Cardinal Resources

Good morning!

Statement re Financing

RNS Number:1558W
Cardinal Resources plc
23 December 2005


CARDINAL RESOURCES PLC ANNOUNCES US$38 MILLION FINANCING



LONDON - Friday, 23rd December 2005



Cardinal Resources plc (Cardinal) (AIM:CDL), an independent oil and gas
production and exploration company, today announces that it has secured a US$38
million bridge financing facility from Silver Point Finance (Silver Point).



The bridge facility will be used to:



* refinance the US$8 million in PIK Notes issued on 1st December 2005 by
Cardinal to Silver Point;



* enable Cardinal to reinstate its net profit interest in the
Rudivsko-Chernovozavodske (RC) Field back up to 45% by settling the capital
expenditure account of Cardinal's Joint Activity Agreement (JAA) with JSC
Ukrnafta (Ukrnafta);



* reinstate Cardinal's rights to a 45% net profit interest in and
reimburse Ukrnafta for costs related to the current drilling of four new
development wells within the RC Field; and



* settle fees and expenses relating to the transaction and provide for
general corporate and capital expenditure purposes.



Cardinal has a contractual right to increase its net profit interest in the RC
Field - held through a JAA with Ukrnafta - from 14.9% back up to 45% by settling
its outstanding balance in the JAA capital account. Since Cardinal's position in
the JAA was diluted down to 14.9%, Ukrnafta has, with Cardinal's approval,
commenced the drilling of the new four development wells in the RC Field.



With sufficient funds in place, Cardinal will resume negotiations in the New
Year with Ukrnafta to reinstate its net profit interest in the RC Field and in
the four development wells, on terms to be agreed by Cardinal and Ukrnafta.



Commenting on today's announcement, Robert J. Bensh, Cardinal's Chairman and
Chief Executive Officer said, "This financing enables Cardinal to move into a
new phase of development. Reinstating our interest in the RC Field would
generate a substantial increase in reserves and production and value for
Cardinal stakeholders. In addition, this creates a significant opportunity for
Cardinal in Ukraine to substantially increase reserves and production through
additional farm-ins or acquisitions, moving the Company closer to its goal of
aggregating reserves in the range of 100-200 million barrels of oil equivalent
(MMBOE)."



Summary Terms of Financing Agreement

Cardinal has issued US$38 million in two-year Bridge Payment-in-Kind (PIK) Notes
to Silver Point. The Bridge PIK Notes will carry a coupon of 15% with quarterly
interest payable in cash or by issue of further PIK Notes (on the same terms) at
Cardinal's option.



As part of this financing, a recently-formed, UK intermediate holding company
owned by Cardinal, under which Cardinal's assets are held - Cardinal Resources
Finance Limited (Cardinal Finance) - has issued to Silver Point warrants to
subscribe for approximately 32.2% of Cardinal Finance, before adjustment to take
account of inter-company balances, (at a price equivalent to 27.5p if such
shares had been issued at the parent company level) for a period of five years.
The holders of the warrants will have pre-emption rights over new share issues
by Cardinal Finance and tag along rights in the event of any sale of Cardinal
Finance. The warrants will also have a put option to sell the warrants to
Cardinal in the event of a change of control of Cardinal.



Issuance of the Bridge PIK Notes provides the note holders (Silver Point) with
the right to appoint two Directors to the Board of Cardinal and Cardinal Finance
for as long as the Notes are outstanding. Silver Point has not yet exercised its
right to appoint such Directors.



Cardinal has the right to redeem the notes in full after one year, subject to an
early redemption fee, unless refinanced by Silver Point or its affiliates.
Subject to shareholder and regulatory approval, it is intended that the US$38
million Bridge PIK Notes will be refinanced with Silver Point by an issue of
five-year Senior PIK Notes before expiry of the two-year term and that the
Cardinal Finance warrants will be cancelled and reissued as warrants in Cardinal
Resources plc upon issuance of the Senior Notes. If the Senior PIK Notes are not
issued within six months from today, interest payments on the Bridge PIK Notes
will rise from 15% to 20% per annum and then another 1% per annum for every
quarter thereafter until maturity.



The US$8 million PIK Notes, issued on 1st December 2005, were refinanced in this
new two-year facility but Silver Point retained the 4,389,875 Cardinal warrants
already issued.





Cardinal Resources plc

Cardinal Resources plc is an independent oil and gas production and exploration
company with assets in Ukraine. Cardinal is an experienced operator in the
country focused on expanding its existing operations through the farm-in or
acquisition of additional upstream oil and gas assets that can be further
developed through the application of modern technology and expertise.



Silver Point Finance

Silver Point Finance structures and provides custom financing for large and
middle market companies across all industries.



###



This release may contain certain forward-looking statements. These statements
relate to future events or future performance and reflect management's
expectations regarding Cardinal's growth, results of operations, performance and
business prospects and opportunities. Such forward-looking statements reflect
management's current beliefs, are based on information currently available to
management and are based on reasonable assumptions as of this date. No
assurance, however, can be given that the expectations will be achieved. A
number of factors could cause actual results to differ materially from the
projections, anticipated results or other expectations expressed in this
release. While Cardinal makes these forward-looking statements in good faith,
neither Cardinal, nor its directors and management, can guarantee that the
anticipated future results will be achieved.





Contact:
Kate Spiro
Director, Investor Relations
kspiro@cardinal-uk.com
+44 (0) 20 7936 5258