicitation & Information Statement 2019

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this circular or as to the action to be taken, you should consult a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Persta Resources Inc., you should, as soon as possible, provide this circular with the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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PERSTA RESOURCES INC.

(incorporated under the laws of Alberta with limited liability)

(HK stock code: 3395)

Suite 3600, 888-3rd Street SW, Calgary, Alberta T2P 5C5, Canada

Telephone: 1-403-355-6623 Fax: 1-403-440-1206

NOTICE OF MEETING

and

MANAGEMENT INFORMATION CIRCULAR

and

PROXY STATEMENT

with respect to the

Special Meeting of Shareholders

to be held on November 29, 2019 at 9:00 a.m. (Calgary time) at Suite 3600, Bankers Hall West, 888-3rd Street SW, Calgary, Alberta T2P 5C5

Dated: October 31, 2019

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this notice, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this notice.

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PERSTA RESOURCES INC.

(incorporated under the laws of Alberta with limited liability)

(HK stock code: 3395)

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD AT 9:00 A.M. ON NOVEMBER 29, 2019 (CALGARY TIME)

NOTICE IS HEREBY GIVEN that a special meeting (the ‘‘Meeting’’) of the shareholders (the ‘‘Shareholders’’) of common shares (the ‘‘Common Shares’’) of Persta Resources Inc. (‘‘Persta’’ or the ‘‘Company’’) will be held at Suite 3600, Bankers Hall West, 888-3rd Street SW, Calgary, Alberta T2P 5C5, on November 29, 2019, at 9:00 a.m. (Calgary time) for the following purposes:

for the Shareholders to consider, and if deemed advisable, pass, with or without variation, an ordinary resolution granting the board a specific mandate from the Shareholders approving the allotment and issuance of warrants and Common Shares upon the exercise of such warrants (the ‘‘Specific Mandate’’), as more particularly described in the accompanying information circular; and
to transact such further or other business as may properly come before the Meeting or any adjournment or adjournments thereof.

The accompanying management information circular (the ‘‘Circular’’) provides additional information relating to the matters to be dealt with at the Meeting.

Only Shareholders of record as at 11:00 p.m. on October 28, 2019 (Hong Kong time) and 9:00 a.m. on October 28, 2019 (Calgary time) (the ‘‘Record Date’’) will be entitled to vote at the Meeting, unless that Shareholder has transferred any Common Shares subsequent to that date and the transferee Shareholder, not later than 10 days before the Meeting, establishes ownership of the Common Shares and demands that the transferee’s name be included on the list of Shareholders entitled to vote at the Meeting, in which case such transferee shall be entitled to vote such Common Shares at the Meeting. To ensure that there is no risk that any of the Common Shares will be voted twice, the transferee must provide written evidence to the Company including, without limitation, providing properly endorsed certificates evidencing the transfer of such Common Shares or having otherwise established ownership of such Common Shares, written evidence of the identification of the relevant transferor and written evidence that the relevant transferor has not exercised and will not exercise the right to vote either by proxy or in person at the Meeting. The Company may refuse the demand by a transferee to be included in the list of Shareholders entitled to vote at the Meeting if the transferee cannot demonstrate to the Company with sufficient certainty that the relevant Common Shares have not already been voted by proxy or will be voted by the relevant transferor at the Meeting.

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Shareholders who receive this Circular and other accompanying Meeting materials from the Company’s branch share registrar in Hong Kong, being Computershare Hong Kong Investor Services Limited, and who are unable to be present at the Meeting, are requested to date and sign the enclosed form of proxy and return it to Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, in the enclosed envelope provided for that purpose, so that it is received during regular business hours no later than 48 hours (Hong Kong time) (excluding Saturdays, Sundays and public holidays in Hong Kong) prior to the time of the Meeting or any adjournment thereof. If a Shareholder is registered as a shareholder of the Company on the register of shareholders in Hong Kong on the Record Date, such Shareholder’s records are currently maintained on the Hong Kong register and such Shareholder’s proxy should be deposited in accordance with the instructions set out in this paragraph.

Shareholders who receive this Circular and other accompanying Meeting materials from the Company’s principal share registrar in Canada, being Computershare Trust Company of Canada, and who are unable to be present at the Meeting, are requested to date and sign the enclosed form of proxy and return it to Computershare Trust Company of Canada, Proxy Department, 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1, Canada, in the enclosed envelope provided for that purpose, so that it is received no later than 48 hours (Toronto time) (excluding Saturdays, Sundays and public holidays in Canada) prior to the time of the Meeting or any adjournment thereof. Registered shareholders may submit their voting instructions online at www.investorvote.com or by phone at 1-866-732-VOTE (8683) (toll free within North America) or 1-312-588-4290 (outside North America). Shareholders are cautioned that the use of mail to transmit proxies is at each Shareholder’s risk. If a Shareholder acquired its Common Shares prior to the Record Date and is registered as a Shareholder on the register of Shareholders in Canada on the Record Date, such Shareholder’s records are currently maintained on the Canadian register and such Shareholder’s proxy should be deposited in accordance with the instructions set out in this paragraph.

In order to be valid, your proxy or voting instructions must be received in each case no later than 48 hours (excluding Saturdays, Sundays and holidays) before the Meeting or any adjournment thereof.

BY ORDER OF THE BOARD

Signed: ‘‘Le Bo’’

Le Bo Chairman of the Board, President and Chief Executive Officer

Calgary, Alberta, October 31, 2019.

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LETTER FROM THE BOARD

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PERSTA RESOURCES INC.

(Incorporated under the laws of Alberta with limited liability)

(HK stock code: 3395)

Executive Director

Mr. Le Bo (Chairman)

Non-Executive Director

Mr. Yuan Jing

Registered Office 15th Floor, Bankers Court 850-2nd Street SW Calgary, Alberta T2P 0R8 Canada

Independent Non-Executive Directors

Mr. Richard Dale Orman

Mr. Bryan Daniel Pinney

Mr. Peter David Robertson

Principal Place of Business in Hong Kong

Room 1901, 19/F Lee Garden One 33 Hysan Avenue, Causeway Bay Hong Kong

October 31, 2019

To: the Shareholders

Dear Sirs/Mesdames,

ISSUE OF UNLISTED WARRANTS PURSUANT TO SPECIFIC MANDATE AND NOTICE OF SPECIAL MEETING

INTRODUCTION

Reference is made to the announcement of the Company dated July 26, 2019 in relation to, among other things, the subscription agreement (the ‘‘Subscription Agreement’’) entered into between Persta and Macquarie Bank Limited (the ‘‘Subscriber’’) and the proposed issuance of the unlisted warrants (the ‘‘Warrants’’) under the specific mandate.

The purpose of this Circular is to provide the Shareholders with, among other things: (i) further details of the Subscription Agreement; (ii) the issuance of Warrants pursuant to the Subscription Agreement and the allotment and reservation for issuance of Common Shares upon the exercise of

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the Warrants (each, a ‘‘Warrant Share’’); and (iii) notice and details regarding the Meeting for the purpose of considering and, if thought fit, ratifying and approving the issuance of the Warrants and the allotment and reservation for issuance of the Warrant Shares.

SUBSCRIPTION AGREEMENT AND DEED POLL

On July 26, 2019, the Company entered into the Subscription Agreement with the Subscriber, pursuant to which the Company agreed to issue a warrant certificate to the Subscriber representing an aggregate of 52,377,304 Warrants. The Warrants carry the rights to subscribe for Warrant Shares at an exercise price which is equivalent to 90% of the volume weighted average price of the Common Shares traded on The Stock Exchange of Hong Kong Limited or any body to which its functions have been transferred (the ‘‘Stock Exchange’’) on the day on which the Stock Exchange is open for trading and the Common Shares are freely available for trading immediately preceding the date on which the Subscriber submits an irrevocable notice of exercise to the Company.

On July 26, 2019, the Company also entered into a deed poll (the ‘‘Deed Poll’’) governing the terms of the Warrants to be issued to the Subscriber.

On September 13, 2019, the Company and the Subscriber amended the Subscription Agreement to set the minimum exercise price threshold enabling the Company to reject an exercise of the Warrants at HK$1.00 and to extend the outside date for this transaction to October 31, 2019.

On October 31, 2019, the Company and the Subscriber further amended the Subscription Agreement to set the minimum exercise price threshold enabling the Company to reject an exercise of the Warrants at HK$0.50 and to extend the outside date for this transaction to December 15, 2019.

SHAREHOLDER APPROVAL

The full text of the ordinary resolution approving the issuance of the Warrants and a specific mandate granting the Company’s board of directors the authority to exercise the powers of the Company to create, allot and reserve for issuance the Warrant Shares is set out in the accompanying management information circular.

Notwithstanding the date that the Shareholders approve the ordinary resolution and all other regulatory approvals are obtained, the effective date of the issuance of the Warrants will be the date as reflected on the definitive Warrant Certificate to be issued to the Subscriber upon closing of the transaction, which will occur shortly after the Meeting, should the requisite approval of the Shareholders be obtained.

RECOMMENDATION

Following an extensive review of multiple financing options and consideration of other alternatives, the Company’s board of directors is of the opinion that the terms of the Subscription Agreement, the Deed Poll and the issuance of the Warrants are fair and reasonable and in the best interests of the Company and the Shareholders. The Company’s board of directors unanimously recommends that the Shareholders vote in favor of the resolution.

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Your vote is important. Whether or not you are able to attend the Meeting, please take the time to vote your Common Shares in accordance with the instructions contained in the accompanying Circular and on the form of proxy or voting instruction form provided to you.

Yours very truly,

(signed) ‘‘Le Bo’’

Chairman of the Board, President and Chief Executive Officer Persta Resources Inc.

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DEFINITIONS

In this Circular, unless the context otherwise requires, the following expressions have the following meanings:

‘‘ABCA’’ Business Corporations Act (Alberta), as amended, supplemented or as otherwise modified from time to time; ‘‘Board’’ the board of the Directors; ‘‘C$’’ Canadian dollars, the lawful currency of Canada; ‘‘Canada’’ Canada, its territories, its possessions and all areas subject to its jurisdiction; ‘‘Closing’’ the closing of the issuance of the Warrant Certificate, as contemplated by the Subscription Agreement and which will occur shortly after the Meeting, should the requisite approval of the Shareholders be obtained; ‘‘Common Share(s)’’ the common share(s) of no par value in the capital of the Company; ‘‘Company’’ Persta Resources Inc., a company incorporated under the laws of the Province of Alberta on March 11, 2005 and whose shares are listed on the main board of the Stock Exchange (stock code: 3395); ‘‘connected person(s)’’ has the meaning ascribed to it under the Listing Rules; ‘‘Crown’’ Crown Capital Fund IV, LP, a limited partnership governed by the laws of the Province of Alberta, the majority shareholder of which is Crown Capital Partners Inc., a company incorporated under the laws of Canada on September 8, 1999 and whose shares are listed on the Toronto Stock Exchange under the stock symbol CRWN; ‘‘Crown Warrants’’ an aggregate of 8,000,000 unlisted transferable warrants held by Crown, exercisable into an equivalent number of Common Shares at an exercise price of HK$3.16 per share (subject to adjustments) until May 15, 2023, the details of which are more particularly set forth in the management information circular of Persta dated July 23, 2018 with respect to its special meeting of Shareholders held on August 13, 2018;

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‘‘Deed Poll’’

the deed poll of the Company dated July 26, 2019 governing the terms of the Warrants;
‘‘Director(s)’’ the director(s) of the Company;
‘‘Effective Date’’
the date of the Closing and the effective date of the issuance of the Warrants, which shall be no later than December 15, 2019;
‘‘Exercise Date’’ the date on which the holder of the Warrants submits an irrevocable notice of exercise to the Company;
‘‘Exercise Period’’
the period during which the holder(s) of the Warrant(s) may exercise the subscription right(s) attaching to the Warrant(s);
‘‘Exercise Price’’
the exercise price per Warrant Share at which the holder of each Warrant may subscribe for a Warrant Share, being 90% of the volume weighted average price of the Common Shares traded on the Stock Exchange on the Trading Day immediately preceding the Exercise Date;
‘‘HK$’’

Hong Kong dollars, the lawful currency of Hong Kong;

‘‘Independent Third Party(ies)’’
person(s) who or company(ies) together with its/their ultimate beneficial owner(s) which, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, is/are third party(ies) independent of the Company and its connected person(s) in accordance with the Listing Rules;
‘‘IPO Financing’’
the initial public offering of the Company on the Stock Exchange where it raised approximately C$38,000,000 through the offering of 69,850,000 Common Shares at HK$3.16 per share;
‘‘Issue Price’’ the deemed issue price per Warrant, being HK$0.0108;
‘‘Last Financing’’
the private placement offering of the Company where it raised approximately C$6,000,000 through the offering of 23,600,000 Common Shares at HK$1.50 per share to Jixing Gas Holdings Limited, the details of which are described in the Company’s announcements dated March 25, 2019 and May 14, 2019;

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‘‘Latest Practicable Date’’

October 31, 2019, being the last practicable date for ascertaining certain information contained in this Circular;

‘‘Listing Committee’’

has the meaning ascribed to it under the Listing Rules;

‘‘Listing Rules’’
the Rules Governing the Listing of Securities on the Stock Exchange, as amended, supplemented or as otherwise modified from time to time;
‘‘Meeting’’
the special meeting of the Shareholders to be held on November 29, 2019, or any adjournment thereof;
‘‘Results Announcement’’
the announcement of the Company’s annual results for the year ended December 31, 2018 on March 29, 2019;
‘‘SFO’’
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);
‘‘Shareholder(s)’’ the holder(s) of the Common Shares;
‘‘Specific Mandate’’
the specific mandate to be granted to the Directors at the Meeting to allot and issue the Warrant Shares;
‘‘Stock Exchange’’
The Stock Exchange of Hong Kong Limited, or any body to which its functions have been transferred;
‘‘Subscriber’’
Macquarie Bank Limited, a company incorporated under the laws of Australia;
‘‘Subscription Agreement’’
the Subscription Agreement dated July 26, 2019 entered into between the Subscriber and the Company in relation to the issuance of the Warrants by the Company to the Subscriber, as amended by an amending agreement dated September 13, 2019, and as further amended by a second amending agreement dated October 31, 2019, between the Subscriber and the Company;
‘‘Trading Day(s)’’
the day(s) on which the Stock Exchange is open for trading and the Common Shares are freely available for trading;
‘‘Warrant(s)’’
the total of 52,377,304 unlisted transferable warrants issued by the Company at the Issue Price pursuant to the Subscription Agreement and the Deed Poll, each conferring rights entitling its holder(s) to subscribe for one Warrant Share at the Exercise Price during the Exercise Period;

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‘‘Warrant Certificate’’ the warrant certificate to be dated as of the Effective Date and issued by the Company to the Subscriber; and ‘‘Warrant Share(s)’’ the Common Shares to be allotted and issued by the Company upon the exercise of the subscription rights attaching to the Warrants.

For the purpose of illustration only and unless otherwise specified, conversion of C$ to HK$ in this Circular is based on the exchange rate of C$1.00 to HK$5.95. Such conversion should not be construed as a representation that any amount has been, could have been, or may be exchanged at this or any other rate.

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Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.

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PERSTA RESOURCES INC.

(incorporated under the laws of Alberta with limited liability)

Suite 3600, 888-3rd Street SW, Calgary, Alberta T2P 5C5, Canada

Telephone: 1-403-355-6623 Fax: 1-403-440-1206 (HK Stock code: 3395)

MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT

GENERAL PROXY MATTERS

Solicitation of Proxies by Management

This management information circular (the ‘‘Circular’’) is furnished in connection with the solicitation of proxies by the management of the Company for use at the Meeting to be held at Suite 3600, Bankers Hall West, 888-3rd Street SW, Calgary, Alberta T2P 5C5, on November 29, 2019, at 9:00 a.m. (Calgary time), and any adjournment thereof. This Circular contains information as at the Latest Practicable Date unless otherwise noted.

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Registered Shareholders are invited to attend the Meeting and vote their Common Shares at the Meeting. Shareholders can also appoint a proxy holder (who need not be a Shareholder) to attend and vote at the Meeting on the Shareholder’s behalf and to convey a Shareholder’s voting instructions. Solicitations of proxies will be primarily by mail, but some proxies may be solicited personally or by telephone, facsimile transmission or other electronic means by Persta’s directors, officers or employees at a nominal cost. The cost of solicitation will be borne by the Company.

Registered Shareholders who received this Circular and other accompanying Meeting materials from the Company’s branch share registrar in Hong Kong, and who elect to submit a proxy may do so by completing, dating and signing the accompanying proxy and returning it to the Company’s branch share registrar in Hong Kong, being Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, ensuring that the proxy is received during regular business hours at least 48 hours (Hong Kong time) (excluding Saturdays, Sundays and public holidays in Hong Kong) before the Meeting or any adjournment thereof, at which the proxy is to be used. If a Shareholder is registered as a shareholder of the Company on the register of shareholders in Hong Kong on the Record Date, such Shareholder’s records are currently maintained on the Hong Kong register and such Shareholder’s proxy should be deposited in accordance with the instructions set out in this paragraph.

Registered Shareholders who received this Circular and other accompanying Meeting materials from the Company’s principal share registrar in Canada, and who elect to submit a proxy may do so by completing, dating and signing the accompanying proxy and returning it to the Company’s principal share registrar in Canada, being Computershare Trust Company of Canada at Proxy Department, 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1, Canada, in the enclosed envelope provided for that purpose, so that it is received no later than 48 hours (Toronto time) (excluding Saturdays, Sundays and public holidays in Canada) prior to the time of the Meeting or any adjournment thereof, at which the proxy is to be used. Registered shareholders may also submit their voting instructions online at www.investorvote.com or by phone at 1-866-732-VOTE (8683) (toll free within North America) or 1-312-588-4290 (outside North America), ensuring that the proxy is received during regular business hours at least 48 hours (Toronto time) (excluding Saturdays, Sundays and public holidays in Canada) before the Meeting or any adjournment thereof, at which the proxy is to be used. If a Shareholder acquired its Common Shares prior to the Record Date and is registered as a shareholder on the register of shareholders in Canada on the Record Date, such Shareholder’s records are currently maintained on the Canadian register and such Shareholder’s proxy should be deposited in accordance with the instructions set out in this paragraph. The instrument appointing a proxy must be in writing and must be executed by you or your attorney authorized in writing or, if you are a corporation, under your corporate seal or by a duly authorized officer or attorney of the corporation.

The individuals named in the enclosed form of proxy are officers of the Company (‘‘Management Designees’’). A Shareholder wishing to appoint some other person (who need not be a Shareholder) to represent him or her at the Meeting has the right to do so, either by inserting that person’s name in the blank space provided in the form of proxy and striking out the names of the Management Designees, or by completing another form of proxy, or by using the internet at www.investorvote.com or the telephone by calling 1-866-732-8683 (toll free within North America) or 1-312-588-4290 (outside North America).

If you vote your proxy using the internet or the telephone, please do not send back the form of proxy.

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Advice to Beneficial Holders of Common Shares

The information set forth in this section is of significant importance to you if you do not hold your Common Shares in your own name. Only proxies deposited by Shareholders whose names appear on Persta’s records as the registered holders of Common Shares can be recognized and acted upon at the Meeting. If Common Shares are listed in your account statement provided by your broker, then in almost all cases those Common Shares will not be registered in your name on Persta’s records. Such Common Shares will likely be registered under the name of your broker or an agent of that broker.

Only registered holders of Common Shares or the persons they validly appoint as their proxies are permitted to vote at the Meeting. However, in many cases, Common Shares beneficially owned by a person (a ‘‘Non-Registered Holder’’) are registered either: (i) in the name of an intermediary (an ‘‘Intermediary’’) (including banks, trust companies, securities dealers or brokers and trustees or administrators of self-administered RRSP’s, RRIF’s, RESP’s and similar plans) that the Non-Registered Holder deals with in respect of the shares; or (ii) in the name of a clearing agency (such as the Canadian Depository for Securities Limited) of which the Intermediary is a participant.

If you do not hold your Common Shares in your own name, you may give permission to your broker or other intermediary to release your name and address to Persta so that Persta can send proxy related materials to you directly. Alternatively, you may instruct your broker or other intermediary who holds your Common Shares to not provide your name and address to Persta, in which case, your broker or other intermediary is required to send such materials to you. Persta currently does not provide proxy related materials directly to beneficial Shareholders and Persta assumes the costs associated with the delivery of meeting materials to beneficial Shareholders.

Applicable regulatory policy requires your broker to seek voting instructions from you in advance of the Meeting. Every broker has its own mailing procedures and provides its own return instructions, which you should carefully follow in order to ensure that your Common Shares are voted at the Meeting. Often, the form of proxy supplied by your broker is identical to the form of proxy provided to registered Shareholders. However, its purpose is limited to instructing the registered Shareholder on how to vote on your behalf.

In Canada, most brokers now delegate responsibility for obtaining instructions from clients to Broadridge Financial Solutions Inc. (‘‘Broadridge’’). Broadridge mails a voting instruction form in lieu of a proxy provided by the Company. The voting instruction form will name the same persons as the Company’s proxy to represent you at the Meeting. You have the right to appoint a person (who need not be a Beneficial Shareholder), other than the persons designated in the voting instruction form, to represent you at the Meeting. To exercise this right, you should insert the name of the desired representative in the blank space provided in the voting instruction form. The completed voting instruction form must then be returned to Broadridge by mail or facsimile or given to Broadridge by phone or over the internet, in accordance with Broadridge’s instructions. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of Common Shares to be represented at the Meeting. If you receive a voting instruction form from Broadridge, you cannot use it to vote Common Shares directly at the Meeting. The voting instruction form must be completed and returned to Broadridge, in accordance with its instructions, well in advance of the Meeting in order to have the Common Shares voted.

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Although you may not be recognized directly at the Meeting for the purposes of voting Common Shares registered in the name of your broker, you may attend the Meeting as a proxyholder for the registered Shareholder and vote your Common Shares in that capacity. If you wish to attend the Meeting and vote your own Common Shares, you must do so as proxyholder for the registered Shareholder. To do this, you should enter your own name in the blank space on the applicable form of proxy provided to you and return the document to your broker or the agent of such broker in accordance with the instructions provided by such broker well in advance of the Meeting.

The Canadian Securities Administrators have adopted a ‘‘notice-and-access’’ regime for shareholder meetings which permits issuers to send a reduced package of meeting materials to shareholders, together with the document required to cast their vote. Persta has elected not to use the ‘‘notice-and-access’’ regime for the Meeting and paper copies of such materials will be sent to all of the Shareholders.

Revocation of Proxy

A Shareholder who has submitted a proxy may revoke it at any time prior to the exercise thereof. In addition to revocation in any other manner permitted by law, a Shareholder who has given a proxy may revoke it by:

(a) executing a proxy bearing a later date or by executing a valid notice of revocation, either of the foregoing to be executed by the Shareholder or such person’s authorized attorney in writing or, if such person is a corporation, under its corporate seal by an officer or attorney duly authorized, and by delivering the proxy bearing a later date to the Company’s principal share registrar in Canada, being Computershare Trust Company of Canada at Proxy Department, 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1, Canada, in the enclosed envelope provided for that purpose, so that it is received no later than 48 hours (Toronto time) (excluding Saturdays, Sundays and public holidays in Canada) prior to the time of the Meeting or any adjournment thereof. Registered shareholders may also use the internet site at www.investorvote.com to transmit their voting instructions or vote by phone at 1-866-732-VOTE (8683) (toll free within North America) or 1-312-588-4290 (outside North America), or the Company’s branch share registrar in Hong Kong, being Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, as applicable, at least 48 hours (Hong Kong time) (excluding Saturdays, Sundays and public holidays in Hong Kong) before the Meeting (i.e., 9:00 a.m. on November 27, 2019 (Calgary time) or 12:00 a.m. on November 28, 2019 (Hong Kong time)), or any adjournment thereof, at which the proxy is to be used, or to the chairman of the Meeting on the day of the Meeting or any adjournment thereof, or in any other manner provided by law; or
(b) personally attending the Meeting and voting such person’s Common Shares at the Meeting.

A revocation of a proxy will not affect a matter on which a vote is taken before the revocation.

Persons Making the Solicitation

This solicitation is made on behalf of the Company’s management. Persta will bear the costs incurred in the preparation and mailing of the form of proxy, notice of Meeting, and this Circular. In addition to mailing forms of proxy, proxies may be solicited by personal interviews, or by other means of communication, by Persta’s directors, officers or employees, who will not be remunerated therefor.

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Exercise of Discretion by Proxyholders

The Common Shares represented by proxy in favour of Management Designees will be voted on any poll at the Meeting. Where you specify a choice with respect to any matter to be acted upon, the Common Shares will be voted or withheld from voting on any poll in accordance with the specification so made. If you do not provide instructions, your Common Shares will be voted in favour of the matters to be acted upon as set out herein. The persons appointed under the form of proxy which Persta has furnished are conferred with discretionary authority with respect to amendments or variations of those matters specified in the form of proxy and notice of Meeting and with respect to any other matters which may properly be brought before the Meeting or any adjournment thereof. At the time of printing this Circular, management of Persta is not aware of any such amendment, variation or other matter.

Voting by Poll

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of shareholders at a meeting must be taken by poll except where the chairman, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands. The Company will announce the results of the poll in the manner prescribed in Rule 13.39(5) of the Listing Rules.

Counting the Votes

The Company’s principal share registrar, Computershare Trust Company of Canada, and the Company’s branch share registrar, Computershare Hong Kong Investor Services Limited, will count and tabulate the proxies for Common Shares. This is done independently of the Company to preserve confidentiality in the voting process. Proxies are referred to the Company only in cases where a Shareholder clearly intends to communicate with management or when it is necessary to do so to meet the requirements of applicable law.

VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES

Voting Securities

The Company’s authorized share structure consists of an unlimited number of Common Shares without par value and an unlimited number of preferred shares. As at the Record Date, the Company had 301,886,520 fully paid and non-assessable Common Shares and no preferred shares outstanding. Each Common Share carries the right to one vote at meetings of Shareholders.

Quorum

By-Law Number Two of the Company provides that if at least two persons present as registered Shareholders or as proxyholders for registered Shareholders, together of which is entitled to vote at such meeting, holding or representing in the aggregate not less than 5% of the total number of shares carrying the right to vote at such meeting, a quorum for the purposes of conducting a shareholders’ meeting is constituted.

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Principal Holders

To the knowledge of the Directors and executive officers of the Company, as at the Record Date, the only persons who beneficially own, control or direct, directly or indirectly, Common Shares carrying 10% or more of the votes attached to the Common Shares entitled to be voted at the Meeting are as follows:

			% of Common Shares (on a fully diluted basis upon exercise of the Warrants and the Crown Warrants)
Name of Shareholder	Number of Common Shares	% of Common Shares (on a non-diluted basis)	% of Common Shares (on a fully diluted basis upon exercise of the Warrants and the Crown Warrants)
Aspen Investment Holdings Ltd.1	186,862,832	61.90%	51.58%
HKSCC Nominees Limited2	255,538,832	91.83%3	70.54%

As at the Latest Practicable Date, the Directors and executive officers of Persta as a group, beneficially owned, or controlled or directed, directly or indirectly, 186,862,832 Common Shares, or approximately 61.90% of the Company’s issued and outstanding Common Shares.

Assuming that the Subscriber exercises its right to acquire the 52,377,304 Warrant Shares underlying the Warrants and assuming that the Crown Warrants remain unexercised, the Subscriber would hold approximately 14.78% of the issued and outstanding Common Shares in case the Subscriber does not subsequently sell or otherwise dispose of the Warrant Shares[4] .

Assuming that the Subscriber exercises its right to acquire the 52,377,304 Warrant Shares underlying the Warrants and assuming that the Crown Warrants are fully exercised, the Subscriber would hold approximately 14.46% of the issued and outstanding Common Shares in case the Subscriber does not subsequently sell or otherwise dispose of the Warrant Shares[4] .

1 Aspen Investment Holdings Ltd. (‘‘Aspen’’) holds 185,982,832 Common Shares and is a corporation controlled by two of the Directors, Mr. Yuan Jing and Mr. Le Bo, who indirectly hold 41.09% and 36.69% of Aspen respectively. Pursuant to the Unanimous Shareholders Agreement dated December 18, 2015 and the First Supplemental Unanimous Shareholders Agreement dated April 29, 2016, Aspen, Mr. Yuan Jing, Ji Lin Hong Yuan Trade Group Limited, Mr. Le Bo, 1648557 Alberta Ltd., Changchun Liyuan Investment Co. Ltd. and Ms. Jing Hou (being spouse of Mr. Le Bo) become a group of the Controlling Shareholders (as defined in the Listing Rules) acting in concert and are interested in under Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and therefore, Aspen is deemed to be interested in all the Common Shares in which Mr. Jing and Mr. Bo are interested in, which in aggregate represent approximately 61.90% of the issued and outstanding Common Shares.
2 HKSCC Nominees Limited is a subsidiary of the Stock Exchange and its principal business is to act on behalf of other corporate or individual shareholders. All shares of Hong Kong listed companies, which are deposited into the Stock Exchange’s Central Clearing and Settlement System, are registered in the name of HKSCC Nominees Limited.
3 Includes Common Shares held by Aspen, which have been transferred from the Canadian share register to the Hong Kong share register and have been deposited into the Stock Exchange’s Central Clearing and Settlement System.
4 It is noted that the Subscriber has indicated that it does not intend to be a major long-term shareholder of Persta, and may sell any of the Warrant Shares throughout the course of and after the Exercise Period.

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INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON

None of the Directors or executive officers of the Company, none of the persons who have been Directors or executive officers of the Company since the commencement of the Company’s most recently completed financial year and no associate or affiliate of any of the foregoing persons has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting.

To the best knowledge, belief and information of the Directors, having made all reasonable enquiries, no Shareholder is required under the Listing Rules to abstain from voting on the resolution at the Meeting.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

For the purposes of this Circular, ‘‘informed person’’ means:

(i) a director or executive officer of the Company;
(ii) a director or executive officer of a person or company that is itself an informed person or subsidiary of the Company;
(iii) any person or company who beneficially owns, directly or indirectly, voting securities of the Company or who exercises control or direction over voting securities of the Company, or a combination of both, carrying more than 10% of the voting rights attached to all outstanding voting securities of the Company, other than voting securities held by the person or company as underwriter in the course of a distribution; and
(iv) the Company if it has purchased, redeemed or otherwise acquired any of its own securities, for so long as it holds any of its securities.

Other than as disclosed herein, none of the Directors or executive officers of the Company, nor any person who beneficially owns directly or indirectly or exercises control or direction over securities carrying more than 10% of the voting rights attaching to the shares in the capital of the Company, nor any known associate or affiliate of these persons, had any material interest, direct or indirect in any transaction within the three years before the date hereof which has materially affected the Company, or in any proposed transaction which has materially affected or would materially affect the Company.

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BACKGROUND TO THE SUBSCRIPTION AGREEMENT AND WARRANT ISSUANCE

Subscription Agreement and Deed Poll

On July 26, 2019, the Company entered into the Subscription Agreement with the Subscriber, pursuant to which the Subscriber agreed to issue the Warrants to the Subscriber. The Warrants carry the rights to subscribe for an equivalent number of Warrant Shares at the Exercise Price during the Exercise Period. On July 26, 2019, the Company also entered into the Deed Poll, governing the terms of the Warrants to be issued to the Subscriber.

Reasons for Entering Into the Subscription Agreement and the Issuance of Warrants

The Company is principally engaged in natural gas and crude oil exploration and production, with a focus on natural gas. The Company focuses on long-term growth through acquisition, exploration, development and production in the Western Canadian Sedimentary Basin.

The Company has been actively seeking business and investment opportunities since 2017 and has been exploring a number of financing options. In the 12 months immediately preceding the date of this Circular, the Company’s financing activities have comprised the Subscription Agreement, the Last Financing and the Crown Warrants. On May 14, 2019, the Company completed the Last Financing, issuing 23.6 million Common Shares at a price of HK$1.50 per Common Share for gross proceeds of HK$35.4 million (approximately C$6 million). On May 15, 2018, the Company successfully secured a loan from Crown in the principal amount of C$25,000,000 for a term of five years (with the Crown Warrants being issued as partial consideration which, as of the Latest Practicable Date, remained outstanding and unexercised). The Company intends to apply the net proceeds from the Last Financing to the expansion of its existing business, the development of new business, and as general working capital of the Company. The net proceeds from the Crown Warrants were used as general working capital for the Company.

Since early 2018, the price of Canadian gas has remained low, reflecting an oversupply of gas, as demand from the United States (‘‘US’’) for Canadian products has weakened given significant increases in US domestic production over the same period. The outlook for Canadian gas is forecast to improve, as the market is already rebalancing through reduced drilling in 2019 and curtailment of production from legacy fields which are uneconomic at the current price. Nonetheless, given the persistently low natural gas price and the uncertainty in the Canadian oil and gas industry, the Company remains in need of additional capital. The Company believes that the issuance of the Warrants offers potential access to new capital and in the quantity required by the Company, taking

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into account that the Subscriber is a highly respected and established international financial institution, with a contractual obligation under the Subscription Agreement to deliver a minimum amount to the Company through the exercise of the Warrants during certain periods subject to certain conditions.

The Company has considered alternative financing options and engaged in extensive discussions with numerous potential investors and underwriters in Canada, the United States of America, the United Kingdom, Singapore, Australia and China. In the course of these discussions, the Company explored and considered the feasibility of alternative financing options prior to agreeing to enter into the Subscription Agreement. Options considered by the Company included equity financings, open offer and pre-emptive share issuances and debt financings. Over the previous six months, the Company has approached four potential underwriters, but none of them had interest in underwriting new equity, open offer, rights issue or bond offerings for the Company given the price performance of the Common Shares since the IPO Financing.

The Last Financing was not underwritten and the Common Shares were issued under the General Mandate. The terms of the placing were negotiated in the context of the market with the issue price of HK$1.50 per Common Share representing a discount of approximately 8.5% to the market price of the Common Shares prior to the announcement of the Last Financing, and a discount of approximately 2% to the market price of the Common Shares at the time of closing the Last Financing. As at the Latest Practicable Date, the price per Common Share is HK$0.495 as quoted on the Stock Exchange.

After considering the above mentioned factors, including the inability to secure an underwriter or placing agent, the Company was of the belief that, given current market conditions, any additional equity financing pursuant to which new Common Shares were issued to independent investors would be of disadvantage to the Company. The price of such Common Shares would likely have to be set at a deep discount to the current Common Share price for the underwriter, the placing agent or the placees to participate, and at a price significantly below the Last Financing. Accordingly, the Company is of the view that a placement of new Common Shares at this time would not be in the best interests of the Company and the Shareholders as a whole.

Both an open offer or rights issue would allow the Shareholders to participate in the subscription of new Common Shares to be issued by the Company, and would allow Shareholders to maintain their respective pro rata shareholdings in the Company. Given that both an open offer and rights issue would require approval from the relevant authorities and would involve, among other things, the preparation and filing of a prospectus, and the printing and handling of application forms, the Company considered that the relatively small size of the financing required did not warrant an open offer or a rights issue, as it would incur additional time and significant costs. The Company was unable to find an underwriter willing to underwrite any Common Shares not subscribed for, without providing a discount on the price of such Common Shares which would not be in the best interests of the Company and the Shareholders as a whole. Debt financing methods had been contemplated by the Company in view of several factors, including: (i) bank borrowings could be negotiated in a way that would match the Company’s needs in terms of timeline and size of the funding; and (ii) issuance of bonds would not result in any dilution effect to the Company’s shareholding structure.

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The Company was unable to engage an underwriter to explore a bond offering given the price performance of the Common Shares and increase in net loss for the six months ended June 30, 2019 to C$12.8 million, compared to C$0.9 million for the same period in 2018.

As at March 31, 2019, the Company had Macquarie Bank Limited as its senior lender and Crown as its subordinated lender with a combined principal amount of C$24.3 million outstanding (C$2.7 million owed to Macquarie Bank Limited and C$21.6 million owed to Crown). During this period, the Company held discussions with three banks in Canada to assess the possibility of replacing the Company’s senior bank facility with a larger facility which would provide new capital to the Company. The banks advised that increasing the Company’s borrowing base through a traditional facility would incur significantly higher interest expenses than the Macquarie Bank Limited senior facility.

Subsequent to the Last Financing, the Company paid out Macquarie Bank Limited in full and terminated the senior debt facility. As at June 30, 2019, the Company owed C$22.4 million to Crown as the Company’s sole lender. The Company is of the belief that any additional debt financing would be of disadvantage to the Company as the quantum of Crown debt currently held is appropriate for the amount of cashflow the Company’s operations are generating. To be further leveraged would not be in the best interests of the Company and the Shareholders as a whole as higher finance costs would constrain the Company’s working capital.

The Company is of the view that the heavy interest expenses and increase in financial costs resulting from additional debt financing or bank borrowings may not be beneficial to, or suitable for, the Company and the Shareholders as a whole, and could have an adverse impact on the profitability of the Company. The Exercise Price of the Warrants will be 90% of the volume weighted average price of the Common Shares traded on the Stock Exchange on the trading day immediately preceding the Exercise Date. If the share price increases in the future, the Exercise Price will be set in line with such increase, and dilution to Shareholders may be lower than if the same number of Common Shares were issued at (or at a discount to) current market prices. The Company is cognizant of the possibility of the Subscriber exercising the Warrants at a price significantly below the Last Financing if the share price decreases in the future as well. Nonetheless, given the aforementioned factors, the Company is of the view that the issuance of the Warrants is the most appropriate financing method available to the Company at this time, and that it is in the best interests of the Company and the Shareholders as a whole.

The Company has considered the possibility of listing of the Warrants. However, the application for listing of the Warrants would incur additional costs which will further reduce the net proceeds from the issue of the Warrants. In addition, the application for listing of the Warrants could delay the entire financing process. Further, as the Company has no plans to issue further Warrants in the near term, there is not an adequate number of holders of the Warrants to satisfy Listing Rule 8.08(2). Therefore, the Company is of the view that the Warrants should remain unlisted given the current circumstances.

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The Subscription Agreement and the terms of the Warrant Certificate are on normal commercial terms, determined after arm’s length negotiations between the Company and the Subscriber. The Company believes that the terms (including the Issue Price and the Exercise Price) are fair and reasonable so far as the interests of the Company and the Shareholders as a whole are concerned.

Information Concerning the Subscriber

The Subscriber is a company incorporated under the laws of Australia and is a financial institution regulated by the Australian Prudential Regulation Authority. The Subscriber is authorized to carry out banking business in a number of countries, including Australia and Hong Kong.

Certain principals within the Macquarie Group are business acquaintances of the Company’s senior management, including Mr. Le Bo, the Company’s chairman of the board of Directors and an executive Director, and Mr. Jesse Meidl, the Company’s chief financial officer, through prior discussions on potential fundraising options for the Company. No advisor, broker or agent was involved in any aspect of the issuance of the Warrants and no fees have been paid, or will be paid, to any third party.

The Company is confident that the Subscriber will have sufficient financial ability to satisfy the capital requirement upon exercise of the Warrants, given that the Subscriber is highly regarded both in Canada and internationally and has total assets of more than HK$943 billion and total equity of more than HK$62 billion as at March 31, 2019 (based on the exchange rate of Australian dollars to Hong Kong dollars as of March 29, 2019).

To the best of the Directors’ knowledge, information and belief and having made all reasonably enquiries, the Subscriber and its ultimate beneficial owners are Independent Third Parties. Other than the entering into of the Subscription Agreement, the Company has not entered into, or contemplated entering into, any other arrangements, agreements or understandings (whether formal or informal and whether express or implied) with the Subscriber.

Information Concerning Subscription Agreement and Deed Poll

The following descriptions of the Subscription Agreement and Deed Poll are summaries of their material attributes and are qualified in their entirety by reference to the Subscription Agreement and Deed Poll, which have been filed and are available on SEDAR at www.sedar.com.

Subscription Agreement

The Subscription Agreement governing the subscription of the Warrants includes a number of rights and obligations of the Company with regards to the issuance and exercise of the Warrants and the contractual relationship between the Company and the Subscriber. Pursuant to the Subscription Agreement, the Company has agreed to certain restrictions on the use of funds received from the exercise of the Warrants. In particular, the Company may not use any of the funds for the purpose of financing the activities of any person currently the subject of sanctions imposed by certain major governments and intergovernmental organizations or operating in any country or territory that is the

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subject of such sanctions. Further, the Company may not use the proceeds for the purpose of financing any activities that may have a material negative impact on the environment, society or human rights, or that are in any way relating to gaming.

Pursuant to the Subscription Agreement, the Subscriber has a right of first refusal to arrange and participate in any future financing transaction proposed to be entered into by the Company that is substantially similar to the transactions contemplated by the Subscription Agreement. Upon receiving notice of a financing activity subject to the right of first refusal, the Subscriber and the Company have 15 business days to agree upon the terms of engagement for the particular financing activity. If the Company and the Subscriber cannot agree on the terms of engagement, or if the Company receives written notice that the Subscriber is unwilling or unable to participate in the financing activity, the Company may appoint or engage another person to act in relation to the financing activity. The right of first refusal will terminate at the earlier of six months following: (i) the expiry date of the Warrants; or (ii) the termination date of the Subscription Agreement.

In the event that the Company redeems or repurchases the Warrants prior to the Subscriber having exercised subscription rights for a minimum of 13,094,326 Common Shares, or in the event that the Subscription Agreement is terminated for any reason (other than as a result of the Subscriber not having been provided with legal opinions of the Company’s Canadian and Hong Kong counsels and supporting documentation relating to the issue of the Warrants as the Subscriber may reasonably require), the Company must pay to the Subscriber a cancellation fee equal to HK$2,000,000 (the ‘‘Cancellation Fee’’). The Cancellation Fee was agreed to compensate the Subscriber for expenses it has incurred in respect of the Warrants. These include legal and other advisory costs incurred for the establishment of the Warrant facility.

These fees are common in agreements of this type. The Cancellation Fee as agreed provides a limit to the Company’s exposure to the Subscribers costs. Any expenses the Subscriber incurs in excess of HK$2.0 million in respect of the Warrants are the sole responsibility of the Subscriber. The Company assessed the Cancellation Fee as fair and reasonable to shareholders as the amount of the fee is consistent with fees agreed by other issues for offerings comparable in size and structure, and the fee limits the Company’s exposure to costs borne by the Subscriber.

Deed Poll and Warrant Certificate

The Deed Poll sets forth the definitive form of the Warrant Certificate which contains terms and conditions of the Warrants, including that the form of Warrant Certificate may only be modified with the consent of the holder(s) of the Warrants. For a description of principal terms of the Warrants see ‘‘Terms and Conditions of the Warrants’’ below.

Information Concerning the Warrants

Pursuant to the Subscription Agreement, the Company agreed to issue the Subscriber a total of 52,377,304 Warrants. Each Warrant entitles the Subscriber to one Warrant Share upon payment of the Exercise Price, being equivalent to 90% of the volume weighted average price of the Common Shares traded on the Stock Exchange on the day on which the Stock Exchange is open for trading and the Common Shares are freely available for trading immediately preceding the date on which

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the Subscriber submits an irrevocable notice of exercise to the Company. The Warrants confer the right upon the holders thereof to subscribe for in aggregate up to a maximum of 52,377,304 Warrant Shares (subject to certain adjustments) at the relevant Exercise Price. The Warrant Shares to be issued upon exercise of the subscription rights attaching to the Warrants will be issued under the Specific Mandate to be sought at the Meeting.

The Warrant Shares, when issued and fully paid, will rank pari passu in all respects with the existing issued and outstanding Common Shares as at the date of tender of the exercise form required under the Warrant Certificate. The holder(s) of the Warrants will not have any right to attend or vote at any meeting of the Company by virtue of them being the holders of the Warrants. The holder(s) of the Warrants shall not have the right to participate in any distributions and/or offers of further securities made by the Company. The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Warrant Shares issuable upon the exercise of the Warrants. The Warrants will not be listed on the Stock Exchange or any other stock exchange.

The Warrants were issued for aggregate consideration of HK$566,000. The determination of the value of the Warrants was determined by arm’s length negotiations between the Company and the Subscriber after considering the valuation given by a Monte Carlo Pricing Model for calculation of the fair value of the Warrants. By definition, the Monte Carlo Pricing Model does not use a specific input assumption or parameter, but is a multiple probability simulation used to model the probability of different outcomes in any process that cannot easily be predicted due to the existence of, and intervention from, random variables. Using a possible range of estimates across multiple scenarios, the Monte Carlo Pricing Model provides an estimate of how likely a given outcome will be. The Directors agreed on the range of scenarios for the Monte Carlo Pricing Model and the valuations calculated. Furthermore, suitability for the Warrant valuation was tested by assessing the outputs derived from two model inputs which are easily quantified: liquidity and interest rate. The range of pricing expectations obtained from the Monte Carlo Pricing Model were consistent with movements in liquidity and interest rates. Specifically, the value of the Warrants predicted by the Monte Carlo Pricing Model increases as estimated Common Share liquidity increases, and the value of the Warrants decreased as the estimated interest rate increased.

The Directors did not obtain an independent valuation of the Warrants, as the cost of the valuation would significantly erode, if not exceed, the gross consideration of HK$566,000. The Directors satisfied themselves that the consideration of HK$0.0108, as derived from the Monte Carlo Pricing model which was validated as described above, is fair and reasonable in the context of the recent trading volume, recent volatility, and current market price for the Common Shares.

The Monte Carlo Pricing Model includes consideration of expected future stock price dynamics, stock liquidity, issuer default probability, timing of non-exercise periods and issuer buyback decisions, among other inputs. The estimates for the expected future values of key inputs like stock liquidity and volatility were anchored around current and recent market conditions. As with all derivative securities, the Issue Price reflects expectations of returns attributable to the Subscriber

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given the likelihood of exercise and the price at which an exercise would be made. As the Warrants can only be exercised during an Exercise Period at the Exercise Price, the potential returns available to the Subscriber are anchored by both the liquidity and price of the Common Shares.

Following is some supporting information on stock liquidity and volatility of the Common Shares.

Liquidity

Shown below is the average number of Common Shares traded per day in the various time periods ending on the Latest Practicable Date.

Average Daily Share Turnover	3 Months 235,313	6 Months 149,770	12 Months
			280,772

Volatility

Shown below is the annualised volatility of daily price moves in the various time periods leading up to the Latest Practicable Date.

Annualised Price Volatility	3 Months 46.0%	6 Months 47.7%	12 Months
			56.7%

The price of the Warrants was negotiated between the Company and the Subscriber, and was validated using the Monte Carlo Pricing Model. The 10% discount to the volume weighted average price for the Exercise Price was negotiated giving consideration to the following:

(i) Recent performance of the Company’s Common Shares. The price of the Company’s common shares has decreased over the past 12 months, from a high of HK$1.99 on November 14, 2018 to HK$0.495 on the Last Practicable Date. Liquidity has decreased over the same period. Price and liquidity both trending lower have an adverse impact for future price expectations and attractiveness of the Company’s Common Shares and Warrants. The movement of both price and liquidity makes it harder to attract investors to the Company, and the cost of doing so more expensive.
(ii) The challenging market for financing small cap exploration and production companies. The decline in global commodity prices and investor preference for large capital companies with more predictable and stable earnings has materially reduced the number of equity, debt and derivative financings, and average amount raised per financing, for small cap exploration and production companies over the past 5 years.
(iii) Establishing a discount that balances dilution to the Company while providing the Subscriber with a potential return sufficient to encourage exercises. A lower discount is advantageous to the Company and its shareholders as dilution is reduced. However a lower discount is disadvantageous for the Subscriber as the potential returns are reduced, which a weaker

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incentive to subscribe for, and actively exercise the Warrants. The Company and its shareholders forego the capital it would receive from the Subscriber on unexercised Warrants, while the Subscriber foregoes the potential return it would obtain through the discounted Common Shares it would receive.

(iv) Considering discounts on equity placings in the local market for small cap issuers over the last five years. The exercise price of the Warrant, rather than being a fixed number, is determined at each exercise at a fixed 10% discount to the volume weighted average price of the Common Shares at the time of exercise, and therefore is comparable to discounts realised on equity placings completed through the issuance of common shares. Analyses conducted indicate that companies of similar sizes to Persta have raised equity capital over recent years at average costs (including discounts and fees) greater than 10%. Equity placings completed through the issuance of common shares resulting from the exercise of derivative securities including warrants and options at a fixed strike price (as opposed to a fixed discount for the Warrants) are not comparable and were excluded in the analysis.

The Directors consider that the consideration for the issue of the Warrants is fair and reasonable and is in the best interests of the Company and the Shareholders as a whole.

Use of Proceeds

The gross proceeds and net proceeds from the issuance of the Warrants will be approximately HK$566,000 and HK$441,000, respectively. Under the terms of the Subscription Agreement (refer to Terms and Conditions of the Warrants below), the Warrants are exercisable in tranches over time. Changes in the future price and daily trading volume of the Common Shares from currently levels may have a material impact on the funds ultimately raised from the Warrants.

If the Company declares consecutive committed exercise periods until all the Warrants are exercised, and assuming that the price and trading volume of the Common Shares are in line with long term historical averages and that all Trading Days throughout the Exercise Period are ‘‘Qualified Trading Days’’ (as described in ‘‘Terms and Conditions of Warrants’’ below), HK$3.0 million could be raised approximately every month until all the Warrants are exercised, resulting in total net proceeds of approximately HK$47.0 million (received incrementally at HK$3.0 million per month for approximately 15 months). If the Company does not declare consecutive committed exercise periods, the Warrants will be exercised at the discretion of the Subscriber in single tranches, with each tranche capped at 1% of the total number of Common Shares then outstanding (as described in ‘‘Exercise Period’’ below).

As the Warrants can only be exercised in tranches, the net proceeds received for each individual exercise may fluctuate over time. Based on current price and trading volumes, the Company does not anticipate monthly exercises will result in receipt of net proceeds in excess of HK$3.0 million per tranche. If there are no Qualifying Trading Days realised in a given period, no exercises can be made, and there may be extended periods of time where there are no proceeds raised from the Warrants.

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If up to HK$3.0 million is realised monthly, the net proceeds would be applied towards the Company’s general and administrative expenses. For the six month period ended June 30, 2019, general and administrative expenses averaged HK$2.4 million per month. The Company forecasts its general and administrative expenses will range between HK$2.0 million and HK$3.0 million per month. The Company will apply net proceeds in excess of its general and administrative expenses towards operating costs, which average HK$4.0 million per month for the six month period ended June 30, 2019.

Changes in the future price and daily trading volume of the Common Shares from current levels may have a material impact on the funds ultimately raised from the Warrants. If the Warrants are not exercised, given the issue of the Warrants would have already provided immediate net funds of HK$441,000 without any dilution effect to the Shareholders or further liability to the Company, it is in the interest of the Company and the Shareholders as a whole.

Since the proceeds that may be raised from the issue of Warrants will depend on the exercise of the subscription rights attaching to the Warrants as well as the price of the Common Shares, which may be out of control of the Company, the proceeds that will actually be raised therefrom may not match with the Company’s capital requirements. The Company shall review its business plan from time to time and shall not rule out the possibility of alternative fund raising methods should the subscription rights attaching to the Warrants not be exercised in full or the Exercise Price of the Warrants (determined based on the market price of the Common Shares) not reach expected levels and the net proceeds not match the future capital needs of the Company.

With the signing of the Subscription Agreement, proceeds from the Last Financing and giving effect to the Company’s forecast cashflow from existing and future production, the Company believes it has access to sufficient capital to fund its capital program for the remainder of 2019. This program calls for evaluation and tie-in of the Company’s Voyager wells, with first production currently forecast in the first quarter of 2020.

The Company does not anticipate any material additional expenses will be incurred in connection with the exercise of the Warrants.

Contemplated Transactions

As at the Latest Practicable Date, the Company did not have any plans for any contemplated acquisitions, disposals or other matters that may have a material impact on the Company which is necessary for the Shareholders and the public to appraise the position of the Company during the Exercise Period of the Warrants (i.e., two years commencing from the date of issue of the Warrants). However, the Company periodically engages in considering acquisition or disposal activities. The Company will review its business plan from time to time and may consider potential business expansion and investment opportunities. Should such opportunities arise in the future, the Company will make the relevant announcement in accordance with the Listing Rules if and when applicable.

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Conditions to the Issuance of the Warrants

In connection with the issuance of the Warrants and, should the Subscriber exercise its rights under the Warrants, the issuance of the Warrant Shares, the Company is seeking the following:

(1) if required, Listing Committee approval of the issuance of the Warrants or Warrant Shares either unconditionally or subject to such conditions to which both the Company and the Subscriber reasonably accept;
(2) Listing Committee approval of the listing of, and permission to deal in, the Warrant Shares either unconditionally or subject to such conditions to which both the Company and the Subscriber reasonably accept, such permission and listing not subsequently being revoked or withdrawn prior to the issuance of Warrant Shares; and
(3) all other necessary consents, approval and waivers required for or in connection with the issue of the Warrants and Warrant Shares (without prejudice to conditions (1) and (2) above).

As at the Latest Practicable Date, none of the above conditions have been fulfilled.

Other Arrangements with Subscriber

As at the Latest Practicable Date, the Company has not entered, or contemplated to enter into, any other arrangements, agreements, negotiations or understandings, both formal and informal and whether expressed or implied with the Subscriber, other than those disclosed herein.

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TERMS AND CONDITIONS OF THE WARRANTS

The Subscription Agreement for the 52,377,304 Warrants was entered into between the Company and the Subscriber on July 26, 2019. The material terms and conditions of the Warrants are summarised below.

Issuance of the Warrants

Pursuant to the Subscription Agreement, the Company has agreed to issue and the Subscriber has agreed to subscribe for the Warrants on a day that is no later than five business days following the date on which all necessary conditions are satisfied. The conditions include, among others, that: (i) all necessary shareholder and regulatory approvals having been obtained by the Company; and (ii) the Subscriber is satisfied with the results of its customary due diligence. Such conditions must be satisfied or waived by 5:00 p.m. (Hong Kong time) on December 15, 2019.

The Issue Price of the Warrants (not including legal expenses) will be HK$0.0108 per Warrant. The net issue price, after deduction of relevant expenses, is expected to be approximately HK$0.0084 per Warrant.

Exercise Price and Entitlement

The Exercise Price of the Warrants will be 90% of the volume weighted average price of the Common Shares as quoted on the Stock Exchange for the Trading Day immediately preceding the applicable Exercise Date. The Exercise Price was determined through arm’s length negotiations.

The number of Warrant Shares to be issued on exercise of one Warrant will initially be one (‘‘Entitlement’’). If more than one Warrant held by the same holder is exercised at any one time by the same holder, the number of Warrant Shares to be issued upon such exercise will be calculated on the basis of the aggregate notional amount of the Warrants to be exercised. The Entitlement shall be subject to adjustments in case of certain Company events. In determining the Issue Price of the Warrants, the Exercise Price per Warrant Share and Entitlement of the Warrants, the Directors considered, among other things, the Company’s past financial performance, the then prevailing market price of the Common Shares, the existing market conditions, the liquidity of the Common Shares, the historical prices of the Common Shares, the prevailing stock market sentiment, and Exercise Price of the Warrants.

Adjustments to the Entitlement

The Entitlement will be subject to adjustments in certain events, including: (i) a consolidation, reclassification or subdivision of the Common Shares; (ii) the issuance of Common Shares to Shareholders by way of a capitalization of profits or reserves; (iii) any distribution of assets in specie to the Shareholders; (iv) an issue or grant by the Company to Shareholders by way of rights, Common Shares or options, warrants or other rights to subscribe for, purchase or otherwise acquire Common Shares at a price which is less than 95% of the market price of the Common Shares; (v) an issue or grant by the Company to Shareholders by way of rights, other securities or options, warrants or other rights to subscribe for, purchase or otherwise acquire such other securities; and (vi) an issue by the Company or any other person of any securities that carry rights of conversion into, or exchange or subscription for, Common Shares at a consideration per Common Share which is less than 95% of the market price of the Common Shares.

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Exercise Period

Subject to certain conditions as described below, the subscription rights attaching to the Warrants can be exercised at any time during the period commencing from the date of issuance to two years from the date of issuance. The Company has the right to reject any exercise of the Warrants in the event that: (i) the number of Common Shares to be issued on exercise of the Warrants exceeds 1% of the total number of Common Shares then outstanding; or (ii) the applicable exercise price is less than HK$0.50 (subject to adjustments in such events and described in the preceding paragraph). If the Company believes the market for the Common Shares is reasonable, it can allow the Subscriber to exercise more than 1% of the total number of Common Shares then outstanding.

The HK$0.50 threshold provides a baseline for the Warrant exercise. This ensures that if the market for the Common Shares eroded from current levels, the dilutive impact from the Warrants would be capped. Without a baseline, the dilutive impact of the Warrants would increase as the price for the Common Shares decreases, given the floating exercise price. The HK$0.50 threshold was determined in the context of the current market of the Common Shares, which traded for HK$0.495 as at the Latest Practicable Date, and is approximately 66% lower than the Last Financing price of HK$1.50 per Common Share.

Upon expiry of the Exercise Period, any Warrants which have not been exercised will lapse and cease to be valid for any purpose.

Committed Exercise

Upon delivering one Trading Day’s notice to the Subscriber, the Company may, from time to time at its discretion, declare a committed exercise period. A committed exercise period is a 20 Qualified Trading Day (as defined below) period during which the Subscriber must exercise the Warrants to subscribe for a minimum amount (‘‘Minimum Committed Amount’’) of (a) if the average daily value of the Shares traded on-market during 20 consecutive Trading Days up to (and including) the day on which the Company delivers the notice to declare a Committed Exercise Period is less than or equal to HK$1,000,000, HK$3,000,000, or (b) if the average daily value of the Shares traded onmarket during the 20 consecutive Trading Days up to (and including) the day on which the Company delivers the notice to declare a Committed Exercise Period is more than HK$1,000,000, HK$6,000,000 (‘‘Committed Exercise’’).

The Minimum Committed Amounts are value based (i.e., volume × price). The Minimum Committed Amount was negotiated to allow for the Company to retain some control over the future exercise of the Warrants. The Company can declare consecutive Committed Exercises, but only a single Minimum Committed Amount can be declared for every 20 Qualified Trading Day period. As there are approximately 20 Trading Days in every month, the expectation of raising consistent proceeds every month is predicated on the continuous satisfaction of the Qualified Trading Day criteria. As disclosed in the announcement of the Company dated July 26, 2019, changes in the future price and daily trading volume of the Common Shares from current levels may have a material impact on the funds ultimately raised from the Warrants.

The Minimum Committed Amounts and Qualified Trading Day criteria were negotiated in the context of the current market for the Common Shares, considering both past performance and future prospects for the Company. The Subscriber is an institutional investor with extensive experience in the local market and the Company’s sector. The liquidity of a listed company’s shares is a key

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factor for most institutional investors. While the Qualified Trading Day criteria would not have been fully satisfied for any month to date in 2019, it would have been met for each month throughout 2018.

The Company is optimistic that the market for the Common Shares will improve from current levels, as the Company’s natural gas and associated natural gas liquids production will increase following the completion of a new pipeline which will bring the Company’s Voyager area into first production, and improvements in the forecast price of Western Canadian gas for 2020 and beyond (refer to the Company’s voluntary announcement dated September 16, 2019 for additional information).

The Qualified Trading Day criteria is a reflection of the Company’s optimism, as a Committed Exercise can only be effectively achieved if the average daily trading value of the Company’s Common Shares is higher than current levels. The Qualified Trading Day criteria and Minimum Committed Amounts as negotiated provide potential benefits to the Company and its shareholders, such as: (i) if the Qualified Trading Day criteria are met, the market for the Common Shares will have improved, which benefits all shareholders of the Company; (ii) if the Qualified Trading Day criteria are met, the Company can obtain additional funding through the exercise of the Warrants; and (iii) the Company controls the trigger of the Committed Exercise. If it believes the value of the Common Shares will improve it can elect to wait to trigger a Committed Exercise in the future if the criteria are met. If the price is higher at that time there would be lower dilution for shareholders as the exercise price floats with the Common Share price.

A Trading Day is a Qualified Trading Day if all of the following conditions are satisfied:

(a) the spot trading price of the Common Shares during such trading day at no time traded below 90% of the closing price of the Common Shares on the immediately preceding Trading Day;
(b) there are no Warrants that have been exercised, for which the Warrant Shares on exercise of such Warrants have not been delivered in accordance with the terms of the Warrants;
(c) the total value of the Common Shares traded on-market on such Trading Day is (A) in the case that the Minimum Committed Amount is HK$3,000,000, more than HK$500,000, or (B) in the case that the Minimum Committed Amount is HK$6,000,000, more than HK$1,000,000 (not including the value of any Common Shares traded through block trades or direct transactions);
(d) the Subscriber is not in possession of any material non-public information concerning the Company as of such Trading Day;
(e) the Subscriber is not prevented from exercising its right of exercise due to regulatory reasons; and
(f) all of the Company’s representations and warranties as set out in the Subscription Agreement remain true, accurate and correct, and the Subscriber has no reasonable grounds to believe otherwise.

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The Company may declare a committed exercise period at any time during the term of the Warrants provided at least five Trading Days have elapsed since the expiry of the immediately preceding committed exercise period. Each committed exercise period will terminate upon: (i) the expiry of the 20 Qualified Trading Days; (ii) the redemption, expiry or termination of any outstanding Warrants; (iii) the Company exercising its right to reject the exercise of any Warrants; or (iv) the Subscriber having exercised all of the outstanding Warrants. The Company may also terminate a committed exercise period at any time by written notice to the Subscriber, in which case such committed exercise period shall terminate on the Trading Day that such notice is received by the Subscriber (unless a later date is specified in the notice). For the avoidance of doubt, if a committed exercise period is terminated prior to the lapse of 20 Qualified Trading Days, the Subscriber shall have no further obligation to fulfil the Minimum Committed Amount in respect of the terminated committed exercise period.

Non-Exercise Period

During the term of the Warrants, the Company may declare up to five non-exercise periods which may last for up to 10 Trading Days. During a non-exercise period, the Subscriber may not exercise any of the Warrants. A non-exercise period cannot be declared during any committed exercise period. Each non-exercise period will terminate upon either: (i) the expiry of the non-exercise period as indicated by the Company in its notice thereof to the Subscriber; or (ii) the declaration of a committed exercise period by the Company (and the non-exercise period shall not be resumed after the completion of such committed exercise period).

Additionally, the Subscriber is not entitled to exercise any Warrants if the Common Shares held by the public, after the new Common Shares are issued on the intended exercise of the Warrants, would be less than the minimum public shareholder threshold as required by the Stock Exchange.

In rejecting any exercise of the Warrants or declaring a non-exercise period, the Company would consider multiple factors, including, but not limited to:

(a) future prospects of the Company: if the market for the Common Shares is expected to improve, future Warrant exercises could be made at higher prices lowering dilution to shareholders; and
(b) capital requirements of the Company: if the Company has no immediate needs for additional capital, the Company may reject an exercise of Warrants or declare a non-exercise period.

Redemption or Repurchase

The Company may, at any time, repurchase the Warrants at the Issue Price provided that, in the event that the Subscriber is the holder of any Warrants to be repurchased, the Company must give 10 business days’ notice of the repurchase.

The Company (or any subsidiary of the Company) shall, at the request of the holder of the Warrants, repurchase the Warrants within 10 business days upon such request in the event that (a) the spot trading price of the Common Shares during any Trading Day is less than 50% of the most

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recent closing price of the Common Shares prior to when the Company makes the first public announcement in respect of the Warrants on the Stock Exchange, (b) the average daily traded volume of the Common Shares traded on-market for the immediately preceding 20 Trading Days on any Trading Day is less than 50% of the average daily traded volume of the Common Shares traded on-market for the immediately preceding 20 Trading Days on the Trading Day when the Company makes the first public announcement in respect of the Warrants on the Stock Exchange, or (c) the Warrants are expiring in one calendar month’s time (or less).

If the Subscriber is the holder of any Warrants and the Subscriber terminates the Subscription Agreement upon the occurrence of (a) any material breach of, or any event rendering untrue or incorrect in any material respect, any of the warranties and representations contained in the Subscription Agreement or any material failure to perform any of the Company’s undertakings or agreements in the Subscription Agreement, (b) any change, or any development involving a prospective change, in local, national or international monetary, financial, political or economic conditions or currency exchange rates or foreign exchange controls likely to have a materially prejudicial effect, (c) any event or series of events (including any disaster, hostility, insurrection, armed conflict, act of terrorism, act of God or epidemic) likely to have a material adverse effect, or (d) any event of default as specified in the Deed Poll, the Company shall repurchase Warrants at the issue price within 10 business days of the termination of the Subscription Agreement.

The Company will not re-issue any Warrant which has been exercised, redeemed or repurchased and all such Warrants will be cancelled.

Transferability

The Warrants and the Warrant Shares issuable upon exercise of the Warrants are freely transferable by the holder thereof at any time, except that (i) any transfer of the Warrants must be made with the prior written consent of the board of directors of the Company, and (ii) no Warrants or Warrant Shares issuable upon exercise of the Warrants shall be transferred to a connected person (as defined under the Listing Rules) of the Company or an associate (as defined under the Listing Rules) of any connected person of the Company.

Rights on Liquidation

If an order is made or an effective resolution passed for the winding-up or dissolution, judicial management or administration of the Company, or the Company ceases to carry on all or substantially all of its business or operations, except for the purpose of and followed by a reconstruction, amalgamation, reorganisation, merger or consolidation on terms approved by the Subscriber, such event shall constitute an event of default upon which the Subscriber may, by notice to the Company given at any time, terminate the Subscription Agreement. The Company shall repurchase the Warrants at the Issue Price within 10 business days upon the termination of the Subscription Agreement. Any such repurchased Warrants will be cancelled and may not be reissued. In addition, the Company shall, within 15 days upon request by the Subscriber, pay to the Subscriber the Cancellation Fee.

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STOCK EXCHANGE LISTING RULES

Pursuant to Rule 15.02(1) of the Listing Rules, the Warrant Shares to be issued on exercise of the Warrants must not, when aggregated with all other equity securities that may be issued on exercise of any other subscription rights, if all such rights were immediately exercised, whether or not such exercise is permissible, exceed 20% of the issued share capital of the Company at the time the Warrants are issued. Options granted under share option plans that comply with Chapter 17 of the Listing Rules are excluded for the purpose of such limit.

As at the Latest Practicable Date, other than the Crown Warrants, the Company did not have any securities with subscription rights outstanding and not yet exercised.

Assuming: (i) full exercise of the subscription rights attaching to the Warrants; and (ii) no Shares are further issued and repurchased, a maximum of 52,377,304 Warrant Shares will be issued, which represents approximately 17.35% of the issued and outstanding share capital of the Company as at the Latest Practicable Date and approximately 14.78% of the issued and outstanding share capital of the Company on a fully diluted basis.

Accordingly, the issue of the Warrants is in compliance with Rule 15.02(1) of the Listing Rules.

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MATTERS TO BE CONSIDERED

1. Specific Mandate to Issue Common Share Purchase Warrants

At the Meeting, the Shareholders will be asked to consider and, if deemed advisable, to pass, with or without variation, an ordinary resolution granting the Board a specific mandate from the Shareholders approving, ratifying and confirming the allotment and issuance of Warrants and Warrant Shares upon the exercise of such Warrants (the ‘‘Specific Mandate’’).

At the Meeting, the Shareholders will be asked to pass the following ordinary resolution:

‘‘BE IT HEREBY RESOLVED as an ordinary resolution that:

(a) the Subscription Agreement entered into between the Company and the Subscriber dated July 26, 2019, as amended by an amending agreement between the Company and the Subscriber dated September 13, 2019, and as further amended by a second amending agreement between the Company and the Subscriber dated October 31, 2019, in relation to the subscription of 52,377,304 unlisted Warrants and the Deed Poll of the Company dated July 26, 2019 governing the terms of the Warrants (a copy of the Subscription Agreement and the Deed Poll having been marked Exhibits ‘‘A’’ and ‘‘B’’ and initialed by the chairman of the Meeting for identification purpose), and the transactions contemplated under the Subscription Agreement and the Deed Poll, in relation to the issue of Warrants, be and are hereby approved, ratified and confirmed;
(b) conditional upon The Stock Exchange of Hong Kong Limited granting or agreeing to grant the listing of, and permission to deal in, the maximum number of 52,377,304 new Common Shares of no par value in the share capital of the Company on the exercise of the subscription rights attaching to the Warrants (subject to adjustment and the terms and conditions as set out in the Subscription Agreement and the Deed Poll):
(i) the creation and issue of the Warrants by the Company in accordance with the terms and conditions of the Subscription Agreement and the Deed Poll be and are hereby approved, ratified and confirmed; and
(ii) the Directors be and are hereby granted a specific mandate to exercise the powers of the Company for the allotment and issue of the Warrant Shares upon exercise of the subscription rights attaching to the Warrants pursuant to the terms of the Subscription Agreement and the Deed Poll and such Warrant Shares (upon entering the name of the holder thereof in the register of members of the Company) shall rank pari passu in all respects with the then existing issued and outstanding Common Shares; and
(c) any Directors and officers of the Company be and are hereby authorized to do such acts and things, to sign and execute all such further documents (in case of execution of documents under seal, to do so by any two Directors or any Director together with the secretary of the Company) and to take such steps as he/she may consider necessary,

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appropriate, desirable or expedient to give effect to or in connection with the issuance of the Warrants or any transactions contemplated thereunder and all other matters incidental thereto or in connection therewith, and to agree to and make such variations, amendments or waivers of any of the matters relating thereto or in connection therewith.’’

Unless directed otherwise, the Management Designees named in the accompanying Instrument of Proxy intend to vote FOR the resolution approving the Specific Mandate.

2. Other Matters

Management of the Company is not aware of any other matters to come before the Meeting other than as referred to in the notice of the Meeting. Should any other matters properly come before the Meeting, the Common Shares represented by proxies solicited hereby will be voted on such matters in accordance with the best judgment of the person voting such proxy.

This Circular is being provided to Shareholders in English and Chinese. In case of any inconsistency, the English version shall prevail.

RECOMMENDATION

The Directors consider that the Specific Mandate is in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that Shareholders vote in favour of all resolutions to be proposed at the Meeting.

ADDITIONAL INFORMATION

A copy of the Subscription Agreement and the Deed Poll will be available for inspection during normal business hours on any weekdays (except public holidays) at the principal place of business of the Company in Hong Kong at Room 1901, 19/F, Lee Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong from the date of this Circular up to and including the date of the Meeting and will be available for inspection at the Meeting.

Additional information relating to the Company may be found under the profile of the Company on SEDAR at www.sedar.com. Shareholders may also request information from the Company by contacting the Company’s Chief Executive Officer at Suite 3600, 888-3rd Street S.W., Calgary, Alberta, Canada T2P 5C5.

Documents affecting the rights of securityholders, along with other information relating to the Company, can be found on the Company’s website at www.persta.ca.

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BOARD OF DIRECTORS APPROVAL

The contents of this Circular and the sending thereof to the Shareholders of the Company have been approved by the Board.

BY ORDER OF THE BOARD

Signed: (signed) ‘‘Le Bo’’

Le Bo

Chairman of the Board, President and Chief Executive Officer

Calgary, Alberta October 31, 2019

AI assistant

JX Energy Ltd. — Proxy Solicitation & Information Statement 2019

50836_rns_2019-11-05_10ec27a7-48dc-49fa-b134-51d10b71f14e.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

PERSTA RESOURCES INC.

NOTICE OF MEETING

and

MANAGEMENT INFORMATION CIRCULAR

and

PROXY STATEMENT

with respect to the

Special Meeting of Shareholders

PERSTA RESOURCES INC.

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD AT 9:00 A.M. ON NOVEMBER 29, 2019 (CALGARY TIME)

BY ORDER OF THE BOARD

LETTER FROM THE BOARD

PERSTA RESOURCES INC.

Non-Executive Director

Independent Non-Executive Directors

ISSUE OF UNLISTED WARRANTS PURSUANT TO SPECIFIC MANDATE AND NOTICE OF SPECIAL MEETING

INTRODUCTION

SUBSCRIPTION AGREEMENT AND DEED POLL

SHAREHOLDER APPROVAL

RECOMMENDATION

DEFINITIONS

‘‘Deed Poll’’

PERSTA RESOURCES INC.

MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT

GENERAL PROXY MATTERS

Solicitation of Proxies by Management

Advice to Beneficial Holders of Common Shares

Revocation of Proxy

Persons Making the Solicitation

Exercise of Discretion by Proxyholders

Voting by Poll

Counting the Votes

VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES

Voting Securities

Quorum

Principal Holders

INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

BACKGROUND TO THE SUBSCRIPTION AGREEMENT AND WARRANT ISSUANCE

Subscription Agreement and Deed Poll

Reasons for Entering Into the Subscription Agreement and the Issuance of Warrants

Information Concerning the Subscriber

Information Concerning Subscription Agreement and Deed Poll

Subscription Agreement

Deed Poll and Warrant Certificate

Information Concerning the Warrants

Liquidity

Volatility

Use of Proceeds

Contemplated Transactions

Conditions to the Issuance of the Warrants

Other Arrangements with Subscriber

TERMS AND CONDITIONS OF THE WARRANTS

Issuance of the Warrants

Exercise Price and Entitlement

Adjustments to the Entitlement

Exercise Period

Committed Exercise

Non-Exercise Period

Redemption or Repurchase

Transferability

Rights on Liquidation

STOCK EXCHANGE LISTING RULES

MATTERS TO BE CONSIDERED

1. Specific Mandate to Issue Common Share Purchase Warrants

‘‘BE IT HEREBY RESOLVED as an ordinary resolution that:

2. Other Matters

RECOMMENDATION

ADDITIONAL INFORMATION

BOARD OF DIRECTORS APPROVAL

BY ORDER OF THE BOARD

Le Bo

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JX Energy Ltd. Proxy Solicitation & Information Statement 2019