Protean Energy : Sale of KORID Shares and Funding Update

Unit 5, Ground Floor, 1 Centro Avenue

Subiaco WA 6008 PO Box Z5187, Perth, WA 6831

T: +61 (8) 9481 2277

F: +61 (8) 9481 2355

ABN: 81 119 267 391

www.proteanenergy.com

28 February 2017

Market Announcements Platform ASX Limited

Exchange Centre 20 Bridge Street

Sydney NSW 2000

• Off market sale of 1,250,000 KORID Inc shares netting Protean A$500,000 in cash and convertible loan facility secured for up to $650,000
• Share sale and convertible note facility provides interim funding to continue progression of detailed design stage of the wave technology and progress of Energy Storage System commercialisation
• Proposed share consolidation to one ordinary share for every thirty existing shares in the Company
• Intention to launch fully underwritten renounceable rights issue to raise up to ~A$3 million and fund the path to commercialisation

Protean Energy Limited (ASX: POW) (Company) is pleased to advise it has entered into a share purchase agreement with a sophisticated Korean investor to sell 1,250,000 KORID Inc shares at a price of 350 KWON per share providing net proceeds of approximately A$500,000. Additionally, the Company has secured a

$650,000 loan facility with a small number of existing shareholders (Lenders).

The Company also announces it intends to seek shareholder approval to undertake a share consolidation to reduce the number of shares on issue. The consolidation will be to one ordinary share for every thirty (30) existing ordinary shares held in the Company (Consolidation). Further details of the proposed consolidation are set out below.

In addition, the Company intends to launch a fully underwritten renounceable rights issue to raise up to

~$3 million (before costs) and, subject to completion of the Consolidation, will close the rights issue targeted early May 2017 (Rights Issue). The Rights Issue has been designed to provide existing shareholders the opportunity to participate on attractive terms. Funds from the Rights Issue will be used to progress the detail design and build of a commercial pilot wave farm and to progress the commercialisation of the vanadium redox flow battery energy storage system (VRFB ESS), pending completion of the acquisition. Further details of the Rights Issue are set out below.

Subject to shareholder approval, the loan facility will convert into ordinary shares at a 30% discount to the issue price of shares offered to shareholders in the planned Rights Issue (details below). The loan will be drawn down as required by the Company and can be converted into shares following completion of a capital raising of at least $3 million. Interest is payable at a rate of 8% per annum.

A notice of meeting to approve the convertibility of the loan facility will be despatched to shareholders within the next two weeks.

The Company proposes to undertake a reorganisation of capital to reduce the number of shares on issue with the consolidation to one ordinary share for every thirty (30) existing shares in the capital of the Company.

Shareholders should note that the number of consolidated shares which shareholders will be entitled to, based on their holdings of existing shares as at the books closure date will be rounded down to the nearest whole consolidated share and any fractions of a consolidated share arising from the Consolidation will be disregarded.

As at the date of this announcement the Company has an issued and paid up share capital of A$29,399,625 comprising 1,342,529,101 ordinary shares which are listed on the Australian Securities Exchange (ASX). On the assumption that there will be no new shares issued by the Company up to the books closure date the Company will have an issued and paid up share capital of A$29,399,625 comprising approximately 44,750,970 consolidated shares following completion of the proposed share consolidation.

The proposed Consolidation will be subject to shareholders' approval at a meeting to be convened through a notice to be issued within the next two weeks.

The Company intends to launch a fully underwritten renounceable rights issue to raise up to ~$3 million (before costs) and, subject to completion of the Consolidation, will close the rights issue targeted early May 2017. The Rights Issue has been designed to provide existing shareholders the opportunity to participate on attractive terms. The Company will release the full terms and conditions, including the timetable, in due course. Only shares bought prior to the ex-date will be entitled to participate. The issue will be renounceable and new investors will be able to trade rights from the offer open date.

Under the offer, the Company intends to offer eligible shareholders the ability to subscribe for 3.5 new shares for every one existing share at an issue price of $0.02 per share on a post consolidation basis.

It is proposed that the issue will be fully underwritten by a syndicate of broking firms and institutional investors with CPS Capital Group Pty Ltd acting as lead manager and partial underwriter.

Net proceeds from the Rights Issue will be used to progress the detail design and build of a commercial pilot wave farm and to progress the commercialisation of the vanadium redox flow battery energy storage system (VRFB ESS), following completion of the acquisition. These areas are considered to be critical to the future success and growth of the Company.

Further information on the Rights Issue will be contained within a Prospectus, which will be lodged with ASIC in April and mailed to eligible shareholders immediately following completion of the Consolidation. Applications will be made to the ASX for official quotation of the new shares.

Protean wishes to advise that Mr Brendan Hammond has stepped down from his role as Non-Executive Chairman, effective today to pursue other business interests. Mr Bevan Tarratt, who has been a Non Executive Director of the Company since 2007, will assume the role of Non-Executive Chairman.

The Company would like to thank Mr Hammond for the support and guidance he provided the Company and wish him the best in his current and future endeavours. Mr Tarratt brings a wealth of corporate and capital markets expertise.

- ENDS -

ABOUT PROTEAN ENERGY LIMITED (ASX: POW)

Protean Energy Limited is a new energy company focused today on the commercialisation of its proprietary Protean™ Wave Energy Convertor (WEC) system. The Protean™ WEC is an innovative wave energy

technology that is designed to convert all six degrees of wave motion into a usable form of energy. The Protean™ WEC has been developed to use compact architecture to produce power from a small, low cost, scalable design targeted at keeping the projected cost of energy down and has been designed to be cost competitive to manufacture, deploy and maintain.

For further information, see www.proteanenergy.com or contact:

Protean Energy Ltd:

Stephen Rogers - Managing Director

T: + 61 8 9481 2276

E: info@proteanenergy.com

Protean Wave Energy Inc. (US): William (Bill) Toman - President T: + 11 1 (707)-731-9261

E: william.toman@proteanenergy.com

Media Queries (Australia):

T: +61 475 797 471

E: andrew.ramadge@mcpartners.com.au

T: +11 1 (310) 592-8230

E: emiller@sanmarinovg.com