TIDMTLOU
RNS Number : 0011Q
Tlou Energy Ltd
16 October 2019
16 October 2019
Tlou Energy Limited
("Tlou" or "the Company")
OPERATIONAL REPORT - QUARTERING 30 SEPTEMBER 2019
Tlou Energy Limited is an ASX, AIM and BSE listed company
focused on delivering power in Botswana and southern Africa through
the exploration and development of coal bed methane (CBM) natural
gas.
Key events during the previous quarter:
-- Lesedi 3 and 4 achieved initial sustained gas flows of
approximately 20 thousand standard cubic feet per day (Mcfd) from
each pod;
-- Gas flow rates anticipated to increase steadily as the coals become gas saturated;
-- Core-hole drilling utilising Tlou's own drilling rig
commenced in the Mamba project area, with the objective of
providing valuable data required for the expansion of the Company's
gas Reserves and Contingent Resources.
Dewatering and gas flow testing
During the quarter the Company's operations made excellent
progress with the Lesedi gas production pods having achieved
sustained gas production rates.
Following completion of the first phase of production testing,
including initial dewatering, reaching critical gas desorption
point and commencing gas production, the pods commenced producing
sustained gas flows. The initial rates were approximately 20
thousand standard cubic feet per day (Mcfd) from each pod. This was
an excellent start and the Company is very encouraged by production
data to date.
Gas production is continuing and, as with most new CBM
developments the rate is anticipated to continue increasing
following further reduction of pressure in the coal and additional
dewatering, with the aim to reach a peak and commercial gas flow
rate as soon as possible.
The current stage of production involves maintaining pressure on
the reservoir to further reduce water production, so that the
lateral wells become gas saturated, rather than water saturated.
This is followed by reducing pressure in the wells to the desired
level which, once achieved, is usually expected to significantly
increase the gas flows from the wells. This is a metholodical and
detailed process and takes time to achieve. The Company will update
the market on further progress in due course.
With CBM projects not yet established in this region, Tlou could
pioneer CBM development in the area. Successful results from this
project could potentially facilitate the opening up of a whole new
CBM basin in Botswana and be a significant boost not only for Tlou,
but for the whole region, with the potential for Tlou to supply
power within Botswana and also into neighbouring countries via the
Southern African Power Pool (SAPP).
Core-hole drilling
During the quarter, Tlou commenced core-hole drilling in the
Mamba project area. Operations are being conducted using Tlou's
core drilling rig and Tlou's experienced field-based personnel. As
the Company is not using external drilling contractors the costs of
core drilling are relatively low.
Core-hole drilling and core analysis provides valuable
information regarding coal quality and gas content. This data is
required for the expansion of the Company's gas Reserves and
Contingent Resources and providing information to assess new areas
for potential development.
Gas-to-Power Tender
In 2018 the Company submitted a tender to Botswana's Ministry of
Minerals Resources, Green Technology and Energy Security for the
Development of a CBM-fuelled power plant in Botswana and was
subsequently selected as a preferred bidder for this proposal.
If successful, the negotiations will result in the Company
agreeing a Power Purchase Agreement (PPA) with the Government of
Botswana, whereby Botswana Power Corporation (BPC), the national
electricity utility in Botswana, would purchase the power produced
by Tlou at the Lesedi project.
The tender negotiations are confidential and are being led by
the government of Botswana. The government has confirmed its
commitment to the development of CBM-fuelled pilot power plants and
is in the process of sourcing an advisor to assist them in tender
negotiations. Further information will be provided by the
government in due course, with the next update expected after
Botswana's general election later this month.
Forward plan
3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 Post 4Q20
* Gas flows from Lesedi 3P & 4P * Finalise PPA * Seismic (200km) * Start Poles & Wires * Generators & civils at Central Processing Facility * Target first electricity sales * Expansion to 10MW+
* Mamba Project drilling * Generation Licence Award * Reserve upgrade * Southern African Power Pool (SAPP) application * Boomslang Project EIS approval * SAPP membership approved
* Close development financing from Botswana * Boomslang drilling
------------------------------------------------------------ ----------------------------- ----------------------------------------------------------- --------------------------------------------------------------- ------------------------------------------- --------------------------
The Company's forward plan, subject to financing and operational
results, targets finalising a PPA and development financing as soon
as possible, with first electricity sales potentially in late 2020.
The Company will commit to significant field operations once
development, exploration and working capital funding has been
secured. The Company is listed on three exchanges so continually
monitors all corporate and operational costs with a view to reduce
or cut costs in any area not perceived to be adding value.
The Company is progressing funding options for the development
of the first 10MW of power generation as well as funding for
further exploration and working capital requirements. Significant
progress has been made with Botswana Development Corporation (BDC)
for financing of the full 10MW project. The total cost for the 10MW
project is estimated at USD$30m including 66kV transmission lines,
central processing facility (CPF), 10MW of generation assets and
additional production wells. The Company expects to complete
negotiations for the first phase of funding by the end of the
year.
Project areas
The Company has three project areas in Botswana:
-- Lesedi Project - Development, Exploration
-- Mamba Project - Exploration
-- Boomslang Project - Exploration
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 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 gas producing
Lesedi 3 and 4 development wells or 'pods'.
The Lesedi project is the Company's most advanced project, with
plans in place to install gas-fired electricity generators and
connect to the power grid in Botswana. Subject to results, the
first electricity sales could commence in late 2020.
The project has full environmental approval which includes gas
extraction, electricity generation and construction of transmission
lines. In addition, the Company has approval for 20MW of solar
generation. Clean CBM power is ideal for use in conjunction with
solar projects.
Tlou has the only CBM Mining Licence in Botswana. A mining
licence is required by an operator to develop a CBM asset. This
licence spans a large 900 Km(2) area and is valid until 2042 so the
Company has security of tenure over the project.
Tlou has the only independently certified CBM gas reserves in
Botswana, with 252 Billion Cubic Feet (BCF) of 3P gas Reserves
certified in the Lesedi project area. In addition, the 3C
Contingent Gas Resources are approximately 3 Trillion Cubic Feet
(TCF). The potential upside from further successful development of
this area is phenomenal.
The status of the Lesedi area licences is as follows:
Licence Expiry Status
Mining Licence 2017/18L August 2042 Current
--------------- --------
PL 001/2004 March 2021 Current
--------------- --------
PL 003/2004 March 2021 Current
--------------- --------
PL 035/2000 September 2020 Current
--------------- --------
PL 037/2000 September 2020 Current
--------------- --------
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 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 asset that has produced 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. Geographically, the Mamba
Project area is approximately 50 km closer to the Orapa Power
station than the Lesedi Project area.
Independently certified 3P Gas Reserves of 175 BCF are already
in place at the Mamba project. Core-hole drilling is ongoing in the
Mamba project which, along with a proposed seismic survey of the
area is aimed at significantly expanding the reserves footprint
across the Mamba project area.
The Mamba area has the potential to become a separate revenue
generating development project in addition to the proposed
development at Lesedi.
The status of the Mamba area licences is as follows:
Licence Expiry Status
PL 237/2014 September 2021 Current
--------------- --------
PL 238/2014 September 2021 Current
--------------- --------
PL 239/2014 September 2021 Current
--------------- --------
PL 240/2014 September 2021 Current
--------------- --------
PL 241/2014 September 2021 Current
--------------- --------
Boomslang Project Area, Botswana
Licence: Prospecting Licence 011/2019
Ownership: Tlou Energy Limited 100%
The Company's most recently acquired Prospecting Licence,
PL011/2019 designated "Boomslang", is valid for an initial term of
3 years. The licence area is approximately 1,000 Km(2) and is
situated adjacent to the Company's existing licences. The Boomslang
area is also located on-trend with the asset that has produced the
encouraging results observed to date at the Lesedi project and
considered to be highly prospective.
The Boomslang licence area provides the Company further
flexibility and optionality for development of different
projects.
The Company is awaiting confirmation of environmental approval
to commence exploration operations in the Boomslang area. This is
expected to be granted in mid-2020, thereafter initial exploration
operations are planned for this area.
The status of the Boomslang area licence is as follows:
Licence Expiry Status
PL 011/2019 March 2022 Current
----------- --------
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
****
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, Seamus Fricker
----------------------
Shore Capital (Broker) +44 (0) 207 408 4090
----------------------
Jerry Keen, Toby Gibbs, Mark Percy
----------------------
+44 (0) 7891 677
FlowComms Limited (Investor Relations) 441
----------------------
Sasha Sethi
----------------------
Vigo Communications (Financial PR) +44 (0) 20 7390 0230
----------------------
Patrick d'Ancona, Simon Woods
----------------------
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 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 electricity.
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 and
has a 100% interest over its Mining Licence and ten Prospecting
Licences covering an area of 9,300 Km(2) in total. The Lesedi and
Mamba Projects already benefit from significant independently
certified 2P gas Reserves of 41 BCF. In addition, 3P gas Reserves
of 427 BCF and Contingent Gas Resources of 3,043 BCF provide
significant additional potential.
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.
+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 2019
----------------------------------
Consolidated statement of cash Current quarter Year to date
flows $A'000 (3 months)
$A'000
1. Cash flows from operating
activities
1.1 Receipts from customers
1.2 Payments for
(a) exploration & evaluation (587) (587)
(b) development (9) (9)
(c) production
(d) staff costs (389) (389)
(e) administration and corporate
costs (315) (315)
1.3 Dividends received (see note
3)
1.4 Interest received
1.5 Interest and other costs of
finance paid
1.6 Income taxes paid
1.7 Research and development refunds
1.8 Other 254 254
---------------- ----------------
Net cash from / (used in)
1.9 operating activities (1,046) (1,046)
----- ------------------------------------- ---------------- ----------------
2. Cash flows from investing
activities
2.1 Payments to acquire:
(a) property, plant and equipment (21) (21)
(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 in)
2.6 investing activities (21) (21)
------- ----------------------------------- ---------------- ----------------
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
Cash and cash equivalents
4.1 at beginning of period 5,205 5,205
Net cash from / (used in)
operating activities (item
4.2 1.9 above) (1,046) (1,046)
Net cash from / (used in)
investing activities (item
4.3 2.6 above) (21) (21)
4.4 Net cash from / (used in) - -
financing activities (item
3.10 above)
Effect of movement in exchange
4.5 rates on cash held (19) (19)
---------------- ----------------
Cash and cash equivalents
4.6 at end of period 4,119 4,119
------- ----------------------------------- ---------------- ----------------
5. Reconciliation of cash and Current quarter Previous quarter
cash equivalents $A'000 $A'000
at the end of the quarter
(as shown in the consolidated
statement of cash flows) to
the related items in the accounts
5.1 Bank balances 4,119 5,205
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) 4,119 5,205
---- ----------------------------------- ---------------- -----------------
6. Payments to directors of the entity and Current quarter
their associates $A'000
Aggregate amount of payments to these parties
6.1 included in item 1.2 256
----------------
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 Current quarter
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 available Total facility Amount drawn
Add notes as necessary for amount at quarter at quarter end
an understanding of the position end $A'000
$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 $A'000
quarter
9.1 Exploration and evaluation 296
9.2 Development
9.3 Production
9.4 Staff costs 408
9.5 Administration and corporate costs 286
9.6 Other (Equipment)
-------
9.7 Total estimated cash outflows 990
---- ----------------------------------- -------
10. Changes in tenements Tenement Nature of interest Interest Interest
(items 2.1(b) reference at beginning at end
and 2.2(b) above) and location of quarter 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: .....16
October 2019.....
(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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCXELLFKBFLFBD
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