Extension of Loan Facility and Issue of Warrants

1 July 2020

Tower Resources plc

Extension of Loan Facility

Issue of Warrants

Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN)), the AIM listed oil and gas company with its focus on Africa, announces a further extension of its Loan Facility ("Facility") of US$750,000.

The Facility will now be due for repayment on or before 15 August 2020 (the "Extension") and the terms of the extension include the issue of 4.5 million of five-year warrants with a strike price of 0.35 pence, being a premium of 11.1% to the closing price on 30 June 2020. The reason for the extension is the delay to the completion of the farm-out to OilLR, and the timing reflects the Company's expectation in respect of the first payment into escrow. The Facility does also contain a grace period of 21 working days in the event of any further modest delay.

On 15 October 2019 a restructuring of the Facility was announced resulting in Pegasus Petroleum Ltd ("Pegasus") holding 100% of the Facility. Pegasus is a company owned and controlled by Tower's Chairman and CEO, Jeremy Asher.

Background and Issue of Warrants

The Facility was originally established as a bridging loan by Pegasus in April 2019, and was joined by a number of third parties in May 2019. At the end of July 2019, when the facility was already overdue for repayment, an extension to the end of August was agreed with all the parties to the Facility, in return for the issue of 3 million five year warrants with a strike price slightly above the then-prevailing share price. The Company has looked to this transaction as a guide to a reasonable basis for extending the Facility for a further month and 15 days at this juncture.

The Company has agreed with Pegasus an extension of the repayment of the Facility until 15 August 2020 in return for the issue of 4.5 million five-year warrants with a strike price of 0.35p per share. The value of these warrants, based on a Bloomberg valuation using Black-Scholes, is approximately 0.223p per warrant, with the aggregate warrant value of £10,053 corresponding to approximately 1.66% of the value of the Facility, and is intended to compensate the Facility lender for its additional risk and for the additional default interest that the lender will forego by granting the extension. The Bridging Loan will continue to have a preferential right of repayment from any future financing in excess of US$2,500,000, and will remain secured by the Company with interest due of 1% per month (accrued and paid on repayment) along with a fixed and floating charge over the Company's assets.

The warrants will be issued to Pegasus, which holds 100% of the Facility. Jeremy Asher, as a director of the Company, and Pegasus, are considered to be "related parties" as defined under the AIM Rules and accordingly, the Extension and issue of warrants constitute related party transactions for the purposes of Rule 13 of the AIM Rules.  The table of Director warrants will therefore be updated as follows:

*Warrants are held at different prices

† Warrants issued to Pegasus Petroleum Ltd; a company beneficially owned by Jeremy Asher

‡Excludes share options

Related Party Transaction

The Directors independent of the Facility, being Peter Taylor and David M Thomas, consider, having consulted with SP Angel Corporate Finance LLP, the Company's nominated adviser, that the terms of the extension to the Facility and issue of warrants are fair and reasonable insofar as the Company's shareholders are concerned.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

Contacts

NOTIFICATION AND PUBLIC DISCLOSURE OF TRANSACTIONS BY PERSONS DISCHARGING MANAGERIAL RESPONSIBILITIES AND PERSONS CLOSELY ASSOCIATED WITH THEM: