- Tower Resources (TRP) shares crashed 35.7% on a discounted share issue.
- Investors reacted appropriately to the discount by pushing TRP’s price lower.
- Can TRP shares recover? Read on to find out.
The Tower Resources PLC (LON: TRP) share price plunged 35.7% after announcing that it had raised £1,499,999 via a discounted share placement and subscription of 857,142,286 new ordinary shares priced at 0.175p each.
Investors reacted appropriately to the announcement by pushing the Tower Resources share price lower to reflect the discounted price offered to the investors participating in the latest funding round.
Also read: The Long Term Prospects of the Top Energy Shares.
The markets did not care that the company’s Chairman and CEO subscribed for 142,857,143 new shares worth £250,000 during the placement. It is usually a good sign when a company’s executives participate in fundraising activities.
Tower Resources also issued an update on its operations, including its ongoing negotiations with BGFI Bank Group (BGFI) for a loan facility to finance the drilling of the NJOM-3 well in Cameroon, as detailed in the announcement on 29 June 2022.
The oil and gas company will use most of the proceeds of its recent capital raise to prepare for the drilling of the NJOM-3 well, including paying for the services associated with the well and for working capital purposes.
Jeremy Asher, Tower Resources Chairman and CEO, commented: “We are as confident as we can be about the completion of the TRCSA loan financing and other asset financings to complete the NJOM-3 well. We are also paying attention to the tighter markets for rigs and services, and we want to keep the operational discussions moving in parallel with the financial discussions. I have offered to participate in this Placing myself to underscore my personal confidence in our reaching our goals with the NJOM-3 well.”
For those wondering whether Tower Resources’ share price can recover, the short answer is yes, it can. However, there are no guarantees that the company will not dilute existing investors in future via another share placement.
*This is not investment advice. Always do your due diligence before making investment decisions.
Tower Resources share price.
The Tower Resources share price crashed 35.7% to trade at 0.18p, falling from Monday’s closing price of 0.28p.