TIDMTRP
RNS Number : 2511J
Tower Resources PLC
08 September 2016
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO
OR FROM THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH
AFRICA, THE REPUBLIC OF IRELAND OR JAPAN OR ANY OTHER JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A BREACH OF THE RELEVANT SECURITIES
LAWS OF SUCH JURISDICTION.
This announcement does not constitute a prospectus or offering
memorandum or an offer in respect of any securities and is not
intended to provide the basis for any decision in respect of Tower
Resources plc or other evaluation of any securities of Tower
Resources plc or any other entity and should not be considered as a
recommendation that any investor should subscribe for or purchase
any such securities.
8 September 2016
Tower Resources plc
Proposed Placing for up to GBP1.03 million
Intended Open Offer for up to GBP0.56 million
Operational Update and Interim Results to 30 June 2016
Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN)),
the AIM listed Africa focussed oil and gas exploration company
announces today its intention to raise gross proceeds of
approximately GBP1.03 million (US$1.35 million), through a
non-brokered subscription for approximately 45.9 million new
Ordinary Shares (the "Placing Shares") at a placing price of 2.25
pence per Ordinary share (the "Placing Price") (the "Placing").
In addition, in order to provide shareholders the opportunity to
subscribe for Ordinary Shares at the Placing Price, the Company
intends to make an Open Offer to all qualifying UK shareholders
shortly following Admission to raise up to GBP0.56 million (US$0.73
million) (the "Open Offer") at the Placing Price. The Placing is
not conditional upon the Open Offer. The Open Offer will be subject
to shareholder approval. A circular concerning the Open Offer and
Notice of EGM will shortly be sent to Shareholders and will also be
made available on the Company's website
www.towerresources.co.uk.
It is expected that Admission of the Placing Shares will become
effective and that dealings will commence in the Placing Shares by
8.00 a.m. on 13 September 2016.
The Company also announces its interim results for the period to
30 June 2016 and provides an operational update.
Jeremey Asher, Chairman of Tower Resources, said:
"Market conditions for exploration companies continue to be
difficult, however Tower is fortunate in having generally low
forward licence commitments and we are focusing the major part of
our activity on our 100% owned Thali licence in Cameroon. This
licence offers genuinely low risk and near-term appraisal and
development opportunities.
We are proceeding with the farm-out of Thali as planned and we
now have interest from several parties. We are hoping to bring
those discussions to a conclusion quickly. Our objective is
naturally to achieve the best value, and we believe that this is
likely to come from obtaining the maximum possible level of forward
funding for the licence, including for the seismic programme
planned to be acquired in early-mid 2017, with the best strategic
partner.
We have reduced our cost base further and will continue to do
so, but we still require a modest amount of further working capital
to extend cash reserves into the first quarter of 2017 as we
proceed through the farmout process. We anticipate the support of
the majority of our long-standing core shareholders in the proposed
Placing, but we know that sentiment in the market for funding
exploration remains poor and therefore the proposed Placing must be
competitively priced in order to be attractive to as many of our
shareholders as possible. So we are proposing a heavily discounted
placing to investors including some of our major shareholders and
Directors, and inviting the rest of our UK shareholders to take up
shares at the same price, if they wish, via a planned Open
Offer."
Contacts
Tower Resources plc
Jeremy Asher (Chairman)
Graeme Thomson (CEO)
Andrew Matharu (VP - Corporate Affairs)
+44 20 7253 6639
Peel Hunt LLP (Nominated Adviser and Broker)
Richard Crichton/Ross Allister
+44 20 7418 8900
Vigo Communications
Chris McMahon/Richard De Pencier
+44 20 7830 9700
Notes
In accordance with the guidelines for the AIM market of the
London Stock Exchange, Nigel Quinton, BA, MA, FGS, Director of
Exploration for Tower Resources plc, who has over 30 years'
experience in the oil & gas industry, is the qualified person
that has reviewed and approved the technical content of this
announcement and assessment of the Company's estimate of its
resource potential.
Regulatory
The Market Abuse Regulation EU 596/2014 ("MAR") became effective
from 3 July 2016. Market soundings, as defined in MAR, were taken
in respect of the Placing with the result that certain persons
became aware of inside information, as permitted by MAR. That
inside information is set out in this announcement and has been
disclosed as soon as possible in accordance with paragraph 7 of
article 17 of MAR. Therefore, those persons that received inside
information in a market sounding are no longer in possession of
inside information relating to the Company and its securities.
Note regarding forward-looking statements:
This announcement contains certain forward looking statements
relating to the Company's future prospects, developments and
business strategies. Forward looking statements are identified by
their use of terms and phrases such as "targets" "estimates",
"envisages", "believes", "expects", "aims", "intends", "plans",
"will", "may", "anticipates", "would", "could" or similar
expressions or the negative of those, variations or comparable
expressions, including references to assumptions.
The forward looking statements in this announcement are based on
current expectations and are subject to risks and uncertainties
which could cause actual results to differ materially from those
expressed or implied by those statements. These forward looking
statements relate only to the position as at the date of this
announcement. Neither the Directors nor the Company undertake any
obligation to update forward looking statements, other than as
required by the AIM Rules for Companies or by the rules of any
other applicable securities regulatory authority, whether as a
result of the information, future events or otherwise. You are
advised to read this announcement and the information incorporated
by reference herein, in its entirety. The events described in the
forward-looking statements made in this announcement may not
occur.
Neither the content of the Company's website (or any other
website) nor any website accessible by hyperlinks on the Company's
website (or any other website) is incorporated in, or forms part
of, this announcement.
Any person receiving this announcement is advised to exercise
caution in relation to the Placing. If in any doubt about any of
the contents of this announcement, independent professional advice
should be obtained.
This summary should be read in conjunction with the full text of
the announcement which follows.
DETAILS OF THE PROPOSED PLACING AND INTED OPEN OFFER
The Company proposes to place 45,919,084 new Ordinary Shares
(the "Placing Shares") with certain investors including some of our
shareholders and Directors at the Placing Price to raise gross
proceeds of approximately GBP1.03 million (US$1.35 million). The
Placing Price represents a discount of approximately 59 per cent.
to the closing mid-market price of 5.50 pence per Ordinary Share on
7 September 2016 being the last dealing day immediately prior to
the release of this announcement.
Approximately GBP0.6 million of the Placing Shares will be
placed by the Company by way of a cash box placing in order to
shorten the timetable for receipt of funds and increase the
certainty for the Company and the placees. This structure permits
the Company to issue Placing Shares free from pre-emption rights
and has the advantage of allowing the Company to secure financing
without the added time, expense and uncertainty of convening a
general meeting for shareholder approval. The Company will allot
and issue the Placing Shares to the relevant placees in
consideration for them transferring their holdings of redeemable
preference shares in Tower Resources (UK) Limited to the Company.
Accordingly, instead of receiving cash as consideration for the
issue of the relevant Placing Shares, at the conclusion of the
Placing, the Company will own the entire issued share capital of
Tower Resources (UK) Limited whose only asset will be its cash
reserves in an amount approximately equal to GBP0.6 million.
The Placing Shares will total approximately 45.9 million new
Ordinary Shares and represent 60.6% of the enlarged share capital
of the Company.
The Placing Shares, when issued, will rank pari passu in all
respects with the Existing Issued Ordinary Share Capital.
The Board is grateful for the continued support received from
Shareholders and has therefore decided to offer all Shareholders
the opportunity to participate in a further issue of new equity in
the Company by making an Open Offer to all UK Shareholders at the
Placing Price. The Board proposes to raise up to GBP0.56 million
(US$0.73 million) through the Open Offer.
Further details of the Open Offer including the Excess
Application Facility will be set out in a circular and a notice of
EGM to seek shareholder approval for the Open Offer, which will be
sent to shareholders in due course.
BACKGROUND TO AND REASONS FOR THE PLACING AND OPEN OFFER
Tower continues to seek a partner for the Thali licence
("Thali"), offshore Cameroon, to fund the costs of a 3D seismic
programme in early-mid 2017 and to provide additional technical
input. The Company has undertaken a formal farm-out process in
order to identify suitable potential industry partners and is in
discussions with several counterparties who could meet our criteria
as potential joint-venture partners both on Thali and possibly more
widely within Cameroon, although this process is taking longer than
originally anticipated due to industry conditions.
The proceeds of the proposed Placing and intended Open Offer
will be used, primarily, to provide the working capital to progress
the farm-out of Thali and secure a suitable partner and for other
corporate uses.
OPERATIONAL UPDATE
Tower's strategy of shifting its portfolio towards lower risk
assets in proven and emerging basins is presently focused on the
Company's Thali licence (Tower: 100%, Operated) which already has
existing discoveries. It is located in the shallow water Rio de Rey
basin, a proven producing sub-basin of the petroliferous Niger
Delta, offshore Cameroon. The Thali PSC covers an area of 119.2
km(2) , with water depths ranging from 8 to 48 metres. The Rio del
Rey basin has, to date, produced over one billion barrels of oil
and has estimated remaining recoverable reserves of 1.2 billion boe
(Source: Wood Mackenzie), primarily within water depths of less
than 50 metres.
CAMEROON
Tower's entry into Cameroon commenced on 15 September 2015 after
signing the Thali PSC with the Government of Cameroon. Tower has a
100% interest in the Thali block which already has discoveries that
are estimated to contain 15mmbbls of recoverable oil. Tower is
currently in the Initial 3 year Exploration Period of the PSC.
With existing discoveries on the block, near-term shallow
appraisal opportunities and deeper exploration potential, Thali
provides a cornerstone asset with low-risk, yet high potential.
Tower believes that the Thali Block could offer four hydrocarbon
play systems, including the proven one in which three discovery
wells have already been drilled on the block. The other play
systems are all successfully commercialised within the Gulf of
Guinea, and in analogous petroleum systems, such as the Gulf of
Mexico. The next key step to unlocking the block's potential is the
acquisition of modern 3D seismic to significantly improve
subsurface imaging and resolution, as the existing seismic data is
25 years old. Once improved quality seismic data has been obtained
Tower sees both the potential to add incremental oil reserves to
existing discoveries to achieve commerciality, plus significant
exploration prospectivity in the other plays, which are in shallow
water and most with target depths no greater than 2,500 metres, in
both structural and stratigraphic traps.
A small in-country office staffed with local professionals has
been established in Douala and is currently preparing for an
operational campaign to acquire a minimum of 100km(2) of 3D
seismic. To this end Tower has completed the lengthy ESIA
(Environmental and Social Impact Assessment) and successfully
applied for and has recently been granted a Certificate of
Environmental Conformity (CEC) by the Cameroon Ministry of
Environment permitting the acquisition of seismic over the Thali
Block. Tower is engaging with seismic contractors and survey design
modelling has been conducted to optimise acquisition parameters to
ensure a high quality seismic volume is acquired for processing and
interpretation.
Current depressed market conditions have had brought a benefit
in the form of lower costs and competitive financing terms in the
seismic and drilling sector. Tower is seeking a partner to cover
these costs and the timing of operations will reflect these
factors.
SOUTH AFRICA
In September 2015, approval was received to enter the First
Renewal Period of the Algoa-Gamtoos Exploration Right (Tower 50%,
New Age 50% - Operator), offshore South Africa, which will run for
two years until at least September 2017. At present, uncertainty
about the new Mining legislation and its impact on the oil
exploration sector in South Africa has reduced industry activity to
minor levels; it is hoped that this process will be brought to a
conclusion in the next few months and provide greater certainty for
investors.
The Algoa-Gamtoos licence includes three basins, the Algoa,
Gamtoos and deep water Outeniqua basins. Leads have been defined on
2D and 3D seismic data across the basins and the Joint Venture 2016
work programme has developed some positive exploration play types
from the merged seismic volumes. The prospectivity evaluation is in
progress and due to be completed before the end of 2016. Tower will
seek a partner for the next programme of operational activity.
On 16 February 2016 Tower announced that its wholly-owned
subsidiary, Rift Petroleum Limited (50% interest) and its partner,
New African Global Energy SA (Pty) Ltd ("New Age", 50% interest,
operator), agreed not to proceed with an application to convert the
deep-water frontier SW Orange Basin Technical Co-operation Permit
(TCP) into an exploration right. Consequently, New Age reimbursed
Rift the sum of US$500,000, which was paid by Rift as part of its
original farm-in agreement in 2013, which was also terminated.
Tower's exit from this high cost deep-water frontier basin is
consistent with its move towards a more balanced portfolio of
proven and emerging basins and enables the Company to focus its
efforts in South Africa on the Algoa-Gamtoos Exploration Right,
which offers greater near-term potential.
ZAMBIA
Tower is the Operator of Blocks 40 and 41 with a 100% interest.
The blocks are located within the frontier mid-Zambesi basin,
onshore Zambia, where virtually no oil & gas exploration
activity has been conducted, no modern seismic exists over the
blocks and no wells have been drilled. In fact, only two petroleum
wells have been drilled in the entire country.
Despite the lack of prior exploration, the results of the
fieldwork Tower has conducted in 2014 and 2015 have indicated that
all elements for a working petroleum system are present: the
presence of source rock, reservoir and seal is now established.
These geological studies have met all of Tower's commitments to
date.
Future work commitments over the next two years potentially
include airborne gravity/magnetic data acquisition and
interpretation, and a 2D seismic programme. The licences can be
relinquished at the end of each licence year if results are
discouraging, so commitments are low and proportionate to
prospectivity.
The Government of Zambia is currently working towards a new
petroleum code which will further define the fiscal regime and give
new entrants to the Zambian oil & gas sector greater clarity
with respect to the investments they make in the country. Tower
will engage with the appropriate government ministries once a new
cabinet is formed and parliament re-called following nationwide
elections held recently.
Tower will actively seek a partner for Blocks 40 and 41 so it is
carried into the more expensive parts of the work programme and to
re-coup an appropriate part of its investment.
WESTERN SAHARA (SADR)
SADR is the territory known as Western Sahara, and has been
occupied by Morocco since 1975. The sovereignty of the territory
remains in dispute, despite being recognised by the United Nations
as a non-self-governing territory and by the African Union.
Tower holds a 50% interest in the offshore Guelta and Imlili
blocks and the onshore Bojador block in the SADR which are operated
by Hague and London Oil plc ("HALO", 50%). There are no remaining
work commitments on the licences.
INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2016
During the six months to 30 June 2016, the Group capitalised
exploration and evaluation costs totalling US$1.2 million, US$1.1
million of which related to the Thali PSC in Cameroon.
The loss for the period was US$1.9 million (H1 2015: loss US$5.4
million) as detailed in the Interim Consolidated Statement of
Comprehensive Income. The loss in H1 2015 included impairments
totalling US$2.8 million. The consolidated financial statements for
the Interim Results for the six months to 30 June 2016 are set out
in Appendix I in this announcement.
Included within trade and other receivables is US$1 million
(GBP747k) of VAT due to the Company from HMRC. As noted in the 2015
Annual Report, HMRC has withheld VAT repayments pending the
completion of an ongoing review. It remains the firm opinion of the
Company that it has and continues to meet the relevant VAT
criteria, has complied with all relevant VAT legislation and has
submitted valid reclaims in accordance with existing VAT
legislation. Full details are included in note 5.
CONTRACTUAL ISSUE OF EQUITY
A total of 860,483 New Ordinary Shares have today been issued to
P.D.F Limited ("P.D.F"), the Company's Outsourced Exploration
Department (OExD(R)), a company owned by Dr. Mark Enfield, Managing
Director, in part payment for services for the period covering 1
October 2015 to 30 June 2016. P.D.F now holds a total of 1,588,688
Ordinary Shares, including 69,401 Ordinary Shares in Tower owned by
Dr. Mark Enfield.
P.D.F Shareholding Q4 2015 Shares Issued Q1 2016 Shares Issued Q2 2016 Shares Issued P.D.F Shareholding
prior to issue at 26.8500p at 20.1635p at 9.6750p after issue
---------------------- ---------------------- ---------------------- ---------------------- ----------------------
728,205 176,798 272,550 411,135 1,588,688
---------------------- ---------------------- ---------------------- ---------------------- ----------------------
In addition, and pursuant to contractual arrangements, Tower
intends to issue an additional tranche of 1,795,382 New Ordinary
Shares to its Directors and a former Director as part payment for
services covering the period 1 October 2015 to 30 June 2016 and to
certain Directors in lieu of fees.
Application has been made to the London Stock Exchange for the
contractual issue of New Ordinary Shares to P.D.F. to be admitted
to trading on AIM. The shares will rank pari passu in all respects
with the Company's existing Ordinary Shares. It is expected that
the admission will become effective and that trading in the New
Ordinary Shares will commence at 8.00 a.m. on or around 13
September 2016.
SHARE CAPITAL REORGANISATION
At the Company's AGM, held on 6 April 2016, shareholder approval
was sought and resolutions passed for the consolidation and
sub-division of the Company's share capital. Following the passing
of the Share Capital Reorganisation resolutions, every 250 existing
ordinary shares of 0.1p each were consolidated into one new
ordinary share of 1.0 pence each, being 27,228,472 Ordinary Shares.
All existing options and warrants were also consolidated on the
same 250-to-1 basis.
DIRECTORATE CHANGE
Mr Peter Blakey, Non-Executive Director, retired from the Board
following the AGM held in April 2016. Mr Blakey, aged 75, was a
founding Director of Tower in 2005 and has been influential in the
start-up and development of a number of successful publicly listed
and private companies in the oil & gas sector.
IMPORTANT NOTICE
This announcement does not constitute or form part of any offer
or invitation to purchase, or otherwise acquire, subscribe for,
sell, otherwise dispose of or issue, or any solicitation of any
offer to sell, otherwise dispose of, issue, purchase, otherwise
acquire or subscribe for, any security in the capital of the
Company in any jurisdiction.
The information contained in this announcement is not to be
released, published, distributed or transmitted by any means or
media, directly or indirectly, in whole or in part, in or into the
United States or to any US Person. This announcement does not
constitute an offer to sell, or a solicitation of an offer to buy,
securities in the United States or to any US Person. Securities may
not be offered or sold in the United States absent: (i)
registration under the Securities Act; or (ii) an available
exemption from registration under the Securities Act. The
securities mentioned herein have not been, and will not be,
registered under the Securities Act and will not be offered to the
public in the United States.
This announcement does not constitute an offer to buy or to
subscribe for, or the solicitation of an offer to buy or subscribe
for, Ordinary Shares in the capital of the Company or any other
security in any jurisdiction in which such offer or solicitation is
unlawful. The securities mentioned herein have not been, and the
Ordinary Shares will not be, qualified for sale under the laws of
any of Canada, Australia, the Republic of South Africa or Japan and
may not be offered or sold in Canada, Australia, the Republic of
South Africa or Japan or to any national, resident or citizen of
Canada, Australia, the Republic of South Africa or Japan. Neither
this announcement nor any copy of it may be sent to or taken into
the United States, Canada, Australia, the Republic of South Africa
or Japan. In addition, the securities to which this announcement
relates must not be marketed into any jurisdiction where to do so
would be unlawful.
This announcement has been issued by and is the sole
responsibility of the Company.
Peel Hunt LLP is authorised and regulated in the UK by the
Financial Conduct Authority and is advising the Company and no one
else in connection with the Placing (whether or not a recipient of
this announcement). Peel Hunt will not be responsible to any person
other than the Company for providing the regulatory and legal
protections afforded to customers of Peel Hunt nor for providing
advice in relation to the contents of this announcement or any
matter, transaction or arrangement referred to in it. The
responsibilities of Peel Hunt, as nominated adviser under the AIM
Rules for Nominated Advisers, are owed solely to London Stock
Exchange and are not owed to the Company or to any Director or
Shareholder or to any other person in respect of their decision to
acquire Ordinary Shares in reliance on any part of this
announcement.
APPIX I:
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Six months ended
30 June 2016 30 June 2015
(unaudited) (unaudited)
Note $ $
------------------------------------------------------------ ----- ----------------- --- -----------------
Revenue - -
Cost of sales - -
------------------------------------------------------------ ----- ----------------- --- -----------------
Gross profit - -
Other administrative expenses (1,527,268) (1,047,275)
Pre-licence expenditures (457,476) (1,511,445)
Reversal / impairment of exploration and evaluation assets 4 85,044 (2,841,308)
------------------------------------------------------------ ----- ----------------- --- -----------------
Total administrative expenses (1,899,700) (5,400,028)
------------------------------------------------------------ ----- ----------------- --- -----------------
Group operating loss (1,899,700) (5,400,028)
Finance income 175 1,436
Finance expense (3,348) (5,781)
------------------------------------------------------------ ----- ----------------- --- -----------------
Loss for the year before taxation (1,902,873) (5,404,373)
Taxation - -
------------------------------------------------------------ ----- ----------------- --- -----------------
Loss for the year after taxation (1,902,873) (5,404,373)
------------------------------------------------------------ ----- ----------------- --- -----------------
Other comprehensive income - -
------------------------------------------------------------ ----- ----------------- --- -----------------
Total comprehensive expense for the period (1,902,873) (5,404,373)
------------------------------------------------------------ ----- ----------------- --- -----------------
Basic loss per share (USc) as restated 3 (6.99c) (35.42c)
------------------------------------------------------------ ----- ----------------- --- -----------------
Diluted loss per share (USc) as restated 3 (6.99c) (35.42c)
------------------------------------------------------------ ----- ----------------- --- -----------------
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 2016 31 December 2015
(unaudited) (audited)
Note $ $
----------------------------------- ----- -------------- -----------------
Non-current assets
Property, plant and equipment 63,977 72,226
Exploration and evaluation assets 4 38,285,902 36,982,467
----------------------------------- ----- -------------- -----------------
38,349,879 37,054,693
----------------------------------- ----- -------------- -----------------
Current assets
Trade and other receivables 5 2,220,778 2,202,055
Cash and cash equivalents 756,922 3,494,083
----------------------------------- ----- -------------- -----------------
2,977,700 5,696,138
----------------------------------- ----- -------------- -----------------
Total assets 41,327,579 42,750,831
----------------------------------- ----- -------------- -----------------
Current liabilities
Trade and other payables 6 1,912,916 1,576,165
----------------------------------- ----- -------------- -----------------
Total liabilities 1,912,916 1,576,165
----------------------------------- ----- -------------- -----------------
Net assets 39,414,663 41,174,666
----------------------------------- ----- -------------- -----------------
Equity
Share capital 7 11,024,090 11,024,090
Share premium 141,289,445 141,289,445
Retained losses (112,898,872) (111,138,869)
----------------------------------- ----- -------------- -----------------
Total shareholders' equity 39,414,663 41,174,666
----------------------------------- ----- -------------- -----------------
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share (1) Share-based Retained Total
capital premium payments losses
reserve
$ $ $ $ $
At 1 January 2015 6,346,538 137,554,592 3,576,682 (107,273,954) 40,203,858
------------------------------------------- ----------- ------------ ---------------- -------------- ------------
Shares issued for cash net of costs 5,516 15,500 - - 21,016
Shares issued on settlement of third party
fees 32,497 132,986 - - 165,483
Total comprehensive income for the period - - 1,013,976 (5,404,373) (4,390,397)
At 30 June 2015 6,384,551 137,703,078 4,590,658 (112,678,327) 35,999,960
------------------------------------------- ----------- ------------ ---------------- -------------- ------------
Shares issued for cash net of costs 4,540,321 3,498,322 - - 8,038,643
Shares issued on settlement of third party
fees 99,218 88,045 - - 187,263
Total comprehensive income for the period - - 1,336,596 (4,387,796) (3,051,200)
At 31 December 2015 11,024,090 141,289,445 5,927,254 (117,066,123) 41,174,666
------------------------------------------- ----------- ------------ ---------------- -------------- ------------
Shares issued for cash net of costs - - - - -
Shares issued on settlement of third party - - - - -
fees
Total comprehensive income for the period - - 142,870 (1,902,873) (1,760,003)
At 30 June 2016 11,024,090 141,289,445 6,070,124 (118,968,996) 39,414,663
------------------------------------------- ----------- ------------ ---------------- -------------- ------------
(1) The share-based payment reserve has been included within the
retained loss reserve and is a non-distributable reserve.
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
Six months Six months
ended 30 June ended 30 June
2016 (unaudited) 2015 (unaudited)
Note $ $
----------------------------------------------------------------------- ----- ------------------ ------------------
Cash outflow from operating activities
Group operating loss for the period (1,899,700) (5,400,028)
Depreciation of property, plant and equipment 8,505 826
Share-based payments 8 142,870 1,013,976
(Reversal) / impairment of intangible exploration and evaluation
assets 4 (85,044) 2,841,308
----------------------------------------------------------------------- ----- ------------------ ------------------
Operating cash flow before changes in working capital (1,833,369) (1,543,918)
Increase in receivables and prepayments (18,723) (309,352)
Increase / (decrease) in trade and other payables 336,751 (1,201,537)
------------------------------------------------------------------------------ ------------------ ------------------
Cash used in operations (1,515,341) (3,054,807)
Interest received 175 1,436
----------------------------------------------------------------------- ----- ------------------ ------------------
Cash used in operating activities (1,515,166) (3,053,371)
----------------------------------------------------------------------- ----- ------------------ ------------------
Investing activities
Exploration and evaluation costs 4 (1,218,391) (3,671,646)
Purchase of property, plant and equipment (256) (4,241)
----------------------------------------------------------------------- ----- ------------------ ------------------
Net cash used in investing activities (1,218,647) (3,675,887)
----------------------------------------------------------------------- ----- ------------------ ------------------
Financing activities
Cash proceeds from issue of ordinary share capital net of issue costs 7 - 21,016
Finance costs (3,348) (5,781)
----------------------------------------------------------------------- ----- ------------------ ------------------
Net cash (used in) / from financing activities (3,348) 15,235
----------------------------------------------------------------------- ----- ------------------ ------------------
Decrease in cash and cash equivalents (2,737,161) (6,714,023)
Cash and cash equivalents at beginning of period 3,494,083 7,941,833
----------------------------------------------------------------------- ----- ------------------ ------------------
Cash and cash equivalents at end of period 756,922 1,227,810
----------------------------------------------------------------------- ----- ------------------ ------------------
NOTES TO THE INTERIM FINANCIAL INFORMATION
1. Accounting policies
a) Basis of preparation
This interim financial report, which includes a condensed set of
financial statements of the Company and its subsidiary undertakings
("the Group"), has been prepared using the historical cost
convention and based on International Financial Reporting Standards
("IFRS") including IAS 34 'Interim Financial Reporting' and IFRS 6
'Exploration for and Evaluation of Mineral Reserves', as adopted by
the European Union ("EU").
The condensed set of financial statements for the six months
ended 30 June 2016 is unaudited and does not constitute statutory
accounts as defined in Section 434 of the Companies Act 2006. They
have been prepared using accounting bases and policies consistent
with those used in the preparation of the audited financial
statements of the Company and the Group for the year ended 31
December 2015 and those to be used for the year ending 31 December
2016. The comparative figures for the half year ended 30 June 2015
are unaudited. The comparative figures for the year ended 31
December 2015 are not the Company's full statutory accounts but
have been extracted from the financial statements for the year
ended 31 December 2015 which have been delivered to the Registrar
of Companies and the auditors' report thereon was unqualified and
did not contain a statement under sections 498 (2) and 498(3) of
the Companies Act 2006.
This half-yearly financial report was approved by the Board of
Directors on 7 September 2016.
b) Going concern
The Group's business activities, future development, financial
performance and position are discussed in the Overview and
Operational Update.
At 30 June 2016 the Group had cash balances of $757k. The
operations of the Group are currently being financed by funds
raised from private and public placings of shares and the Directors
recognise that the Group will need to raise additional finance
within the next few months sufficient to meet its committed capital
expenditure programme for at least the next 12 months and are
confident of the Company's ability to do so within this timeframe.
As a consequence, the Directors believe that the Group is well
placed to manage its business risks and have a reasonable
expectation of it continuing in operational existence for the
foreseeable future. The Directors therefore continue to adopt the
going concern basis of accounting in preparing the interim report
and accounts.
2. Operating segments
The Group has two reportable operating segments: Africa and Head
Office. Non-current assets and operating liabilities are located in
Africa, whilst the majority of current assets are carried at Head
Office. The Group has not yet commenced production and therefore
has no revenue. Each reportable segment adopts the same accounting
policies. In compliance with IAS 34 'Interim Financial Reporting'
the following table reconciles the operational loss and the assets
and liabilities of each reportable segment with the consolidated
figures presented in these Financial Statements, together with
comparative figures for the period-ended 30 June 2015.
Africa Head Office Total
Six months Six months Six months Six months Six months Six months
ended ended ended ended ended ended
30 June 2016 30 June 2015 30 June 2016 30 June 2015 30 June 2016 30 June 2015
$ $ $ $ $ $
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
Loss by reportable
segment 35,644 3,089,774 1,867,229 2,314,599 1,902,873 5,404,373
Total assets by
reportable segment
(1) 39,444,261 36,870,172 1,883,318 1,821,213 41,327,579 38,691,385
---------------------- -------------- -------------- -------------- -------------- --------------
Total liabilities by
reportable segment
(2) (1,001,396) (2,112,333) (911,520) (579,092) (1,912,916) (2,691,425)
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
(1) Carrying amounts of segment assets exclude investments in
subsidiaries.
(2) Carrying amounts of segment liabilities exclude intra-group
financing.
3. Loss per ordinary share
Basic & Diluted
30 June 2016 30 June 2015
(restated)
$ $
------------------------------------------------------------------- ----- ------------- -------------
Loss for the period 1,902,873 5,404,373
Weighted average number of ordinary shares in issue during the period 27,228,472 15,257,812
Dilutive effect of share options outstanding - -
Fully diluted average number of ordinary shares during the period 27,228,472 15,257,812
Loss per share (Usc) 6.99c 35.42c
-------------------------------------------------------------------------- ------------- -------------
At the Company's AGM held on 6 April 2016, shareholders approved
the consolidation of 6,807,118,052 ordinary shares of GBP0.001 each
to 27,228,472 ordinary shares of GBP0.01 each. The comparative
figures at 30 June 2015 have been restated to reflect the
consolidated balances as they would have been at that time had the
consolidation already have taken place. Full details of the
consolidation can be found in note 7.
4. Intangible Exploration and Evaluation (E&E) assets
Exploration and evaluation assets Goodwill Total
Period-ended 30 June 2016 $ $ $
---------------------------------- ------------ -------------
Cost
At 1 January 2016 121,285,504 8,023,292 129,308,796
Additions during the period 1,218,391 - 1,218,391
At 30 June 2016 122,503,895 8,023,292 130,527,187
---------------------------------------- ---------------------------------- ------------ -------------
Amortisation and impairment
At 1 January 2016 (84,346,827) (7,979,502) (92,326,329)
Impairment reversal during the period 85,044 - 85,044
At 30 June 2016 (84,261,783) (7,979,502) (92,241,285)
---------------------------------------- ---------------------------------- ------------ -------------
Net book value
At 30 June 2016 38,242,112 43,790 38,285,902
At 31 December 2015 36,938,677 43,790 36,982,467
---------------------------------------- ---------------------------------- ------------ -------------
During the period the Group reversed impaired assets totalling
$85k in accordance with IAS 36 "Impairment of Assets" following the
final withdrawal in Kenya from the Block 2B licence and
finalisation of joint-venture costs. Of the $1.2 million
capitalised with respect to exploration and evaluation assets, $1.1
million related to Cameroon with the majority of the remaining
balance relating to Zambia.
5. Trade and other receivables
30 June 2016 31 December 2015
(unaudited) (audited)
$ $
----------------------------- -------------- -----------------
Trade and other receivables 2,220,778 2,202,055
----------------------------- -------------- -----------------
Included within trade and other receivables is $1 million
(GBP747k) of VAT due to the company from HMRC. As noted in the 2015
Annual Report, HMRC has withheld VAT repayments totalling GBP613k
pending the completion of an ongoing review. A further GBP134k has
accrued in the 6 months to 30 June 2016. Whilst the review process
remains on-going, and in order to preserve their rights over the
maximum period, HMRC has since issued further assessments totalling
GBP843k excluding interest and penalties, in respect of which the
Company continues to take professional advice.
Following a detailed review by advisers, and as part of the
review process, the Company has identified that certain suppliers
have incorrectly charged UK VAT on their fees. VAT incorrectly
charged to the Company totals GBP903k. The suppliers concerned have
filed letters disclosing this error with HMRC and are seeking
reimbursement from HMRC. The benefit and the handling of these
claims have been assigned to the Company. Settlement of these
reclaims in full would mean that the Company would be owed a net
sum over and above the value of VAT repayments being withheld by
HMRC, although there can be no certainty of the quantum of the
repayment resulting from these reclaims until this part of the
consultation has been concluded.
A summary of the current position is noted below:
30 June 2016 30 June 2016
(unaudited) (unaudited)
GBP $
----------------------------------------------------------------- -------- ---- -------------- --------------
Assessments raised by HMRC (1,456,019) (1,949,580)
UK VAT incorrectly charged to the Compamy by suppliers 902,577 1,208,533
Repayment due to the Company from HMRC (excluding interest and penalties) (59,728) (79,975)
UK VAT Repayments claimed but withheld by HMRC 613,170 821,022
UK VAT Repayments accrued but withheld by HMRC 134,299 179,824
--------------------------------------------------------------------------- ---- -------------- --------------
Total UK VAT receivable 747,469 1,000,846
--------------------------------------------------------------------------------- -------------- --------------
It remains the firm opinion of the Company that it has and
continues to meet the VAT registration criteria, has complied with
all relevant VAT legislation and has submitted valid reclaims in
accordance with existing VAT legislation. The Directors therefore
consider the $1 million receivable to be recoverable in full from
HMRC. The Company also notes the fast rising number of disputes
with respect to UK holding companies and VAT, in the energy and
mining sectors and more widely, and that new guidance meant to
clarify the position in light of case law developments in this area
remains unpublished by HMRC despite these rises.
6. Trade and other payables
30 June 2016 31 December 2015
(unaudited) (audited)
$ $
-------------------------- -------------- -----------------
Trade and other payables 1,690,157 1,407,354
Accruals 222,759 168,811
1,912,916 1,576,165
-------------------------- -------------- -----------------
7. Share capital
30 June 31 December
2016 2015
(unaudited) (audited)
$ $
--------------------------------------------------------- ---- -------------- ------------
Authorised, called up, allotted and fully paid
27,228,472 (2015: 15,257,812(1) ) ordinary shares of 1p 11,024,090 11,024,090
--------------------------------------------------------------- -------------- ------------
653,483,333 (2015: nil) deferred shares of 0.004p - -
--------------------------------------------------------------- -------------- ------------
(1) share capital of 3,814,453,006 adjusted for share
consolidation approved by shareholders on 6 April 2016.
The share capital issues during the period are summarised
below:
Number of shares Share capital at nominal value Share premium
Ordinary shares $ $
--------------------------------- ------------------ ------------------------------- --------------
At 1 January 2016 6,807,118,052 11,024,090 141,289,445
Shares consolidated in period (6,779,889,580) - -
At 30 June 2016 27,228,472 11,024,090 141,289,445
--------------------------------- ------------------ ------------------------------- --------------
Deferred shares
--------------------------------- ------------------ ------------------------------- --------------
At 1 January 2016 - - -
Shares issued on consolidation 163,370,833,248 - -
Shares consolidated in period (162,717,349,915) - -
At 30 June 2016 653,483,333 - -
--------------------------------- ------------------ ------------------------------- --------------
At the Company's AGM held on 6 April 2016, shareholders approved
the consolidation of 6,807,118,052 ordinary shares of GBP0.001 each
to 27,228,472 ordinary shares of GBP0.01 each. For every share in
issue on at that date, 24 interim deferred shares and 1 interim
ordinary share was created. For every 250 interim ordinary and
interim deferred shares in issue at that time, a single
consolidated share in the Company was issued. The ordinary shares
carry full voting rights, however, the deferred shares carry no
voting rights and only such limited other rights that no value has
been ascribed to them.
There were no other share capital issues during the period.
8. Share-based payments
Six months ended 30 June 2016 Six months ended 30 June 2015
(unaudited) (unaudited)
$ $
-------------------------- -------------------------- ------------------------------ ------------------------------
In the Statement of Comprehensive Income the Group
recognised the following charge in respect
of its share based payment plan: 142,870 544,006
------------------------------------------------------ ------------------------------ ------------------------------
Options
Details of share options outstanding at 30 June 2016 are as
follows:
Number in issue
(restated)
--------------------------- ----------------
At 1 January 2016 794,800
Granted during the period 537,600
----------------------------- ----------------
At 30 June 2016 1,332,400
----------------------------- ----------------
Following the share consolidation outlined in note 7, all
options outstanding at that date were consolidated pari-passu.
Prior to the consolidation there were 333,100,000 share options in
issue with a weighted average exercise price of 0.31p and a
weighted average contractual life of 4.6 years. Subsequent to the
consolidation there were 1,332,400 share options in issue with a
weighted average exercise price of 77.6p and a weighted average
contractual life of 4.6 years.
Number Option
in issue price (p)
Latest
Date of exercise
grant (restated) (restated) date
--------- ------------- ---- ------------- ----------
27 Dec 27 Dec
14 314,800 (1) 175.000 19
09 Dec 09 Dec
15 480,000 (1) 47.500 20
16 Mar 16 Mar
16 537,600 (1) 47.500 21
1,332,400
--------- ------------- ---- ------------- ----------
(1) These options vest in the beneficiaries in equal tranches on
the first, second and third anniversaries of grant.
Warrants
Details of warrants outstanding at 30 June 2016 are as
follows:
Number in issue
(restated)
-------------------------- ----------------
At 1 January 2016 143,767
Lapsed during the period (6,865)
At 30 June 2016 136,902
---------------------------- ----------------
Following the share consolidation outlined in note 7, all
warrants outstanding at that date were consolidated pari-passu.
Prior to the consolidation there were 35,944,363 share warrants in
issue with a weighted average exercise price of 1.99p and a
weighted average contractual life of 1.9 years. Subsequent to the
consolidation there were 143,767 share warrants in issue with a
weighted average exercise price of 496.2p and a weighted average
contractual life of 1.9 years.
Number Warrant
in issue price (p)
Latest
Date of exercise
grant (restated) (restated) date
--------- ------------- --- ------------- ----------
30 Jul 30 Jul
12 40,054 806.250 17
26 Jul 26 Jul
13 96,848 306.250 18
136,902
--------- ------------- --- ------------- ----------
These warrants vest in the beneficiaries on the first
anniversary of grant.
-----------------------------------------------------------------------------------------------------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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