• $3.2 million raised through issue of unsecured convertible notes at a 33% premium
• Directors convert $0.5 million of their debt into Convertible notes
• Funds to accelerate predevelopment activities for the Rolleston West Project

State Gas Limited (ASX: GAS) has received firm commitments of $3.2 million from sophisticated and professional investors to subscribe for new convertible notes. The issue of the convertible notes is subject to Shareholder approval at a general meeting, which the Company intends to convene as early as practicable in calendar year 2026. Until the convertible notes are issued following Shareholder approval, the subscription funds will be treated as loan funds. The convertible notes have a conversion price of $0.04 (4.0 cents) for the first 16 weeks after the payment date and thereafter have a conversion price which is the lesser of $0.04 (4.0 cents) or a 20% discount to the 15-day VWAP of State Gas shares at the time. In lieu of interest, and subject to State Gas shareholder approval, State Gas will issue each Note holder unlisted options exercisable at $0.05 (5.0 cents) and expiring 30 months from the date of issue. To demonstrate their support for this transaction and State Gas' plans for Rolleston West entering its commercialisation stage, the Directors have agreed to convert $0.5 million of their existing Director loans to Notes subject to shareholder approval. The proceeds from the Note Transaction will be used to fund internal engineering and commercial resources, third party costs of gas processing plant and pipeline connection concept studies, third party consultants and advisors to support the application for permanent production tenure including the commencement of baseline environmental studies, and corporate overheads, legal costs and working capital.

The funds raised materially enhance the Company's capacity to meet its next phase of technical, regulatory, and commercial milestones for the Rolleston West Project. The Company is now focused on accelerating pre-development activities at Rolleston West and securing a Project partner who can support the delivery of a new gas project at a time of substantial increasing demand for natural gas on the East Coast of Australia.