TIDMTLOU
RNS Number : 7433V
Tlou Energy Ltd
25 July 2018
25 July 2018
Tlou Energy Limited
("Tlou" or "the Company")
OPERATIONAL REPORT - QUARTERING 30 JUNE 2018
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 30 June 2018.
Highlights
-- Core drilling rig wholly owned by Tlou onsite with operations
aimed at upgrading sub-surface data in the project areas
-- Successful capital raising completed raising approximately AUD$8m
-- Preparations for drilling of new pilot production wells close
to the proposed central processing facility are under way
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 in Botswana 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 Selemo
pilot project where the Company commenced gas production in
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 - Renewal application submitted
------------------------ --------------- ----------------------------------------
PL 037/2000 September 2018 Current - Renewal application submitted
------------------------ --------------- ----------------------------------------
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 in Botswana
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 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 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 drilling and rig purchase
In early 2018 Tlou purchased a core drilling rig which arrived
on site this month. The rig has low hours and will be ideal for
obtaining coal and gas data in regions of sparse geological
information, noting that the Company holds 100% of licences
covering over 8,000 Km(2) .
Once commissioned the rig will be prepared for a core well
drilling campaign in advance of proposed pilot well drilling. In
addition, Tlou already has its own desorption testing facilities
onsite which allows the Company to test core-hole samples without
the requirement to mobilise third party personnel. Owning the core
rig and gas testing equipment is expected to greatly reduce the
cost of Tlou's core-hole drilling and core sample analysis.
Core-hole information assists with the addition of gas reserves
and resources and it is to this end that the Company intends to use
the rig to obtain additional subsurface information. This also
brings field operations more under the direct control of the
Company in terms of timing of coring programs, maintenance, and
health and safety. It also leads to additional direct employment of
local staff by Tlou.
Key benefits of drilling further core-holes include:
-- Confirming coal quality, thickness, and gas content in
previously un-drilled areas of the Lesedi and Mamba projects;
-- Acquiring new information to expand the Company's gas reserves and contingent resources;
-- Providing additional data that can be used to determine
optimum locations for project development as well as high-grading
areas for further development in both the Lesedi and Mamba project
areas.
CBM Tender
Earlier this year the Company received confirmation that
Botswana's Ministry of Mineral Resources Green Technology and
Energy Security ('the Ministry') has requested that the Request for
Proposal (RFP) for Development of up to 100MW of CBM fuelled power
plants in Botswana be re-tendered, with both Tlou and the other
shortlisted party to be invited to submit a bid under a new
re-tender process.
The initial RFP was issued in early 2017 and Tlou submitted a
detailed response to the Ministry in September 2017. 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.
Being one of the most advanced CBM projects in Botswana, with
gas reserves in place, having environmental approval for upstream
development and a mining licence secured allowing the Company to
commence development operations, the Company is very eager to
receive the re-tender document and review the terms therein.
Earlier this month, members of the Tlou board met with the
Minister of Mineral Resources Green Technology and Energy Security,
the Honourable Minister Molale, in Gaborone, Botswana. The
Honourable Minister was very knowledgeable on Tlou's project and
appreciated the huge investment Tlou had made in Botswana to date,
the potential positive impact the project can bring to the country
and that it made perfect sense for the project to succeed as
Botswana needs the power and Tlou has the gas. The Minister
expressed his concern that the tender had not progressed further
already especially as the project had been approved by cabinet some
time ago. The meeting also highlighted the other advantages the
project can bring including energy security and vital long term
sustainable direct and indirect local employment opportunities.
Tlou is also considering whether it should become a member of
the Southern African Power Pool ("SAPP") as an Independent Power
Producer ("IPP") and what the costs and benefits of membership
would be. Currently Tlou is investigating whether it is practical
to potentially become an IPP member of SAPP to either trade in the
SAPP or to have some form of contract with an existing SAPP member
for an offtake.
Capital raised to progress activities
In June and July 2018, the company completed a Non-Renounceable
Entitlement Offer ("Entitlement Offer") whereby existing eligible
shareholders were invited to subscribe for 1 Offer Share for every
6 ordinary shares held at a price of A$0.10 (GBP0.0575) per Offer
Share. In addition, the Company successfully placed shares with
institutional investors in the UK and Australia. Following the
Entitlement Offer and placements a total of approximately AUD $8m
was raised.
The net proceeds of the placements and the Entitlement Offer,
along with existing cash, will mainly be applied by Tlou towards
drilling of production pods, core-hole drilling regulatory
approvals and working capital.
The Company intends to commence production pod drilling in the
Q3 2018 with dewatering to be completed prior to planned production
testing, installation and commissioning of power generation
facilities. The proposed production pods, referred to as Dual
Lateral Pods, consist of two lateral or horizontal wells that
intersect a vertical well. Up to three pods are anticipated subject
to funds and operational parameters. The pods will be drilled in
areas identified as being potentially highly suited for initial
project development, where quality seismic and core-hole data
exists. In addition, the reserve certifiers have indicated that
drilling of production pods in a slightly different orientation to
existing wells has the potential to enhance gas production rates.
The work program, if successful, could de-risk the project even
further and add to the Company's independently certified gas
reserves at the Lesedi CBM project.
A proportion of the capital raised is also planned to be used
towards further core-hole drilling operations, using the
core-drilling rig recently purchased by the Company. Additional
core-hole data can upgrade the existing data control over the
project and could assist with reserves and contingent resources
expansion.
Progressing environmental and licencing requirements for project
development is also planned. This includes the Environmental Impact
Assessment for the downstream component (transmission lines, gas
and potential solar generation) of the project. The Company has
already secured approval for upstream development (i.e. field
operations including drilling of production wells and further
exploration wells).
The Company will also continue negotiations to secure offtake or
power purchase agreements with interested parties and in the coming
weeks plans to apply for a Generation licence in Botswana, which is
required to generate and sell power in the country.
Funds will also be used to cover working capital requirements
including general and administrative costs across the Company's
three stock exchange listings on ASX, AIM and BSE.
With this funding in place, Tlou is currently working with its
geological and drilling consultants on optimising the production
well design which it hopes will lead to the wells delivering
enhanced flow rates. Long lead items have now been ordered with
drilling of the first of the production wells scheduled to begin
during Q3 2018.
The Company's priorities remain to:
-- secure a clear pathway towards a gas to power pilot project
Power Purchase Agreement in Botswana;
-- Connect to the Power grid in Botswana which facilitates
access to the Southern African Power Pool;
-- Further de-risk the Lesedi project by the drilling of
additional dual lateral pods in the Company's mining licence area
to prove up additional gas reserves and enhance commercial gas flow
rates;
-- Expand the Company's reserves and contingent resources
footprint through further core-hole drilling, core-sample analysis,
and seismic surveys subject to funding.
In addition, the company will continue to progress other options
including:
-- Offtake opportunities outside Botswana to service the enormous regional power demand;
-- Investigating possibilities for the Company to expand into other countries.
****
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, General Manager
------------------------------------ ---------------------
Grant Thornton (Nominated
Adviser) +44 (0)20 7383 5100
------------------------------------ ---------------------
Samantha Harrison, Colin Aaronson,
Harrison Clarke
------------------------------------ ---------------------
+44 (0) 207 408
Shore Capital (Broker) 4090
------------------------------------ ---------------------
Jerry Keen, Toby Gibbs, Mark
Percy
------------------------------------ ---------------------
FlowComms Limited (Investor +44 (0) 7891 677
Relations) 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 8,300Km(2) 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. Following successful implementation of this first scalable
project, the Company looks forward to evaluating longer-term
prospects for the delivery of electricity generated from CBM in
Botswana to neighbouring countries.
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 June 2018
--------------- ------------------------
Consolidated statement Current quarter Year to date
of cash flows $A'000 (12 months)
$A'000
--------------------------------------- ---------------- -------------
1. Cash flows from operating
activities
1.1 Receipts from customers
1.2 Payments for
(a) exploration & evaluation (764) (3,087)
(b) development (233)
(c) production
(d) staff costs (331) (1,319)
(e) administration
and corporate costs (482) (1,733)
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) 48 262
---------------- -------------
Net cash from / (used
1.9 in) operating activities (1,529) (6,109)
----- -------------------------------- ---------------- -------------
2. Cash flows from investing
activities
2.1 Payments to acquire:
(a) property, plant
and equipment (6) (562)
(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)
---------------- -------------
Net cash from / (used
2.6 in) investing activities (6) (562)
------- ------------------------------ ---------------- -------------
3. Cash flows from financing
activities
Proceeds from issues
3.1 of shares 2,476 6,658
3.2 Proceeds from issue
of convertible notes
Proceeds from exercise
3.3 of share options 237
Transaction costs related
to issues of shares,
convertible notes or
3.4 options (15) (43)
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)
---------------- -------------
Net cash from / (used
3.10 in) financing activities 2,461 6,852
------- ------------------------------ ---------------- -------------
4. Net increase / (decrease)
in cash and cash equivalents
for the period
Cash and cash equivalents
4.1 at beginning of period 5,922 6,727
Net cash from / (used
in) operating activities
4.2 (item 1.9 above) (1,529) (6,109)
Net cash from / (used
in) investing activities
4.3 (item 2.6 above) (6) (562)
Net cash from / (used
in) financing activities
4.4 (item 3.10 above) 2,461 6,852
Effect of movement
in exchange rates on
4.5 cash held 171 112
---------------- -------------
Cash and cash equivalents
4.6 at end of period 7,019 7,019
------- ------------------------------ ---------------- -------------
5. Reconciliation of cash Current quarter Previous
and cash equivalents $A'000 quarter
at the end of the quarter $A'000
(as shown in the consolidated
statement of cash flows)
to the related items
in the accounts
---- ------------------------------- ---------------- ---------
5.1 Bank balances 7,019 5,922
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) 7,019 5,922
---- ------------------------------- ---------------- ---------
6. Payments to directors of the entity Current quarter
and their associates $A'000
----------------
Aggregate amount of payments to
these parties included in item
6.1 1.2 218
----------------
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 Current quarter
the entity and their associates $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 Total facility Amount drawn
available amount at at quarter
Add notes as necessary quarter end end
for an understanding $A'000 $A'000
of the position
--------------- -------------
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 $A'000
for next quarter
---- ------------------------------ -------
9.1 Exploration and evaluation 3,004
9.2 Development
9.3 Production
9.4 Staff costs 532
Administration and corporate
9.5 costs 331
9.6 Other (Equipment) 971
-------
9.7 Total estimated cash outflows 4,838
---- ------------------------------ -------
10. Changes in Tenement Nature of interest Interest Interest
tenements reference at beginning at end
(items 2.1(b) and location of quarter of quarter
and 2.2(b)
above)
----- ---------------------- -------------- ------------------- -------------- ------------
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: .....................................................
Date: .....25 July 2018.....
(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.
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END
DRLSEFFSIFASELW
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