TIDMTLOU
RNS Number : 5127W
Tlou Energy Ltd
26 April 2021
Click on the link to view full announcement:
http://www.rns-pdf.londonstockexchange.com/rns/5127W_1-2021-4-25.pdf
26 April 2021
Tlou Energy Limited
("Tlou" or "the Company")
Operational Report - Quarter ending 31 March 2021
Tlou Energy Limited is an ASX, AIM and BSE listed company
focused on delivering power in Botswana and southern Africa through
the exploration and development of gas and solar. The Lesedi Power
Project ("Lesedi") is the Company's most advanced project. Tlou
plans to develop gas and solar power generation assets at Lesedi
with the sale of electricity into the regional power grid. In
addition, the Company has two large exploration areas designated
Mamba and Boomslang.
Project Finance
The Company is seeking project finance to build infrastructure
to connect the Lesedi power project to the existing electricity
grid in Botswana. This infrastructure includes transmission lines,
electrical substations as well as the installation of gas and solar
generation assets.
Project finance discussions are at an advanced stage with a very
reputable Botswana-based entity. Due to confidentiality the Company
is unable to name the entity concerned at this time. However, we
can confirm that their investment committee and board have
discussed the project financing and are favourably disposed to
Tlou's proposal. They are now proceeding with a third-party
technical review of the project as part of their due diligence
process. Once this report is assessed an investment decision can be
made.
The Lesedi project is proposed to be developed in two phases.
Phase One involves transmission line construction, substations,
grid connection, electricity generators and potentially the
drilling of additional gas wells. The 100 Km transmission line will
run from the Lesedi project to the town of Serowe where it will
connect to the existing power grid. Initial generation is proposed
to be up to 2MW of electricity. Funding required for Phase One is
USD $10m which can be staged if necessary or prudent to do so.
Phase Two funding is for the expansion of electricity generation
up to 10MW. This will involve drilling gas wells and the purchase
of additional electricity generation assets. The funding required
for Phase Two is USD $20m. Upon successful completion of Phase One
and Two, the Company plans to expand the project beyond 10MW.
During the quarter, the Company successfully raised gross
proceeds of GBP2.625 million pursuant to the placing of 75,000,000
new shares at an issue price of 3.5 pence per share. The f unds
raised are planned to go towards commencement of transmission line
construction. While this work proceeds, Tlou will also continue its
negotiations with other financiers for further development of the
Lesedi project.
Boomslang Project - Environmental Impact Statement (EIS)
Approved
Botswana's Department of Environmental Affairs (DEA) has
approved the EIS for Tlou's Boomslang project. The Boomslang
Prospecting Licence PL011/2019 is located adjacent to the Company's
Lesedi power project.
All proposed project activities outlined under the EIS have been
authorised. These include:
-- Drilling of core holes and stratigraphy boreholes;
-- Conducting seismic and geomagnetic surveys;
-- Pilot testing pods, monitoring wells and evaporation ponds; and
-- Installation of pumping monitoring, gathering lines and evaluation equipment.
Tlou believes the Boomslang project can complement the more
mature Lesedi and Mamba projects, particularly given the presence
of the highly prospective Serowe coal seam. The Lesedi and Mamba
projects primarily target the deeper Morupule coal seam.
EIS approval for exploration of the Boomslang permit (Tlou 100%)
represents another key milestone for the Company. Successful
exploration and development of the Boomslang area could facilitate
Tlou's longer term strategy of expansion beyond the current Lesedi
project area.
Lesedi Project - Commencement of Development
The Company plans to commence work on the development of the
Lesedi project as soon as possible. Key stages to achieve first
revenue are as follows:
1. Construction of the transmission line to connect Lesedi to the existing power grid
2. Installation of substations at the Lesedi site and at Serowe to integrate with the grid
3. Installation of generation assets at Lesedi
4. Commissioning and testing
5. Sale of first power
Following the recent capital raising, the Company has funds in
place to allow the transmission line construction to commence.
Transmission Line Tender
As outlined above, the first phase of development will be the
construction of a transmission line to connect to the electricity
grid. The line will be 100 Km in length with a 66kV overhead cable.
The route has been surveyed and full environmental approval is in
place. The line will predominantly cross relatively flat, arid
terrain with the last 5 Km being through the outskirts of the
Serowe township.
The Company had issued tenders for the construction of the
transmission line and substations and post quarter end tenders were
awarded to Zismo Engineering (Pty) Ltd ("Zismo") for the
construction of the overhead lines and to OptiPower for
construction of substations at Lesedi and Serowe. The Company looks
forward to finalising the contracts with both groups and subsequent
commencement of construction.
-- Zismo is a Botswana-based Electrical Engineering,
Contracting, Automation and Refurbishment Company. Further
information is available at http://zismoengineering.com.
-- OptiPower is a division of Murray & Roberts Ltd. Based in
South Africa, OptiPower's core business includes the construction
of substations, power lines and fibre optic networks. See
https://optipower.co.za for further details.
10MW Power Purchase Agreement (PPA)
During the quarter, the Company received correspondence from
advisors assisting the Government of Botswana in the execution of
their Coal Bed Methane (CBM) program for the development of up to
100MW of CBM fueled pilot power plants.
The aim of this process is to secure a 10MW PPA between Tlou and
the national energy utility, Botswana Power Corporation (BPC). The
advisors have confirmed that they are reviewing project documents
including the draft PPA. The Company is focused on progressing this
to a conclusion as soon as possible.
Other items
Orapa Gas Supply Tender
Botswana Power Corporation has issued a tender for the supply
and delivery of natural gas to the Orapa 90MW power plant. The
power plant provides power to the Orapa diamond mine - one of the
largest diamond mines in the world. Orapa is currently running on
intermittent grid power and emergency diesel generation. Anglo
American PLC, owner of the De Beers group and co-owner of Orapa
along with the Government of Botswana, has publicly stated their
objective to move to cleaner fuel sources.
Gas from Tlou's nearby discoveries could be ideally suited to
assist with meeting their cleaner energy objectives. The Company
will review the tender documentation and subject to meeting the
eligibility criteria, plan to submit a response. The tender closes
in May 2021.
Hydrogen
The Company is looking into the potential of using gas and solar
to produce Hydrogen power. These early-stage plans may lead to a
trial project hosted at the Company's field operations in
Botswana.
Forward plan
Key focus areas include:
-- Commence work on the transmission line infrastructure
-- Finalise funding to advance the Lesedi power project towards
initial electricity generation and first revenue
-- Agree and sign a 10MW power purchase agreement
-- Progressing solar development plans
-- Drilling additional gas wells in the Lesedi project
-- Completing further operations across the Mamba and Boomslang project areas
Project Areas
The Company has three project areas in Botswana:
-- Lesedi Project - Gas & Solar Development, Exploration & Evaluation
-- Mamba Project - Exploration & Evaluation
-- Boomslang Project - Exploration & Evaluation
Lesedi Project Area, Botswana
Licences: Mining Licence 2017/18L, Prospecting Licences 001
& 003/2004 and 35 & 37/2000
Ownership: Tlou Energy Limited 100%
The Lesedi project covers an area of approximately 3,800 Km(2)
and consists of four Coal and Coal Bed Methane (CBM) Prospecting
Licences (PL) and a Mining Licence. The Mining Licence area is
currently the focal point for the Company's operations and includes
the Lesedi production wells or 'pods'.
The Lesedi project is the Company's most advanced project. Plans
are in place to purchase land at the Lesedi project, install solar
photovoltaic (PV) panels and gas-fired electricity generators and
connect to the power grid in Botswana. The project has full
environmental approval which includes gas extraction, electricity
generation and construction of transmission lines. In addition, the
Company has approval for 20MW of solar generation. CBM power is
ideal for use in conjunction with solar projects. A generation
licence has also been granted by the Botswana Energy Regulatory
Authority (BERA). This licence has a 15-year term and is valid for
both solar and gas-fired generation.
Tlou's mining licence is required by an operator to develop a
CBM asset. This licence spans a large 900 Km(2) area and is valid
until 2042.
Tlou has the only independently certified CBM gas reserves in
Botswana, with 252 Billion Cubic Feet (BCF) of 3P gas Reserves
certified in the Lesedi project area. In addition, the 3C
Contingent Gas Resources are approximately 3 Trillion Cubic Feet
(TCF).
Initial development of the Lesedi project is planned to be up to
10MW of power. With plans for solar and gas fired power, these can
be standalone operations or a hybrid solution with gas-fired power
able to provide back-up power when solar is not available. The
location of the Central Processing Facility (generation site) at
the Lesedi project is approximately 100 Km from the electricity
grid and the Company is planning to construct a 100 Km transmission
line to connect to the grid.
The proposed off-taker (purchaser) of the power generated by
Tlou is BPC. The Company has signed a PPA with BPC for the first
2MW of electricity and a submission has been made to secure a PPA
for up to 10MW.
The status of the Lesedi area licences is as follows:
Licence Expiry Status
Mining Licence 2017/18L August 2042 Current
------------------------------ ------------------------------
PL 001/2004 Renewal application submitted Awaiting renewal confirmation
------------------------------ ------------------------------
PL 003/2004 Renewal application submitted Awaiting renewal confirmation
------------------------------ ------------------------------
PL 035/2000 September 2022 Current
------------------------------ ------------------------------
PL 037/2000 September 2022 Current
------------------------------ ------------------------------
Mamba Project Area, Botswana
Licences: Prospecting Licences 237-241/2014
Ownership: Tlou Energy Limited 100%
The Mamba project consists of five Coal and CBM prospecting
licence s covering an area of approximately 4,500 Km(2) . The Mamba
area is situated adjacent to Tlou's Lesedi project and is on-trend
with the asset that has produced the encouraging results observed
to date. In the event of a gas field development by Tlou, the Mamba
area provides the Company with flexibility and optionality.
Independently certified 3P Gas Reserves of 175 BCF are already
in place at the Mamba project. The Mamba project is in the
exploration and evaluation phase with further operations required
on these licences. The next stage of development is likely to be
core-hole drilling and a seismic survey of the area. Positive
results from these operations could expand the reserves footprint
across the Mamba project area.
The Mamba area has the potential to become a separate revenue
generating development project in addition to the proposed
development at Lesedi, with solar and gas-fired generation a
possibility subject to approvals. Geographically, the Mamba project
area is approximately 50 Km closer to the Orapa Power station
compared to the Lesedi project area. The potential exists for a gas
pipeline to be constructed to supply gas from the Mamba project to
the 90MW Orapa power station.
The status of the Mamba area licences is as follows:
Licence Expiry Status
PL 237/2014 September 2021 Current
--------------- --------
PL 238/2014 September 2021 Current
--------------- --------
PL 239/2014 September 2021 Current
--------------- --------
PL 240/2014 September 2021 Current
--------------- --------
PL 241/2014 September 2021 Current
--------------- --------
Boomslang Project Area, Botswana
Licence: Prospecting Licence 011/2019
Ownership: Tlou Energy Limited 100%
Prospecting Licence, PL011/2019 designated "Boomslang", is valid
for an initial term of 3 years. The licence area is approximately
1,000 Km(2) and is situated adjacent to the Company's existing
licences. The Boomslang area is also located on-trend with the
asset that has produced the encouraging results observed to date at
the Lesedi project.
The Boomslang licence area provides the Company further
flexibility and optionality for development of different
projects.
There have been no ground operations completed in the Boomslang
area as the Company only received environmental approval to
commence exploration activities during the quarter. Subject to
funding, initial exploration work is planned for this area. Like
the Lesedi and Mamba areas, the Boomslang project could produce
solar and gas-fired power.
The status of the Boomslang area licence is as follows:
Licence Expiry Status
PL 011/2019 March 2022 Current
----------- --------
By Authority of the Board of Directors
Mr. Anthony Gilby
Managing Director
****
For further information regarding this announcement please
contact:
Tlou Energy Limited +61 7 3012 9793
Tony Gilby, Managing Director
---------------------
Solomon Rowland, General Manager
---------------------
Grant Thornton (Nominated Adviser) +44 (0)20 7383 5100
---------------------
Harrison Clarke, Colin Aaronson, Lukas
Girzadas
---------------------
Shore Capital (Broker) +44 (0)20 7408 4090
---------------------
Jerry Keen, Toby Gibbs, John More
---------------------
Vigo Consulting (PR) +44 (0)20 7390 0230
---------------------
Patrick d'Ancona, Chris McMahon, Simon
Woods
---------------------
Company Information
Tlou Energy is focused on delivering power solutions to Botswana
and southern Africa to alleviate some of the chronic power shortage
in the region. Tlou is currently developing projects using gas and
plans to combine this with solar power to provide a cleaner base
load power source.
Botswana has a significant energy shortage and generally relies
on imported power and diesel generation to fulfil its power
requirements. Tlou's Lesedi Power Project provides investors with
access to a compelling opportunity to displace expensive, carbon
intensive diesel and imported coal-fired electricity with a cleaner
and more environmentally friendly alternative.
In addition to plans for cleaner energy, the Company is also
committed to developing community projects in Botswana adding real
value to peoples' lives in a region with sparse services and where
few opportunities exist for the local population. This includes
work to assist communities to become self-sustaining, develop
business opportunities, improve access to education and create
opportunities for self-employment and wealth creation.
The Company is listed on the Australian Securities Exchange,
London's AIM market and the Botswana Stock Exchange and is led by
an experienced Board, management, and advisory team.
The project is significantly de-risked. The Company produced its
first gas in 2014, has a Mining (or development) Licence valid to
2042 and 10 Prospecting (or exploration) Licences. The Company's
project acreage covers a vast area spanning approximately 9,300
Km(2) in total.
Tlou's Lesedi and Mamba projects already benefit from
significant independently certified 2P gas Reserves of 41 Billion
Cubic Feet (BCF). In addition, 3P gas Reserves of 427 BCF and
Contingent Gas Resources of 3,043 BCF provide significant
additional potential.
The Company is planning an initial scalable power project.
Following successful implementation of this first scalable project,
the Company looks forward to evaluating longer-term prospects for
the delivery of additional electricity to Botswana and to
neighbouring countries.
Forward-Looking Statements
This announcement may contain certain forward-looking
statements. Actual results may differ materially from those
projected or implied in any forward-looking statements. Such
forward-looking information involves risks and uncertainties that
could significantly affect expected results. No representation is
made that any of those statements or forecasts will come to pass or
that any forecast results will be achieved. You are cautioned not
to place any reliance on such statements or forecasts. Those
forward-looking and other statements speak only as at the date of
this announcement. Tlou Energy Limited undertakes no obligation to
update any forward-looking statements.
Appendix 5B
Mining exploration entity or oil and gas exploration entity
quarterly cash flow report
Name of entity
------------------------------------------------------
Tlou Energy Limited
ABN Quarter ended ("current quarter")
--------------- -----------------------------------
79 136 739 967 31 March 2021
-----------------------------------
Consolidated statement of cash Current quarter Year to date
flows (9 months)
$A'000 $A'000
1. Cash flows from operating
activities
1.1 Receipts from customers
1.2 Payments for
(a) exploration & evaluation
(if expensed)
(b) development (126)
(c) production
(d) staff costs (195) (495)
(e) administration and corporate
costs (180) (573)
1.3 Dividends received (see note
3)
1.4 Interest received
1.5 Interest and other costs of
finance paid
1.6 Income taxes paid
1.7 Government grants and tax
incentives
1.8 Other 5 75
---------------- -------------
Net cash from / (used in)
1.9 operating activities (370) (1,119)
----------------- ----------------------------------- ---------------- -------------
2. Cash flows from investing
activities
2.1 Payments to acquire:
(a) entities
(b) tenements
(c) property, plant and equipment (5) (44)
(d) exploration & evaluation
(if capitalised) (135) (648)
(e) investments
(f) other non-current assets
2.2 Proceeds from the disposal
of:
(a) entities
(b) tenements
(c) property, plant and equipment
(d) investments
(e) other non-current assets
2.3 Cash flows from loans to other
entities
2.4 Dividends received (see note
3)
2.5 Other (provide details if
material)
---------------- -------------
Net cash from / (used in)
2.6 investing activities (140) (692)
----------------- ----------------------------------- ---------------- -------------
3. Cash flows from financing
activities
Proceeds from issues of equity
securities (excluding convertible
3.1 debt securities) 4,725 7,726
3.2 Proceeds from issue of convertible
debt securities
3.3 Proceeds from exercise of
options
Transaction costs related
to issues of equity securities
3.4 or convertible debt securities (269) (549)
3.5 Proceeds from borrowings
3.6 Repayment of borrowings
3.7 Transaction costs related
to loans and borrowings
3.8 Dividends paid
3.9 Other (provide details if
material)
---------------- -------------
Net cash from / (used in)
3.10 financing activities 4,456 7,177
----------------- ----------------------------------- ---------------- -------------
4. Net increase / (decrease)
in cash and cash equivalents
for the period
Cash and cash equivalents
4.1 at beginning of period 3,032 1,576
Net cash from / (used in)
operating activities (item
4.2 1.9 above) (370) (1,119)
Net cash from / (used in)
investing activities (item
4.3 2.6 above) (140) (692)
Net cash from / (used in)
financing activities (item
4.4 3.10 above) 4,456 7,177
Effect of movement in exchange
4.5 rates on cash held (57) (21)
---------------- -------------
Cash and cash equivalents
4.6 at end of period 6,921 6,921
----------------- ----------------------------------- ---------------- -------------
5. Reconciliation of cash and Current quarter Previous quarter
cash equivalents $A'000 $A'000
at the end of the quarter
(as shown in the consolidated
statement of cash flows) to
the related items in the accounts
5.1 Bank balances 6,921 3,032
5.2 Call deposits
5.3 Bank overdrafts
5.4 Other (provide details)
---------------- -----------------
Cash and cash equivalents
at end of quarter (should
5.5 equal item 4.6 above) 6,921 3,032
----------------- ------------------------------------ ---------------- -----------------
6. Payments to related parties of the entity Current quarter
and their associates $A'000
Aggregate amount of payments to related
parties and their associates included in
6.1 item 1 150
----------------
6.2 Aggregate amount of payments to related
parties and their associates included in
item 2
----------------
Note: if any amounts are shown in items 6.1 or 6.2, your quarterly
activity report must include a description of, and an explanation
for, such payments
Item 6.1 includes payment of Directors salaries, fees and office
rent.
----------------------------------------------------------------------------------
7. Financing facilities Total facility Amount drawn
Note: the term "facility' amount at quarter at quarter end
includes all forms of financing end $A'000
arrangements available to $A'000
the entity. Add notes as necessary
for an understanding of the
sources of finance available
to the entity.
7.1 Loan facilities - -
------------------- ----------------
7.2 Credit standby arrangements - -
------------------- ----------------
7.3 Other (please specify) - -
------------------- ----------------
7.4 Total financing facilities - -
------------------- ----------------
7.5 Unused financing facilities available at -
quarter end
----------------
7.6 Include in the box below a description of each facility
above, including the lender, interest rate, maturity date
and whether it is secured or unsecured. If any additional
financing facilities have been entered into or are proposed
to be entered into after quarter end, include a note providing
details of those facilities as well.
----------------- ----------------------------------------------------------------------------
8. Estimated cash available for future operating $A'000
activities
Net cash from / (used in) operating activities
8.1 (Item 1.9) 370
8.2 Capitalised exploration & evaluation (Item 135
2.1(d))
8.3 Total relevant outgoings (Item 8.1 + Item 505
8.2)
8.4 Cash and cash equivalents at quarter end 6,921
(Item 4.6)
8.5 Unused finance facilities available at quarter -
end (Item 7.5)
8.6 Total available funding (Item 8.4 + Item 6,921
8.5)
Estimated quarters of funding available
8.7 (Item 8.6 divided by Item 8.3) 14
----------------- ---------------------------------------------------------
8.8 If Item 8.7 is less than 2 quarters, please provide answers
to the following questions:
1. Does the entity expect that it will continue to have
the current level of net operating cash flows for the
time being and, if not, why not?
-------------------------------------------------------------------
Answer:
-------------------------------------------------------------------
2. Has the entity taken any steps, or does it propose
to take any steps, to raise further cash to fund its operations
and, if so, what are those steps and how likely does it
believe that they will be successful?
-------------------------------------------------------------------
Answer:
-------------------------------------------------------------------
3. Does the entity expect to be able to continue its operations
and to meet its business objectives and, if so, on what
basis?
-------------------------------------------------------------------
Answer:
-------------------------------------------------------------------
Compliance statement
1 This statement has been prepared in accordance with accounting
standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.
Date: ......26/04/2021..........................................................
Authorised by: .....By the
Board.........................................................
(Name of body or officer authorising release - see note 4)
Notes
1. This quarterly cash flow report and the accompanying activity
report provide a basis for informing the market about the entity's
activities for the past quarter, how they have been financed and
the effect this has had on its cash position. An entity that wishes
to disclose additional information over and above the minimum
required under the Listing Rules is encouraged to do so.
2. If this quarterly cash flow report has been prepared in
accordance with Australian Accounting Standards, the definitions
in, and provisions of, AASB 6: Exploration for and Evaluation of
Mineral Resources and AASB 107: Statement of Cash Flows apply to
this report. If this quarterly cash flow report has been prepared
in accordance with other accounting standards agreed by ASX
pursuant to Listing Rule 19.11A, the corresponding equivalent
standards apply to this report.
3. Dividends received may be classified either as cash flows
from operating activities or cash flows from investing activities,
depending on the accounting policy of the entity.
4. If this report has been authorised for release to the market
by your board of directors, you can insert here: "By the board". If
it has been authorised for release to the market by a committee of
your board of directors, you can insert here: "By the [name of
board committee - eg Audit and Risk Committee]". If it has been
authorised for release to the market by a disclosure committee, you
can insert here: "By the Disclosure Committee".
5. If this report has been authorised for release to the market
by your board of directors and you wish to hold yourself out as
complying with recommendation 4.2 of the ASX Corporate Governance
Council's Corporate Governance Principles and Recommendations, the
board should have received a declaration from its CEO and CFO that,
in their opinion, the financial records of the entity have been
properly maintained, that this report complies with the appropriate
accounting standards and gives a true and fair view of the cash
flows of the entity, and that their opinion has been formed on the
basis of a sound system of risk management and internal control
which is operating effectively.
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