RE: New Year Message to the curious29 Dec 2021 09:28
If you are viewing TLOU with a view to potentially putting a few shillings into shares - don't be put off by the apparent lack of interest on this chatroom or the current share price, which, imho,makes this share a strong buy.
If you are ready to look at the next share on your list of shares, please check out this one further and don't judge this book by it's cover.
In a nutshell ....
1. Our CEO has decades of experience in the gas and oil industry.
2. He switched to Gas from Oil in the early 2000's , managing two Australian companies (Arrow and Sunshine) before selling them off with profits of $1Bn and $3.5BN for shareholders on the ASX exchange.
3. Red tape in Australia and a lowish selling price of $10-$12 per unit put him off a further stab at a third CBM (Coal Based Methane, i.e. Gas) in his native country!
4. He settled on Botswana for its stable government, abundance of suitable coal to provide CBM, and a huge demand for imported power at much high prices. They were producing some power for themselves from expensive , dirty , diesel and selling it at the equivalent of $30 per unit!
5. He formed TLOU Energy (Tlou is the local name for an elephant), and listed us on the London Stock Exchange as well as ASX and the Botswana exchange.
6. He adopted the slowly, slowly , catch a monkey approach to develop TLOU. He aimed to produce gas in small quantities to prove the viability of CBM , to lower the cost of financing many expansions whilst keeping our costs to a minimum. Any profits would be help finance the many expansions!
7. He started with a site at Selemo , which produced gas very quickly and the excess water was removed withing a couple of months! Selemo was subject to royalties from the company we bought the mineral rights from!
8. A decision was made to change tactics! Instead of selling gas through pipelines (the Botswana diesel power is produced by dual-fuel generators , oil or gas , though gas has never been available), TLOU decided to generate electricty themselves!
N.B. Orapa (diamond mines) have us on their short-list to pipe gas to them one day!
9. Tlou were generating electricity for the site from 50k barrels of diesel - they saved those costs by modifying a gas to power generator for the Selemo gas and have been self sufficent on electricity since 2015 - the royalties were based on gas (12.5%) or electricity (3%) so I guess those are still payable.
10. Wisely , TLOU switched to one of our royalty-free sites , Lesedi (Mamba and Boomslang are the others). We expected Lesedi to perform as well as Selemo but there is much more water at Lesedi and it is taking forever to get it out , hindered by Covid , which ruled out drilling more wells to assist with dewatering.
11. It is a recognised rule of thumb, that more water = more cavities etc = more gas production when the water reaches low levels.
12. All permissions are granted, contractors are ready to erect the transmission lines from Lesedi to Serowe(Grid).