Africa-focused oil and gas firm Tower Resources has said it has raised £1.5 million (~$2 million) via a placing and subscription of 576,923,077 new ordinary shares of 0.001p each at a price of 0.26 pence per placing share, a discount of 29% to the closing share price on January 13, 2022.
Novum Securities Limited ("Novum"), has acted as sole broker on this Placing. The company's Chairman and CEO, Jeremy Asher, has entered into an agreement to subscribe for, in aggregate, 9,615,384 new Ordinary Shares in the Placing for £25,000.
The company said it would use the net proceeds to advance its portfolio and to cover working capital requirements going forward.
This includes funding maintenance and planning expenditure in Cameroon to maintain the long-lead items inventory ready for the start of drilling and testing of the NJOM-3 well, pending completion of the farm-out, and to make payments and pre-payments to contractors.
To remind, Tower Resources said back in September 2021 that the documentation for its proposed farm-out of a share in the Thali offshore block in Cameroon had been finalized and submitted to the country's authorities for approval.
As reported in August, Tower Resources agreed to farm out a 49% non-operating working interest in its Thali Production Sharing Contract to Beluga Energy Limited. The farm-out covers US$15 million towards the cost of the NJOM-3 well that Tower is planning to drill on the Thali block.
Back to the proceeds from the placing, they will also be used for work program costs in Namibia (for license PEL 96), where Tower plans to conduct a basin modeling study based on the latest data available from recent drilling in the areas adjoining the PEL96 acreage.
Further, Tower will use part of the cash for work program costs in South Africa (for the Algoa-Gamtoos license operated by 50% partner New Age Energy Algoa (Pty) Ltd, which adjoins the Total-operated blocks 11B/12B) where the license partners are preparing for 3D seismic data acquisition in 2022/23. It will also use the proceeds for general working capital purposes.
"The Placing is conditional on, inter alia, the Placing Shares being admitted to trading on AIM. Application has been made for the Placing Shares to be admitted to trading on AIM and it is expected that admission of the Placing Shares will become effective and that dealings will commence at 8.00 a.m. on or around 21 January 2022," Tower said.
The Company has issued a broker warrant in favor of Novum granting it the right to acquire 7,058,824 ordinary shares for a period of two years at a price of 0.425p per share, being a premium of 16% to the closing share price on 13 January 2022.
Jeremy Asher, Chairman and Chief Executive Officer, said: "We are working to finalize the Cameroon farm-out, which both parties wish to see completed, and we are also encouraged by recent news reports of drilling operations underway at Graff-1 and Venus-1X, operated by Shell and TotalEnergies, respectively.
"However, while waiting for the farm-out to complete we must continue to prepare for drilling operations and to maintain the current equipment inventory in a drill-ready state. We also want to keep moving forward in Namibia and South Africa, so that we can capitalize on both the improving economics of our acreage positions and also further positive news around us. This does require us to raise capital at this time, though we continue to seek to keep share issues to a minimum."