TIDMTLOU
RNS Number : 8036J
Tlou Energy Ltd
16 April 2020
16 April 2020
Tlou Energy Limited
("Tlou" or "the Company")
OPERATIONAL REPORT - QUARTERING 31 MARCH 2020
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.
Power Purchase Agreement (PPA)
Just after the end of the quarter, the Company announced that an
interim 2MW CBM Pilot PPA has been agreed between the Company and
Botswana Power Corporation (BPC) with the interim PPA now
undergoing final regulatory formalities. The commercial terms of
the agreement remain confidential. This PPA is seen as a major step
forward for the Company.
The interim PPA facilitates connection to the power grid and
first revenue for the Company. A pathway to revenue generation is
key for the Company and once connected to the grid, expansion of
the project is expected to be relatively straightforward.
The project has been largely de-risked following the granting of
the PPA.
Regulatory approvals are in place that facilitate project
development including:
-- A Mining Licence for gas development valid until 2042;
-- Environmental Impact Assessment (EIA) approval for upstream
development comprising production wells, water handling, seismic,
gas gathering pipelines and a gas processing facility;
-- EIA approval for downstream development comprising 20MW of
gas fired power generation and 20MW of solar generation;
-- EIA approval for power station site and transmission line;
-- Generation Licence approval from Botswana Energy Regulatory
Authority (BERA). The Company is awaiting detailed licence
terms;
-- Serowe Sub-Land Board approval for transmission line wayleave
application (subject to compensation agreements). In addition the
route survey has been completed.
The Company submitted a proposal to Botswana's Ministry of
Mineral Resources Green Technology and Energy Security (MMGE) in
2018 for the development of a 10MW CBM Gas-to-Power plant. The 10MW
proposal is separate to the 2MW interim PPA. BPC and MMGE continue
to assess the 10MW proposal and will advise the Company in due
course.
Response to Prevailing Financial Market Conditions
The Covid-19 outbreak and the impact on financial markets is
challenging for many companies including Tlou and the government of
Botswana has declared a State of Emergency. It is difficult to
predict just how long the impact of Covid-19 will last and the
ultimate effect it may have on the Company.
Therefore, Tlou considers it to be prudent to significantly
reduce overheads so that existing funds last longer and to enable
the Company more time to conclude commercial and project finance
negotiations. Cost reductions will remain in place for the
foreseeable future, with further reductions possible if considered
necessary at a later date.
Lesedi 3 & 4 Production Pods
The Lesedi 3 and 4 production pods have been flowing gas for
many months with sustained gas flow rates having been achieved from
both pods.
Increased sustained gas flow rates are anticipated to take some
considerable time, based on the currently available data, unless
additional wells are drilled to facilitate the dewatering process.
A decision to drill additional wells is being considered but no
decision has yet been made.
During the quarter, the Company proposed to shut-in one or
possibly both of the production pods as sufficient data has now
been gathered indicating the presence of potentially commercial gas
in the coal seams. Shutting-in the wells reduces unnecessary
expenditure and stops flaring of gas that could otherwise be
converted to electricity and sold once the project is connected to
the grid. Bringing the pods back on-line should not take too long
given the current understanding of the production process gleaned
from the comprehensive data base acquired.
Solar Power
The Company is advancing its plans for development of solar
power. Solar generation can work as a standalone project or in
addition to the planned gas fired generation. Both solar and gas
can be used together to provide reliable base load power, with
solar generation during daylight hours and gas fired power used
when solar is unavailable. This approach would further reduce
carbon dioxide emissions compared to Botswana's existing coal and
diesel fired generation.
The Company has engaged with potential suppliers and consultants
to prepare the design of the solar project and will provide further
details to the market in the near term.
Forward plan
While on-the-ground access is restricted, the Company can
constructively advance project finance and the 10MW PPA
negotiations.
In relation to project finance, discussions with potential
project finance partners progressed during the quarter with the
Company evaluating debt or equity funding or a mix of both. Tlou's
objective is to source the lowest cost of capital with the least
risk going forward.
The Company currently plans to secure the funds required for the
electrical transmission lines over the next few months with work
ideally able to commence on the ground in the second half of 2020
(subject to current travel restrictions being lifted). Initial
focus will be on construction of the transmission lines given that
this is currently the principal next step in the continuum of
project risk reduction.
Project areas
The Company has three project areas in Botswana:
-- Lesedi Project - Development, Exploration
-- Mamba Project - Exploration
-- Boomslang Project - Exploration
Lesedi CBM 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 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 3 and 4
production wells or 'pods'.
The Lesedi project is the Company's most advanced project, with
plans in place to install 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.
Tlou has the only CBM Mining Licence in Botswana. A 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 so the
Company has security of tenure over the project.
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). The potential upside from further successful development of
this area is substantial.
The status of the Lesedi area licences is as follows:
Licence Expiry Status
Mining Licence 2017/18L August 2042 Current
--------------- --------
PL 001/2004 March 2021 Current
--------------- --------
PL 003/2004 March 2021 Current
--------------- --------
PL 035/2000 September 2020 Current
--------------- --------
PL 037/2000 September 2020 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 PL's covering an
area of approximately 4,500 Km(2) . The Mamba area is considered to
be highly prospective being situated adjacent to Tlou's Lesedi CBM
Project and being 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
considerable flexibility and optionality. Geographically, the Mamba
Project area is approximately 50 Km closer to the Orapa Power
station than the Lesedi Project area.
Independently certified 3P Gas Reserves of 175 BCF are already
in place at the Mamba project. Further core-hole drilling and a
proposed seismic survey of the area could significantly 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.
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%
The Company's most recently acquired 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 and
considered to be highly prospective.
The Boomslang licence area provides the Company further
flexibility and optionality for development of different
projects.
The Company is awaiting confirmation of environmental approval
to commence exploration operations in the Boomslang area. This is
expected to be granted in mid-2020, thereafter and subject to
funding initial exploration operations are planned for this
area.
The status of the Boomslang area licence is as follows:
Licence Expiry Status
PL 011/2019 March 2022 Current
----------- --------
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
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
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+44 (0)20 7383
Grant Thornton (Nominated Adviser) 5100
-----------------
Colin Aaronson, Harrison Clarke, Samantha Harrison,
Seamus Fricker
-----------------
+44 (0) 207 408
Shore Capital (Broker) 4090
-----------------
Jerry Keen, Toby Gibbs
-----------------
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 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 2020
-----------------------------------
Consolidated statement of cash Current quarter Year to date
flows (nine 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 (9)
(c) production
(d) staff costs (172) (851)
(e) administration and corporate
costs (240) (823)
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 (VAT/GST refunds) 29 335
---------------- ---------------
Net cash from / (used in)
1.9 operating activities (383) (1,348)
----------------- ----------------------------------- ---------------- ---------------
2. Cash flows from investing
activities
2.1 Payments to acquire:
(a) entities
(b) tenements
(c) property, plant and equipment 2 (149)
(d) exploration & evaluation
(if capitalised) (321) (1,399)
(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 (319) (1,548)
----------------- ----------------------------------- ---------------- ---------------
3. Cash flows from financing
activities
3.1 Proceeds from issues of equity
securities (excluding convertible
debt securities)
3.2 Proceeds from issue of convertible
debt securities
3.3 Proceeds from exercise of
options
3.4 Transaction costs related
to issues of equity securities
or convertible debt securities
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)
---------------- ---------------
3.10 Net cash from / (used in) - -
financing activities
----------------- ----------------------------------- ---------------- ---------------
4. Net increase / (decrease)
in cash and cash equivalents
for the period
Cash and cash equivalents
4.1 at beginning of period 2,958 5,205
Net cash from / (used in)
operating activities (item
4.2 1.9 above) (383) (1,348)
Net cash from / (used in)
investing activities (item
4.3 2.6 above) (319) (1,548)
4.4 Net cash from / (used in) - -
financing activities (item
3.10 above)
Effect of movement in exchange
4.5 rates on cash held (63) (116)
---------------- ---------------
Cash and cash equivalents
4.6 at end of period 2,193 2,193
----------------- ----------------------------------- ---------------- ---------------
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 2,193 2,958
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) 2,193 2,958
----------------- ------------------------------------ ---------------- -----------------
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 1 120
----------------
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) 383
8.2 Capitalised exploration & evaluation (Item 321
2.1(d))
8.3 Total relevant outgoings (Item 8.1 + Item 704
8.2)
8.4 Cash and cash equivalents at quarter end 2,193
(Item 4.6)
8.5 Unused finance facilities available at quarter -
end (Item 7.5)
8.6 Total available funding (Item 8.4 + Item 2,193
8.5)
Estimated quarters of funding available
8.7 (Item 8.6 divided by Item 8.3) 3
----------------- ---------------------------------------------------------
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?
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Answer:
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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?
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Answer:
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3. Does the entity expect to be able to continue its operations
and to meet its business objectives and, if so, on what
basis?
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Answer:
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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: ......16/04/2020..........................................................
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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END
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