Tower Resources Regulatory News (TRP)

4 March 2021

Tower Resources plc

("Tower" or the "Company")

Extension of Loan Facility

Tower Resources plc (TRP.L, TRP LN), the AIM listed oil and gas company with its focus on Africa, is pleased to announce a further extension of its Loan Facility ("Facility") of US$750,000. The Facility is provided by the Company's shareholder Pegasus Petroleum Limited ("Pegasus") whose ultimate beneficial owner is the Company's Chairman and CEO, Jeremy Asher, and was originally provided to the Company as a bridging loan announced on 16 April 2019. The Facility has now been extended to the end of November 2021, though the Company hopes to repay the Facility by 15 July 2021, in which case the cost of the extension will reflect the earlier repayment.

The Facility was originally extended for 9 months, as announced on 15 October 2019, in consideration of a 25% share of the Company's future entitlements to royalties (if any) from production on its Thali license in Cameroon, in addition to interest of 12% per annum (pro rata) which was rolled up rather than paid in cash. As announced on 28 August 2020, the Company received a further 6-month loan facility from Shard Merchant Capital ("Shard"), which required fees, the prepayment of interest in the form of shares, and the issue of a substantial number of warrants, and the Pegasus Facility was extended for 6 months on similar terms including the prepayment of interest accrued to the end of February 2021 in shares. The purpose of these transactions was to provide an appropriate return to Pegasus and subsequently to Shard to reward the near-equity risk of the loans, in the event the Company achieves success, while not creating any cash burden on the Company until it would be in a position to repay the loans, which in the case of the Shard loan was done in January 2021.

As previously announced, the $750,000 principal of the Pegasus Facility remains outstanding and the Company's independent Directors believe that it is in the Company's best interest not to repay nor to convert the Facility now, nor to issue further warrants, given the potential additional dilution this may create.

Therefore, the Company has agreed with Pegasus to extend the facility on terms equivalent to the 9-month extension agreed in October 2019, in return for an increase in the 25% share of royalties previously agreed in consideration for that October 2019 extension. Interest will accrue at 12% per annum pro rata, and will be payable only at the end of the Facility period. Provided the Facility is repaid prior to 15 July 2021, then the royalty share will increase from 25% to 37.5%, and otherwise the royalty share will increase to 50%.

The Extension constitutes a related party transaction in accordance with AIM Rule 13. Accordingly, Paula Brancato and Mark Enfield, being the Directors independent of the Extension, consider, having consulted with the Company's Nominated Adviser, SP Angel Corporate Finance LLP, that the terms of the Extension are fair and reasonable insofar as the Company's shareholders are concerned.

Jeremy Asher, Chairman and CEO, commented:

"The independent directors and I are all committed to getting the NJOM-3 well in Cameroon drilled as soon as circumstances permit. The possible easing of pandemic restrictions globally both provides a more favourable market environment, and also means that it is now important we complete current financing discussions for the well. We are therefore optimistic that we can get this financing in place by the summer, which would reduce the time required for the extension of the facility, and this is why the independent directors have adopted this extension structure. If the NJOM-3 well succeeds as we hope, then we believe that the royalty share agreed provides an appropriate reward to both shareholders and Pegasus. We also hope that shareholders will see clearly, in the terms of this extension, the confidence that I have in our ability to deliver the NJOM-3 well and production from Thali in due course."

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.

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