REG - Tower Resources PLC - Preliminary Results to 31 December 2023
03/06/2024 07:15
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RNS Number : 7518Q Tower Resources PLC 03 June 2024
3 June 2024
Tower Resources plc
("Tower" or the "Company")
Preliminary Results to 31 December 2023
Tower Resources plc (AIM: TRP), the Africa-focused energy company, announces
its preliminary results for the 12 months ended 31 December 2023.
Highlights
· Cameroon operational update covering:
o Application for a one-year extension of the initial exploration period of
the Production Sharing Contract ("PSC"), following positive discussions with
the Minister of Mines, Industry and Technological Development and the Prime
Minister of the Republic of Cameroon
o Ongoing discussions with rig owners and operators with the aim to secure
rig availability to drill at NJOM-3
o Ongoing negotiations for a term loan with BGFI Bank Group and asset-level
financing with several other parties
o Updated resource estimates and risks for the reservoirs connected to the
NJOM-1 and the NJOM-2 discovery wells, substantially lowering risk attributed
to PS9 Sup and PS3 HW reservoirs, and increasing total risked pMean
prospective resources to 35.4 million bbls
o Deployment of software to conduct detailed attribute analysis of the
reprocessed 3D seismic data to identify the oil and gas elements of the
reservoirs in the Njonji-1 and Njonji-2 fault blocks, resulting in a clearer
picture of the pay zones in both fault blocks.
· Namibia technical update covering:
o A basin and thermal maturity study to significantly progress the
understanding of the hydrocarbon prospectivity of the license. The basin
modelling study has been carefully integrated with seismic sequence
stratigraphic interpretation of the large 2D seismic datasets and combined
with the well data within PEL96 and available well data elsewhere in the
Walvis Basin region.
o The integrated analysis of the seismic, wells and the basin modelling
results showing clear evidence of a working petroleum system present within
the Dolphin Graben in PEL 96; in the form of oil recovered from cores in the
1911/15-1 well and direct hydrocarbon indicators (DHIs) observed on seismic.
o The objectives of the basin modelling study were to assess the critical
elements of the hydrocarbon charging system, i.e. thermal maturity,
distribution of generative source kitchens, volumetric estimation of
generative capacity of mature source rocks, timing of generation/expulsion of
hydrocarbons and mapping of migration pathways.
o An oil seep analysis to accompany the basin modelling work, and a review
of the existing volumetric data on the prospects and leads that have already
been identified
· The execution of a contract with Borr Drilling Limited for the hire
of the Norve jack-up rig, one of Borr's fleet of high-specification drilling
units, to drill the NJOM-3 well on Tower's Thali license in Cameroon in 2024.
· The completion of an institutional placing via an investment deed to
Energy Exploration Capital Partners, LLC ("EEPC"), in January 2023 with an
initial placing of $1.3 million at a price of 0.36p per share with additional
follow-on commitments up to a total commitment of $6.0 million. As part of the
placing commitment, additional tranches of share issues were made throughout
2023 raising an additional $556K at an issue price of between 0.028p and 0.12p
per share.
· A placing and subscription of 4,600 million shares to raise £2.3
million ($2.9 million) at a price of 0.05p (0.06¢) per share announced in May
2023 together with the appointment of Axis Capital Markets Limited as joint
broker to the Company.
· A subscription at a share price of 0.02p per share to raise £600k
announced in December 2023 with proceeds receivable in January 2024.
· Cash balance at year-end of $21k (2022: $231k) prior to receipt of
subscription proceeds
· 2023 full-year net administrative costs, excluding share-based
payment charges, of $702k (2022: $631k)
Post-Reporting Period Events
4 January 2024: Share issuance in accordance with the terms of the investment
deed with EEPC announced on 16 January 2023, of 440,567,445 ordinary shares of
0.001 pence each. The purchase price of 0.0225 pence per Ordinary Share for
the settlement amount of $125,000 had been prepaid by EEPC.
4 January 2024: Issue of 350.9 million warrants in lieu of £60,000 (in
aggregate) of Directors fees in respect of the period January-June 2024, to
conserve the Company's working capital. The warrants are exercisable at a
strike price of 0.03 pence per share. The warrants are exercisable for a
period of five years from the date of issue.
8 February 2024: The Company received formal notification from the Minister of
Mines, Industry and Technological Development in Cameroon of the extension of
the First Exploration Period of the Thali production-sharing contract to 4
February 2025, in accordance with the Company's PSC and the Cameroon Petroleum
Code, and with the approval of the President of the Republic of Cameroon. The
Company's principal obligation during the First Exploration Period is the
drilling of a single well which the Company intends to fulfil through the
drilling of the NJOM-3 well during 2024.
9 February 2024: Share issuance in accordance with the terms of the investment
deed with EEPC announced on 16 January 2023, of 396,825 ordinary shares of
0.001 pence each. The purchase price of 0.021 pence per Ordinary Share for the
settlement amount of $105,000 had been prepaid by EEPC.
15 February 2024: The Company reached an agreement for the repayment of the
outstanding balance owed to EECP, in accordance with the terms of the
investment deed announced to the market on 16 January 2023. In addition, the
Company also announced a Subscription to raise £600,000 via the issue of
3,333,333,333 shares at a price of 0.018p per share.
In addition to the events above, subsequent to the year-end the Company
received notice that the third of its appeals to the First-Tier Tax Tribunal
had been successful, resulting in a release of the remaining VAT provision and
the receipt of remaining receivables.
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this
announcement via Regulatory Information Service ('RIS'), this inside
information is now considered to be in the public domain.
Contacts
Tower Resources plc +44 20 7157 9625
Jeremy Asher
Chairman & CEO
Andrew Matharu
VP - Corporate Affairs
BlytheRay +44 20 7138 3208
Financial PR
Tim Blythe
Megan Ray
SP Angel Corporate Finance LLP +44 20 3470 0470
Nominated Adviser and Joint Broker
Stuart Gledhill
Caroline Rowe
Kasia Brzozowska
Axis Capital Markets Limited +44 203 026 2689
Joint Broker
Richard Hutchison
Ben Tadd
Novum Securities Ltd +44 20 7399 9400
Joint Broker
Jon Bellis
Colin Rowbury
About Tower Resources
Tower Resources plc is an AIM listed energy company building a balanced
portfolio of energy opportunities in Africa across the exploration and
production cycle in oil and gas and beyond. The Company's current focus is on
advancing its operations in Cameroon to deliver cash flow through short-cycle
development and rapid production with long term upside, and de-risking
attractive exploration licenses through acquiring 3D seismic data in the
emerging oil and gas provinces of Namibia and South Africa, where world-class
discoveries have recently been made.
Tower's strategy is centred around stable jurisdictions that the Company knows
well and that offer excellent fiscal terms. Through its Directors, staff and
strategic relationship with EPI Group, Tower has access to decades of
expertise and experience in Cameroon and Namibia, and its joint venture with
New Age builds on years of experience in South Africa.
CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT
2023 has been a year of steady progress for our Company, against a backdrop of
a more stable oil market environment, even though the geopolitical environment
has remained uncertain. As we observed last year, the global crude oil market
has been quite well balanced in the short term, and prices remain very
favourable for the Company's projects.The underinvestment of the past few
years also still leaves potential for further upside in the years ahead.
Another notable aspect of our commercial environment has been the further
drilling success of Shell, Total and now GALP in Namibia. Apart from the
direct implications for our own subsurface analysis and the availability of
services in Namibia, this success has also led to a noticeable renewal of
interest in exploration generally, which is helpful in finding partners for
our projects even though funding, especially for smaller companies and
projects, remains tight.
In the latter part of the year, we contracted a rig, the Norve, one of Borr's
fleet of modern high-specification jackup rigs, to drill the NJOM-3 well in
Cameroon once the rig has completed its existing contractual obligations.
Naturally, the contract is subject to our having financing in place in good
time, and it is now already clear that the rig's current drilling campaign has
encountered some delays, but we still expect the well to be drilled later this
year.
The Government of Cameroon has continued to be extremely supportive and we are
very grateful to them for the further extension of the initial exploration
period of our Thali license to February 2025. We are also still in active and
detailed discussions and due diligence regarding the financing for the NJOM-3
well, and we still expect this to be completed in time for the rig schedule
for the well.
In Namibia, as discussed in more detail in the Operational Review, we
completed our basin modelling work, and integrated it with a new seep
analysis, completed after the basin modelling work was done, and which was
consistent with the basin model we had developed. This has greatly increased
our confidence in our understanding of the subsurface, and we shared a summary
of our analysis with the industry in Cape Town in October 2023, which was well
received. A copy of that technical presentation can be found on our website.
Since then, we have been reviewing all of our seismic data (including some
20,000 line-kilometres of 2D data) to identify the most promising anticlines
and stratigraphic traps along the expected oil migration paths we have
identified. While this includes some of the large anticlines we had already
identified in the license area more than a decade ago, it also includes some
very large stratigraphic traps which we had not considered before. At the time
of writing this, we are still reviewing this work with our partners and with
the Ministry, but we are looking forward to sharing our latest view of these
leads/prospects and their prioritisation with investors shortly.
In South Africa, our co-venturer and operator NewAge is continuing to explore
the options for acquisition of new 3D seismic data over our deep-water
Outeniqua basin lead, which continues to attract interest from third
parties. The farm-out process which they have been conducting has now
resulted in a serious discussion with one party getting underway, though we
cannot yet say if it will result in a transaction, and we cannot provide more
detail or comment further while discussions are in process. We will inform
investors promptly if a firm agreement is reached.
All in all, 2023 is a year in which we have been able to move our projects
forward despite funding constraints, and while we would have liked to have
done more, it does appear that we will see some of the fruit of this progress
in 2024.
Jeremy Asher
Chairman and Chief Executive
31 May 2024
STRATEGIC REPORT
Our strategy over the past several years has been to focus in the near term on
lower risk appraisal and development within proven basins where there is still
low-risk exploration upside, such as our Thali PSC in Cameroon, while still
maintaining selective exposure to longer term and high risk/reward exploration
in areas where we have existing relationships, such as Namibia and South
Africa.
Even before the current conflict in Ukraine, markets were becoming aware by
the end of 2021 that the global underinvestment in exploration and production
since 2015 was already having a profound effect on both oil and gas supply,
and on prices. This has reinforced the benefits, both short and long term, of
a strategy based on achieving short-term production as quickly as we can,
while also continuing to develop potential resources for the future.
TotalEnergies' 2020 success in South Africa with its Brulpadda and Luiperd
wells in the Outeniqua basin, and its recent success in Namibia at Venus-X1,
coupled with Shell's recent success in Namibia with its Graff-1 well and the
subsequent successful appraisal drilling, followed more recently by GALP's
successful well, all indicate that in Namibia and South Africa we have chosen
promising countries for our exposure to high risk, high reward exploration.
These successes have also resulted in a renaissance of investor interest in
exploration, and especially in these countries, as both the scale of these
opportunities and the need for the resulting oil and gas over the next decade
have become apparent.
In the near term, our strategy still requires reaching first oil in Cameroon
as soon as possible, especially now that production is worth so much more than
a few years ago. Our Cameroon license also has substantial exploration upside,
but this can only be unlocked once we have the existing discovery appraised
and in production.
This activity requires financing, and while there is still non-dilutive
financing available (within limits) for producing assets, the equity
requirements for the earlier stages of exploration and development usually
require some trade-offs between the amount of a project one can retain and the
speed with which it can be developed. We always look at the alternatives of
financing our activity at the asset level, whether via debt or other
non-dilutive financing, or via farm-outs, or at the corporate level, again
with debt or equity, in order to achieve the best expected outcome for our
shareholders.
Although we have both operated and non-operated interests, our preference is
to operate assets, in order to control costs and timing more directly, and to
build up our local relationships and internal knowledge of reservoirs and
petroleum systems, and this remains the case today.
Over the past few years, keeping costs low and flexible without losing access
to our people and their skills has also been critical to survival, and we
believe will continue to be critical to success in future - not merely in
being able to keep costs to a minimum in periods where activity is necessarily
low, as we have recently seen, but also in being able to ramp up the resources
and technology we are able to bring to our projects in the future when needed.
This is why strategic relationships such as our technical-subsurface
relationship with EPI, which has served us well since 2015, and our more
recent relationship with Bedrock Drilling on well design and management, have
formed a key part of our strategy, although we are also now looking to
increase our in-house subsurface capability.
Finally, as noted in previous annual reports, our strategy remains to enable
and to support the wider strategic and environmental plans of each of the
countries in which we operate, to increase power generation from cleaner
sources, including both renewables and natural gas, both to aid economic
development and to displace less efficient diesel and fuel-oil based power
generation, and to reduce imports of liquid fuels by increasing local
production where possible. These countries' strategic plans depend critically
on the continued development of local oil and gas production in the near term,
in order to meet the national goals and COP26 and other climate commitments
which they have set for the next decade.
OPERATIONAL REVIEW
In 2023 we were able to make progress on our licenses in Cameroon and Namibia,
while progress in South Africa has been slower.
In Cameroon we received an extension of the initial exploration period of the
Thali PSC to February 2025. Investors may recall that we explained last year
how the market for jack-up rigs had tightened due to very high levels of
chartering by Saudi Aramco in 2022, however we remained confident that we
would be able to secure a rig in the year ahead, when the rigs that remained
working in West Africa came free from existing contractual commitments, and so
it has proved. In December 2023, we contracted with Borr to use the Norve, one
of their fleet of premium jack-up rigs which is currently operating in West
Africa, to drill the NJOM-3 well on our Thali license once its existing
contractual obligations were completed. At the time, we expected this to be by
the end of August 2024. We now believe this will be later due to operational
delays to the current charterer's drilling schedule, but we still expect to be
able to spud the NJOM-3 well within the current exploration period.
In the meantime, we have continued to prepare for drilling both by maintaining
readiness of our long-lead items and well plans, and also by refreshing our
frame contracts with key service providers and keeping abreast of lead times
for consumables, fuel and so forth. We have also been developing our thinking
and planning for the next phase of development, after NJOM-3 is drilled,
notably in respect of the platform to support the wellheads for NJOM-3 and the
three subsequent wells.
In Namibia, we completed the basin modelling work that we had begun in 2021.
In May 2023 we updated investors regarding the initial conclusions of this
basin modelling work. As we explained in our last annual report, this had
indicated the potential for mature oil source rocks in the deeper syn-rift
sections across the Dolphin Graben, generating predominantly oil phase
hydrocarbons in substantial volumes, capable of charging very large
structures. It has also identified focused migration pathways from those
source rocks and generative kitchens to the giant anticlines in the Western
area of the license, and a number of potential stratigraphic trap plays both
in the Dolphin Graben itself and along the flanks of the giant structures to
the West, which are also capable of containing large volumes of oil. The basin
modelling work was very closely calibrated with the actual geochemical data
measured in the nearby wells and explained the presence of the lacustrine oil
in the Norsk Hydro well 1911/15-1 in our license area. The analysis explains
why this oil would originally have been generated and potentially trapped and
the subsequent tilting of the area would have caused any trapped hydrocarbons
to have migrated elsewhere, explaining the residue of oil in the well and
providing us with high confidence in the analysis.
By October we had completed the integration of this work with an oil seep
analysis we had commissioned over the license area, which matched up very
closely with the generation locations and migration paths we had identified,
giving us further confidence in the basin model. We presented this work in
Cape Town, where it attracted considerable interest, and a similar
presentation with voiceover is available on our website.
Between then and now we have been working to prioritise the leads we have
already identified in the license area, and to identify new leads, and to
reassess their likelihood and expected volume of charge. This will allow us to
choose the best area over which to acquire new 3D seismic data in due course.
We are now close to completing that work, and look forward to sharing it with
investors as soon as we have incorporated feedback from our partners and the
Ministry.
In South Africa, our 50% partner NewAge, as operator of the Algoa-Gamtoos
block, has continued to negotiate with potential contractors for 3D seismic
data acquisition on either a proprietary or a multi-client basis. Just as in
2022, this remains a slow process partly because of the uncertainties created
by the new Petroleum Bill and its implementation, and also the associated
uncertainty over the environmental consultation process highlighted by the
litigation over Shell's delayed plans to acquire 3D seismic over a rather
larger area to the East of our license. PASA, the regulatory authority, has
remained understanding of this situation, and the regulatory and other
uncertainties do appear to be getting clarified step by step. Nevertheless, we
are not yet in a position to move forward with the next phase of 3D seismic
data acquisition; however, we are continuing to plan and budget for this work.
NewAge has continued to explore farm-out options for the Algoa Gamtoos block
and some reasonably detailed discussions are now underway with an interested
party, although no agreement has yet been reached.
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
31 December 2023 31 December 2022
(audited)
(audited)
Note $ $
Revenue - -
Cost of sales - -
Gross profit - -
Other administrative expenses (749,540) (712,915)
Share-based payment charges (337,358) (294,125)
VAT provision release 14 1,178,228 -
Total administrative expenses 91,330 (1,007,040)
Group operating (loss) / profit 4 91,330 (1,007,040)
Finance expense 6 (545,526) (2,082)
(Loss) / profit for the year before taxation (454,196) (1,009,122)
Taxation 7 - -
(Loss) / profit for the year after taxation (454,196) (1,009,122)
Other comprehensive income - -
Total comprehensive (expense) / income for the year (454,196) (1,009,122)
Basic (loss) / profit per share (USc) 10 (0.01c) (0.05c)
Diluted (loss) / profit per share (USc) 10 (0.01c) (0.05c)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 2023 31 December 2022
(audited)
(audited)
Note $ $
Non-current assets
Property, plant and equipment 11 - -
Exploration and evaluation assets 12 34,770,924 31,833,671
34,770,924 31,833,671
Current assets
Trade and other receivables 14 1,420,325 474,749
Cash and cash equivalents 20,633 231,216
1,440,958 705,965
Total assets 36,211,882 32,539,636
Current liabilities
Trade and other payables 15 2,832,127 2,631,815
Provision for liabilities and charges 16 - 502,972
Borrowings 17 12,867 12,244
2,844,994 3,147,031
Non-current liabilities
Borrowings 17 18,098 29,286
Total liabilities 2,863,092 3,176,317
Net assets 33,348,790 29,363,319
Equity
Share capital 18 18,394,680 18,283,317
Share premium 18 156,166,470 152,336,303
Retained losses 19 (141,212,360) (141,256,301)
Total shareholders' equity 33,348,790 29,363,319
The financial statements of Tower Resources plc, registered number 05305345
were approved by the Board of Directors and authorised for issue on 31 May
2024.
Signed on behalf of the Board of Directors
Jeremy Asher - Chairman and Chief Executive
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share (1) Share-based Retained Total
capital
premium
payments
losses
reserve
$ $ $ $ $
At 1 January 2022 18,264,803 148,747,595 2,883,798 (143,494,024) 26,402,172
Shares issued for cash 18,384 3,870,790 3,889,174
Shares issued on settlement of third-party fees 131 29,393 - - 29,524
Share issue costs - (311,475) (311,475)
Share-based payment charge for the year - - 363,047 - 363,047
Transfer to retained losses - - (738,615) 738,615 -
Total comprehensive expense for the year - - - (1,009,122) (1,009,122)
At 31 December 2022 18,283,317 152,336,303 2,508,230 (143,764,531) 29,363,319
Shares issued for cash 97,460 3,859,030 3,956,490
Shares issued on settlement of third-party fees 13,903 298,593 - - 312,496
Share issue costs - (327,456) (327,456)
Share-based payment charge for the year - - 498,137 - 498,137
Total comprehensive income for the year - - - (454,196) (454,196)
At 31 December 2023 18,394,680 156,166,470 3,006,367 (144,218,727) 33,348,790
(1) The share-based payment reserve has been included within the retained loss
reserve on the consolidated statement of financial position and is a
non-distributable reserve.
CONSOLIDATED STATEMENT OF CASH FLOWS
31 December 2023 31 December 2022
(audited)
(audited)
Note $ $
Cash outflow from operating activities
Group operating profit / (loss)loss for the year 91,330 (1,007,040)
Share-based payments 21 498,137 363,047
Shares issued on settlement of third-party fees 312,496 29,524
Operating cash flow before changes in working capital 901,963 (614,469)
Increase in receivables and prepayments (945,576) (466,510)
(Decrease) / increase in provision for liabilities and charges (502,972) 502,972
Increase in trade and other payables 200,312 295,479
Cash used in operations (346,273) (282,528)
Interest paid (net) (542,704) (7,387)
Cash used in operating activities (888,978) (289,915)
Investing activities
Exploration and evaluation costs 12 (2,937,253) (3,053,280)
Net cash used in investing activities (2,937,253) (3,053,280)
Financing activities
Repayment of loan facilities 17 (12,465) (12,294)
Cash proceeds from issue of ordinary share capital net of issue costs 18 3,629,034 3,577,698
Interest paid 17 (921) (1,220)
Net cash from financing activities 3,615,647 3,564,184
(Decrease) / increase in cash and cash equivalents (210,583) 220,989
Cash and cash equivalents at beginning of year 231,216 10,227
Cash and cash equivalents at end of year 20,633 231,216
COMPANY STATEMENT OF FINANCIAL POSITION
31 December 2023 31 December 2022
(audited)
(audited)
Note $ $
Non-current assets
Loans to subsidiary undertakings 13 26,242,971 20,859,388
Investments in subsidiary undertakings 13 12,307,766 12,307,766
38,550,737 33,167,154
Current assets
Trade and other receivables 14 1,420,323 474,747
Cash and cash equivalents 11,663 159,456
1,431,986 634,203
Total assets 39,982,723 33,801,357
Current liabilities
Trade and other payables 15 1,013,290 87,069
Provision for liabilities and charges 16 - 502,972
Borrowings 17 12,867 12,244
1,026,157 602,285
Non-current liabilities
Borrowings 17 18,098 29,286
Total liabilities 1,044,255 631,571
Net assets 38,938,468 33,169,786
Equity
Share capital 18 18,394,680 18,283,317
Share premium 18 156,166,470 152,336,303
Retained losses 19 (135,622,682) (137,449,834)
Total shareholders' equity 38,938,468 33,169,786
( )In accordance with the provisions of Section 408 of the Companies Act
2006, the Company has not presented a statement of comprehensive income and
for the year-ended 31 December 2023 the Company made a loss of $1.3 million
(2022: $312k)
The financial statements of Tower Resources plc, registered number 05305345
were approved by the Board of Directors and authorised for issue on 31 May
2024.
Signed on behalf of the Board of Directors
Jeremy Asher - Chairman and Chief Executive
COMPANY STATEMENT OF CHANGES IN EQUITY
Share Share (1) Share-based Retained Total
capital
premium
payments
losses
reserve
$ $ $ $ $
At 1 January 2022 18,264,803 148,747,595 2,883,798 (140,384,601) 29,511,595
Shares issued for cash 18,384 3,870,790 - - 3,889,174
Shares issued on settlement of third-party fees 131 29,393 - - 29,524
Share issue costs - (311,475) - - (311,475)
Share option charge for the year - - 363,047 - 363,047
Transfer to retained losses - - (738,615) 738,615 -
Total comprehensive expense for the year - - - (312,078) (312,078)
At 31 December 2022 18,283,317 152,336,303 2,508,230 (139,958,064) 33,169,786
Shares issued for cash 97,460 3,859,030 - - 3,956,490
Shares issued on settlement of third-party fees 13,903 298,593 - - 312,496
Share issue costs - (327,456) - - (327,456)
Share option charge for the year - - 498,137 - 498,137
Total comprehensive expense for the year - - - (1,329,015) (1,329,015)
At 31 December 2023 18,394,680 156,166,470 3,006,367 (138,629,049) 38,938,468
( )
( 1) The share-based payment reserve has been included within the retained
loss reserve on the Company statement of financial position and is a
non-distributable reserve.
COMPANY STATEMENT OF CASH FLOWS
31 December 2023 31 December 2022
(audited)
(audited)
Note $ $
Cash flow from operating activities
Operating profit/(loss) for the year 887,121 (846,081)
Share-based payments 21 498,137 363,047
Shares issued on settlement of third-party fees 312,496 29,524
Operating cash flow before changes in working capital 1,697,754 (453,510)
Increase in receivables and prepayments (945,576) (466,510)
(Decrease) / increase in provision for liabilities and charges (502,972) 502,972
Increase / (decrease) in trade and other payables 926,221 (139,125)
Cash from / (used in) operations 1,175,427 (556,173)
Interest received 444,715 528,698
Cash from / (used in) operating activities 1,620,142 (27,475)
Investing activities
Loans granted to subsidiary undertakings 13 (5,383,583) (3,383,485)
Net cash used in investing activities (5,383,583) (3,383,485)
Financing activities
Repayment of loan facilities 17 (12,465) (12,294)
Cash proceeds from issue of ordinary share capital net of issue costs 18 3,629,034 3,577,698
Interest paid 17 (921) (1,220)
Net cash from financing activities 3,615,648 3,564,184
(Decrease) / increase in cash and cash equivalents (147,793) 153,224
Cash and cash equivalents at beginning of year 159,456 6,232
Cash and cash equivalents at end of year 11,663 159,456
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies
a) General information
Tower Resources plc is a public company incorporated in the United Kingdom
under the UK Companies Act. The address of the registered office is 134
Buckingham Palace Road, London, SW1W 9SA. The Company and the Group are
engaged in the exploration for oil and gas.
These financial statements are presented in US dollars as this is the currency
in which the majority of the Group's expenditures are transacted and the
functional currency of the Company and have been prepared in accordance with
UK-adopted International Accounting Standards, and in compliance with the
requirements of the Companies Act 2006.
b) Basis of accounting and adoption of new and revised standards
Changes in accounting policies
A number of new standards are effective from 1 January 2023 but they do not
have material effect on the Group's financial statements.
New and amended standards
The following amended standards and interpretation are effective for financial
years commencing on or after 1 January 2024. The Group does not intend to
adopt the standards below, before their mandatory application date.
Standard Description IASB Issue Date IASB Effective Date Secretary of State Adoption Date
IAS 1 (amendments) Classification of Liabilities as Current or Non-current. 23 January 2020 1 January 2024 Endorsed
IFRS 16 (amendments) Lease Liability in a Sale and Leaseback 22 September 2022 1 January 2024 Endorsed
IAS 1 (amendments) Non-current Liabilities with Covenants. 31 October 2022 1 January 2024 Endorsed
IAS 12 (amendments) International Tax Reform - Pillar Two Model Rules. 23 May 2023 1 January 2024 Endorsed
IAS 7 and IFRS 7 (Amendments) Supplier Finance Arrangements. 25 May 2023 1 January 2024 Endorsed
Future accounting pronouncements
The Company intends to adopt the above listed standards and interpretations in
its financial statements for the annual period beginning 1 January 2024. The
Company does not expect the implementation to have a material impact on the
financial statements.
c) Going concern
The Group will need to complete a farm-out and/or another asset-level
transaction within the coming months, or otherwise raise further funds in
addition to funds already raised in 2024, in order to meet its liabilities as
they fall due, particularly with respect to the forthcoming drilling programme
in Cameroon. The Directors believe that there are a number of options
available to them through either, or a combination of, capital markets,
farm-outs or asset disposals with respect to raising these funds. There can,
however, be no guarantee that the required funds may be raised or transactions
completed within the necessary timeframes, which results in an inherent
material uncertainty as to the application of going concern in these accounts.
Having assessed the risks attached to these uncertainties on a probabilistic
basis, the Directors are confident that they can raise sufficient finance in a
timely manner and therefore believe that the application of going concern is
both appropriate and correct.
This point is also discussed in note 2 of the financial statements.
d) Basis of consolidation
The consolidated financial statements incorporate the accounts of the Company
and its subsidiaries and have been prepared by using the principles of
acquisition accounting ("the purchase method") which includes the results of
the subsidiaries from their date of acquisition. Intra-group sales, profits
and balances are eliminated fully on consolidation.
The results of subsidiaries acquired or disposed of are included in the
consolidated statement of comprehensive income from the effective date of
acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used
by the Group. All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
As a Consolidated Statement of Comprehensive Income is published, a separate
Statement of Comprehensive Income for the Parent Company has not been
published in accordance with section 408 of the Companies Act 2006.
e) Jointly controlled operations
Jointly controlled operations are arrangements in which the Group holds an
interest on a long-term basis which are jointly controlled by the Group and
one or more ventures under a contractual arrangement. The Group's exploration,
development and production activities are sometimes conducted jointly with
other companies in this way. Since these arrangements do not constitute
entities in their own right, the consolidated financial statements reflect the
relevant proportion of costs, revenues, assets and liabilities applicable to
the Group's interests.
f) Oil and Gas Exploration and Evaluation Expenditure
Costs incurred before the acquisition of a license or permit to explore an
area are expensed to the income statement.
All exploration and evaluation costs incurred following a license or permit to
explore being obtained or acquired on the acquisition of a subsidiary are
capitalised in respect of each identifiable project area. These costs are
classified as intangible assets and are only carried forward to the extent
that they are expected to be recouped through the successful development of
the area or where activities in the area have not yet reached a stage which
permits reasonable assessment of the existence of economically recoverable
reserves (successful efforts).
Costs incurred by Directors' and employees of the parent Company on the
exploration activities are recharged to the subsidiaries and capitalised as
exploration assets accordingly.
Other costs are expensed unless commercial reserves have been established or
the determination process has not been completed. Accumulated costs in
relation to an abandoned area are written off in full against profit in the
year in which the decision to abandon the area is made.
When production commences the accumulated costs for the relevant area of
interest are transferred from intangible assets to tangible assets as
'Developed Oil and Gas Assets' and amortised over the life of the area
according to the rate of depletion of the economically recoverable costs.
g) Impairment of Oil and Gas Exploration and Evaluation assets
The carrying value of unevaluated areas is assessed when there has been an
indication that impairment in value may have occurred. The impairment of
unevaluated prospects is assessed based on the Directors' intention with
regard to future exploration and development of individual significant areas
and the ability to obtain funds to finance such exploration and development.
h) Decommissioning costs
Where a material liability for the removal of production facilities and site
restoration at the end of the field life exists, a provision for
decommissioning is made. The amount recognised is the present value of
estimated future expenditure determined in accordance with local conditions
and requirements. An asset of an amount equivalent to the provision is also
created and depreciated on a unit of production basis. Changes in estimates
are recognised prospectively, with corresponding adjustments to the provision
and the associated asset.
i) Property, plant and equipment
Property, plant and equipment is stated at cost less depreciation.
Depreciation is provided at rates calculated to write off the cost less
estimated residual value of each asset over its expected useful life as
follows:
Computers and equipment, fixtures, fittings and equipment: straight line over
4 years
Leasehold and office refurbishment costs: over duration of lease
The assets' residual values and useful lives are reviewed and adjusted if
necessary at each year-end. Profits or losses on disposals of plant and
equipment are determined by comparing the sale proceeds with the carrying
amount and are included in the statement of comprehensive income. Items are
reviewed for impairment if and when events indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by
which the carrying amount of the asset exceeds its recoverable amount which is
the higher of an asset's net selling price and value in use.
j) Investments
The Parent Company's investments in subsidiary companies are stated at cost
less any expected credit loss for impairment and are shown in the Company's
Statement of Financial Position.
k) Share-based payments
The Company makes share-based payments to certain Directors, employees and
consultants by the issue of share options or warrants. The fair value of these
payments is calculated either using the Black Scholes option pricing model or
by reference to the fair value of the remuneration settled by way of the grant
of such options or warrants. The expense is recognised on a straight-line
basis over the period from the date of award to the date of vesting, based on
the Company's best estimate of shares that will eventually vest.
l) Foreign currency translation
i Functional and presentational currency
Items included in the financial statements are shown in the currency of the
primary economic environment in which the Company operates ("the functional
currency") which is considered by the Directors to be the U.S Dollar. The
exchange rate at 31 December 2023 was £1 / $1.2715 (2022: £1 / $1.2026).
ii Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the statement
of comprehensive income.
Transactions in the accounts of individual Group companies are recorded at the
rate of exchange ruling on the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are translated at the rates
ruling at the year-end. All differences are taken to the statement of
comprehensive income.
m) Taxation
i Current tax
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the statement of comprehensive
income because it excludes items of income or expense that are taxable or
deductible on other years and it further excludes items that are never taxable
or deductible. The Group's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the reporting date.
ii Deferred taxation
Deferred income taxes are provided in full, using the liability method, for
all temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements. Deferred
income taxes are determined using tax rates that have been enacted or
substantially enacted and are expected to apply when the related deferred
income tax asset is realised or the related deferred income tax liability is
settled.
The principal temporary differences arise from depreciation or amortisation
charged on assets and tax losses carried forward. Deferred tax assets relating
to the carry forward of unused tax losses are recognised to the extent that it
is probable that future taxable profit will be available against which the
unused tax losses can be utilised.
n) Financial instruments
The Group's Financial Instruments comprise of cash and cash equivalents, loans
and receivables. There are no other categories of financial instrument.
i Cash and cash equivalents
Cash and cash equivalents are carried at cost and comprise cash in hand, cash
at bank, deposits held at call with banks, and other short-term highly liquid
investments with original maturities of three months or less.
ii Receivables
Receivables are measured at amortised cost unless the time value of money is
immaterial. A provision for expected credit losses of receivables is
established when there is objective evidence that the Group will not be able
to collect all amounts due according to the original terms of the receivables.
The amount of the expected credit losses is the difference between the assets'
carrying amount and the recoverable amount. Expected credit losses for
impairment of receivables are included in the statement of comprehensive
income.
iii Payables
Payables are recognised initially at fair values and subsequently measured at
amortised cost using the effective interest method.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the asset of the Group
after deducting all of its liabilities. Equity instruments issued by the
Company are recorded at the proceeds received net of direct issue costs.
o) Share capital
Ordinary shares are classified as equity. Proceeds received from the issue of
ordinary shares above the nominal value are classified as Share Premium. Costs
directly attributable to the issue of new shares are shown in equity as a
deduction from the Share Premium account.
p) Provisions
Provisions are recognised when the Group has a present obligation as a result
of a past event and it is probable that the Group would be required to settle
that obligation. Provisions are measured at the managements' best estimate of
the expenditure required to settle the obligation at the reporting date and
are discounted to present value where the effect is material.
q) Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision makers. The chief operating
decision makers have been identified as the executive Board members.
r) Leases
The Group do not have any leases with a term of 12-months or more that contain
an option to purchase or where the underlying asset has anything other than a
low value and has elected for exemption to the reporting requirements of IFRS
16 (Leases).
2. Critical accounting judgements and key sources of
estimation uncertainty
The preparation of financial statements in conformity with International
Financial Reporting Standards requires the use of accounting estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of income and
expenses during the reporting period. Although these estimates are based on
managements' best knowledge of current events and actions, actual results
ultimately may differ from those estimates. IFRS also require management to
exercise its judgement in the process of applying the Group's accounting
policies.
The prime areas involving a higher degree of judgement or complexity, where
assumptions and estimates are significant to the financial statements, are as
follows:
Recoverability of inter-company balances
Determining whether inter-company investments and balances are impaired
requires an estimation of whether there are any indications of expected credit
losses that result in their carrying values not being recoverable, details of
which are included in note 13. The Board believes that the carrying values at
the year end are recoverable based primarily on the expected realisation value
of the exploration assets even though they are unlikely to be repaid until the
projects are successful and the subsidiaries start to generate revenues.
Impairment of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation
expenditure is dependent on a number of factors, including whether it
successfully recovers the related exploration and evaluation asset through
sale. Factors which could impact the future recoverability include the level
of proved, probable and inferred resources, future technological changes which
could impact the cost of drilling and extraction, future legal changes
(including changes to environmental restoration obligations), changes to
commodity prices and licence renewal dates and commitments.
To the extent that capitalised exploration and evaluation expenditure is
determined to be irrecoverable in the future, this will reduce profits and net
assets in the period in which this determination is made. In addition,
exploration and evaluation expenditure is capitalised if activities in the
area of interest have not yet reached a stage which permits reasonable
assessment of the existence or otherwise of economically recoverable reserves.
To the extent that it is determined in the future that this capitalised
expenditure should be written off, this will reduce profits and net assets in
the period in which this determination is made. Details of impairments of
capitalised exploration and evaluation expenditure during the year are
included in note 12.
VAT receivable
At 31 December 2022 there remained three further appeals to the First-Tier Tax
Tribunal by HMRC, which were yet to be heard. The two earlier appeals
concerned time periods not covered by the original Tribunal decisions, to
which HMRC had raised procedural objections which it latterly withdrew. These
appeals were formally settled during 2023, resulting in a payment to the
Company of $422,359 (£351,212). The third more recent appeal concerns a
revised assessment in respect of time periods covered by the Upper Tribunal's
21 May 2021 decision which was proved to be incorrect and upheld in favour of
the Company. As such no further liability to HMRC for VAT exists and a VAT
receivable was recognised within the financial statements, and received
subsequent to the year-end.
Capital markets / going concern
The Group relies on the UK equities market and the market for equity
participations in oil and gas exploration assets in order to raise the funds
required to operate as a listed entity and complete the respective work
programmes for its oil and gas exploration assets. From time to time, and
especially in light of the repercussions of events in the Ukraine, general
economic and market conditions may deteriorate to a point where it is not
possible to raise equity finance to fund exploration projects, nor debt to
develop projects.
Additional financing may therefore not be available to the Group restricting
the scope of operations, risking both its long-term expansion programme, its
obligations under contracts which may be withdrawn or terminated for
non-compliance and ultimately the financial stability of the Group to continue
as a going concern.
Please see note 1 (c) for a more detailed discussion of going concern matters.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date at which
they are granted. The fair value is determined by using the Black Scholes
model and by reference to the value of the fees or remuneration settled by way
of granting of warrants. The determination of fair value using the Black
Scholes methodology is based on the input parameters chosen and will therefore
contain an element of judgement and uncertainty. Details of share-based
payment transactions are included in note 21.
3. 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 IFRS 8 'Operating
Segments' 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 year-ended 31 December 2022.
Africa Head Office Total
2023 2022 2023 2022 2023 2022
$ $ $ $ $ $
Administrative expenses (1) (122,982) (55,120) 551,670 (709,024) 428,688 (764,144)
Share-based payment charges - - (337,358) (242,896) (337,358) (242,896)
Financing costs (596) (641) (544,930) (1,441) (545,526) (2,082)
Loss by reportable segment (123,578) (55,761) (330,618) (953,361) (454,196) (1,009,122)
Total assets by reportable segment (2 / 3) 34,779,896 31,905,433 1,431,986 634,203 36,211,882 32,539,636
Total liabilities by reportable segment (4) (1,818,839) (2,544,748) (1,044,253) (631,569) (2,863,092) (3,176,317)
(1) Administrative expenses include $1.2 million (2022: $nil) of VAT provision
write-backs
(2) Included within total assets of $34.8 million (2022: $32.5 million) are
$20.1 million Cameroon (2022: $17.4 million) , $907k Namibia (2022: $751k) and
$13.8 South Africa (2022: $13.7 million)
(3) Carrying amounts of segment assets exclude investments in subsidiaries.
(4) Carrying amounts of segment liabilities exclude intra-group financing.
4. Group operating (loss) / profit
2023 2022
$ $
Share-based payment charges included within staff costs 278,255 242,897
Share-based payment charges included within professional costs 59,103 51,228
Gain on foreign currencies 48,022 69,299
An analysis of auditor's remuneration is as follows:
Fees payable to the Group's auditors for the audit of the Group and subsidiary 65,856 57,136
annual accounts
Fees payable to the Group's auditors for non-audit assurance services - -
Total audit fees 65,856 57,136
5. Employee information
The average monthly number of employees of the Group (including Directors)
was:
2023 2021
Head office 3 3
Africa 3 3
6 6
Group employee costs during the year (including executive Directors) amounted
to:
2023 2022
$ $
Share-based payment charges 278,255 242,897
278,255 242,897
During 2023, no awards were made under the Group share incentive scheme.
Key management personnel include the executive and non-executive Directors
whose remuneration comprised entirely non-cash share-based payment charges
of $278k (2022: $290k); see Directors' Report for additional detail. During
the year $332k (2022: $271k) of the full-year share-based payment charge of
$493k (2022: $363k) related to employees and their remuneration as employees.
The highest paid Director was Jeremy Asher $204k (2022: $187k).
6. Finance costs
During the year covered by these financial statements the Group incurred
finance costs of $545k (2022: $2k) in connection with its equity fundraisings
(see note 18). The Company incurred finance costs of $545k (2022: $2k).
7. Taxation
2023 2022
$ $
Current tax
UK Corporation tax - -
Total current tax charge - -
The tax charge for the period can be reconciled to the loss for the year as
follows:
Group loss before tax 454,196 996,438
Tax at the UK Corporation tax rate of 23.5% (2022: 19%) (106,738) (189,323)
Tax effects of:
Expenses not deductible for tax purposes 71,721 46,150
Tax losses carried forward not recognised as a deferred tax asset 35,017 143,173
Current tax charge - -
As of 1 April 2023, the main rate of UK corporation tax increased from 19% to
25%. As the company's financial year straddles this date, a blended
corporation tax rate of 23.5% has been applied which is calculated by
apportioning the two tax rates on a weighted basis for the proportion of the
financial year for which each main tax rate was applicable.
8. Deferred tax
At the reporting date the Group had an unrecognised deferred tax asset of $4.6
million (2022: $4.8 million) relating to unused tax losses. No deferred tax
asset has been recognised due to the uncertainty of future profit streams
against which these losses could be utilised.
9. Parent company income statement
For the year-ended 31 December 2023 the Parent Company made a loss of $1.3
million (2022: loss of $312k) including financing costs of $545k (2022: $1k)
and VAT provision movements of $1.2 million (2022: $nil). The Company charged
finance interest on intercompany loan accounts of $1.5 million (2022: $536k)
and fees with respect to the provision of strategic advice and support of
$172k (2022: $105k). In accordance with the provisions of Section 408 of the
Companies Act 2006, the Parent Company has not presented a statement of
comprehensive income.
10. Loss / (profit) per share
The fully diluted weighted average number of shares in issue and to be issued
as at 31 December 2023 is 6,405,097,403 (2022: 2,165,197,663). At 31 December
2023 the dilutive effect of share options outstanding was nil (2022: nil). At
31 December 2023 and 31 December 2022, the fully diluted loss per share has
been kept the same as the basic loss per share because the conversion of share
options and share warrants would decrease the basic loss per share and is thus
anti-dilutive. The number of anti-dilutive shares that were excluded from this
computation of profit per share was 9,382,490 (2022: 7,688,323).
Basic & Diluted
2023 2022
$ $
(Loss) / profit for the year (454,196) (996,438)
Weighted average number of ordinary shares in issue during the year 6,405,097,403 2,165,197,663
Dilutive effect of share options outstanding - -
Fully diluted average number of ordinary shares during the year 6,405,097,403 2,165,197,663
(Loss) / profit per share (USc) (0.01c) (0.05c)
11. Property, plant and equipment
Group Company
Year-ended 31 December 2023 $ $
Cost
At 1 January 2023 1,046 1,046
At 31 December 2023 1,046 1,046
Depreciation
At 1 January 2023 1,046 1,046
At 31 December 2023 1,046 1,046
Net book value
At 31 December 2023 - -
At 31 December 2022 - -
Group Company
Year-ended 31 December 2022 $ $
Cost
At 1 January 2022 1,046 1,046
At 31 December 2022 1,046 1,046
Depreciation
At 1 January 2022 1,046 1,046
At 31 December 2022 1,046 1,046
Net book value
At 31 December 2022 - -
At 31 December 2021 - -
12. Intangible Exploration and Evaluation (E&E) assets
Exploration and evaluation assets Goodwill Total
Year-ended 31 December 2023 $ $ $
Cost
At 1 January 2023 103,842,133 8,023,292 111,865,425
Additions during the year 2,937,253 - 2,937,253
At 31 December 2023 106,752,824 8,023,292 114,776,116
Amortisation and impairment
At 1 January 2023 (72,008,462) (8,023,292) (80,031,754)
Impairment during the year - - -
At 31 December 2023 (72,008,462) (8,023,292) (80,031,754)
Net book value
At 31 December 2023 34,770,924 - 34,770,924
At 31 December 2022 31,833,671 - 31,833,671
Exploration and evaluation assets Goodwill Total
Year-ended 31 December 2022 $ $ $
Cost
At 1 January 2022 100,788,853 8,023,292 108,812,145
Additions during the year 3,053,280 - 3,053,280
At 31 December 2022 103,842,133 8,023,292 111,865,425
Amortisation and impairment
At 1 January 2022 (72,008,462) (8,023,292) (80,031,754)
Impairment during the year - - -
At 31 December 2022 (72,008,462) (8,023,292) (80,031,754)
Net book value
At 31 December 2022 31,833,671 - 31,833,671
At 31 December 2021 28,780,391 - 28,780,391
During the year the Group capitalised amounts totalling $2.9 million (2022:
$3.1 million) with respect to the following assets:
2023 2022
$ $
Cameroon 2,651,002 3,085,434
Namibia 156,851 383,193
South Africa 102,838 (415,347)
Total 2,910,691 3,053,280
The carrying values of E&E assets at the year end were:
2023 2022
$ $
Cameroon 20,073,606 17,422,604
South Africa 13,789,397 13,659,997
Namibia 907,921 751,070
Total 34,770,924 31,833,671
Cameroon
The $2.7 million of capitalised expenditure comprised ongoing NJOM-3 appraisal
drilling preparation costs (geotechnical platform site survey plus the
capitalised cost of operating the local office in Douala).
The Directors have not provided for any impairment of the Group's investment
in the Thali license, because potential transactions and funding discussions
with third parties and the Company's internal cash flow projections for the
license support the Directors' view that the current carrying value is
recoverable. Furthermore, the operating company, Tower Resources Cameroon SA,
has applied for and been awarded an extension of the First Exploration Period
of the license to 4 February 2025.
Namibia
The Group continued to make various licence commitment and training payments
to the Government of the Republic of Namibia in addition to commencing basin
modelling work and other work in line with the work programme commitments.
The Company's investment in the current license is currently $908k (2022:
$751k), which appears well supported by the valuations implied by recent
transactions in the region, allowing for the early stage of the evaluation and
appraisal process. Furthermore, the Directors continue to believe firmly that
the relatively modest amounts of expenditure incurred on acquiring and
securing tenure to the licence is fully supported by their initial view of its
prospectivity based on the information that is currently available
South Africa
In South Africa, Rift Petroleum Limited, Tower's wholly owned subsidiary, and
its JV partner and operator New African Global Energy SA (Pty) Ltd, continued
to work on planning the 3D seismic acquisition, the tendering and evaluation
process for which is ongoing. The Petroleum Authority of South Africa ("PASA")
formally approved the application to enter the second renewal period,
submitted by the Operator NewAge Energy Algoa (Pty) Ltd, on 17 November 2020,
having confirmed that the first renewal period work programme had been
completed to its satisfaction. The second renewal period commits the JV to the
acquisition of 700km of 2D seismic acquisition or the acquisition of 300km of
3D seismic. The minimum spend is $5.0 million in total to the JV and this
period will conclude upon the completion of the work programme, representing a
commitment to acquire a minimum of 700km 2D or 300km of 3D seismic over the
block. Acquiring the additional seismic data in 2024 is now unlikely to be
possible, and as a result, the JV partners do not expect to acquire the new 3D
seismic data over the block until 2025 at the earliest. The operator has told
the Company that PASA accepts this position and merely requires that the
seismic acquisition obligation is completed before the JV enters the next
renewal period.
Impairment
In accordance with the Group's accounting policies and IFRS 6 'Exploration for
and Evaluation of Mineral Resources' the Directors have reviewed each of the
exploration license areas for indications of impairment. Having done so, it
was concluded that a full impairment review was not required on the Cameroon,
South African or Namibian CGUs.
13. Investment in subsidiaries
Loans to subsidiary undertakings Shares in subsidiary undertakings Total
Company $ $ $
Cost
At 1 January 2023 85,721,514 32,216,739 117,938,253
Net advances during the year 5,383,583 - 5,383,583
At 31 December 2023 91,105,097 32,216,739 123,321,836
Provision for impairment -
At 1 January 2022 (64,862,126) (19,908,973) (84,771,099)
Provision for impairment - - -
At 31 December 2023 (64,862,126) (19,908,973) (84,771,099)
Net book value -
At 31 December 2023 26,242,970 12,307,766 38,550,737
At 31 December 2022 20,859,388 12,307,766 33,167,154
Included within loans made to subsidiary undertakings during the year of $5.3
million (2022: $3.4 million) are amounts of $4.3 million Cameroon (2022: $2.5
million), $402k South Africa (2022: $158k), $610k Rift Petroleum Holdings
(2022: $616k) and $110k (2022: $131k) Namibia.
Loans made by the parent company to subsidiary undertakings are
interest-bearing in accordance with loan agreements made in 2015, and are
repayable to the parent company on demand.
The subsidiary undertakings at the year-end are as follows (these undertakings
are included in the Group accounts):
Country of Class of Proportion of voting rights held Nature of business
incorporation shares held
2023 2023 2023 2022 2023
Tower Resources Cameroon Limited (1) England & Wales Ordinary 100% 100% Holding company
Tower Resources Cameroon SA (2) Cameroon Ordinary 100% 100% Oil and gas exploration
Rift Petroleum Holdings Limited (1) Isle of Man Ordinary 100% 100% Holding company
Rift Petroleum Limited (3) Zambia Ordinary 100% 100% Oil and gas exploration
Rift Petroleum Limited (3) Isle of Man Ordinary 100% 100% Oil and gas exploration
Tower Resources (Namibia) Holdings Limited (1) England & Wales Ordinary 100% 100% Holding company
Tower Resources (Namibia) Limited (4) England & Wales Ordinary 100% 100% Oil and gas exploration
(1) Held directly by the Company, Tower Resources plc
(2) Held directly or indirectly through Tower Resources Cameroon Limited
(3) Held directly or indirectly through Rift Petroleum Holdings Limited
(4) Held directly or indirectly through Tower Resources (Namibia) Holdings
Limited
14. Trade and other receivables
Group Company
2023 2022 2023 2022
$ $ $ $
Trade and other receivables 1,420,325 474,749 1,420,323 474,747
Trade and other receivables include VAT recoverable from HMRC on late appeals
owed to the Company, which at the end of 2023 were $632k (2022: $422k), all
amounts for which were repaid by HMRC in May 2024.
Also included are net amounts due on the settlement of shares placed on 18
December 2023 of $759k, which was received in January 2024.
15. Trade and other payables
Group Company
2023 2022 2023 2022
$ $ $ $
Trade payables 291,647 195,776 186,626 28.451
Other payables 757,719 - 757,719 -
Accruals 1,782,761 2,436.039 66,945 58.618
2,832,127 2,631.815 1,013,290 87,069
Included within other payables are amounts prepaid by EECP against shares not
yet drawn down against the Share Placement Deed (see note 18).
Accruals include UK $67k (2022: $59k); Cameroon $1.4 million (2022: $2.1
million); Namibia $221k (2022: $167k) and South Africa $128k (2022: $190k) and
comprise operational and other asset related costs due plus amounts payable to
Ministerial bodies with respect to licence tenure, most of which have been
settled subsequent to the year-end.
Group creditor payment days are approximately 30 days (2022: 32 days).
16. Provision for liabilities and charges
Group Company
2023 2022 2023 2022
$ $ $ $
VAT appeals - 502,972 - 502,972
- 502,972 - 502,972
At 31 December 2022 there remained three further appeals to the First-Tier Tax
Tribunal by HMRC, which were yet to be heard. The two earlier appeals
concerned time periods not covered by the original Tribunal decisions, to
which HMRC had raised procedural objections which it latterly withdrew. These
appeals were formally settled during 2023, resulting in a payment to the
Company of $422,359 (£351,212). The third more recent appeal concerns a
revised assessment in respect of time periods covered by the Upper Tribunal's
21 May 2021 decision, which revised assessment was contested successfully by
the Company. As such no further liability to HMRC for VAT exists or is
recognised within the financial statements (see note 14 for VAT amounts
receivable at the year-end).
17. Borrowings
Total borrowings for the Group and Company are noted below:
Group Company
2023 2022 2023 2022
$ $ $ $
Principal balance at beginning of year 41,088 59,532 41,088 59,532
Amounts drawn down during the year - - - -
Principal repaid during the year (12,465) (12,294) (12,465) (12,294)
Currency revaluations at year end 2,105 (6,149) 2,105 (6,149)
Principal balance at end of year 30,728 41,088 30,728 41,088
Financing costs at beginning of year 442 818 442 818
Changes to financing costs during the year - - - -
Interest expense 696 925 696 925
Interest paid during the year (921) (1,220) (921) (1,220)
Currency revaluations at year end 20 (81) 20 (81)
Financing costs at the end of the year 237 442 237 442
Carrying amount at end of period 30,965 41,530 30,965 41,530
Current 12,867 12,244 12,867 12,244
Non-current 18,098 29,286 18,098 29,286
PRINCIPAL REPAYMENT DATES Group Company
2023 2022 2023 2022
$ $ $ $
Due within 1 year 12,867 12,244 12,867 12,244
Due within years 2-5 18,098 29,286 18,098 29,286
Due in more than 5 years - - - -
30,965 41,530 30,965 41,530
Borrowing represent a 5-year Barclays Bounceback loan taken out in June 2021
and repayable in June 2026. During the year, the Group and Company entered
into no new facilities (2022: $nil).
18. Share capital
2023 2022
$ $
Authorised, called up, allotted and fully paid
12,467,459,075 (2022: 3,554,437,955) ordinary shares of 0.001p 18,394,680 18,283,317
The share capital issues during 2023 are summarised as follows:
Number of shares Share capital at nominal value Share premium
$ $
At 1 January 2023 3,554,437,955 18,283,317 152,336,303
Shares issued for cash 7,784,543,067 97,460 3,859,029
Shares issued on settlement of third party fees 1,128,478,053 13,903 298,593
Share issue costs - - (327,454)
At 31 December 2023 12,467,459,075 18,394,680 156,166,470
In December 2022, the Company entered into a Share Placement Deed ("SPD") with
Energy Exploration Capital Partners LLC ("EECP") under which EECP advanced
$1.3 million in January 2023 against subsequent share placements as outlined
under the SPD. Following the initial placing, EECP could also invest, at the
request of the Company, up to US$1.8 million in the aggregate for Shares worth
$1.9 million. If required by the Company, a further $3.0 million could have
been raised for shares worth an equivalent amount, with EECP's consent. At the
year-end $758k remained owing to EECP. Shares totalling 1,313,021,120 were
issued to EECP during 2023, and these are included in shares issued for cash
($16k nominal value / $776k share premium)
On 31 May 2023 the Company raised $2.9 million by placing 4,600,000,000 shares
for cash at 0.05 pence per share.
On 18 December 2023 the Company raised $760k by placing 3,000,000,000 shares
for cash at 0.02 pence per share.
19. Reserves
Reserves within equity are as follows:
Share capital
Amounts subscribed for share capital at nominal value.
Share premium account
The share premium account represents the amounts received by the Company on
the issue of its shares which were in excess of the nominal value of the
shares.
Retained losses
Cumulative net gains and losses recognised in the Statement of Comprehensive
Income less any amounts reflected directly in other reserves.
20. Financial instruments
Capital risk management and liquidity risk
Capital structure of the Group and Company consists of cash and cash
equivalents held for working capital purposes and equity attributable to the
equity holders of the Parent, comprising issued capital, reserves and retained
losses as disclosed in the Statement of Changes in Equity. The Group and
Company uses cash flow models and budgets, which are regularly updated, to
monitor liquidity risk.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including
the criteria for recognition, the basis of measurement and the basis on which
income and expenses are recognised, in respect of each material class of
financial asset, financial liability and equity instrument are disclosed in
note 1 to the financial statements.
Due to the short-term nature of these assets and liabilities such values
approximate their fair values at 31 December 2023 and 31 December 2022.
Carrying amount / fair value
2023 2022
Group $ $
Financial assets (classified as loans and receivables)
Cash and cash equivalents 20,633 231,216
Trade and other receivables 1,420,325 474,749
Total financial assets 1,440,958 705,965
Financial liabilities at amortised cost
Trade and other payables 2,832,127 2,631,815
Borrowings 30,965 41,530
Total financial liabilities 2,863,092 2,673,345
Carrying amount / fair value
2023 2022
Company $ $
Financial assets (classified as loans and receivables)
Cash and cash equivalents 11,663 159,456
Trade and other receivables 1,420,323 474,747
Loans to subsidiary undertakings 26,242,971 20,859,388
Total financial assets 27,674,957 21,493,591
Financial liabilities at amortised cost
Trade and other payables 1,013,290 87,069
Borrowings 30,965 41,530
Total financial liabilities 1,044,255 128,599
Financial risk management objectives
The Group's and Company's objective and policy is to use financial instruments
to manage the risk profile of its underlying operations. The Group continually
monitors financial risk including oil and gas price risk, interest rate risk,
equity price risk, currency translation risk and liquidity risk and takes
appropriate measures to ensure such risks are managed in a controlled manner
including, where appropriate, through the use of financial derivatives. The
Group and Company does not enter into or trade financial instruments,
including derivative financial instruments, for speculative purposes.
Interest rate risk management
The Group and Company borrowings carry a fixed interest rate of 1% per month
and are therefore not exposed to any sensitivity risk.
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to
interest rates at the reporting date and assuming the amount of the balances
at the reporting date were outstanding for the whole year.
A 100-basis point change represents management's estimate of a possible change
in interest rates at the reporting date. If interest rates had been 100 basis
points higher and all other variables were held constant the Group's profits
and equity would be impacted as follows:
Group Company
Increase Increase
2023 2022 2023 2022
$ $ $ $
Cash and cash equivalents 4,013 1,122 3,311 782
Borrowings 366 500 366 500
4,379 1,622 3,677 1,282
The Group's exposure to interest rate risk, which is the risk that a financial
instrument's value will fluctuate as a result of changes in market interest
rates on classes of financial assets and financial liabilities, was as
follows:
2023 2023 2022 2022
Floating interest rate Non-interest bearing Floating interest rate Non-interest bearing
$ $ $ $
Cash and cash equivalents 14,123 6,510 172,782 58,434
Foreign currency risk
The Group's and Company's reporting currency is the US dollar, being the
currency in which the majority of the Group's revenue and expenditure is
transacted. The US dollar is the functional currency of the Company and the
majority of its subsidiaries. Less material elements of its management,
services and treasury functions are transacted in pounds sterling. The
majority of balances are held in US dollars with transfers to pounds sterling
and other local currencies, as required to meet local needs. The Group does
not enter into derivative transactions to manage its foreign currency
translation or transaction risk as it does not believe such risks are
material.
At the year-end the Group and Company maintained the following cash reserves:
Group Company
2023 2022 2023 2022
Cash and cash equivalents $ $ $ $
Cash and cash equivalents held in US$ 2,167 55,874 2,167 55,874
Cash and cash equivalents held in GBP 11,149 156,448 9,496 103,582
Cash and cash equivalents held in XAF 2,460 13,326 - -
Cash and cash equivalents held in other currencies 4,857 5,568 - -
20,633 231,216 11,663 159,456
Credit risk management
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group or Company.
The Group and Company reviews the credit risk of the entities that it sells
its products to or that it enters into contractual arrangements with and will
obtain guarantees and commercial letters of credit as may be considered
necessary where risks are significant to the Group or Company.
The Group has cash and cash equivalents of $21k as at 31 December 2023 (2022:
$231k). The cash and cash equivalents are held with financial institutions
which are rated below. Wherever possible ratings are provided by Fitch
Ratings, however, where no rating was available from either Fitch Ratings or
either of the other major international credit rating agencies such as
Standard & Poors or Moodys, the bank's local credit rating was used:
Group Company
2023 2022 2023 2022
Cash and cash equivalents Rating $ $ $ $
Barclays Bank plc A+ 11,663 159,456 11,663 159,456
Royal Bank of Scotland A 6,510 58,434 - -
First Afriland Bank No rating 2,081 12,947 - -
BGFI Bank A+ 379 379 - -
20,633 231,216 11,663 159,456
21. Share-based payments
2023 2022
$ $
In the statement of comprehensive income the Group recognised the following 498,137 363,047
charge with respect to its share-based payments
The share-based payments include the cost of warrants issued in respect of the
company's equity financings and bridging loan, and also share-based payments
for a number of services to the Group's various contractors and brokers and
payments in lieu of Director fees.
Options
Details of share options outstanding at 31 December 2023 are as follows:
Number in issue
At 1 January 2022 392,000,000
Lapsed during the year -
Awarded during the year 296,000,000
At 31 December 2022 688,000,000
( )
Date of grant Number in issue (1) Option price (pence) Latest exercise date
24 Jan 2019 70,000,000 1.250 24 Jan 2024
18 Dec 2020 86,000,000 0.450 18 Dec 2025
01 Apr 2021 88,000,000 0.450 01 Apr 2026
16 Aug 2022 148,000,000 0.300 16 Aug 2027
16 May 2023 268,000,000 0.100 15 May 2028
660,000,000
(1) These options vest in the beneficiaries in equal tranches on the first,
second and third anniversaries of grant.
The following Directors held interests, directly or indirectly, in share
options at the year-end:
2023 2022
No. No.
Jeremy Asher 480,000,000 280,000,000
Total 480,000,000 280,000,000
Warrants
Details of warrants outstanding at 31 December 2023 are as follows:
Number in issue
At 1 January 2023 599,969,023
Awarded during the year 545,526,533
Lapsed during the year (162,162,382)
At 31 December 2023 983,333,174
Date of grant Number in issue Warrant price (pence) Latest exercise date
01 Oct 2018 4,687,500 1.575 30 Sep 2023
16 Apr 2019 90,000,000 1.000 14 Apr 2024
30 Jun 2019 4,285,714 1.000 28 Jun 2024
30 Jul 2019 3,000,000 1.000 28 Jul 2024
15 Oct 2019 10,990,933 0.500 13 Oct 2024
31 Mar 2020 49,816,850 0.200 30 Mar 2025
29 Jun 2020 19,719,338 0.350 28 Jun 2025
28 Aug 2020 78,616,352 0.600 28 Aug 2023
01 Oct 2020 10,960,907 0.390 30 Sep 2025
01 Dec 2020 4,930,083 0.375 30 Nov 2025
31 Dec 2020 12,116,316 0.450 30 Dec 2025
01 Apr 2021 16,998,267 0.450 31 Mar 2026
01 Jul 2021 24,736,149 0.250 30 Jun 2026
01 Oct 2021 16,233,765 0.425 30 Sep 2026
01 Jan 2022 17,329,020 0.425 01 Jan 2027
01 Apr 2022 19,851,774 0.263 01 Apr 2027
01 Jul 2022 16,831,240 0.295 01 Jul 2027
03 Oct 2022 26,114,205 0.250 03 Oct 2027
01 Aug 2022 10,588,228 0.425 31 Jul 2024
15 Feb 2023 29,114,906 0.175 15 Feb 2028
02 May 2023 43,053,960 0.143 01 May 2028
16 May 2023 112,500,000 0.100 16 May 2026
03 Jul 2023 128,571,426 0.050 02 Jul 2028
18 Dec 2023 65,000,000 0.040 18 Dec 2026
02 Oct 2023 167,286,241 0.050 01 Oct 2028
983,333,174
The following table shows the interests of the Directors in the share warrants
in issue at 31 December:
2023 2022
No. No.
Jeremy Asher 333,341,403 217,875,279
Paula Brancato 96,981,488 33,238,104
Mark Enfield 95,137,640 31,394,256
Total 525,460,531 282,507,639
The weighted average exercise price of the share warrants was 0.28p (2022:
0.59p) with a weighted average contractual life of 2.8 years (2022: 1.8
years). At 31 December 2023 and 2022 all warrants had fully vested.
In its Statement of Comprehensive Income, the Company recognised share-based
payment charges of $337k (2022: $294k).
In compliance with the requirements of IFRS 2 on share-based payments, the
fair value of options or warrants granted during the year is calculated using
the Black Scholes option pricing model. For this purpose, the volatility
applied in calculating the above charge varied between 20% and 100% (2022: 20%
and 111%), depending upon the date of grant, and the risk-free interest rate
was 0.50% (2022: 0.50%) and the Dividend Yield was nil% for 2023 and 2022.
The Company's share price ranged between 0.02p and 0.2p (2022: 0.2p and 0.4p)
during the year. The closing price on 31 December 2023 was 0.03p per share
(2022; 0.2p). The weighted average exercise price of the share options was
0.4p (2022: 0.5p) with a weighted average contractual life of 3.1 years (2022:
3.3 years). The total number of options vested at the end of the year was
214.7 million (2022: 185.3 million).
22. Related party transactions
Related party transactions include both transactions between group companies
and the Directors of the Company, and also intercompany transactions within
the Group.
The key management of the Group comprises the Directors of the Company. Except
as disclosed, there are no transactions with the Directors other than their
remuneration and interests in shares, share options and warrants. As noted in
the Directors' Report, Pegasus Petroleum Ltd ("Pegasus"), a company owned and
controlled by Jeremy Asher, received $466k (2022: $381k) in fees for
management services Further information on Directors' remuneration is detailed
in the Directors' Report and their total remuneration in each of the
categories specified in IAS 24 'Related Party Disclosures' is shown below:
Group Company
2023 2022 2023 2022
$ $ $ $
Fees charged by companies associated with Jeremy Asher (1) 567,649 381,428 - -
Share-based payments 278,254 242,896 278,254 242,896
Finance interest on Group intercompany loan accounts 1,487,503 536,375 1,487,503 536,375
Fees charged within the Group in respect of the provision of strategic advice 172,135 104,911 172,135 104,911
and support by the parent
2,505,541 1,265,610 1,937,892 884,182
(1) Charged by Pegasus Petroleum Limited ("Pegasus"), a company registered in
the Channel Islands, to Rift Petroleum Holdings Limited, a wholly owned
subsidiary of Tower Resources plc and registered in the Isle of Man. Pegasus
Petroleum Limited ("Pegasus") is owned and controlled by a family trust of
which Jeremy Asher is the settlor and lifetime beneficiary.
The following amounts were owed by subsidiary undertakings at the balance
sheet date:
Rift Rift Tower Resources (Namibia) Holdings Limited Tower Resources Namibia Tower Resources Cameroon Limited Tower Resources Cameroon SA TOTAL
Petroleum Holdings Limited
Petroleum Limited
($000)
Limited
($000)
($000)
($000)
($000)
($000)
($000)
2023 3,225 2,287 16 472 4 20,238 26,242
2022 2,616 1,885 18 362 6 15,974 20,861
23. Control
The Company is under the control of its shareholders and not any one party.
24. Leases and capital commitments
The Group is committed to funding the following exploration expenditure
commitments as at 31 December 2023
Country Interest 2024 2025 onwards
Cameroon Thali (1) Cameroon 100% $2.80 million $5.60 million
South Africa Algoa-Gamtoos (2) South Africa 50% - $3.45 million
Namibia Blocks 1910A, 1911 and 1912B (3) Namibia 80% - $4.50 million
$2.80 million $13.55 million
(1) Extension granted to February 2025
(2) Period ends on completion of work programme commitments
(3) First period expiration November 2024, extendable to November 2025
25. Subsequent events
4 January 2024: Share issuance in accordance with the terms of the investment
deed with EEPC announced on 16 January 2023, of 440,567,445 ordinary shares of
0.001 pence each. The purchase price of 0.0225 pence per Ordinary Share for
the settlement amount of $125,000 had been prepaid by EEPC.
4 January 2024: Issue of 350.9 million warrants in lieu of £60,000 (in
aggregate) of Directors fees in respect of the period January-June 2024, to
conserve the Company's working capital. The warrants are exercisable at a
strike price of 0.03 pence per share. The warrants are exercisable for a
period of five years from the date of issue.
8 February 2024: The Company received formal notification from the Minister of
Mines, Industry and Technological Development in Cameroon of the extension of
the First Exploration Period of the Thali production-sharing contract to 4th
February 2025, in accordance with the Company's PSC and the Cameroon Petroleum
Code, and with the approval of the President of the Republic of Cameroon. The
Company's principal obligation during the First Exploration Period is the
drilling of a single well which the Company intends to fulfil through the
drilling of the NJOM-3 well during 2024.
9 February 2024: Share issuance in accordance with the terms of the investment
deed with EEPC announced on 16 January 2023, of 396,825 ordinary shares of
0.001 pence each. The purchase price of 0.021 pence per Ordinary Share for the
settlement amount of $105,000 had been prepaid by EEPC.
15 February 2024: The Company reached an agreement for the repayment of the
outstanding balance owed to EECP, in accordance with the terms of the
investment deed announced to the market on 16 January 2023. In addition, the
Company also announced a Subscription to raise £600,000 via the issue of
3,333,333,333 shares at a price of 0.018p per share.
In addition to the events above, subsequent to the year-end the Company
received notice that the third of its appeals to the First-Tier Tax Tribunal
had been successful, resulting in a release of the remaining VAT provision and
the receipt of remaining receivables.
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