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, THE REPUBLIC OF IRELAND 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.

Tower Resources plc (the “Company” or “Tower” (TRP.L, TRP LN)), the AIM listed Africa focussed oil and gas exploration company announces today its intention to raise gross proceeds of approximately £1.03 million (US$1.35 million), through a non-brokered subscription for approximately 45.9 million new Ordinary Shares (the “Placing Shares”) at a placing price of 2.25 pence per Ordinary share (the “Placing Price”) (the “Placing”).

In addition, in order to provide shareholders the opportunity to subscribe for Ordinary Shares at the Placing Price, the Company intends to make an Open Offer to all qualifying UK shareholders shortly following Admission to raise up to £0.56 million (US$0.73 million) (the “Open Offer”) at the Placing Price. The Placing is not conditional upon the Open Offer. The Open Offer will be subject to shareholder approval. A circular concerning the Open Offer and Notice of EGM will shortly be sent to Shareholders and will also be made available on the Company’s website www.towerresources.co.uk.

It is expected that Admission of the Placing Shares will become effective and that dealings will commence in the Placing Shares by 8.00 a.m. on 13 September 2016.

The Company also announces its interim results for the period to 30 June 2016 and provides an operational update.

Jeremey Asher, Chairman of Tower Resources, said:

“Market conditions for exploration companies continue to be difficult, however Tower is fortunate in having generally low forward licence commitments and we are focusing the major part of our activity on our 100% owned Thali licence in Cameroon. This licence offers genuinely low risk and near-term appraisal and development opportunities.

We are proceeding with the farm-out of Thali as planned and we now have interest from several parties. We are hoping to bring those discussions to a conclusion quickly. Our objective is naturally to achieve the best value, and we believe that this is likely to come from obtaining the maximum possible level of forward funding for the licence, including for the seismic programme planned to be acquired in early-mid 2017, with the best strategic partner.

We have reduced our cost base further and will continue to do so, but we still require a modest amount of further working capital to extend cash reserves into the first quarter of 2017 as we proceed through the farmout process. We anticipate the support of the majority of our long-standing core shareholders in the Proposed Placing, but we know that sentiment in the market for funding exploration remains poor and therefore the proposed Placing must be competitively priced in order to be attractive to as many of our shareholders as possible. So we are proposing a heavily discounted placing to investors including some of our major shareholders and Directors, and inviting the rest of our UK shareholders to take up shares at the same price, if they wish, via a planned Open Offer.”

Contacts
Tower Resources plc

Jeremy Asher (Chairman)
Graeme Thomson (CEO)
Andrew Matharu (VP – Corporate Affairs)
+44 20 7253 6639

Peel Hunt LLP (Nominated Adviser and Broker)

Richard Crichton/Ross Allister
+44 20 7418 8900

Vigo Communications

Chris McMahon/Richard De Pencier
+44 20 7830 9700

Download full press release including the Interim Results for the Six Months to 30 June 2016 [PDF, 184KB]

Notes

In accordance with the guidelines for the AIM market of the London Stock Exchange, Nigel Quinton, BA, MA, FGS, Director of Exploration for Tower Resources plc, who has over 30 years’ experience in the oil & gas industry, is the qualified person that has reviewed and approved the technical content of this announcement and assessment of the Company’s estimate of its resource potential.

Regulatory

The Market Abuse Regulation EU 596/2014 (“MAR”) became effective from 3 July 2016. Market soundings, as defined in MAR, were taken in respect of the Placing with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.

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.

This summary should be read in conjunction with the full text of the announcement which follows.

DETAILS OF THE PROPOSED PLACING AND INTENDED OPEN OFFER

The Company proposes to place 45,919,084 new Ordinary Shares (the “Placing Shares”) with certain investors including some of our shareholders and Directors at the Placing Price to raise gross proceeds of approximately £1.03 million (US$1.35 million). The Placing Price represents a discount of approximately 59 per cent. to the closing mid-market price of 5.50 pence per Ordinary Share on 6 September 2016 being the last dealing day immediately prior to the release of this announcement.

Approximately £0.6 million of the Placing Shares will be placed by the Company by way of a cash box placing in order to shorten the timetable for receipt of funds and increase the certainty for the Company and the placees. This structure permits the Company to issue Placing Shares free from pre-emption rights and has the advantage of allowing the Company to secure financing without the added time, expense and uncertainty of convening a general meeting for shareholder approval. The Company will allot and issue the Placing Shares to the relevant placees in consideration for them transferring their holdings of redeemable preference shares in Tower Resources (UK) Limited to the Company. Accordingly, instead of receiving cash as consideration for the issue of the relevant Placing Shares, at the conclusion of the Placing, the Company will own the entire issued share capital of Tower Resources (UK) Limited whose only asset will be its cash reserves in an amount approximately equal to £0.6 million.

The Placing Shares will total approximately 45.9 million new Ordinary Shares and represent 60.6% of the enlarged share capital of the Company.

The Placing Shares, when issued, will rank pari passu in all respects with the Existing Issued Ordinary Share Capital.

The Board is grateful for the continued support received from Shareholders and has therefore decided to offer all Shareholders the opportunity to participate in a further issue of new equity in the Company by making an Open Offer to all UK Shareholders at the Placing Price. The Board proposes to raise up to £0.56 million (US$0.73 million) through the Open Offer.

Further details of the Open Offer including the Excess Application Facility will be set out in a circular and a notice of EGM to seek shareholder approval for the Open Offer, which will be sent to shareholders in due course.

BACKGROUND TO AND REASONS FOR THE PLACING AND OPEN OFFER

Tower continues to seek a partner for the Thali licence (“Thali”), offshore Cameroon, to fund the costs of a 3D seismic programme in early-mid 2017 and to provide additional technical input. The Company has undertaken a formal farm-out process in order to identify suitable potential industry partners and is in discussions with several counterparties who could meet our criteria as potential joint-venture partners both on Thali and possibly more widely within Cameroon, although this process is taking longer than originally anticipated due to industry conditions.

The proceeds of the proposed Placing and intended Open Offer will be used, primarily, to provide the working capital to progress the farm-out of Thali and secure a suitable partner and for other corporate uses.

OPERATIONAL UPDATE

Tower’s strategy of shifting its portfolio towards lower risk assets in proven and emerging basins is presently focused on the Company’s Thali licence (Tower: 100%, Operated) which already has existing discoveries. It is located in the shallow water Rio de Rey basin, a proven producing sub-basin of the petroliferous Niger Delta, offshore Cameroon. The Thali PSC covers an area of 119.2 km2, with water depths ranging from 8 to 48 metres. The Rio del Rey basin has, to date, produced over one billion barrels of oil and has estimated remaining recoverable reserves of 1.2 billion boe (Source: Wood Mackenzie), primarily within water depths of less than 50 metres.

CAMEROON

Tower’s entry into Cameroon commenced on 15 September 2015 after signing the Thali PSC with the Government of Cameroon. Tower has a 100% interest in the Thali block which already has discoveries that are estimated to contain 15mmbbls of recoverable oil. Tower is currently in the Initial 3 year Exploration Period of the PSC.

With existing discoveries on the block, near-term shallow appraisal opportunities and deeper exploration potential, Thali provides a cornerstone asset with low-risk, yet high potential. Tower believes that the Thali Block could offer four hydrocarbon play systems, including the proven one in which three discovery wells have already been drilled on the block. The other play systems are all successfully commercialised within the Gulf of Guinea, and in analogous petroleum systems, such as the Gulf of Mexico. The next key step to unlocking the block’s potential is the acquisition of modern 3D seismic to significantly improve subsurface imaging and resolution, as the existing seismic data is 25 years old. Once improved quality seismic data has been obtained Tower sees both the potential to add incremental oil reserves to existing discoveries to achieve commerciality, plus significant exploration prospectivity in the other plays, which are in shallow water and most with target depths no greater than 2,500 metres, in both structural and stratigraphic traps.

A small in-country office staffed with local professionals has been established in Douala and is currently preparing for an operational campaign to acquire a minimum of 100km2 of 3D seismic. To this end Tower has completed the lengthy ESIA (Environmental and Social Impact Assessment) and successfully applied for and has recently been granted a Certificate of Environmental Conformity (CEC) by the Cameroon Ministry of Environment permitting the acquisition of seismic over the Thali Block. Tower is engaging with seismic contractors and survey design modelling has been conducted to optimise acquisition parameters to ensure a high quality seismic volume is acquired for processing and interpretation.

Current depressed market conditions have had brought a benefit in the form of lower costs and competitive financing terms in the seismic and drilling sector. Tower is seeking a partner to cover these costs and the timing of operations will reflect these factors.

SOUTH AFRICA

In September 2015, approval was received to enter the First Renewal Period of the Algoa-Gamtoos Exploration Right (Tower 50%, New Age 50% – Operator), offshore South Africa, which will run for two years until at least September 2017. At present, uncertainty about the new Mining legislation and its impact on the oil exploration sector in South Africa has reduced industry activity to minor levels; it is hoped that this process will be brought to a conclusion in the next few months and provide greater certainty for investors.

The Algoa-Gamtoos licence includes three basins, the Algoa, Gamtoos and deep water Outeniqua basins. Leads have been defined on 2D and 3D seismic data across the basins and the Joint Venture 2016 work programme has developed some positive exploration play types from the merged seismic volumes. The prospectivity evaluation is in progress and due to be completed before the end of 2016. Tower will seek a partner for the next programme of operational activity.

On 16 February 2016 Tower announced that its wholly-owned subsidiary, Rift Petroleum Limited (50% interest) and its partner, New African Global Energy SA (Pty) Ltd (“New Age”, 50% interest, operator), agreed not to proceed with an application to convert the deep-water frontier SW Orange Basin Technical Co-operation Permit (TCP) into an exploration right. Consequently, New Age reimbursed Rift the sum of US$500,000, which was paid by Rift as part of its original farm-in agreement in 2013, which was also terminated.

Tower’s exit from this high cost deep-water frontier basin is consistent with its move towards a more balanced portfolio of proven and emerging basins and enables the Company to focus its efforts in South Africa on the Algoa-Gamtoos Exploration Right, which offers greater near-term potential.

ZAMBIA

Tower is the Operator of Blocks 40 and 41 with a 100% interest. The blocks are located within the frontier mid-Zambesi basin, onshore Zambia, where virtually no oil & gas exploration activity has been conducted, no modern seismic exists over the blocks and no wells have been drilled. In fact, only two petroleum wells have been drilled in the entire country.

Despite the lack of prior exploration, the results of the fieldwork Tower has conducted in 2014 and 2015 have indicated that all elements for a working petroleum system are present: the presence of source rock, reservoir and seal is now established. These geological studies have met all of Tower’s commitments to date.

Future work commitments over the next two years potentially include airborne gravity/magnetic data acquisition and interpretation, and a 2D seismic programme. The licences can be relinquished at the end of each licence year if results are discouraging, so commitments are low and proportionate to prospectivity.

The Government of Zambia is currently working towards a new petroleum code which will further define the fiscal regime and give new entrants to the Zambian oil & gas sector greater clarity with respect to the investments they make in the country. Tower will engage with the appropriate government ministries once a new cabinet is formed and parliament re-called following nationwide elections held recently.

Tower will actively seek a partner for Blocks 40 and 41 so it is carried into the more expensive parts of the work programme and to re-coup an appropriate part of its investment.

WESTERN SAHARA (SADR)

SADR is the territory known as Western Sahara, and has been occupied by Morocco since 1975. The sovereignty of the territory remains in dispute, despite being recognised by the United Nations as a non-self-governing territory and by the African Union.

Tower holds a 50% interest in the offshore Guelta and Imlili blocks and the onshore Bojador block in the SADR which are operated by Hague and London Oil plc (“HALO”, 50%). There are no remaining work commitments on the licences.

INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2016

During the six months to 30 June 2016, the Group capitalised exploration and evaluation costs totalling US$1.2 million, US$1.1 million of which related to the Thali PSC in Cameroon.

The loss for the period was US$1.9 million (H1 2015: loss US$5.4 million) as detailed in the Interim Consolidated Statement of Comprehensive Income. The loss in H1 2015 included impairments totalling US$2.8 million. The consolidated financial statements for the Interim Results for the six months to 30 June 2016 are set out in Appendix I in this announcement.

Included within trade and other receivables is US$1 million (£747k) of VAT due to the Company from HMRC. As noted in the 2015 Annual Report, HMRC has withheld VAT repayments pending the completion of an ongoing review. It remains the firm opinion of the Company that it has and continues to meet the relevant VAT criteria, has complied with all relevant VAT legislation and has submitted valid reclaims in accordance with existing VAT legislation. Full details are included in note 5.

CONTRACTUAL ISSUE OF EQUITY

A total of 860,483 New Ordinary Shares have today been issued to P.D.F Limited (“P.D.F”), the Company’s Outsourced Exploration Department (OExD®), a company owned by Dr. Mark Enfield, Managing Director, in part payment for services for the period covering 1 October 2015 to 30 June 2016. P.D.F now holds a total of 1,588,688 Ordinary Shares, including 69,401 Ordinary Shares in Tower owned by Dr. Mark Enfield.

P.D.F Shareholding prior to issue Q4 2015 Shares Issued at 26.8500p Q1 2016 Shares Issued at 20.1635p Q2 2016 Shares Issued at 9.6750p P.D.F Shareholding after issue
728,205 176,798 272,550 411,135 1,588,688

In addition, and pursuant to contractual arrangements, Tower intends to issue an additional tranche of 1,795,382 New Ordinary Shares to its Directors and a former Director as part payment for services covering the period 1 October 2015 to 30 June 2016 and to certain Directors in lieu of fees.

Application has been made to the London Stock Exchange for the contractual issue of New Ordinary Shares to P.D.F. to be admitted to trading on AIM. The shares will rank pari passu in all respects with the Company’s existing Ordinary Shares. It is expected that the admission will become effective and that trading in the New Ordinary Shares will commence at 8.00 a.m. on or around 13 September 2016.

SHARE CAPITAL REORGANISATION

At the Company’s AGM, held on 6 April 2016, shareholder approval was sought and resolutions passed for the consolidation and sub-division of the Company’s share capital. Following the passing of the Share Capital Reorganisation resolutions, every 250 existing ordinary shares of 0.1p each were consolidated into one new ordinary share of 1.0 pence each, being 27,228,472 Ordinary Shares. All existing options and warrants were also consolidated on the same 250-to-1 basis.

DIRECTORATE CHANGE

Mr Peter Blakey, Non-Executive Director, retired from the Board following the AGM held in April 2016. Mr Blakey, aged 75, was a founding Director of Tower in 2005 and has been influential in the start-up and development of a number of successful publicly listed and private companies in the oil & gas sector.

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.

This announcement has been issued by and is the sole responsibility of the Company.

Peel Hunt LLP is authorised and regulated in the UK by the Financial Conduct Authority and is advising the Company and no one else in connection with the Placing (whether or not a recipient of this announcement). Peel Hunt will not be responsible to any person other than the Company for providing the regulatory and legal protections afforded to customers of Peel Hunt nor for providing advice in relation to the contents of this announcement or any matter, transaction or arrangement referred to in it. The responsibilities of Peel Hunt, as nominated adviser under the AIM Rules for Nominated Advisers, are owed solely to London Stock Exchange and are not owed to the Company or to any Director or Shareholder or to any other person in respect of their decision to acquire Ordinary Shares in reliance on any part of this announcement.

Download full press release including the Interim Results for the Six Months to 30 June 2016 [PDF, 184KB]