Tlou Energy Regulatory News (TLOU)

Tlou Energy Limited

("Tlou" or "the Company")

Interim Results and Convertible Note update

The Company is pleased to announce its interim results for the six months ended 31 December 2021. The report is available on the Company's website at tlouenergy.com/financial_reports_notices

The Company has progressed remarkably over the period having finally delivered all the important targets that we have spoken about for many years. Key to this were two items:

(i) signing the 10MW Power Purchase Agreement with BPC, the first of its kind in Botswana; and

(ii) securing funds to start development of the 10MW Lesedi power project from our long-term supporter and largest shareholder, Botswana Public Officers Pension Fund.

Interim Results

As a Sub-Saharan electricity company, the future looks very bright indeed. The Lesedi 10MW project is just the start. Tlou has the potential to develop this project into hundreds of MW's of power with our existing independently certified gas reserves and contingent resources. The potential opportunity is enormous.

Sub-Saharan Africa demands reliable power, now more than ever, and the region needs to transition towards cleaner energy. Tlou's gas is the ideal transitional fuel source. Tlou is also developing solar and hydrogen power for the region. While the Lesedi 10MW project is the current priority, the green solar and hydrogen options are key to a clean future and will be progressed in tandem with the gas project. This is a very exciting time for the Company.

The market for power in Botswana alone is significant. However, while Botswana is our initial target the wider southern African region is also a key focus and in dire need of reliable power. Through the Southern African Power Pool, Tlou aims to tap into this power market opportunity.

Our results for the half year were in line with expectations. Importantly, we now have funding which allows us to progress development of the Lesedi project. During the period we were delighted to get our field operations back to normal post pandemic.

Gas Production

Our gas production wells continue to perform and we have been producing gas for a prolonged period. The Lesedi 3P production well was brought back online in January and started to produce gas much more quickly than expected which was a very encouraging development.

Gas production from the Lesedi 3P and Lesedi 4P wells for January 2022 amounted to 1,413 Mcf (thousand cubic feet) equivalent to (~250 BOE). Average daily production is approximately 56 Mcf (~10 BOE). These wells are dewatering in isolation and gas flow rates are expected to continue to increase, potentially significantly, when part of a full field development. We plan further production and exploration drilling in due course aimed at expanding gas production and to increase our gas reserves even further. Our current 2P gas reserves stand at approximately 41 billion cubic feet (~7.2m BOE).

Transmission Lines

Transmission line contractors are set to commence work in the field. The timeline for completion is 15-18 months and all going to plan we look forward to getting first power into the grid in 2023. While this is in progress, we will have a number of other activities ongoing as outlined below.

Central Processing Facility

The power generation site or Central Processing Facility (CPF) will be put in place and gas fired power generators installed. The CPF will be located adjacent to the Lesedi field camp, which is also being upgraded to accommodate more staff, equipment, a mechanical workshop, and storage facilities.

Solar

We also aim to install solar PV panels in the field. These will initially be used to power our field operations and at a later stage power can be sold into the grid.

Hydrogen

Our Hydrogen partner Synergen Met, is working on the pyrolysis prototype unit that we expect will be shipped to Lesedi later this year. This is a highly innovative project and could see Tlou's currently flared gas used to produce hydrogen and solid carbon products, using a clean process with no greenhouse gas emissions. A truly innovative way to produce clean fuel.

It has taken some time to get here but we have never been more positive and excited about the prospects for Tlou. The transition from an exploration focused entity to a developer was a key target and to see it come to fruition is extremely rewarding.

There is more work to do, and we look forward to progressing the Company to become a significant energy producer.

Convertible Note update

Further to the announcement on 30 November 2021, the Company and Botswana Public Officers Pension Fund (BPOPF) have agreed a minimum conversion price of BWP 0.50 (~£0.032) per share under the Convertible Note Agreement ("Note") and funds have been received by the Company.

Should BPOPF decide to convert the Note, the Company will issue a maximum of 115,772,900 ordinary shares in the Company. All other terms in relation to the Note remain unchanged.

By Authority of the Board of Directors

Mr. Anthony Gilby

Managing Director

The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK law by virtue of the European Union (withdrawal) Act 2018. The information is disclosed in accordance with the Company's obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

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For further information regarding this announcement please contact:

About Tlou

Tlou is developing energy solutions in Sub-Saharan Africa through gas-fired power, solar power and hydrogen projects. The company is listed on the ASX (Australia), AIM (UK) and the BSE (Botswana). The Lesedi Power Project ("Lesedi") is 100% owned and is the Company's most advanced. Tlou's competitive advantages include our ability to drill cost effectively for gas, our operational experience and Lesedi's strategic location in relation to energy customers. All major government approvals have been achieved.

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. Save as required by any applicable law or regulation, Tlou Energy Limited undertakes no obligation to update any forward-looking statements.

Consolidated statement of comprehensive income

Consolidated statement of financial position as at 31 December 2021

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes to the consolidated financial statements

Note 1. Significant accounting policies

Introduction

Tlou Energy Limited (Tlou) is a company domiciled and incorporated in Australia. The Financial Report for the half-year ended 31 December 2021 consists of the Financial Statements of Tlou Energy Limited and the entities it controlled during the period ('Consolidated Entity').

Compliance with accounting standards

The half-year financial report is a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standard AASB 134: Interim Financial Reporting.

The half-year financial report does not include all the notes of the type normally included in an annual financial report and shall be read in conjunction with the most recent annual financial report of the group.

Basis of preparation

The financial statements have been prepared on an accruals basis and are based on historical costs. The financial report is presented in Australian dollars.

The accounting policies and methods of computation applied by the Consolidated Entity in the consolidated interim financial report are the same as those applied by the Consolidated Entity in its consolidated financial report as at and for the year ended 30 June 2021, except as noted below.

New and revised standards

A number of new or amended standards became applicable for the current reporting period. The impact of the adoption of these standards did not have any impact on the group's accounting policies and did not require retrospective adjustments.

Going Concern

The consolidated financial statements have been prepared on a going concern basis which contemplates that the group will continue to meet its commitments and can therefore continue normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

Because of the nature of the operations, exploration companies, such as Tlou Energy Limited, find it necessary on a regular basis to raise additional cash funds to fund future exploration activity and meet other necessary corporate expenditure. At the date of this financial report, the ability of the group to execute its currently planned development, exploration and evaluation activities requires the group to raise additional capital within the next 12 months. Accordingly, the group is in the process of investigating various options for the raising of additional funds which may include but is not limited to an issue of shares or the sale of exploration assets where increased value has been created through previous exploration activity.

At the date of this financial report, none of the above fund-raising options have been concluded and no guarantee can be given that a successful outcome will eventuate. The directors have concluded that as a result of the current circumstances there exists a material uncertainty that may cast significant doubt regarding the group's and the Company's ability to continue as a going concern and therefore the group and Company may be unable to realise their assets and discharge their liabilities in the normal course of business. Nevertheless, after taking into account the current status of the various funding options currently being investigated and making other enquiries regarding other sources of funding, the directors have a reasonable expectation that the group and the Company will have adequate resources to fund its future operational requirements and for these reasons they continue to adopt the going concern basis in preparing the financial report.

The interim financial report does not include adjustments relating to the recoverability or classification of recorded assets amounts nor to the amounts or classification of liabilities that might be necessary should the group not be able to continue as a going concern.

Fair values

The fair values of Consolidated Entity's financial assets and financial liabilities approximate their carrying values. No financial assets or financial liabilities are readily traded on organised markets in standardised form.

Accounting estimates and judgements

Critical estimates and judgements are continually evaluated and are consistent with those disclosed in the previous annual report.

Exploration & evaluation assets

In a prior period the Consolidated Entity converted a prospecting licence into a mining licence. A mining licence allows the commencement of commercial development. Despite this management believe that it is not practical to commence amortisation of the exploration and evaluation assets held in relation to the mining licence as the Consolidated Entity has not yet entered into production of a commercially viable resource.

Note 2. Expenses

Note 3. Exploration and evaluation expenditure

Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. Such expenditures comprise net direct costs and an appropriate portion of related overhead expenditure but do not include overheads or administration expenditure not having a specific nexus with a particular area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves and active or significant operations in relation to the area are continuing.

Accumulated costs in relation to an area no longer considered viable are written off in full in the year the decision is made. Regular reviews are undertaken on each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phase is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.

Note 4. Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding freehold land) over their expected useful lives as follows:

Plant and equipment 3-7 years

Leasehold property 25 Years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

Note 5. Contingent liabilities

The Directors are not aware of any contingent liabilities at 31 December 2021.

Note 6. Contributed equity

Issued and paid up capital is recognised at the fair value of the consideration received by the consolidated entity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

*Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of, and amounts paid on, the shares held. The fully paid ordinary shares have no par value. On a show of hands every member present at a meeting, in person or by proxy, shall have one vote and upon a poll, each share shall have one vote. The Company does not have authorised capital or par value in respect of its issued shares.

Options and performance rights

At 31 December 2021, the following options for ordinary shares in Tlou Energy Limited and performance rights were on issue.

Options

Performance rights

The following table shows the number, movements and exercise price of performance rights at 31 December 2021.

The outstanding performance shares have the following key terms and conditions:

Note 7. Share-based payments

Share Options and Performance Rights may be granted to certain personnel of the Company on terms determined by the directors or otherwise approved by the Company at a general meeting.

Share options are granted for no consideration. Options and entitlements to the options are vested on a time basis and/or on specific performance-based criteria such as share price increases or reserves certification. Options granted as described above carry no dividend or voting rights. When exercisable, each option is convertible to one ordinary share.

Performance Rights are linked to the share price performance of the Company, ensuring alignment with the interests of the Company's shareholders. For the Performance Rights that are issued but not yet exercised at the date of this report to vest and, therefore, become exercisable by a participant, certain performance conditions are required to be met as set out below. On vesting, holders of Performance Rights will be entitled to acquire Tlou Energy Limited ordinary shares at nil cost.

Note 8. Segment information

Identification of reportable segments

Operating segments are identified on the basis of internal reports that are regularly reviewed by the executive team in order to allocate resources to the segment and assess its performance. The Company currently operates in one segment, being the exploration, evaluation and development of coalbed methane resources and power generation in southern Africa.

Segment revenue

As at 31 December 2021 no revenue has been derived from its operations (2020: $nil).

Segment assets

Segment non-current assets are allocated to countries based on where the assets are located as outlined below.

Note 9. Events occurring after balance date

Post the half-year end the Company received funds under the convertible note agreement with BPOPF. Other than the matters discussed in this report, there has not arisen in the interval between the end of the half-year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect significantly the operations of the group, the results of those operations or the state of affairs of the group in subsequent financial periods.

Directors' declaration

In the directors' opinion:

(a)  the attached financial statements and notes are in accordance with the Corporations Act 2001 including:

(i) the attached financial statements and notes thereto comply with the Corporations Act 2001, Australian Accounting Standard AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professional reporting requirements;

(ii) the attached financial statements and notes thereto give a true and fair view of the consolidated entity's financial position as at 31 December 2021 and of its performance for the financial half-year ended on that date; and

(iii) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of directors made pursuant to section 303(5)(a) of the Corporations Act 2001.

On behalf of the directors

Anthony Gilby

Managing Director

Dated at Brisbane this 2nd day of March 2022