Tower Resources Regulatory News (TRP)

30 July 2019

Tower Resources plc

Extension of Bridging Loan Facility

Issue of Warrants

Farm-out discussions

Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN)), the AIM listed oil and gas company with its focus on Africa, is pleased to announce an extension of its Bridging Loan Facility ("Facility") of US$750,000. The terms of the extension include the issue of 3 million of attached five-year 1.0 pence warrants with the Facility now being due for repayment on or before 31 August 2019, representing a two month extension from its original term (the "Extension").

As previously disclosed, the purpose of the Facility is to cover working capital while the Company seeks to finalise funding arrangements for the drilling of the NJOM3 well on the Thali licence. The purpose of the Extension is to allow additional time to progress farm-out discussions and arrange for refinancing of the Facility. The Company continues to manage its limited cash resources carefully as these discussions are progressed.

Bridging Loan Facility and Issue of Warrants

The Company has agreed an extension of the repayment of the Facility until 31 August 2019 in return for the issue of 3 million five-year warrants with a strike price of 1p per share. The value of these warrants, based on a Bloomberg valuation using Black-Scholes, is approximately 0.4p per warrant, with the aggregate warrant value corresponding to approximately 2% of the value of the Facility, and is intended to compensate the Facility lenders for their additional risk and for the additional default interest that the lenders will forego by granting the extension. The Bridging Loan will continue to have a preferential right of repayment from any future financing in excess of $750,000, and will remain secured by the Company with interest due of 1% per month (accrued and paid on repayment) along with a fixed and floating charge over the Company's assets.

Some of the warrants will be issued to Pegasus Petroleum Ltd, a company owned by Jeremy Asher, which is one of the lenders in the Facility. Jeremy Asher, as a director of the Company, and Pegasus Petroleum Ltd, are considered to be "related parties" as defined under the AIM Rules and accordingly, the Extension and issue of warrants constitute related party transactions for the purposes of Rule 13 of the AIM Rules. The table of Director warrants will therefore be updated as follows:

*Warrants are held at different prices

† Warrants issued to Pegasus Petroleum Ltd; a company beneficially owned by Jeremy Asher

‡Excludes share options

800,100 of the warrants will be issued to Peel Hunt LLP, another one of the lenders in the Facility. Peel Hunt LLP, as a substantial shareholder of the Company, is also considered to be a "related party" as defined under the AIM Rules and accordingly, the Extension and issue of warrants constitute related party transactions for the purposes of Rule 13 of the AIM Rules.

Related Party Transaction

The Directors independent of the Facility, being Peter Taylor and David M Thomas, consider, having consulted with SP Angel Corporate Finance LLP, the Company's nominated adviser, that the terms of the extension to the Facility and issue of warrants are fair and reasonable insofar as the Company's shareholders are concerned.

Farm-out discussions

The Company is continuing farm-out discussions with multiple parties and is hopeful of achieving a first term sheet in the near future.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

 Contacts

Notes:

Tower Resources Cameroon S.A, a wholly-owned subsidiary of Tower Resources plc, holds a 100% interest in the shallow water Thali (formerly known as "Dissoni") Production Sharing Contract (PSC), in the Rio del Rey basin, offshore Cameroon. Tower was awarded the PSC on 15 September 2015 for an Initial Exploration Period of 3 years, which has been extended for a further year ending 15 September 2019.

The Thali PSC covers an area of 119.2 km², with water depths ranging from 8 to 48 metres, and lies in the prolific Rio del Rey basin, in the eastern part of the Niger Delta. The Rio del Rey basin has, to date, produced over one billion barrels of oil and has estimated remaining reserves of 1.2 billion barrels of oil equivalent ("boe"), primarily within depths of less than 2,000 metres. The Rio del Rey is a sub-basin of the Niger Delta, an area in which over 34.5 billion barrels of oil has been discovered, with 2.5 billion boe attributed to the Cameroonian section.

An independent Reserve Report conducted by Oilfield International Limited (OIL) has highlighted the contingent and potential resources on the Thali licence and the associated Expected Monetary Value (EMV) as follows:

§ Gross mean contingent resources of 18 MMbbls of oil across the proven Njonji-1 and Njonji-2 fault blocks;

§ Gross mean prospective resources of 20 MMbbls of oil across the Njonji South and Njonji South-West fault blocks;

§ Gross mean prospective resources of 111 MMbbls of oil across four identified prospects located in the Dissoni South and Idenao areas in the northern part of the Thali licence;

§ Calculated EMV10s of US$118 million for the contingent resources, and US$82 million for the prospective resources, respectively.

In accordance with the guidelines for the AIM market of the London Stock Exchange, Dr Mark Enfield, BSc, PhD, FGS, Advisor to the Board of 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.

NOTIFICATION AND PUBLIC DISCLOSURE OF TRANSACTIONS BY PERSONS DISCHARGING MANAGERIAL RESPONSIBILITIES AND PERSONS CLOSELY ASSOCIATED WITH THEM:

MANAGERIAL RESPONSIBILITIES AND PERSONS CLOSELY ASSOCIATED WITH THEM