Tower Resources (LSE:TRP) has reported further progress towards securing regulatory approvals for its previously announced farm-out agreements with Prime Global Energies in Namibia and Cameroon. Completion of the approval processes is expected to trigger initial payments and provide access to further funding for the company’s African exploration activities.
Namibia and Cameroon Approvals Move Forward
In Namibia, the deed of assignment covering PEL 96 is currently with the Upstream Petroleum Unit for final checks before being submitted for ministerial execution. Completion would allow Tower to move ahead with planned activities across the licence with the financial support of its farm-out partner.
Progress is also being made in Cameroon, where the approval documentation relating to the Thali licence is awaiting execution at the Presidency. Final approval represents an important step towards funding and advancing the proposed NJOM-3 well.
The two farm-out transactions are central to Tower’s strategy of bringing in external capital to progress its exploration portfolio while limiting the amount of funding required directly from shareholders.
Tower Raises £325,000 for Working Capital
While it waits for proceeds from the farm-out transactions, Tower has raised £325,000 through a subscription for approximately 2.36 billion new shares at a discount to the prevailing market price.
The company has also granted broker warrants covering around 59.1 million shares, with an exercise price representing a 100% premium to the subscription price.
Following admission of the newly issued shares, Tower’s total issued share capital will increase to approximately 45.2 billion shares. Although the transaction results in further dilution for existing investors, the proceeds provide additional working capital while the company awaits completion of the regulatory processes and receipt of farm-out funding.
External Funding Remains Critical
Tower’s financial position remains challenging, with the company generating no reported revenue while continuing to record losses and negative free cash flow. As an exploration-stage business, it therefore remains dependent on external financing and farm-out partnerships to fund its operations and development plans.
Technical indicators also remain weak, with the shares trading below major moving averages and signalling an established downward trend. While valuation may appear inexpensive based on certain price-to-earnings measures, such metrics provide limited insight given the company’s underlying losses, lack of operating revenue and continuing cash requirements.
More About Tower Resources
Tower Resources is an AIM-quoted oil and gas exploration company focused on upstream opportunities in Africa. Its principal assets include the PEL 96 licence offshore Namibia and the Thali licence in Cameroon.
The company uses farm-out partnerships as a central part of its financing strategy, bringing in external partners to help fund exploration, appraisal and drilling programmes. Its portfolio provides exposure to frontier and emerging African hydrocarbon basins, although the early-stage nature of its projects carries significant exploration, financing and execution risks.
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