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

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.