Tellus Resources : Capital Raising & Strategic Review

ASX ANNOUNCEMENT 19th DECEMBER 2014

Tellus Resources Ltd is an Australian- based oil, gas and mineral

exploration company with licences in

Utah, Madagascar, South Australia, Queensland and New South Wales.

Directors:

Robert Kennedy (Chairman)

Carl Dorsch (Managing Director)

Neil Young (Non-Executive Director)

283,848,295 ordinary shares

Tellus Resources Ltd

ASX Code: TLU

T: +61 8 8100 9200

F: +61 8 8212 9291

Level 7, 28 Grenfell Street (PO Box 190, Rundle Mall) ADELAIDE 5000

SOUTH AUSTRALIA

Website: www.tellusresources.com.au

Enquiries :

Carl Dorsch

+61 (0)400 508 088

carl.dorsch@tellusresources.com.au

 Renounceable pro-rata rights issue to raise up to $0.85M at 0.2cps

 Strategic review undertaken with focus on progressing achievable oil and gas exploration activity

Tellus Resources Limited ("TLU" or the "Company") is pleased to announce a partially underwritten 3-for-2 renounceable pro-rata rights issue ("Rights Issue") at an issue price of $0.002 per new share to raise gross proceeds of up to approximately $0.85 million. The issue price for the Rights Issue represents a significant discount of 50% to the last trading price.
The Rights Issue is partially underwritten by the Company's Managing
Director, Mr Carl Dorsch, for up to $200,000 of any shortfall.
Funds raised will be used to maintain all of the Company's assets in good standing and for general working capital purposes.

To focus the forward direction of the Company on achievable oil and gas exploration activity, TLU has conducted a strategic review and is now focused on implementing the following:

 Raising equity to support the near term funding requirements of the

Company;

 Pursuing parallel commercial and legal solutions to the dispute with the Operator of the Company's Utah assets;

 Reducing operating costs; and

 Pursuing non-core asset disposals.

Shareholders with an address in Australia or New Zealand on the Company's register at the close of business on 13 January 2015 will be eligible to participate in the Rights Issue ("Eligible Shareholders").
Existing optionholders will need to exercise their options and be a registered holder of shares on the Record Date if they wish to participate in the Rights Issue.

TELLUS RESOURCES LTD - ASX Announcement 1

ASX ANNOUNCEMENT 19th DECEMBER 2014

The Company has decided that it is unreasonable to make the offer to shareholders who have a registered address in a country outside of Australia or New Zealand, having regard to the number of shareholders in such places, the number and value of the new shares they would be offered and the substantial costs of complying with the legal and regulatory requirements in those jurisdictions.
The Directors reserve the right to place the remaining shortfall at their discretion after the close of the Rights Issue.
Full details of the Rights Issue will be set out in a Prospectus which will be lodged by the
Company with ASIC and ASX on 7 January 2015.
The proposed timetable for the Rights Issue is as follows:

This timetable is indicative only. Subject to ASX Listing Rules, the Directors reserve the right to withdraw the Offer at any time, close the Rights Issue early or extend the Closing Date for the Offer at their discretion. Should the Offer be closed early or extended, there will be a consequential effect on the anticipated date of the issue for the new shares.

TELLUS RESOURCES LTD - ASX Announcement 2

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