Tower Resources PLC (LON:TWR) has launched a placing to raise £1.7mln through a share placing and subscription to support the funding of a drill programme at the Njonji area of the Thali project, in Cameroon.
It intends to sell some 170mln new shares priced at 1p.
The injection of funds is earmarked to pay for long-lead items required for the envisaged drill programme which aims to unlock the Njoni asset.
In an October a third-party assessment was estimated to have 18mln barrels of contingent resources and was valued at US$118mln – compared to Tower’s market capitalisation of around £4.3mln.
“The company has an asset whose potential value greatly exceeds its current market capitalisation, but the asset does require capital to develop,” Tower said in Thursday’s statement.
After the placing, Tower will still need to secure funds to pay for the majority of the drill programme.
Today it told investors that it had received interest from potential farm-in partners which may have funded the project and it has also had talks with potential lenders over a debt-based project financing.
“The company's opinion is that a borrowing facility encompassing both pre-production and production financing, including the Thali NJOM-3 well scheduled for Q2 2019, is the best way forward for shareholders,” Tower added.
“… the company believes that it is possible to conclude such a facility before the mobilisation of the Vantage Topaz Driller rig which the company has contracted to drill this well.
“While the company cannot rule out the possibility of needing additional equity financing for this forthcoming well, the company does not wish to raise more capital than needed while a good likelihood exists that such a borrowing facility can be completed, and the company is hopeful that in that case no further equity fundraising may be required prior to the NJOM-3 well.”