TIDMTRP

RNS Number : 4424N

Tower Resources PLC

30 September 2021

30 September 2021

Tower Resources plc

Interim Results to 30 June 2021

Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN)), the AIM-listed oil and gas company with its focus on Africa, announces its Interim Results for the six months ended 30 June 2021.

HIGHLIGHTS

-- January 2021 Placing of 384,615,384 new ordinary shares at 0.325p to raise GBP1.25 million (gross), together with issuance of one placing warrant for every three placing shares exercisable for two years at 0.65 pence per share and repayment of the US$500,000 Shard Merchant Capital Ltd loan facility;

-- Up dated resource estimates for the Algoa-Gamtoos license, offshore South Africa, following the reprocessing of additional 2D seismic data from Tower's 50% partner and license Operator, New Age Energy Algoa (Pty) Ltd. The updated resource estimate identified three separate reservoir targets in the deep-water (Outeniqua basin) section of the license with a total of 1,411 million boe Pmean recoverable resources (unrisked). A new lead in the submarine fan complex in the shallower Gamtoos area of the license was also identified and is estimated to contain 135 million boe Pmean recoverable resources (unrisked);

-- March 2021 extension to the US$750,000 Pegasus Petroleum Loan Facility ("Facility") to 30 November 2021 in exchange for an increase in production-based payments due to Pegasus from the Company's Thali license, offshore Cameroon. Interest continued to accrue at 12% per annum, and the production-based payments were increased to 3.75% of the contractor share of production if the Facility was repaid prior to July 15 2021 and 5.00% otherwise.

-- In March 2021 through the Company's subsidiary, Tower Resources Cameroon SA, Tower received Presidential approval of a further extension to the First Exploration Period of the Thali PSC, offshore Cameroon, to May 2022 following the Company having declared Force Majeure with respect to the PSC a year earlier due to the Covid-19 pandemic.

-- In May 2021, Tower Resources Cameroon SA received formal c onfirmation from the Cameroon Minister of Mines, Industry and Technological Development ("MINMIDT") of the formal extension of the First Exploration Period of the Thali PSC, offshore Cameroon, to May 2022. The extension enables the Company to finalise the schedule for the drilling and testing of the NJOM-3 well;

-- A ruling by the UK's VAT Upper-Tier Tax Tribunal, which upheld the First-Tier Tribunal's decision in favour of Tower in the Company's dispute with HMRC regarding its decision to deny the Company credit for input VAT, was announced in May 2021;

-- June 2021 Subscription for 20,000,000 new ordinary shares at 0.25p to raise GBP50,000 (gross) by the Company's Chairman and CEO, Jeremy Asher. At the same time the terms of the Facility were modified so that the higher level of production-based payments due to Pegasus from the Thali PSC would only come into force if the Facility were not repaid by 15 August 2021 as opposed to 15 July 2021.

POST REPORTING PERIOD EVENTS

-- In August 2021 the Company announced binding Heads of Agreement ("HoA") in respect of a farm-out to Beluga Energy Limited ("Beluga") of a 49% non-operating working interest in its Thali PSC in Cameroon.

The key economic elements of the transaction set out in the HoA were:

o The farm-out covers US$15 million towards the cost of the NJOM-3 well that Tower is planning to drill on the Thali block;

o Beluga will receive a 49% working interest in the PSC, subject to production-based payments to Tower's subsidiary TRCSA amounting to 10% of the contractor share of production accruing to Beluga under the PSC;

o The well cost is currently expected to be approximately US$16.8 million, of which approximately US$3 million has already been spent;

o Each party will recover costs actually funded and recoverable under the PSC, pari-passu;

o Tower will effectively contribute its non-recoverable costs in consideration of the production-based payments referred to above;

o Costs in excess of U$15 million, and future costs, will be funded pro-rata with respect to Tower's and Beluga's working interests.

The HoA were binding subject only to final documentation, a financing contingency requiring Beluga's shareholders' approval, and approval of the Minister of Mines, Industry and Technological Development ("MINMIDT");

-- August 2021 Placing of 352,941,176 new ordinary shares at 0.425p to raise GBP1.5 million (gross). Net proceeds of the Placing were used to repay the US$750,000 Facility, together with accrued interest and fees of US$102,500, and to cover working capital requirements; the repayment of the Facility was made in time to avoid the higher level of production-based payments which would have been due had repayment been delayed to November 2021.

-- Finalisation of documentation relating to the farm-out to Beluga Energy Limited of a 49% non-operating working interest in the Company's Thali PSC in Cameroon and submission of the documentation the Minister of Mines, Industry and Technological Development ("MINMIDT") as per the Cameroon Petroleum Code.

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 and CEO 
 
    Andrew Matharu 
    VP - Corporate Affairs 
 
  SP Angel Corporate Finance 
   LLP 
   Nominated Adviser and Joint 
   Broker 
   Stuart Gledhill                 + 44 20 3470 
   Caroline Rowe                    0470 
  Novum Securities Limited 
   Joint Broker 
   Jon Bellis                      + 44 20 7399 
   Colin Rowbury                    9400 
 
  Panmure Gordon (UK) Limited 
   Joint Broker 
   Nick Lovering                   + 44 20 7886 
   Hugh Rich                        2500 
 

CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S STATEMENT FOR THE SIX MONTHSED 30 JUNE 2021

Dear Shareholder,

The first six months of 2021 have been very positive for our Company, in marked contrast to the first six months of 2020, and the progress we have made during this period has, so far, been carried through the third quarter.

We were delighted to agree the farm-out to Beluga Energy Limited ("Beluga"), and over the last two months we have moved forward with negotiation of a fresh rig contract and with resumption of discussions with the service companies to finalise both terms and schedule for the drilling and testing of the NJOM-3 well.

It took a little longer to finalise the full documentation of the farm-out than we had hoped but this was still achieved quite rapidly, and the documents are now with the relevant Cameroon Government bodies, and also with Beluga's financiers. Beluga yesterday requested, and we have agreed, a 30-day extension to the financing contingency which, together with the Cameroon government approval, are conditions precedent for completion of the farmout, and we also still have to finalise the escrow agreement with our lawyers, Watson, Farley & Williams LLP, for funds to be held prior to disbursements. So although we now expect completion will not be before the end of October at the earliest, we believe the transaction remains on track.

At the time of writing, while spudding the well before the year-end remains theoretically possible, we believe that the most likely timing for the well is in the first quarter 2022, and we are still working on the dates which will best fit the combination of rig and service company schedules and lead times. I should note that we are presently considering two rigs, one available early in Q1 2022 and one available later in Q1 2022, in addition to other rig possibilities, and so we are confident of both rig and service availability in this period. But we are obviously keen to spud earlier rather than later if possible.

We have also already begun work on planning the next steps to reach oil production assuming a successful test result from NJOM-3. As presently conceived, this would involve the design and drilling of three further wells deviated into different parts of the Njonji structure from the NJOM-3 well location, and the completion of the four wells with wellheads above the water on a simple steel structure which would also brace the four well conductors. This would allow easy access to the wellheads for a Mobile Oil Production Unit ("MOPU") and shuttle tanker.

A significant element on the critical path to oil production is the specification and procurement of the MOPU, and until it is secured this also probably represents the largest operational risk to both schedule and budget for reaching first oil. Therefore we have already begun discussions with contractors about cooperation to secure or build a suitable unit as a joint venture, including the possibility of securing an option on a unit, to be declared after we have the result of the NJOM-3 well. These negotiations will reduce significantly the lead time for the next stage of the Njonji project, assuming the current well achieves its objectives successfully.

Looking forward outside Cameroon, in South Africa we anticipate making decisions over the coming months with our joint venture partner NewAge regarding the timing, specification and financing of further 3D seismic acquisition over our Algoa-Gamtoos license in South Africa, with our preferred focus being the leads in the deep water Outeniqua basin section of the block that contain a combined unrisked potential recoverable resource of over 1.4 billion boe. We are also engaging in further basin modelling on our Namibian blocks, while waiting with interest for the results from Shell and Total's upcoming wells in the Namibian Orange Basin.

Finally, we were very gratified by the decision of the Upper Tier Tribunal, which we received in May, to uphold the First Tier Tribunal's 2019 decision in our favour regarding our eligibility for VAT and our entitlement to refunds of input VAT, which HMRC now accepts. This ruling covers our current and future VAT returns and also the past returns up to the period covered by our original appeal to the FTT. There are a number of returns for periods after those covered by the original FTT appeal that are covered by two further appeals that remain with the FTT, which is why we have not yet completed eliminated the provision for VAT in our accounts, but we are hopeful that these will also be resolved satisfactorily in due course.

Jeremy Asher

Chairman and Chief Executive

30 September 2021

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 
                                                                              Six months ended        Six months ended 
                                                                                  30 June 2021            30 June 2020 
                                                                                   (unaudited)             (unaudited) 
                                                                       Note                  $                       $ 
--------------------------------------------------------------------  -----  -----------------  ---  ----------------- 
 Revenue                                                                                     -                       - 
 Cost of sales                                                                               -                       - 
--------------------------------------------------------------------  -----  -----------------  ---  ----------------- 
 Gross profit                                                                                -                       - 
 Other administrative expenses                                                       (276,150)               (364,019) 
 VAT provision                                                                         519,912                 135,907 
 Share-based payment charges incurred on incentivisation of staff 
  and consultants                                                       9            (153,039)               (148,924) 
 Pre-licence expenditures                                                                (274)                       - 
--------------------------------------------------------------------  -----  -----------------  ---  ----------------- 
 Total administrative expenses                                                          90,449               (377,036) 
 Group operating loss                                                                   90,449               (377,036) 
 Finance expense                                                                     (129,907)                (80,651) 
--------------------------------------------------------------------  -----  -----------------  ---  ----------------- 
 Loss for the period before taxation                                                  (39,458)               (457,687) 
 Taxation                                                                                    -                       - 
--------------------------------------------------------------------  -----  -----------------  ---  ----------------- 
 Loss for the period after taxation                                                   (39,458)               (457,687) 
--------------------------------------------------------------------  -----  -----------------  ---  ----------------- 
 Other comprehensive income                                                                  -                       - 
--------------------------------------------------------------------  -----  -----------------  ---  ----------------- 
 Total comprehensive expense for the period                                           (39,458)               (457,687) 
--------------------------------------------------------------------  -----  -----------------  ---  ----------------- 
 
 Basic loss per share (USc)                                             3              (0.00c)                 (0.04c) 
--------------------------------------------------------------------  -----  -----------------  ---  ----------------- 
 Diluted loss per share (USc)                                           3              (0.00c)                 (0.04c) 
--------------------------------------------------------------------  -----  -----------------  ---  ----------------- 
 

INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 
                                              30 June 2021   31 December 2020 
                                               (unaudited)          (audited) 
                                      Note                                  $ 
-----------------------------------  -----  --------------  ----------------- 
 Non-current assets 
 Exploration and evaluation assets     4        27,942,083         27,080,202 
-----------------------------------  -----  --------------  ----------------- 
                                                27,942,083         27,080,202 
 Current assets 
 Trade and other receivables           5            23,275              8,805 
 Cash and cash equivalents                         125,030             10,054 
-----------------------------------  -----  --------------  ----------------- 
                                                   148,305             18,859 
 Total assets                                   28,090,388         27,099,061 
-----------------------------------  -----  --------------  ----------------- 
 Current liabilities 
 Trade and other payables              6         3,256,877          3,796,111 
 Borrowings                            7           870,645          1,262,937 
-----------------------------------  -----  --------------  ----------------- 
                                                 4,127,522          5,059,048 
 Non-current liabilities 
 Borrowings                            7            54,906             68,763 
-----------------------------------  -----  --------------  ----------------- 
                                                    54,906             68,763 
 Equity 
 Share capital                         8        18,259,833         18,254,040 
 Share premium                         8       147,107,600        145,343,446 
 Retained losses                             (141,459,473)      (141,626,236) 
-----------------------------------  -----  --------------  ----------------- 
                                                23,907,960         21,971,250 
-----------------------------------  -----  --------------  ----------------- 
 Total liabilities and equity                   28,090,388         27,099,061 
-----------------------------------  -----  --------------  ----------------- 
 

Signed on behalf of the Board of Directors

Jeremy Asher

Chairman and Chief Executive

29 September 2021

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 
                                                    Share         Share   (1) Share-based        Retained        Total 
                                                  capital       premium          payments          losses 
                                                                                  reserve 
                                                        $             $                 $               $            $ 
 At 1 January 2020                             18,251,117   144,294,128         7,659,308   (148,452,837)   21,751,716 
--------------------------------------------  -----------  ------------  ----------------  --------------  ----------- 
 Shares issued for cash                             1,748       653,757                 -               -      655,505 
 Shares issued on settlement of third-party 
  fees                                                 70        26,150                 -               -       26,220 
 Shares issued on settlement of staff                   -             -                 -               -            - 
 remuneration 
 Share issue costs                                      -      (58,996)                 -               -     (58,996) 
 Total comprehensive income for the period              -             -           177,107       (457,687)    (280,580) 
 At 30 June 2020                               18,252,935   144,915,039         7,836,415   (148,910,524)   22,093,865 
--------------------------------------------  -----------  ------------  ----------------  --------------  ----------- 
 Shares issued for cash                               517       202,838                 -               -      203,355 
 Shares issued on settlement of third-party             -             -                 -               -            - 
 fees 
 Shares issued in settlement of loan 
  interest                                            588       225,568                 -               -      226,156 
 Share issue costs                                      -             1                 -               -            1 
 Total comprehensive expense for the period             -             -           350,922       (903,049)    (552,127) 
 At 31 December 2020                           18,254,040   145,343,446         8,187,337   (149,813,573)   21,971,250 
--------------------------------------------  -----------  ------------  ----------------  --------------  ----------- 
 Shares issued for cash                             5,521     1,767,869                 -               -    1,773,390 
 Shares issued on settlement of third-party 
  fees                                                273        88,330                 -               -       88,603 
 Shares issue costs                                     -      (92,045)                 -               -     (92,045) 
 Total comprehensive income for the period              -             -           206,221        (39,458)      166,763 
 At 30 June 2021                               18,259,833   147,107,600         8,393,558   (149,853,031)   23,907,960 
--------------------------------------------  -----------  ------------  ----------------  --------------  ----------- 
 
   (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 ended   Six months ended 
                                                                                     30 June 2021       30 June 2020 
                                                                                      (unaudited)        (unaudited) 
                                                                          Note                  $                  $ 
-----------------------------------------------------------------------  -----  -----------------  ----------------- 
 Cash outflow from operating activities 
 Group operating profit / (loss) for the period                                            90,449          (377,036) 
 Share-based payments                                                      9              206,221            148,924 
 Finance costs                                                             4                (769)                  - 
-----------------------------------------------------------------------  -----  -----------------  ----------------- 
 Operating cash flow before changes in working capital                                    295,901          (228,112) 
 (Increase) / decrease in receivables and prepayments                                    (14,470)              6,993 
 (Decrease) / increase in trade and other payables                                      (539,234)            861,314 
-----------------------------------------------------------------------  -----  -----------------  ----------------- 
 Cash used in operating activities                                                      (257,803)            640,195 
-----------------------------------------------------------------------  -----  -----------------  ----------------- 
 Investing activities 
 Exploration and evaluation costs                                          4            (861,881)        (1,290,678) 
 Net cash used in investing activities                                                  (861,881)        (1,290,678) 
-----------------------------------------------------------------------  -----  -----------------  ----------------- 
 Financing activities 
 Cash proceeds from issue of ordinary share capital net of issue costs     8            1,769,947            622,729 
 Proceeds from drawdown of borrowing facilities                            7                    -             61,596 
 Repayment of borrowing facilities                                                      (501,154)                  - 
 Repayment of interest on borrowing facilities                                           (35,142)                  - 
 Effects of foreign currency movements on borrowing facilities                              1,010              (476) 
-----------------------------------------------------------------------  -----  -----------------  ----------------- 
 Net cash from financing activities                                                     1,234,660            683,849 
-----------------------------------------------------------------------  -----  -----------------  ----------------- 
 Increase in cash and cash equivalents                                                    114,976             33,366 
 Cash and cash equivalents at beginning of period                                          10,054             38,662 
-----------------------------------------------------------------------  -----  -----------------  ----------------- 
 Cash and cash equivalents at end of period                                               125,030             72,028 
-----------------------------------------------------------------------  -----  -----------------  ----------------- 
 

NOTES TO THE INTERIM FINANICAL 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 2021 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 2020 and those to be used for the year ending 31 December 2021. The comparative figures for the half year ended 30 June 2020 are unaudited. The comparative figures for the year ended 31 December 2020 are not the Company's full statutory accounts but have been extracted from the financial statements for the year ended 31 December 2020 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 29 September 2021.

   b)       Going concern 

The Group will need to raise further funds sufficient to meet its financial and operating commitments for the 12-month period commencing immediately subsequent to the date of signature of these interim financial statements and is planning to do this through:

-- Completion of the Beluga Energy Limited farmout transaction for which heads of agreement were signed and announced on 10 August 2021; and

-- A farm-out of its South African license sufficient to cover its share of 3D acquisition work programme costs which are approximately GBP2 million; or

-- Receipt of further funds from the exercise of warrants or the issuance of shares in order to provide partial funding of the proposed 3D acquisition work programme in South Africa.

The Directors are confident that the above initiatives will be concluded satisfactorily within the necessary timeframes and the financial statements have, therefore, been prepared on a going concern basis.

There can, however, be no guarantee that the required funds may be raised or transactions completed within the necessary timeframes. Consequently, a material uncertainty exists that may cast doubt on the Group's ability to continue to operate and to meet its commitments and discharge its liabilities in the normal course of business for a period of not less than twelve months from the date of this report. The financial statements do not include the adjustments that would result if the Group was unable to continue in operation such as the impairment of the exploration assets.

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 2020.

 
                                    Africa                        Head Office                        Total 
                            Six months      Six months      Six months      Six months      Six months      Six months 
                                 ended           ended           ended           ended           ended           ended 
                          30 June 2021    30 June 2020    30 June 2021    30 June 2020    30 June 2021    30 June 2020 
                                     $               $               $               $               $               $ 
----------------------  --------------  --------------  --------------  --------------  --------------  -------------- 
 Loss by reportable 
  segment                     (65,611)          11,608         105,069         446,079          39,458         457,687 
 Total assets by 
  reportable segment 
  (1)                       27,954,857      25,624,797         135,531         100,180      28,090,388      25,724,977 
----------------------  --------------  --------------  --------------  --------------                  -------------- 
 Total liabilities by 
  reportable segment 
  (2)                      (2,384,500)     (1,313,963)     (1,797,928)     (2,317,149)     (4,182,428)     (3,631,112) 
----------------------  --------------  --------------  --------------  --------------  --------------  -------------- 
 

(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 2021   31 December 2020 
                                                                                  (unaudited)          (audited) 
                                                                                            $                  $ 
-----------------------------------------------------------------------  ----  --------------  ----------------- 
 Loss for the period                                                                   39,458            457,687 
 Weighted average number of ordinary shares in issue during the period          1,699,278,182      1,190,700,446 
 Dilutive effect of share options outstanding                                               -                  - 
 Fully diluted average number of ordinary shares during the period              1,699,278,182      1,190,700,446 
 Loss per share (USc)                                                                   0.00c              0.04c 
-----------------------------------------------------------------------------  --------------  ----------------- 
 

4. Intangible Exploration and Evaluation (E&E) assets

 
                                  Exploration and evaluation assets      Goodwill          Total 
 Period-ended 30 June 2021                                        $             $              $ 
                                 ----------------------------------  ------------  ------------- 
 Cost 
 At 1 January 2021                                       99,088,664     8,023,292    107,111,956 
 Additions during the period                                861,881             -        861,881 
 At 30 June 2021                                         99,950,545     8,023,292    107,973,837 
-------------------------------  ----------------------------------  ------------  ------------- 
 Amortisation and impairment 
 At 1 January 2021                                     (72,008,462)   (8,023,292)   (80,031,754) 
 At 1 January and 30 June 2021                         (72,008,462)   (8,023,292)   (80,031,754) 
-------------------------------  ----------------------------------  ------------  ------------- 
 Net book value 
 At 30 June 2021                                         27,942,083             -     27,942,083 
 At 31 December 2020                                     27,080,202             -     27,080,202 
-------------------------------  ----------------------------------  ------------  ------------- 
 

In accordance with the Group's accounting policies and IFRS 6 the Directors' have reviewed each of the exploration license areas for indications of impairment. Having done so, based on the financial constraints on the Group, and specific issues associated with each license it was concluded that a full ongoing impairment was only necessary in the case of the Zambian licenses 40 and 41, the circumstances of which have not changed since previous reporting period.

The additions during the period represent $600k (2020: $1.2 million), $197k in South Africa (2020: $80k), $77k in Namibia (2020: $21k) and $nil in Zambia (2020: $nil). The focus of the Group's activities during this period has been on preparing for and acquiring inventory and services with respect to the anticipated drilling of the Njonji-3 appraisal well.

5. Trade and other receivables

 
                                 30 June 2021   31 December 2020 
                                  (unaudited)          (audited) 
                                            $                  $ 
-----------------------------  --------------  ----------------- 
 Trade and other receivables           23,275              8,805 
-----------------------------  --------------  ----------------- 
 

Trade and other receivables comprise prepaid expenditures.

6. Trade and other payables

 
                                     30 June 2021   31 December 2020 
                                      (unaudited)          (audited) 
                                                $                  $ 
---------------------------------  --------------  ----------------- 
 Trade and other payables                 512,810            531,253 
 Work programme-related accruals        1,982,683          1,882,999 
 Other accruals                           122,968            149,930 
 VAT payable                              638,416          1,231,929 
                                        3,256,877          3,796,111 
---------------------------------  --------------  ----------------- 
 

The future ability of the Group to recover UK VAT was confirmed by the Upper Tier Tribunal in its judgement in favour of the Company on 20 May 2021 and is no longer the subject of a dispute with HMRC. Previously, on 8 July 2019, the Company had received an initial judgement in its favour from the First-Tier Tribunal (Tax Chamber). HMRC have chosen not appeal this latest ruling against them.

This ruling covers the Group's current and future VAT returns and also the past returns up to the period covered by our original appeal to the First Tier Tribunal ("FTT"). There are a number of returns for periods after those covered by the original FTT appeal that are covered by two further appeals that remain with the FTT, which is why the Directors have made the judgement to continue to provide against certain recoverable amounts until such time as the case has been formally closed. The Company has, therefore, continued to provide against $638k / GBP461k (2020: $1.2 million / GBP903k) of VAT recoverable within these financial statements.

Work programme-related accruals of $2.0 million (2020: $1.9 million) comprise $1.1 million with respect to Cameroon (2020: $1.1 million) and $900k with respect to South Africa (2020: $758k).

7. Borrowings

 
                                                            Group 
                                                30 June 2021   31 December 2020 
                                                 (unaudited)          (audited) 
                                                           $                  $ 
--------------------------------------------  --------------  ----------------- 
 Principal balance at beginning of period          1,338,726            770,480 
 Amounts drawn down during the period                      -            561,742 
 Amounts repaid during the period                  (501,154)                  - 
 Currency revaluations at year end                     1,004              6,504 
--------------------------------------------  --------------  ----------------- 
 Principal balance at end of period                  838,576          1,338,726 
 
 Financing costs at beginning of year                (7,026)             70,010 
 Changes to financing costs during the year           47,383            (3,013) 
 Interest expense                                     81,755            152,372 
 Interest paid                                      (35,142)          (226,382) 
 Currency revaluations at year end                         6               (13) 
--------------------------------------------  --------------  ----------------- 
 Financing costs at the end of the year               86,976            (7,026) 
 
 Carrying amount at end of period                    925,552          1,331,700 
--------------------------------------------  --------------  ----------------- 
 Current                                             870,645          1,262,937 
 Non-current                                          54,906             68,763 
 

Repayment dates

 
                              30 June 2021   31 December 2020 
                               (unaudited)          (audited) 
                                         $                  $ 
--------------------------  --------------  ----------------- 
 Due within 1 year                 870,645          1,270,960 
 Due within years 2-5               42,171             55,010 
 Due in more than 5 years           12,735              5,730 
                                   925,552          1,331,700 
--------------------------  --------------  ----------------- 
 

During the period, the Group and Company entered into no new facilities (2020: $562k) and repaid its Shard Merchant Capital Ltd loan in January 2021.

On 21 January 2021, the Company repaid in full the $500k loan facility with Shard Merchant Capital Ltd. The terms of the Shard Facility included the issue of 31,446,541 attached three-year warrants at a strike price of 0.6 pence and 5,761,198 shares to pre-pay interest charged at 12% per annum. The loan was secured by a fixed and floating charge over the Company's assets in favour of Shard Merchant Capital Ltd. The repayment of the loan included facility transaction costs of $35k. During the period the Company recognised interest charges totalling $21k (2020: $43k) and made repayments totalling $535k (2020: $30k).

On 4 March 2021, the Pegasus Petroleum Limited loan facility, to which Jeremy Asher is a controlling party, was extended to the end of November 2021. Consideration for the extension comprised an increase in the production-based payments, the amount depending on whether the loan would be repaid by 15 July or only in November 2021. Additionally, simple interest would accrue at 12% per annum pro rata, commencing on 4 March 2021, and would only be paid at the end of the facility period. The 15 July date was subsequently extended to 20 August 2021, with the production-based payments effectively limited to 3.75% of the Contractor share of revenues from the production sharing contract, net of the Government share and net of all Petroleum Taxes, and the facility was fully repaid on 20 August 2021.

8. Share capital

 
                                                                         30 June 2021   31 December 2020 
                                                                          (unaudited)          (audited) 
                                                                                    $                  $ 
---------------------------------------------------------------  ----  --------------  ----------------- 
 Authorised, called up, allotted and fully paid 
 1,749,911,416 (2020: 1,325,296,032) ordinary shares of 0.001p             18,259,833         18,251,117 
---------------------------------------------------------------------  --------------  ----------------- 
 

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 2021                                     1,325,296,032                       18,254,040     145,343,446 
  Shares issued for cash                                  404,615,384                            5,521       1,767,869 
  Shares issued on settlement of third-party fees          20,000,000                              273          88,330 
  Share issue costs                                                 -                                -        (92,045) 
  At 30 June 2021                                       1,749,911,416                       18,259,833     147,107,600 
--------------------------------------------------  -----------------  -------------------------------  -------------- 
 

9. Share-based payments

 
In the Statement of Comprehensive Income, the Group recognised the following charge in r   30 June 2021   30 June 2020 
espect 
of its share-based payment plan: 
                                                                                            (unaudited)    (unaudited) 
---------------------------------------------------------------------------------------- 
                                                                                                      $              $ 
----------------------------------------------------------------------------------------  -------------  ------------- 
Share-based payment charges incurred on incentivisation of staff included within 
 administrative 
 expenses                                                                                     (153,039)      (148,924) 
Share-based payment charges incurred on incentivisation of consultants included within 
 administrative 
 expenses                                                                                      (11,066)              - 
Share-based payment charges recharged to subsidiary undertakings on incentivisation of 
 staff 
 and consultants                                                                               (42,116)              - 
---------------------------------------------------------------------------------------- 
                                                                                              (206,221)      (148,924) 
----------------------------------------------------------------------------------------  -------------  ------------- 
Share-based payment charges incurred on issue of options and warrants as part of loan 
 financing 
 facilities included within finance expense                                                           -       (28,183) 
Total share-based payment plan charges for the period                                         (206,221)      (177,107) 
----------------------------------------------------------------------------------------  -------------  ------------- 
 

Options

Details of share options outstanding at 30 June 2021 are as follows:

 
                                Number in issue 
---------------------------    ---------------- 
 At 1 January 2021                  157,552,800 
 Awarded during the period           88,000,000 
 Lapsed during the period              (52,800) 
-----------------------------  ---------------- 
 At 30 June 2021                    245,500,000 
-----------------------------  ---------------- 
 
 
 Date of grant    Number in issue   Option price (p)   Latest exercise date 
---------------  ----------------  -----------------  --------------------- 
 26 Oct 16              1,500,000              0.023              25 Oct 21 
 24 Jan 19             70,000,000              1.250              24 Jan 24 
 18 Dec 20             86,000,000              0.450              18 Dec 25 
 01 Apr 21             88,000,000              0.450              01 Apr 26 
                      245,500,000 
---------------  ----------------  -----------------  --------------------- 
 

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 2021 are as follows:

 
                                Number in issue 
 At 1 January 2021                  620,444,335 
 Awarded during the period          169,939,544 
                               ---------------- 
 At 30 June 2021                    790,383,879 
-----------------------------  ---------------- 
 
 
 Date of grant    Number in issue   Warrant price (p)   Latest exercise date 
---------------  ----------------  ------------------  --------------------- 
 09 Nov 17             31,853,761               1.000              09 Nov 22 
 01 Jan 18              2,542,372               1.000              01 Jan 23 
 01 Apr 18              2,083,333               1.500              01 Apr 23 
 01 Jul 18              2,272,726               1.780              30 Jun 23 
 01 Oct 18              4,687,500               1.575              30 Sep 23 
 24 Jan 19            112,211,999               1.250              23 Jan 24 
 16 Apr 19             90,000,000               1.000              14 Apr 24 
 30 Jun 19              4,285,714               1.000              28 Jun 24 
 30 Jul 19              3,000,000               1.000              28 Jul 24 
 15 Oct 19            191,347,084               1.000              13 Oct 24 
 31 Mar 20             49,816,850               0.200              30 Mar 25 
 29 Jun 20             19,719,338               0.350              28 Jun 25 
 28 Aug 20             78,616,352               0.600              28 Aug 23 
 01 Oct 20             10,960,907               0.390              30 Sep 25 
 01 Dec 20              4,930,083               0.375              30 Nov 25 
 31 Dec 20             12,116,316               0.450              30 Dec 25 
 01 Apr 21             16,998,267               0.450              31 Mar 26 
 01 Jul 21             24,736,149               0.250              30 Jun 26 
 14 Jan 21            128,205,128               0.325              14 Jan 23 
                      790,383,879 
---------------  ----------------  ------------------  --------------------- 
 
   10.        Subsequent events 

10 August 2021: Execution of a binding Heads of Agreement in respect of a farm-out to Beluga Energy Limited ("Beluga") of a 49% non-operating working interest in its Thali Production Sharing Contract in Cameroon, conducted through its wholly-owned subsidiary Tower Resources Cameroon S.A. The farm-out covers $15 million towards the cost of the NJOM-3 well that Tower is planning to drill on the Thali block. Beluga will receive a 49% working interest in the Production Sharing Contract, subject to production-based payments of 10%. The well cost is currently expected to be approximately $16.8 million, of which approximately $3 million has already been spent. Costs in excess of $15 million, and future costs, will be funded pro-rata with respect to each party's working interest.

11 August 2021 : Placing for cash of GBP1.5 million via a placing of 352,941,176 new ordinary shares of 0.001p each at a price of 0.425 pence per share, a discount of 14% to the closing share price on 10 August 2021. Novum Securities Limited ("Novum"), acted as sole broker on this Placing was appointed to serve as Joint Broker to the Company going forwards. The Company has used the net proceeds of the Placing to repay the $750,000 loan facility from Pegasus Petroleum Ltd (whose ultimate beneficial owner is the Company's Chairman and CEO, Jeremy Asher) together with accrued interest and fees of $102,500, and to cover working capital requirements going forward, which will include; work programme costs in Namibia (for license PEL 96); South Africa (for the Algoa-Gamtoos license operated by 50% partner New Age Energy Algoa (Pty) Ltd and which adjoins the Total-operated blocks 11B/12B); funding maintenance and planning expenditure in Cameroon to maintain the long-lead items inventory ready for the commencement of drilling and testing of the NJOM-3 well, pending completion of the farm-out with Beluga; and general working capital purposes.

21 September 2021 : Documentation of its farm-out to Beluga of a 49% non-operating working interest in its Thali Production Sharing Contract in Cameroon, conducted through its wholly-owned subsidiary Tower Resources Cameroon S.A was finalised, and the package of documents submitted to the Minister of Mines, Industry and Technological Development per the Cameroon Petroleum Code. Completion of the farm-out is still subject to two conditions precedent: the financing contingency requiring Beluga's shareholders' approval, and the Minister of Mines, Industry and Technological Development's approval. The Company would notify the market when both conditions precedent have been met.

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END

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(END) Dow Jones Newswires

September 30, 2021 02:00 ET (06:00 GMT)

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