Rialto Energy Limited reports the planned acquisition of the remaining 25.0% interest in C&L Natural Resources Limited ('CLNR') it does not already own, thereby increasing Rialto's equity in CI-202 (located offshore Cote d'Ivoire) to 85.0% and the successful completion of an institutional placement ('Placement') of 78,571,429 fully paid ordinary shares to raise approximately A$55.0 million. The Placement was strongly supported by both existing and new institutional investors in Australia, Asia, Europe and North America and has closed significantly oversubscribed.

The Placement was priced at A$0.70 per share, which represents a 10.8% discount to Rialto's last closing price on ASX and a 1.6% discount to Rialto's 30 day volume weighted average price on ASX.

RBC Capital Markets acted as Global Lead Manager and Bookrunner to the Placement with Euroz Securities Limited acting as Joint Lead Manager and GMP Securities L.P. acting as Co-Manager.

Use of Proceeds The proceeds from the Placement will be used: • to finance the required 2011 work program on the highly prospective CI-202 Block, offshore Cote d'Ivoire, including deposits to secure drilling rigs and securing long lead items for subsequent wells in 2012; • to progress the development of the Accra Block in Ghana in which Rialto holds an 18% working interest, including financing a work program and financial guarantee obligations; • to acquire the remaining 25% interest in CLNR that Rialto does not already own, increasing Rialto's effective interest in the CI-202 Block to 85.0% from 63.75% (the 'Acquisition'); and • for general working capital purposes and transaction fees.

The Placement The Placement to institutional and other sophisticated investors will be made in two tranches: • Tranche 1: comprising 40,208,761 ordinary shares, being the number of ordinary shares which the Company can issue without shareholder approval for the purposes of ASX Listing Rule 7.1 (under its available 15% placement capacity), for total proceeds of approximately A$28.1 million (exclusive of fees); and • Tranche 2: comprising 38,362,668 ordinary shares, being the balance of the ordinary shares to be offered under the Placement for total proceeds of approximately A$26.9 million (exclusive of fees). Tranche 2 is subject to shareholder approval pursuant to ASX Listing Rule 7.1.

New ordinary shares issued under the Placement will rank equally with Rialto's existing ordinary shares.

It is intended that settlement of Tranche 1 will occur on Wednesday 5 January 2011 and the ordinary shares to be issued in connection with Tranche 1 will be admitted to trading on ASX on Thursday 6 January 2011. Tranche 2 will settle shortly after the Company receives shareholder approval for Tranche 2.

Details on the Acquisition Rialto is the owner of a 75.0% shareholding in CLNR, the holder of an 85% working interest in the CI-202 Block, offshore Cote d'Ivoire, resulting in Rialto having a current effective working interest of 63.75%. The remaining 25% shareholding in CLNR is held by a group of minority shareholders which include ACC International Holdings Limited ('ACC') a company which is majority owned by Mr. Chaim Lebovits, a Non-executive Director of Rialto. It is proposed that a portion of the proceeds from the Placement be used to acquire the remaining 25.0% interest in CLNR, thereby taking Rialto's effective working interest in the CI-202 Block to 85.0%. Consideration payable in relation to the Acquisition is as follows: • subject to shareholder approval, initial consideration of approximately US$5.5 million in cash and approximately 13.2 million Rialto shares (shares are required to be issued as consideration to ACC pursuant to ASX Listing Rule 10.1); • 17.5 million Rialto shares payable at First Investment Decision for the Phase 1 Development Program or no later than commencement of the first well in CI-202; and • US$2.5 million cash upon achievement of 1 million barrels of oil production (net to Rialto) from CI-202.

Rialto's Managing Director, Jeff Schrull, commented, "We are extremely pleased with the Company's planned increased equity position in our operated CI-202 Block. The Acquisition will provide Rialto with 100% of the contractor share in the significant oil and gas resources on the block. The response to the Company's offering indicates a strong level of institutional support for Rialto's assets and management team. We look forward to a very exciting 2011 when Rialto continues execution of its strategic business plan which will build Rialto into a successful international E&P company'.

Tags: Rialto Energy