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Tower Resources agrees equity line and loan with Yorkville Advisors, shares rise

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Shares in Tower Resources (LON:TRP) were lifted in morning trade by news it has secured an equity line from Yorkville Advisors, which will in part be used to fund the costs of drilling the third and final commitment well, Mvule-1, on Tower's EA5 licence area in Uganda.

It has entered into an £8 million Standby Equity Distribution Agreement (SEDA) and a US$3.125 million SEDA-backed loan agreement with YA Global Master SPV Ltd, an investment fund managed by Yorkville.

At 9.15 am, shares in the explorer were trading up 3.5 percent at 2.97 pence.

The company said in a statement that the loan agreement will be used to provide the immediate funding required to drill the Mvule-1 well, and can be increased in tranches of US$1 million up to a maximum of US$6.125 million if required.

The SEDA will be available to finance repayments of the loan agreement and any balance of the well costs and to provide flexible funding options to the company going forward.

Tower has budgeted US$6.8 million for Mvule-1 on a dry hole basis.

Its wholly owned subsidiary Neptune has reached agreement with all interested parties to use the OGEC K900 drilling rig, currently committed to Tullow, to drill Mvule-1.

Site preparation is planned to start shortly with a view to spudding the well by the middle of February 2012. The well is anticipated to reach a total drilled depth of about 600 metres within two weeks of spud.

Mvule-1 is testing estimated recoverable resource potential of 80 million barrels.

Quick facts: Tower Resources PLC

Price: 0.375 GBX

AIM:TRP
Market: AIM
Market Cap: £4.14 m
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