TIDMTLOU
RNS Number : 6367Q
Tlou Energy Ltd
01 December 2016
1 December 2016
Tlou Energy Limited
('Tlou' or 'the Company')
LESEDI PROJECT UPDATE AND FIELD DEVELOPMENT PROGRAM
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 an
update on progress at the Lesedi CBM Project ('Lesedi' or 'the
Project') located in prospecting licence PL002/2004 in
Botswana.
Highlights:
-- First gas monetisation planned - gas produced by the Company
will power the Project following completion of upgrades leading to
ongoing cost savings
-- Actively planning forthcoming field development program:
o SRK Consulting engaged to assist in recommendation of target
development areas for the Project and further exploration.
o Flow testing at the Selemo wells is progressing well;
providing vital data ahead of full field development and will be
incorporated into Lesedi's Feasibility Study
-- Detailed activities being advanced relating to the phased
development of a CBM to power project (10MW ramping up to 50MW), to
commence following field development:
o Working with specialist engineers on a Field Development Plan.
- Initial project plan is expected to be completed by the end of
the year. This will also provide data ahead of a future mining
licence application
o Advancing a study of power grid integration points and
transmission line options (midstream development)
o Downstream development relating to the planning, design, and
development of the power generation units is progressing alongside
specialist partners
o Terms to be discussed with the Government of Botswana in
relation to an off-take agreement for the approved 50MW power
project
o Assessing various funding options, having been contacted by a
range of parties, for the development of the Project
Executive Director Gabaake Gabaake said, "This is an extremely
exciting time for the Company. The Board and management are very
busy as the Company focuses on getting the initial 10-50MW project
up and running. As investors can see, there are a considerable
number of parts to bring together to develop the project as we aim
to get our first power to market and start generating revenue. In
the near term we will be providing an update on our field
development program, and our studies for the development of our
scalable CBM to power plant, which are being advanced alongside
specialist partners. In addition, we will keep the market up to
date on progress of other items including the offtake agreement,
conversion of the field operations to run on CBM and a future
mining licence application.
"We are incredibly grateful to our shareholders, many of whom
have been with us since 2009, for their strong support. We also
benefit from the backing of the Government of Botswana and, as
highlighted today, a range of potential funding partners. Our
objective is to bring the Project to fruition as soon as possible
to unlock the best possible value for our shareholders."
Gas Flows
The Company has been producing gas at the Selemo wells located
in the Lesedi project during the year. This led to the Company
becoming the first in Botswana to book independently certified gas
reserves in October 2016. Since this time, flow testing has
continued at the Selemo wells and is planned to do so for the
foreseeable future. The data from this testing provides vital input
into full field development and is incorporated into the project's
feasibility study.
Conversion of field generation from diesel to gas
Power required to run pumps and metering at the Selemo wells is
currently supplied by diesel generators. The Company's operations
team are planning to replace these with gas fired generators, which
can then run on the gas being produced from our wells. Once
implemented, this will be a significant milestone and in effect be
proof of concept or 'first gas monetisation' by providing a cost
saving to the Company with a much-reduced diesel requirement.
Regional geological data
Tlou has an extensive geological database across much of its
licence area particularly over the Lesedi project. As the Company
progresses towards field development and further exploration, a key
task is to assess the most prospective areas to base future
projects. In this regard, the Company has engaged SRK Consulting
('SRK') to assist with this process due to their expertise in this
area along with their in-depth knowledge of the project, having
been involved in the booking of initial gas reserves recently as
well as contingent resources prior to that. SRK will review the
Company's geological model and make recommendations in relation to
future work. This will incorporate potential field, seismic and
drilling data, develop optimum production layouts including
updating well performance simulation and help define what work
would best facilitate the addition of further reserves. This is
likely to be completed in late 2016 or early 2017.
Further field exploration
The Company is considering expansion of its exploration work in
the field. The potential remains for exploration in both the Lesedi
and Mamba project areas held by the Company. The report from SRK as
mentioned above will provide valuable data in relation to this
process.
50MW CBM to power project
As previously announced, Tlou has been approved by the
Government of Botswana to develop a 50MW CBM to power project. The
50MW project is planned to be delivered on a staged basis and can
be divided into three distinct parts, upstream, midstream and
downstream development, with excellent progress being made in each
of these areas.
Upstream development
This is essentially the field development part of the project
which includes items such as the drilling of wells and gas
gathering and compression. The Company is working with specialist
engineers to develop this part of the project further. This work is
aimed at:
-- developing the process flow and high level operating
philosophy for the initial 10MW phase of the project;
-- determine capital, operating and maintenance costs; and
-- provide a project execution plan to ensure the Company's
objectives for the Lesedi CBM Project can be achieved in the
desired timeframes.
This work is likely to be completed in late 2016. This process
will also provide engineering, operating and maintenance input into
a future mining licence application.
Midstream development
This process relates to the construction of the transmission
lines or gas pipeline. The Company has been in discussion with
Botswana Power Corporation ('BPC'), owners of the power network
infrastructure in Botswana. Following these discussions, the
Company is working on a study of options available for midstream
development including:
-- determining the lowest cost and most effective integration
point in the BPC network for up to 100MW of power generation
located at the Company's Lesedi project starting with an initial
10MW within two years and ramping up to 50MW;
-- determining the most feasible route and cost of a
transmission line for a 10MW, 50MW and 100MW project;
-- Assessing upgrades required in the BPC network at the
integration point, if any, and the related costs.
This process is expected to take approximately three months to
complete.
Downstream development
Downstream development relates to the planning, design, and
development of the power generation units. This is well underway
and the Company is being assisted by our co-operation partners GE,
a world-leader in the design, construction, operation, and
maintenance of power generation facilities. GE has identified
suitable generation equipment for the initial project along with
capex and opex calculations. These costs as well as the various
specifications of the power generation equipment are key items that
will be used for the project's feasibility planning.
Offtake agreement
Discussions are continuing with the Government of Botswana in
relation to the terms of the power purchase agreement for the
approved 50MW power project. This process involves various elements
within Government and Botswana's Public Procurement and Asset
Disposal Board so is likely to be an evolving process. The terms of
the proposal, including power price and length of the agreement,
are key items that will be incorporated into the offtake
agreement.
Project Funding
Since the recent reserves announcement, the Company has been
contacted by different parties interested in discussing the
Company's proposed power project and potential future investment.
The Company owns 100% of the Lesedi CBM project and as no firm
funding agreement has been put in place, various options remain
available to the Company. These may involve development of projects
through special purpose vehicles, joint ventures, infrastructure
funds, equity and debt financing.
**S**
For further information regarding this announcement please
contact:
Tlou Energy Limited +61 7 3012 9793
--------------------------------------- ---------------------
Gabaake Gabaake, Executive
Director
--------------------------------------- ---------------------
Solomon Rowland, Company Secretary
--------------------------------------- ---------------------
Grant Thornton (Nominated
Adviser) +44 (0)20 7383 5100
--------------------------------------- ---------------------
Samantha Harrison, Colin Aaronson,
Harrison Clarke
--------------------------------------- ---------------------
Brandon Hill Capital (Financial
Adviser and Joint broker) +44 (0)20 3463 5016
--------------------------------------- ---------------------
Jonathan Evans, Alex Walker
--------------------------------------- ---------------------
Optiva Securities Limited
(Joint broker) +44 (0)20 3137 1904
--------------------------------------- ---------------------
Jeremy King, Christian Dennis
--------------------------------------- ---------------------
St Brides Partners Limited +44 (0) 20 7236
(Public Relations) 1177
--------------------------------------- ---------------------
Elisabeth Cowell, Lottie Brocklehurst
--------------------------------------- ---------------------
FlowComms Limited (Investor +44 (0) 7891 677
Relations) 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') projects. 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 ('Lesedi'), Tlou Energy provides investors with access to
an immediate and longer term opportunity using domestic gas to
produce power at lower costs than the current arrangements.
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 pursuit of its goal to become a
significant gas to power producer and the Company has the most
advanced CBM project in Botswana. It holds 10 prospecting licences
covering an area of 8,300Km(2) and the Lesedi project already
benefits from significant, independently certified contingent gas
resources of 3.3 trillion cubic feet (TCF) (3C) as well as an
initial independent gas reserve certification.
The first planned gas-to-power solution is expected to be
delivered through a scalable project with the Botswana Government.
Following successful implementation of this project the Company
plans larger projects to provide further power to Botswana and the
southern African region.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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