Last checked at 23 Oct 2017 12:12
23 October 2017
Tlou Energy Limited
("Tlou" or "the Company")
OPERATIONAL REPORT - QUARTER ENDING 30 SEPTEMBER 2017
Tlou Energy Limited, the AIM and ASX listed company focused on delivering power in Botswana and southern Africa through the development of coal bed methane ('CBM'), is pleased to provide its operational report in respect to its Lesedi and Mamba CBM Projects in Botswana for the quarter ended 30 September 2017.
Highlights
· Mining Licence granted over ~900km2 of the Company's project area
· Gas to power proposal submitted to the Government of Botswana
· Botswana based Non-Executive Director Ms Linah Mohohlo appointed to the Board
· Development financing negotiations ongoing with various interested parties locally and internationally
· Seismic survey commenced at the Lesedi and Mamba project areas post quarter end
TLOU ENERGY LIMITED PROJECTS
Lesedi CBM Project Area, Botswana
Mining Licence, PLs 001 & 003/2004 and PLs 35 & 37/2000
Tlou Energy Limited 100%
The Lesedi project consists of five CBM licences in Botswana covering an area of approximately 3,800km2. Four of the licences are Prospecting Licences and one has now been converted to a Mining Licence. The Mining Licence area is currently the focal point for the Company's operations and includes the Selemo pilot project where the Company has been producing gas for over 12 months.
The status of the Lesedi area licences is as follows:
Licence | Expiry | Status |
Mining Licence | August 2042 | Current |
PL 001/2004 | March 2019 | Current |
PL 003/2004 | March 2019 | Current |
PL 035/2000 | September 2018 | Current |
PL 037/2000 | September 2018 | Current |
Mining Licence
In August 2017, Tlou was granted its Mining Licence by Botswana's Department of Mines in the Ministry of Mineral Resources, Green Technology and Energy Security ("the Ministry"). This milestone achievement gives the Company security of tenure over the Lesedi project area and progresses Tlou's activities from CBM exploration and appraisal to development.
In Botswana, holders of Prospecting Licences ("PL") are issued Mining Licences once exploration on a relevant PL has been concluded and the holder of the PL is ready to commence commercial production. Mining licences are assessed in accordance with the prescribed statutory requirements of the Botswana Mines and Minerals Act. Two major components of a Mining Licence application are an approved Environmental Impact Statement (granted for the Lesedi Project in September 2016) and a feasibility study for the relevant project.
Key terms and information included in the Mining Licence are:
· The Mining Licence has been issued in terms of Section 41 of the Mines and Minerals Act of Botswana;
· The licence grants the holder the right to produce CBM natural gas in the approved Mining Licence area for a term of 25 years commencing on 21 August 2017 and ending on 20 August 2042;
· The Mining Licence was granted in full across the area applied for, which was previously known as Prospecting Licence PL002/2004;
· The licence area is approximately 900Km2;
· An annual licence fee is payable to the office of the Director of Mines of approximately USD$9,000;
· Project development can commence at any time with no minimum spend stipulated;
· Royalties are payable to the Government of Botswana in accordance with Section 66 of the Mines and Minerals Act. Royalties are currently payable at a rate of 3% of gross market value. Gross market value is defined as the sale value receivable at the mine gate in an arm's length transaction without discounts, commissions or deductions for the mineral or mineral product on disposal.
Proposal for a CBM Power Project submitted to Government of Botswana
Early in 2017, the Company received a detailed Request for Proposal ("RFP") from the Ministry for the development of up to 100MW of CBM fuelled pilot power plants in Botswana. Tlou Energy submitted its response to the RFP to the Ministry in September 2017.
This proposal assists in the development of a CBM gas industry in the country and can create a new market for Tlou's independently-certified gas reserves of ~261 billion cubic feet (3P) and significant contingent gas resources of ~3.2 trillion cubic feet (3C). The RFP submission will be assessed based on conditions including eligibility, technical and funding criteria. Tlou's submission outlined a staged development commencing with up to 10MW of generation as well as outlining project feasibility, proposed field development, installation of power generation facilities and supply of power into the grid in Botswana. Some of the key points in the proposal are outlined below.
· Tlou's proposal was submitted as planned prior to the deadline of 20 September 2017, and was accepted by the Ministry;
· The proposal involves the development of a CBM Gas to Power project in an incremental manner;
· The submission will be assessed based on eligibility, technical and funding criteria;
· An indicative date for receipt of a response on Tlou's submission is not yet known but is anticipated in the near term;
Preparation and submission of documentation for the response to the government's request was a very intensive task, taking many months to complete. The submission has described Tlou's planned project in detail as well as outlining the benefits the project can bring to Botswana both directly and indirectly.
If Tlou's submission response is successful, this will provide an ideal pathway towards a power purchase agreement. Once an initial development is completed, Tlou Energy's gas field will be connected to the regional grid, thereby opening the possibility for the Company to provide power across the southern African region, via the Southern African Power Pool.
Mamba Project Area, Botswana
PLs 237-241/2014
Tlou Energy Limited 100%
The Mamba project consists of five CBM prospecting licences in Botswana covering an area of approximately 4,500km2. The Mamba area is considered to be highly prospective being situated adjacent to Tlou's Lesedi CBM Project and being on-trend with 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.
Renewal applications were submitted for the Mamba licences in March 2017. Post the quarter end the Company has received confirmation from the Department of Mines that the licences have been extended up to 30 June 2019.
The status of the Mamba Area Prospecting Licences is as follows:
Licence | Expiry | Status |
PL 237/2014 | June 2019 | Current |
PL 238/2014 | June 2019 | Current |
PL 239/2014 | June 2019 | Current |
PL 240/2014 | June 2019 | Current |
PL 241/2014 | June 2019 | Current |
Corporate
Development financing
To ensure that the Lesedi project timeline remains on track, the Company has had discussions with potential development finance partners should the RFP submission be successful and a power purchase agreement for the sale of power into the grid in Botswana is finalised.
Finance will be required for three key areas prior to commencing production: field development, (including drilling of wells and gas gathering); transmission line construction; and power generation units. To reduce the initial capital requirement, the Company plans to develop the project in stages starting with an initial development of 2MW then 10MW, increasing further once power is being supplied to the grid and a revenue stream has been established.
Tlou has spoken to interested parties including banks, infrastructure funds, social development groups, and pension fund managers. There has been interest from international groups as well as strong interest from parties within Botswana who are very keen to support local industry and development. The Company will update the market with any developments should discussions become more advanced. The Company is also investigating the possibility of a listing on the Botswana Stock Exchange to enhance its profile in the country as it moves into the development phase of the Lesedi Project.
Director appointment
Ms Linah Mohohlo was appointed as a Non-Executive Director of the Company on 12 July 2017. Ms. Mohohlo is the former Governor of the Bank of Botswana, a position she held from 1999 to 2016. Ms Mohohlo joined the Bank of Botswana in 1976, where she served in several capacities prior to being appointed Governor, including Board Secretary, Deputy Director of Research, Director of the Financial Market Department and Deputy Governor. Ms Mohohlo is a member of the Commission for Africa, and the Africa Progress Panel, a group of ten distinguished individuals who advocate at the highest levels for equitable and sustainable development in Africa.
Ms Mohohlo's experience in the banking and finance sectors are extremely valuable to the Company as it moves towards development of the project and associated infrastructure. In addition, Ms Mohohlo brings significant experience from the mining industry in Botswana as a board member of both Debswana Diamond Company and Diamond Trading Company.
Ms Mohohlo holds a Bachelor Degree in Economics from The George Washington University, Washington DC, a Masters Degree in Finance and Investment from University of Exeter, UK and a Diploma in Accounting and Business Studies from the University of Botswana.
Ms Mohohlo currently has no beneficial interest in the Company.
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Anthony Gilby
Managing Director
Tlou Energy Limited
Website: www.tlouenergy.com
For further information regarding this announcement please contact:
Tlou Energy Limited | +61 7 3012 9793 |
Tony Gilby, Managing Director | |
Solomon Rowland, Company Secretary | |
Grant Thornton (Nominated Adviser) | +44 (0)20 7383 5100 |
Samantha Harrison, Colin Aaronson, Harrison Clarke | |
Shore Capital (Joint Broker) | +44 (0) 207 408 4090 |
Jerry Keen, Mark Percy, Toby Gibbs | |
Optiva Securities Limited (Joint Broker) | +44 (0)20 3137 1904 |
Jeremy King, Christian Dennis | |
St Brides Partners Limited (Public Relations) | +44 (0) 20 7236 1177 |
Lottie Wadham, Megan Dennison, Susie Geliher | |
FlowComms Limited (Investor Relations) | +44 (0) 7891 677 441 |
Sasha Sethi |
Company Information
Tlou Energy is an AIM and ASX listed company focused on delivering power in Botswana through the development of coal bed methane ("CBM") gas. Botswana has a severe energy shortage and is currently relying on expensive imported power and diesel generation to deliver its requirements. However, as the 100% owners of the most advanced gas project in the country, the Lesedi CBM Project, Tlou Energy provides investors with access to a compelling immediate and longer-term opportunity using domestic gas to produce power and displace expensive diesel and imported power.
The Company is led by an experienced Board, management and advisory team including individuals with successful track records in the Australian CBM industry.
Since establishment in 2009, the Company has significantly de-risked the project in consideration of its goal to become a significant gas-to-power producer. The Company has the most advanced CBM project in Botswana and flared its first gas in 2014. It holds a Mining Licence and nine Prospecting Licences, covering an area of ~8,300Km2 in total, and the Lesedi Project already benefits from significant independently certified Contingent Gas Resources of ~3.2 trillion cubic feet (3C) and independently certified Gas Reserves of ~261 billion cubic feet (3P).
The Company is planning an initial scalable gas-to-power project in Botswana. Following successful implementation of this first scalable project, the Company plans to expand to provide further power to Botswana and the southern African region.
+Rule 5.5
Appendix 5B
Mining exploration entity and oil and gas exploration entity quarterly report
Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16
Name of entity | ||
Tlou Energy Limited | ||
ABN | Quarter ended ("current quarter") | |
79 136 739 967 | 30 September 2017 | |
Consolidated statement of cash flows | Current quarter $A'000 | Year to date (3 months)$A'000 | ||
1. | Cash flows from operating activities | |||
1.1 | Receipts from customers | |||
1.2 | Payments for | (467) | (467) | |
(a) exploration & evaluation | ||||
(b) development | (200) | (200) | ||
(c) production | ||||
(d) staff costs | (281) | (281) | ||
(e) administration and corporate costs | (440) | (440) | ||
1.3 | Dividends received (see note 3) | |||
1.4 | Interest received | 1 | 1 | |
1.5 | Interest and other costs of finance paid | |||
1.6 | Income taxes paid | |||
1.7 | Research and development refunds | |||
1.8 | Other (GST refunds, Share related expenditure as per AASB 132) | 24 | 24 | |
1.9 | Net cash from / (used in) operating activities | (1,363) | (1,363) | |
2. | Cash flows from investing activities | |||
2.1 | Payments to acquire: | |||
(a) property, plant and equipment | ||||
(b) tenements (see item 10) | ||||
(c) investments | ||||
(d) other non-current assets | ||||
2.2 | Proceeds from the disposal of: | |||
(a) property, plant and equipment | ||||
(b) tenements (see item 10) | ||||
(c) investments | ||||
(d) 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) | |||
2.6 | Net cash from / (used in) investing activities | |||
3. | Cash flows from financing activities | |||
3.1 | Proceeds from issues of shares | |||
3.2 | Proceeds from issue of convertible notes | |||
3.3 | Proceeds from exercise of share options | |||
3.4 | Transaction costs related to issues of shares, convertible notes or options | |||
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 | 6,727 | 6,727 | |
4.1 | Cash and cash equivalents at beginning of period | |||
4.2 | Net cash from / (used in) operating activities (item 1.9 above) | (1,363) | (1,363) | |
4.3 | Net cash from / (used in) investing activities (item 2.6 above) | |||
4.4 | Net cash from / (used in) financing activities (item 3.10 above) | |||
4.5 | Effect of movement in exchange rates on cash held | (76) | (76) | |
4.6 | Cash and cash equivalents at end of period | 5,288 | 5,288 | |
5. | Reconciliation of cash and cash equivalentsat the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts | Current quarter$A'000 | Previous quarter$A'000 |
5.1 | Bank balances | 5,288 | 6,727 |
5.2 | Call deposits | ||
5.3 | Bank overdrafts | ||
5.4 | Other (provide details) | ||
5.5 | Cash and cash equivalents at end of quarter (should equal item 4.6 above) | 5,288 | 6,727 |
6. | Payments to directors of the entity and their associates | Current quarter$A'000 |
6.1 | Aggregate amount of payments to these parties included in item 1.2 | 174 |
6.2 | Aggregate amount of cash flow from loans to these parties included in item 2.3 | |
6.3 | Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2 | |
Office rent, Directors fees and salaries
| ||
7. | Payments to related entities of the entity and their associates | Current quarter$A'000 |
7.1 | Aggregate amount of payments to these parties included in item 1.2 | |
7.2 | Aggregate amount of cash flow from loans to these parties included in item 2.3 | |
7.3 | Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2 | |
| ||
8. | Financing facilities availableAdd notes as necessary for an understanding of the position | Total facility amount at quarter end$A'000 | Amount drawn at quarter end$A'000 |
8.1 | Loan facilities | ||
8.2 | Credit standby arrangements | ||
8.3 | Other (please specify) | ||
8.4 | Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well. | ||
| |||
9. | Estimated cash outflows for next quarter | $A'000 |
9.1 | Exploration and evaluation | 2,189 |
9.2 | Development | |
9.3 | Production | |
9.4 | Staff costs | 302 |
9.5 | Administration and corporate costs | 304 |
9.6 | Other (Share related expenditure as per AASB 132) | |
9.7 | Total estimated cash outflows | 2,795 |
10. | Changes in tenements(items 2.1(b) and 2.2(b) above) | Tenement reference and location | Nature of interest | Interest at beginning of quarter | Interest at end of quarter |
10.1 | Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced | ||||
10.2 | Interests in mining tenements and petroleum tenements acquired or increased |
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.
Sign here: ........Solomon Rowland ........................... Date: .23 October 2017.....
(Director/Company secretary)
Print name: ...... Solomon Rowland................
Notes
1. The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.
2. If this quarterly 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 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.