Tower raises $4m to fund African drilling

13th Oct 2011 09:17

Tower Resources, the Africa focused oil and gas exploration company, has raised $4m through a discounted share placing.The deal has seen 103.7m new shares issued at a price of 2.5p per share, a discount of nearly 30% on last night's price of 3.47p. In total the new shares represent around 8.46% of the company's expanded share capital. The $4m will be used as working capital until September 2010 but the fund-raising should be seen in the context of the firm's big play in Uganda. Tower believes its "Mvule" site could yield around 80 million barrels of oil but, as yet, has not found any. Having tried digging twice it now aims to drill a third well by the end of this year. The Executive Chairman of Tower, Peter Kingston said of the placing:"We are pleased with the on-going support of our shareholder base in this placing, against a backdrop of challenging equity markets. Tower has exciting exploration prospects in both Uganda and Namibia and I look forward to updating the market as we progress." Kingston himself has bought up half a million of the placing shares, raising his stake to 2.97m shares, or 0.24% of the issued share capital.Other directors of the company have also bought the discounted shares, with Mark Savage, Jeremy Asher, Peter Taylor and Peter Blakey each acquiring 7.7m shares, enabling the company to pay back $1.2m of loans from the directors to the company.As a result of the share placing, Savage's stake has increased to 8.79%, while Asher's stake rises to 7.77%, Taylor's rises to 7.64% and Blakey's to 7.44%.Tower Resource's share price dropped 18.7% to 2.83p on news of the fund raising - still 0.33p above the placing price.BS