Tower Resources PLC (AIM:TRP) told investors it a signed term sheet with Central African brank BGFI for a 4.42bn Cameroon francs loan, equivalent to around US$7.1mln, as part of its funding arrangements for the upcoming NJOM-3 well on the Thali block, offshore Cameroon.
The company said the loan would cover around 40% of the expected well cost (US$18mln) and the remainder is being covered by Tower’s subsidiary in Cameroon, according to a statement released after Wednesday’s close.
It will be a five-year loan, at 8% interest per annum though there’s a moratorium on interest payments through the first year of the facility.
"We are delighted to announce this step forward in the financing of the NJOM-3 well, and also in our relationship with BGFI Bank Group,” said chief executive Jeremy Asher.
“As we announced last month, the expected cost of the well has increased to approximately US$18 million, and so this facility and the US$4 million or so we have already invested, will still leave us with a balance - but a much smaller and more manageable balance - of the NJOM-3 well to finance.
“We are continuing to look at financing options at the asset level within TRCSA, including with Beluga Energy and its investors, though obviously for smaller amounts than discussed previously.
“We are also keeping an open mind on other financing alternatives, but whichever path we follow, as we explained in May, we expect the result to be considerably more favourable for shareholders than the farmout structure previously contemplated.
“We plan to conclude financing discussions in the third quarter of this year, as previously intimated, and then to press on with the well.”
Tower noted that long lead items for the well programme have already been purchased, the social and environmental impact assessments are in place, site surveys have been done and the licence had been extended to accommodate the well schedule.
NJOM-3 aims to appraise reservoirs discovered previously in the NJOM-1 well.