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Tower Resources raises £5.4 million in placing to fund Mvule-1 well drilling

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Sub-Saharan Africa focused oil and gas firm Tower Resources (LON:TRP) told investors it had raised  £5.41 million through a placing to drill the Mvule-1 well in Uganda.

Northland Capital Partners has raised the cash through the conditional placing of around 180.3 million shares at a price of 3 pence per share.

The funds will be used to carry out the drilling of the  Mvule-1 well on the EA5 licence area in Uganda and for general working capital in 2012, Tower said.

The firm also revealed today that it had drawn down on its Yorkville equity line to raise £600,000 for the firm - also to pay for the drilling of the well.

On the placing, it said around £5 million was being raised from new institutional investors, with the balance being subscribed for by directors of the company.

Tower said that the proceeds of both the placing and the issue of SEDA shares would be used to pay back interest on the loan, which was given to the firm, to complete the drilling of the well as well as for working capital this year.

The Mvule-1 well is the third and final commitment well on Tower's EA5 license in Uganda in which the company holds a 100 per cent working interest. It is testing an estimated recoverable resource potential of 80 million barrels.

Tower added that the well was expected to spud during today (February 9) or tomorrow (Friday, February 10) with a further announcement of the spud to follow.

Chairman Jeremy Asher said he was delighted to complete the placing, which brought new institutional shareholders into the company, funded the completion of the Mvule-1 well, and will repay the Yorkville promissory note.

"The placing has materially strengthened Tower's financial base and forms part of our prudent preparations for the many opportunities open to the company in the case of either success or failure for Mvule-1.

"Regardless of the well's outcome, we have an extremely attractive licence in Namibia where the exploration well being planned for 2013 will be testing five targets aggregating over 9 billion barrels of recoverable reserves.

"Tower's 15 per cent interest in that well is fully carried by the operator Arcadia, who are currently in advanced discussions regarding a farm-out, but Tower is also looking at strategic options to increase its Namibian exposure".

Broker Westhouse said in a note that the conditional placing shares have been raised at a price of 3p against a closing price of 3.975 pence.

It said it retained its "strong buy" rating for the stock with a target price of 14.8 pence.

Quick facts: Tower Resources PLC

Price: 0.399 GBX

AIM:TRP
Market: AIM
Market Cap: £4.41 m
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