REG - Tower Resources PLC - Cameroon Farm-out Update & Placing

Tower ResourcesAnnouncement

16/10/2024 07:00

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RNS Number : 3239I  Tower Resources PLC  16 October 2024

 

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES, CANADA,
AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A BREACH OF THE RELEVANT SECURITIES LAWS OF
SUCH JURISDICTION.

 

This announcement does not constitute a prospectus or offering memorandum or
an offer in respect of any securities and is not intended to provide the basis
for any decision in respect of Tower Resources PLC or other evaluation of any
securities of Tower Resources PLC or any other entity and should not be
considered as a recommendation that any investor should subscribe for or
purchase any such securities.

 

 

16 October 2024

Tower Resources plc

("Tower" or the "Company")

Cameroon Farm-out Update

Placing to raise £1,188,500

 

Tower Resources plc (AIM: TRP), the AIM-listed oil and gas company focused on
Africa, is pleased to provide an update on the farm-out process in respect of
its Thali production-sharing contract in Cameroon (the "PSC").

 

The Company is also announcing a placing of 4,401,851,851 ordinary shares of
0.001p each (the "Subscription Shares") at a price of 0.027p per Placing Share
(the "Placing"), representing a discount of approximately 22.9% to the closing
bid price of the Company's shares on 15 October 2024.

 

The Placing has been arranged by the Company's joint broker, Axis Capital
Markets Limited.

 

Cameroon Farm-out Update

 

The Company has received an updated proposal from the party whose financing
proposal was first announced together with the Company's Interim Results on 30
September 2024, and is also still in discussions with other parties and
expecting another proposal in due course.

 

The updated proposal the Company has received is more detailed and would now
provide in excess of US$15 million of funding for the Thali PSC work
programme, including drilling the NJOM-3 well (which is already partly
funded), in return for a minority interest in the PSC, and with Tower
remaining as the Operator. It also provides for future production-based
payments to the Company, a portion of which are committed to Pegasus Petroleum
Limited ("Pegasus", wholly owned by a trust of which the Company's CEO and
Chairman is a lifetime beneficiary) pursuant to agreements made in 2019
arising from the working capital facility that Pegasus had provided to the
Company at that time and as announced on 4 March 2021 (the "Production Payment
Agreements").

 

The proposal has normal conditions precedent, including the Cameroon
Government's approval for the farm-out and drilling schedule, and the proposal
would also require amending the Production Payment Agreements, which the
Company believes can be agreed. Importantly, the proposal does not contain any
financing contingency as the counterparty has available funds, and a portion
of the funding would be secured by a bank guarantee.

 

The Company is presently reviewing the current proposal and clarifying its
terms where appropriate, and expects to work on detailed contracts with this
partner, or one of the other parties, over the coming weeks. The Company does
not intend to comment further on these negotiations until a final agreement is
reached.

 

The Company is also continuing its discussions with African banks about either
or both of a short-term facility to enable earlier production from the NJOM-3
well, and also a longer-term facility to finance production from the
subsequent wells the Company intends to drill on the Njonji structure. The
Company has now signed a mandate to BDEAC, the Development Bank of the Central
African States, for it to provide a guarantee in respect of such a facility,
following a lengthy process of due diligence, and that proposal is now being
reviewed at the highest levels of the bank.

 

While we remain confident of achieving a positive funding result, there can be
no certainty in respect of the final outcome of discussions or the timing
thereof until we have signed definitive agreements.

 

Placing

 

The Placing is being made to fund working capital, including work commitments
on the Company's licenses. The objective of the Placing is to remove any
funding pressure while the Company concludes its Cameroon farm-out
negotiations, and to allow the Company to keep operational preparations for
drilling the NJOM-3 well moving forward without delay in the meantime; and
also to fund the Company's ongoing work on the PEL 96 license in Namibia and
to a lesser extent the Algoa-Gamtoos license in South Africa.

 

The Placing will raise gross proceeds of £1,188,500 through the issue of
4,401,851,851 ordinary shares of 0.001p each at a price of 0.027p per
Subscription Share, representing a discount of approximately 22.9% to the
closing bid price of the Company's shares on 15 October 2024.

 

The Subscription Shares will be issued in two tranches with a first tranche of
1,243,851,851 shares ("First Tranche Subscription Shares") and a second
tranche of 3,158,000,000 shares ("Second Tranche Subscription Shares").

 

The Company has agreed to issue the broker, Axis Capital Markets Limited,
warrants over 220,092,592 new ordinary shares for arranging the Placing
("Broker Warrants"). The period of the Broker Warrants will be three years at
a strike price of 0.027p per share.

 

Share Capital following the Subscription

 

Application has been made for the Subscription Shares to be admitted to
trading on AIM. It is expected that Admission of the First Tranche
Subscription Shares will become effective and that dealings will commence at
8.00 a.m. on or around 22 October 2024. It is expected that Admission of the
Second Tranche Subscription Shares will become effective and that dealings
will commence at 8.00 a.m. on or around 6 November 2024.

 

Following admission of the Subscription Shares, the Company's enlarged issued
share capital will comprise 22,375,689,275 Ordinary Shares of 0.001p each with
voting rights in the Company. This figure may be used by shareholders in the
Company as the denominator for the calculations by which they will determine
if they are required to notify their interest in, or a change in the interest
in, the share capital of the Company under the FCA's Disclosure and
Transparency Rules.

 

Warrants and Options in Issue

 

Following the issue of the Broker Warrants, and the expiry of 10,990,933
existing warrants, the total number of warrants in issue is 1,868,424,957
equating to 7.17% of the Company's enlarged share capital assuming full
exercise of all warrants and options.

Tower Resources Chairman & CEO, Jeremy Asher, commented:

 

"We are very pleased with the progress of the farm-out process and look
forward to finalising an agreement in the near future. Although the Thali
farm-out is a key priority for us, we also want to move forward with our work
programme in Namibia and we must ensure that we can also keep well planning on
track while financing discussions are completed. This is a very exciting time
for the Company."

 

 

IMPORTANT NOTICE

This announcement does not constitute or form part of any offer or invitation
to purchase, or otherwise acquire, subscribe for, sell, otherwise dispose of
or issue, or any solicitation of any offer to sell, otherwise dispose of,
issue, purchase, otherwise acquire or subscribe for, any security in the
capital of the Company in any jurisdiction.

 

The information contained in this announcement is not to be released,
published, distributed or transmitted by any means or media, directly or
indirectly, in whole or in part, in or into the United States or to any US
Person. This announcement does not constitute an offer to sell, or a
solicitation of an offer to buy, securities in the United States or to any US
Person. Securities may not be offered or sold in the United States absent: (i)
registration under the Securities Act; or (ii) an available exemption from
registration under the Securities Act. The securities mentioned herein have
not been, and will not be, registered under the Securities Act and will not be
offered to the public in the United States.

 

This announcement does not constitute an offer to buy or to subscribe for, or
the solicitation of an offer to buy or subscribe for, Ordinary Shares in the
capital of the Company or any other security in any jurisdiction in which such
offer or solicitation is unlawful. The securities mentioned herein have not
been, and the Ordinary Shares will not be, qualified for sale under the laws
of any of Canada, Australia, the Republic of South Africa or Japan and may not
be offered or sold in Canada, Australia, the Republic of South Africa or Japan
or to any national, resident or citizen of Canada, Australia, the Republic of
South Africa or Japan. Neither this announcement nor any copy of it may be
sent to or taken into the United States, Canada, Australia, the Republic of
South Africa or Japan. In addition, the securities to which this announcement
relates must not be marketed into any jurisdiction where to do so would be
unlawful.

 

Note regarding forward-looking statements

 

This announcement contains certain forward-looking statements relating to the
Company's future prospects, developments and business strategies.
Forward-looking statements are identified by their use of terms and phrases
such as "targets" "estimates", "envisages", "believes", "expects", "aims",
"intends", "plans", "will", "may", "anticipates", "would", "could" or similar
expressions or the negative of those, variations or comparable expressions,
including references to assumptions.

 

The forward-looking statements in this announcement are based on current
expectations and are subject to risks and uncertainties which could cause
actual results to differ materially from those expressed or implied by those
statements. These forward-looking statements relate only to the position as at
the date of this announcement. Neither the Directors nor the Company undertake
any obligation to update forward looking statements, other than as required by
the AIM Rules for Companies or by the rules of any other applicable securities
regulatory authority, whether as a result of the information, future events or
otherwise. You are advised to read this announcement and the information
incorporated by reference herein, in its entirety. The events described in the
forward-looking statements made in this announcement may not occur.

 

Neither the content of the Company's website (or any other website) nor any
website accessible by hyperlinks on the Company's website (or any other
website) is incorporated in, or forms part of, this announcement.

 

Any person receiving this announcement is advised to exercise caution in
relation to the Placing. If in any doubt about any of the contents of this
announcement, independent professional advice should be obtained.

 

Market Abuse Regulation (MAR) Disclosure

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this
announcement via Regulatory Information Service ('RIS'), this inside
information is now considered to be in the public domain.

 

Contacts:

 

 Tower Resources plc                  +44 20 7157 9625

 Jeremy Asher

 Chairman & CEO

 Andrew Matharu

 VP - Corporate Affairs

 BlytheRay                            +44 20 7138 3204

 Financial PR

 Tim Blythe

 Megan Ray

 SP Angel Corporate Finance LLP       +44 20 3470 0470

Nominated Adviser and Joint Broker

 Stuart Gledhill

 Caroline Rowe

 Axis Capital Markets Limited         +44 203 026 2689

Joint Broker

 Ben Tadd

 Novum Securities Ltd                 +44 20 7399 9400

Joint Broker

 Jon Bellis

 Colin Rowbury

 

About Tower Resources

Tower Resources plc is an AIM listed energy company building a balanced
portfolio of energy opportunities in Africa across the exploration and
production cycle in oil and gas and beyond. The Company's current focus is on
advancing its operations in Cameroon to deliver cash flow through short-cycle
development and rapid production with long term upside, and de-risking
attractive exploration licenses through acquiring 3D seismic data in the
emerging oil and gas provinces of Namibia and South Africa, where world-class
discoveries have recently been made.

Tower's strategy is centred around stable jurisdictions that the Company knows
well and that offer excellent fiscal terms. Through its Directors, staff and
strategic relationship with EPI Group, Tower has access to decades of
expertise and experience in Cameroon and Namibia, and its joint venture with
New Age builds on years of experience in South Africa.

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