Tower Resources Interim Results Highlight Farm-Out Deals and Drilling Delays

Tower Resources interim results: farm-outs agreed, NJOM-3 drilling now targeted for Q1 2026

Tower Resources has delivered a busy set of interim results for the six months to 30 June 2025. The headline is clear: two farm-out deals with Prime Global Energies are agreed for Cameroon and Namibia, the rig line-up is underway for NJOM-3, but government approvals have taken longer than hoped and the first well is now slated for the first quarter of 2026.

Financially, cash remains tight ahead of those approvals and completion payments, so the company has leaned on a convertible bridge loan that has since been increased to £1,000,000. Operational prep continues across the portfolio, with progress in Namibia and slow-moving farm-out efforts in South Africa.

Cameroon – farm-out approved in principle, rig on standby, NJOM-3 pushed to Q1 2026

In January, Tower signed a farm-out in Cameroon: Prime will acquire a 42.5% non-operated interest in the Thali licence in exchange for a US$15,000,000 cash contribution to the Thali work programme, including the NJOM-3 well, plus additional payments. That is material for Tower’s funding of the well and any follow-on activity.

On approvals, Tower has seen a copy of the Prime Minister’s instruction to the Minister of Mines, Industry and Technological Development (MINMIDT) to approve both a one-year extension of the initial exploration period and the farm-out itself. Tower understands the President has also approved this, but the formal process is still working its way through MINMIDT.

To save time, Tower has moved ahead with planning: a Letter of Award went to ADES for a jack-up rig, with flexibility on which unit is used after ADES’ takeover of Shelf Drilling’s West African fleet. Major service contracts are largely agreed. Because most services have up to three-month call-off lead times, the company now expects drilling to commence in Q1 2026 rather than late 2025.

Why it matters for shareholders

• The US$15.0 million contribution from Prime directly reduces Tower’s upfront cash burden for NJOM-3.
• Regulatory timelines are the swing factor. The company reiterates confidence in drilling NJOM-3 and is lining up the supply chain to move quickly once approvals land.
• Tower is running bank discussions in parallel for development financing of the next three wells on the Njonji structure, and potential shorter-term development options if economic.

Namibia PEL96 – farm-out and extra 5% interest moving through partner approvals

In Namibia, Prime will take a 25% non-operated interest in PEL96 for approximately US$2,500,000. Tower also agreed to acquire an additional 5% interest from local partner ZM Fourteen Investment (Pty) Ltd. The Ministry of Industry, Mines and Energy (MIME) has confirmed entry into the first renewal period of PEL96.

Progress has been hampered by management changes at NAMCOR, but Tower says the draft deed of assignment covering both transactions is ready for NAMCOR’s new leadership and will then go to MIME. In the meantime, Tower is refining the target area for new 3D seismic. Realistically, acquisition would not occur before the winter of 2026/2027. Encouragingly, neighbouring interest in new data could reduce costs if vessels and programmes are coordinated.

Investor take on Namibia

• Timelines are longer, but the deal with Prime brings in cash at the asset level once completed.
• Cost-sharing potential on 3D seismic is a positive for future spend efficiency.

South Africa Algoa-Gamtoos – farm-out process slow, but interest improving

In South Africa, the operator New Age Energy Algoa (Pty) Ltd is still in talks with a potential partner, though discussions “do not presently seem to be very productive”. Tower notes new interest from other parties, helped by gradual resolution of legal issues around the new petroleum law and environmental regulations. It remains a slow burn until those frameworks are fully settled.

Funding update – cash tight, bridge loan extended to £1,000,000, equity dilution avoided (for now)

At 30 June 2025, Tower held cash of $394,025 (2024: $337,489). With approvals pending and spend ramping to be drill-ready, the company has used a convertible bridge loan rather than issuing new equity. The unsecured fixed-price facility with Prime Resources Limited (not affiliated with Prime Global Energies) began at £500,000 on 26 March 2025, was extended by £250,000 on 1 July, and by a further £250,000 on 1 September, taking the total to £1,000,000 under the same terms.

Key terms: a 5% cash implementation fee, 15% interest per annum, and a fixed conversion price of 0.05588 pence per share. If the share price is below the fixed conversion price, Tower can prepay the loan with interest and no further fees, with 10 business days’ notice; if the share price is higher, prepayment is at the lender’s discretion.

Elsewhere, 271,018,518 broker warrants were exercised at 0.027p, raising £73,175. In April, 1,540,000,000 Restricted Shares were awarded under the LTIP, vesting after three years. The company says it is focused on asset-level financing (like the Prime farm-outs) to minimise equity dilution at the corporate level.

Key numbers at a glance (six months to 30 June 2025)

Cash and cash equivalents	$394,025
Operating loss	$1,177,149
Loss before tax	$1,216,381
Exploration & evaluation assets	$37,592,222
Trade and other receivables	$1,890,599
Trade and other payables	$2,283,008
Borrowings (carrying amount)	$1,008,223
Net assets	$36,585,615
Shares in issue at period end	29,315,709,993
Farm-out cash to Thali work programme	US$15,000,000
Namibia farm-out consideration	~US$2,500,000
NJOM-3 expected spud window	Q1 2026

Operating loss increased versus 2024 ($447,757) due to staffing ramp-up ahead of drilling and the move in the UK pound/US dollar exchange rate.

Accounting and going concern – a realistic read

Tower recognised $1.9 million within receivables relating to the final Prime farm-out completion payment for Cameroon. The board assessed that, despite administrative delays, the conditions are expected to be met and a financial asset existed at the balance sheet date under IFRS 9.

On going concern, the directors state the group will need to complete the agreed Cameroon farm-out and/or another asset-level transaction, or otherwise raise further funds, to meet liabilities as they fall due, particularly for the Cameroon drilling programme. They are confident, but they also acknowledge a material uncertainty if timelines slip. It is a sensible, candid assessment.

My view: progress banked, timing risk front and centre

On balance, this is an encouraging operational update wrapped in realistic timing guidance. The two Prime farm-outs are the linchpin. Once those complete and approvals are in hand, the funding picture for NJOM-3 improves markedly. Until then, liquidity is thin and the bridge loan does a lot of heavy lifting.

Positives

• US$15.0 million Cameroon farm-out contribution directly supports NJOM-3 and near-term plans.
• Approvals in Cameroon appear advanced within government, with PM and Presidential backing noted.
• Rig and services are being pre-positioned to compress the timeline post-approval.
• Namibia renewal secured, with a pathway to shared 3D seismic costs in 2026/2027.

Watch-outs

• Formal sign-off in Cameroon remains the critical path. Slippage pushes costs and schedules.
• Cash at period end was $394,025; the bridge loan is vital until farm-out cash lands.
• Convertible loan terms include a fixed conversion price of 0.05588 pence – potential dilution if converted.
• South Africa remains slow until legal frameworks fully settle.

What to watch next

• Final Cameroonian approvals for the Thali extension and the Prime farm-out.
• Completion of both Prime transactions and receipt of cash (including the $1.9 million completion receivable).
• Rig selection and firmed mobilisation window from ADES; signing of major service contracts.
• NAMCOR and MIME approvals of the Namibia deed of assignment.
• Updates on development financing options for the next Njonji wells.

Quick jargon buster

• Farm-out: selling a working interest in a licence to a partner in return for cash and/or a commitment to fund work.
• NJOM-3: the next planned well on the Thali licence targeting the Njonji structure offshore Cameroon.
• PEL96: Petroleum Exploration Licence 96 offshore Namibia.
• 3D seismic: advanced subsurface imaging used to refine drilling targets.
• LTIP Restricted Shares: share awards that vest over time to align management incentives with long-term value.
• Convertible bridge loan: short-term debt that can convert into equity at a fixed price, or be repaid in cash.