Last checked at 23 Jan 2018 07:00
23 January 2018
Tlou Energy Limited
("Tlou" or "the Company")
OPERATIONAL REPORT - QUARTER ENDING 31 DECEMBER 2017
Tlou Energy Limited, the ASX, AIM and BSE 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 31 December 2017.
Highlights
· Seismic survey completed across the Lesedi and Mamba project areas with data of excellent quality obtained. Data from survey is being integrated with existing data with a view to expanding the Lesedi and Mamba gas reserves and contingent resources
· Two new core-holes drilled at the Lesedi Project intersected gassy coals. Core samples are being analysed alongside seismic survey with initial results expected in early 2018
· Operations on a third core-hole at the Mamba Project began pre-quarter end with completion expected in late January 2018. This is the first core-hole to be drilled in the Mamba area
· Completed listing upon Botswana Stock Exchange as part of Company's strategy to access significant local investors focused upon the development of Botswana based projects
· Secured cornerstone Botswana investor raising P33 million (approx. £2.4 million or A$4.1 million) through issuance of shares to African Alliance Botswana Limited, a leading asset manager in Botswana
TLOU ENERGY LIMITED PROJECTS
Lesedi CBM Project Area, Botswana
Mining Licence 2017/18L, Prospecting Licences 001 & 003/2004 and 35 & 37/2000
Tlou Energy Limited 100%
The Lesedi project in Botswana covers an area of approximately 3,800km2 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 Selemo pilot project where the Company has been producing gas since 2016.
The status of the Lesedi area licences is as follows:
Licence | Expiry | Status |
Mining Licence 2017/18L | 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 |
Seismic Survey
A seismic survey acquired approximately 250km of data over the Company's Lesedi and Mamba projects including over part of the Mining Licence area. It was conducted by Velseis Pty Ltd, an experienced Australian seismic acquisition and processing company that provides a fully integrated range of seismic services.
The Company identified potential gas reservoir compartments outside the currently mapped Gas Reserve areas. These compartments had relatively sparse geological control other than Tlou's existing aeromagnetic data so new seismic data could demonstrate that continuity of gassy coal exists, and this could lead to expanded gas reserves and/or contingent resources.
The seismic lines were inspected and cleared, and equipment and safety checks completed in advance of commencement of the acquisition of the 2D data. The acquisition involved specially designed tractors that are fitted with a vibrating plate which transmits a frequency into the ground at specified locations. The reverberating frequency is recorded via highly sensitive geophones placed along the seismic line and this is interpreted by specialised software to identify the underlying structure.
The new seismic data is of excellent quality and will serve to provide a more accurate picture of the subsurface target coal horizon. SRK Consulting (Australasia) Pty Ltd ('SRK'), Tlou's geological consultants and independent reserve certifiers, will carry out the seismic interpretation. This will include integration of the new seismic data with existing well and aeromagnetic data sets. A report will then follow which is anticipated in Q1 2018.
Core-hole operations
The Company planned a core-hole drilling program to follow the seismic survey over the Company's Lesedi and Mamba projects. In consultation with SRK, the Company identified a series of locations using the newly acquired seismic data, for further evaluation by drilling of new core-holes. Two new core-holes were completed in the Lesedi project area during the quarter. This work was completed safely within the terms of the Company's approved Environmental Impact Statement.
Following coring, desorption samples were taken and placed into desorption baths in the field with readings being taken and sent to Weatherford laboratories in Brisbane.
Once this analysis is complete, the physical samples will be sent to Weatherford for further analysis. Results of the desorption testing are expected in Q1 2018 and will be taken into account by SRK for expansion of the Company's gas reserves and contingent resources. The Company has begun work upon a further core-hole in the Mamba project area and an initial dual lateral development pod is planned in 2018 with the location to be determined following consultation with SRK.
Key benefits of the core-hole drilling program include:
1. Confirming coal quality, thickness, and gas content in a previously un-drilled area of the Lesedi project;
2. Providing new information to potentially expand the Company's gas reserves and contingent resources. An increase in the gas reserves and contingent resources could significantly increase the Company's valuation;
3. The additional data will be used to determine the optimum location for initial project development as well as high-grading additional areas for further development both within the Lesedi and Mamba project areas. This provides the Company with additional future optionality.
Initial project development is planned to commence in 2018, subject to the results of the Company's application to the Government of Botswana to develop up to 100MW of CBM fuelled power generation.
Mamba Project Area, Botswana
Prospecting Licences 237-241/2014
Tlou Energy Limited 100%
The Mamba project consists of five Coal and 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.
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 |
Core-hole operations
At the end of the quarter, field preparation work, including site clearing and safety checks were conducted at the planned location of a core-hole to be drilled in the Mamba project area.
This is the first core-hole drilled by the Company in the Mamba area. Like the core-holes in the Lesedi area, the data obtained will be used by SRK to potentially expand the Company's gas reserves and contingent resources into the Mamba project. This could allow the Company the option to proceed with development projects in both the Mamba and Lesedi areas.
Corporate
Botswana Stock Exchange listing and cornerstone investor
The Company listed on the main board of the Botswana Stock Exchange ('BSE') on 13 December 2017 and issued capital via a share subscription to new Botswana based investment funds managed by African Alliance Botswana Limited ('African Alliance'), a leading asset manager in Botswana.
African Alliance managed funds subscribed for approximately 21.2 million new ordinary shares in Tlou at a subscription price of P1.56 (approximately £0.11 or A$0.20) per share, raising P33 million (approximately £2.4 million or A$4.1 million). The subscription was conditional on Tlou listing on the BSE.
Listing on the BSE has a number of advantages for the Company. One of the key advantages is that, as a BSE listed entity, the Company has access to the significant investment funds which are available for development of Botswana based projects. This could prove to be valuable to the Company as it progresses discussions on financing options for its planned CBM gas-to-power project.
The subscription was managed by Integra Advisory Partners Pty Ltd in Australia with Motswedi Securities (Pty) Ltd in Botswana acting as sponsoring broker to the subscription and BSE listing.
Other
Two million shares were issued during the quarter following the exercise of share options, with gross proceeds of approximately $235k. The Company also issued 2,275,000 shares following satisfaction of conditions under the Company's performance rights plan.
The Managing Director Tony Gilby has elected to waive 25% of his contracted salary from 1 January 2018. The waived amount will not be payable by the company at a later stage. Mr Gilby has waived 50% of his salary since 1 January 2017. All other terms and conditions of his existing contract remain unchanged.
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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 | |
FlowComms Limited (Investor Relations) | +44 (0) 7891 677 441 |
Sasha Sethi |
Company Information
Tlou Energy is focused on delivering gas-to-power solutions in Botswana and southern Africa to alleviate some of the chronic power shortage in the region. Tlou is developing projects using coal bed methane ('CBM') natural gas. Botswana has a significant energy shortage and generally relies on expensive imported power and diesel generation to fulfil its power requirements. As 100% owner of the most advanced gas project in the country, the Lesedi CBM Project, Tlou Energy provides investors with access to a compelling opportunity using domestic gas to produce power and displace expensive diesel and imported power.
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 including individuals with successful track records in the CBM industry.
Since establishment, the Company has significantly de-risked the project in consideration of its goal to become a significant gas-to-power producer. The Company flared its first gas in 2014, 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 | 31 December 2017 | |
Consolidated statement of cash flows | Current quarter $A'000 | Year to date (6 months)$A'000 | ||
1. | Cash flows from operating activities | |||
1.1 | Receipts from customers | |||
1.2 | Payments for | (1,497) | (1,964) | |
(a) exploration & evaluation | ||||
(b) development | (19) | (219) | ||
(c) production | ||||
(d) staff costs | (352) | (633) | ||
(e) administration and corporate costs | (648) | (1,088) | ||
1.3 | Dividends received (see note 3) | |||
1.4 | Interest received | 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) | 94 | 118 | |
1.9 | Net cash from / (used in) operating activities | (2,422) | (3,785) | |
2. | Cash flows from investing activities | (21) | (21) | |
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 | (21) | (21) | |
3. | Cash flows from financing activities | 4,182 | 4,182 | |
3.1 | Proceeds from issues of shares | |||
3.2 | Proceeds from issue of convertible notes | |||
3.3 | Proceeds from exercise of share options | 237 | 237 | |
3.4 | Transaction costs related to issues of shares, convertible notes or options | (28) | (28) | |
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 | 4,391 | 4,391 | |
4. | Net increase / (decrease) in cash and cash equivalents for the period | 5,288 | 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) | (2,422) | (3,785) | |
4.3 | Net cash from / (used in) investing activities (item 2.6 above) | (21) | (21) | |
4.4 | Net cash from / (used in) financing activities (item 3.10 above) | 4,391 | 4,391 | |
4.5 | Effect of movement in exchange rates on cash held | 227 | 151 | |
4.6 | Cash and cash equivalents at end of period | 7,463 | 7,463 | |
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 | 7,463 | 5,288 |
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) | 7,463 | 5,288 |
6. | Payments to directors of the entity and their associates | Current quarter$A'000 |
6.1 | Aggregate amount of payments to these parties included in item 1.2 | 190 |
6.2 | Aggregate amount of cash flow from loans to these parties included in item 2.3 | |
6.3 | Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2 | |
Office rent, Directors fees and salaries
| ||
7. | Payments to related entities of the entity and their associates | Current quarter$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 | 1,077 |
9.2 | Development | |
9.3 | Production | |
9.4 | Staff costs | 336 |
9.5 | Administration and corporate costs | 371 |
9.6 | Other (Equipment) | 101 |
9.7 | Total estimated cash outflows | 1,885 |
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 January 2018.....
(Director/Company secretary)
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.