Tower Resources to fund work program commitments with new institutional placing

Africa-focused energy company Tower Resources has completed an institutional placing of up to $6 million from which proceeds will be used to fund work program commitments for the company’s licenses in Cameroon, Namibia and South Africa.

Tower Resources completed an institutional placing to Energy Exploration Capital Partners (EECP), a U.S.-based institutional investor, pursuant to an investment deed.

The placing will initially raise $1.25 million as a placing to the placee of new ordinary shares in the company worth $1.36 million. Following the initial placing, EECP will invest up to $1.75 million in the aggregate for shares worth around $1.9 million in the aggregate, no earlier than three months and no later than eight months after the initial placing.

If required by the company, a further $3 million may be raised from the placee for shares worth an equivalent amount.

Tower Resources will use the proceeds from the placing to fund work program commitments in respect of its licenses in Cameroon, Namibia and South Africa, as well as for general working capital purposes.

“We are very pleased to announce this placing to EECP. The placing has been structured specifically to fit alongside the intended bank financing led by BGFI Bank Group, which is presently awaiting group credit committee approval,” said Jeremy Asher, Tower’s Chairman and CEO.

“The timing and amounts are flexible, to enable us to accommodate other sources of financing if we wish, and to adapt to the final schedule of the NJOM-3 well on the Njonji structure in our Thali PSC area in Cameroon.”

The Thali PSC covers an area of 119.2 km2, with water depths ranging from 8 to 48 meters, in the Rio del Rey basin, in the eastern part of the Niger Delta.

The NJOM-3 drilling was previously set for June 2020, however, Tower Resources declared Force Majeure in March 2020 in respect of the first exploration period on the Thali license due to Covid-19 restrictions.

Tower Resources received approval in November 2022 from the credit committee of a local Cameroon bank for a $7 million loan which should cover around 40 per cent of the cost of the well, with a further amount of 25 per cent already having been paid for by Tower Resources Cameroon S.A (TRCSA).

According to Asher, the company is continuing to discuss alternative rig options for the well, which will be targeting the appraisal and testing of 18 million barrels (pMean) of contingent resources and will be penetrating additional potential reservoirs containing further prospective resources unconnected to the original two Njonji discovery wells.