REG - Tlou Energy Ltd - Interim Results and Convertible Note update
02/03/2022 07:16
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RNS Number : 3457D Tlou Energy Ltd 02 March 2022
2 March 2022
Tlou Energy Limited
("Tlou" or "the Company")
Interim Results and Convertible Note update
The Company is pleased to announce its interim results for the six months
ended 31 December 2021. The report is available on the Company's website at
tlouenergy.com/financial_reports_notices
The Company has progressed remarkably over the period having finally delivered
all the important targets that we have spoken about for many years. Key to
this were two items:
(i) signing the 10MW Power Purchase Agreement with BPC,
the first of its kind in Botswana; and
(ii) securing funds to start development of the 10MW Lesedi
power project from our long-term supporter and largest shareholder, Botswana
Public Officers Pension Fund.
Interim Results
As a Sub-Saharan electricity company, the future looks very bright indeed. The
Lesedi 10MW project is just the start. Tlou has the potential to develop this
project into hundreds of MW's of power with our existing independently
certified gas reserves and contingent resources. The potential opportunity is
enormous.
Sub-Saharan Africa demands reliable power, now more than ever, and the region
needs to transition towards cleaner energy. Tlou's gas is the ideal
transitional fuel source. Tlou is also developing solar and hydrogen power for
the region. While the Lesedi 10MW project is the current priority, the green
solar and hydrogen options are key to a clean future and will be progressed in
tandem with the gas project. This is a very exciting time for the Company.
The market for power in Botswana alone is significant. However, while Botswana
is our initial target the wider southern African region is also a key focus
and in dire need of reliable power. Through the Southern African Power Pool,
Tlou aims to tap into this power market opportunity.
Our results for the half year were in line with expectations. Importantly, we
now have funding which allows us to progress development of the Lesedi
project. During the period we were delighted to get our field operations back
to normal post pandemic.
Gas Production
Our gas production wells continue to perform and we have been producing gas
for a prolonged period. The Lesedi 3P production well was brought back online
in January and started to produce gas much more quickly than expected which
was a very encouraging development.
Gas production from the Lesedi 3P and Lesedi 4P wells for January 2022
amounted to 1,413 Mcf (thousand cubic feet) equivalent to (~250 BOE). Average
daily production is approximately 56 Mcf (~10 BOE). These wells are dewatering
in isolation and gas flow rates are expected to continue to increase,
potentially significantly, when part of a full field development. We plan
further production and exploration drilling in due course aimed at expanding
gas production and to increase our gas reserves even further. Our current 2P
gas reserves stand at approximately 41 billion cubic feet (~7.2m BOE).
Transmission Lines
Transmission line contractors are set to commence work in the field. The
timeline for completion is 15-18 months and all going to plan we look forward
to getting first power into the grid in 2023. While this is in progress, we
will have a number of other activities ongoing as outlined below.
Central Processing Facility
The power generation site or Central Processing Facility (CPF) will be put in
place and gas fired power generators installed. The CPF will be located
adjacent to the Lesedi field camp, which is also being upgraded to accommodate
more staff, equipment, a mechanical workshop, and storage facilities.
Solar
We also aim to install solar PV panels in the field. These will initially be
used to power our field operations and at a later stage power can be sold into
the grid.
Hydrogen
Our Hydrogen partner Synergen Met, is working on the pyrolysis prototype unit
that we expect will be shipped to Lesedi later this year. This is a highly
innovative project and could see Tlou's currently flared gas used to produce
hydrogen and solid carbon products, using a clean process with no greenhouse
gas emissions. A truly innovative way to produce clean fuel.
It has taken some time to get here but we have never been more positive and
excited about the prospects for Tlou. The transition from an exploration
focused entity to a developer was a key target and to see it come to fruition
is extremely rewarding.
There is more work to do, and we look forward to progressing the Company to
become a significant energy producer.
Convertible Note update
Further to the announcement on 30 November 2021, the Company and Botswana
Public Officers Pension Fund (BPOPF) have agreed a minimum conversion price of
BWP 0.50 (~£0.032) per share under the Convertible Note Agreement ("Note")
and funds have been received by the Company.
Should BPOPF decide to convert the Note, the Company will issue a maximum of
115,772,900 ordinary shares in the Company. All other terms in relation to the
Note remain unchanged.
By Authority of the Board of Directors
Mr. Anthony Gilby
Managing Director
The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. 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 3040 9084
Tony Gilby, Managing Director
Solomon Rowland, General Manager
Grant Thornton (Nominated Adviser) +44 (0)20 7383 5100
Harrison Clarke, Colin Aaronson, Ciara Donnelly
Arden Partners (Broker) +44 (0) 20 7614 5900
Antonio Bossi
Public Relations
Ashley Seller +61 418 556 875
About Tlou
Tlou is developing energy solutions in Sub-Saharan Africa through gas-fired
power, solar power and hydrogen projects. The company is listed on the ASX
(Australia), AIM (UK) and the BSE (Botswana). The Lesedi Power Project
("Lesedi") is 100% owned and is the Company's most advanced. Tlou's
competitive advantages include our ability to drill cost effectively for gas,
our operational experience and Lesedi's strategic location in relation to
energy customers. All major government approvals have been achieved.
Forward-Looking Statements
This announcement may contain certain forward-looking statements. Actual
results may differ materially from those projected or implied in any
forward-looking statements. Such forward-looking information involves risks
and uncertainties that could significantly affect expected results. No
representation is made that any of those statements or forecasts will come to
pass or that any forecast results will be achieved. You are cautioned not to
place any reliance on such statements or forecasts. Those forward-looking
and other statements speak only as at the date of this announcement. Save as
required by any applicable law or regulation, Tlou Energy Limited undertakes
no obligation to update any forward-looking statements.
Consolidated statement of comprehensive income
Consolidated
Note Dec 2021 Dec 2020
$ $
Interest income 9 399
Other income - 50,000
Expenses
Employee benefits expense (320,901) (264,897)
Depreciation expense (279,106) (286,999)
Foreign exchange gain/(loss) 45,654 (35,300)
Share based payment expense (14,670) -
Professional fees (107,675) (98,305)
Occupancy costs (9,000) (15,427)
Other expenses 2 (585,650) (417,717)
LOSS BEFORE INCOME TAX (1,271,339) (1,068,246)
Income tax - -
LOSS FOR THE PERIOD (1,271,339) (1,068,246)
OTHER COMPREHENSIVE INCOME/(LOSS)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations (1,665,137) (935,201)
Tax effect - -
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS) (1,665,137) (935,201)
TOTAL COMPREHENSIVE INCOME/(LOSS) (2,936,476) (2,003,447)
Earnings per share
Cents Cents
Basic loss per share (0.2) (0.2)
Diluted loss per share (0.2) (0.2)
Consolidated statement of financial position as at 31 December 2021
Consolidated
Note Dec 2021 June 2021
$ $
CURRENT ASSETS
Cash and cash equivalents 4,286,401 6,385,384
Trade and other receivables 345,950 267,258
Other current assets 40,462 2,201
TOTAL CURRENT ASSETS 4,672,813 6,654,843
NON-CURRENT ASSETS
Exploration and evaluation assets 3 48,339,519 48,855,466
Other non-current assets 599,792 626,352
Property, plant and equipment 4 577,272 844,336
TOTAL NON-CURRENT ASSETS 49,516,583 50,326,154
TOTAL ASSETS 54,189,396 56,980,997
CURRENT LIABILITIES
Trade and other payables 267,504 135,127
Lease liabilities 13,088 13,167
Provisions 306,310 297,636
TOTAL CURRENT LIABILITIES 586,902 445,930
NON-CURRENT LIABILITIES
Lease liabilities 63,386 73,153
Provisions 113,000 114,000
TOTAL NON-CURRENT LIABILITIES 176,386 187,153
TOTAL LIABILITIES 763,288 633,083
NET ASSETS 53,426,108 56,347,914
EQUITY
Contributed equity 6 106,763,927 106,763,927
Reserves (6,880,814) (5,230,347)
Accumulated losses (46,457,005) (45,185,666)
TOTAL EQUITY 53,426,108 56,347,914
Consolidated statement of changes in equity
Contributed Equity Share Based Payments Reserve Foreign Currency Translation Reserve Accumulated Losses Total
$ $ $ $ $
Consolidated
Balance at 1 July 2020 99,753,504 736,587 (5,852,354) (43,131,429) 51,506,308
Loss for the period - - - (1,068,246) (1,068,246)
Other comprehensive income, net of tax - - (935,201) - (935,201)
Total comprehensive income - - (935,201) (1,068,246) (2,003,447)
Transactions with owners in their capacity as owners
Share based payments - 189,017 - - 189,017
Shares issued, net of costs 2,531,466 - - - 2,531,466
2,531,466 189,017 - - 2,720,483
Balance at 31 December 2020 102,284,970 925,604 (6,787,555) (44,199,675) 52,223,344
Balance at 1 July 2021 106,763,927 925,604 (6,155,951) (45,185,666) 56,347,914
Loss for the period - - - (1,271,339) (1,271,339)
Other comprehensive income, net of tax - - (1,665,137) - (1,665,137)
Total comprehensive income - - (1,665,137) (1,271,339) (2,936,476)
Transactions with owners in their capacity as owners
Share based payments - 14,670 - - 14,670
- 14,670 - - 14,670
Balance at 31 December 2021 106,763,927 940,274 (7,821,088) (46,457,005) 53,426,108
Consolidated statement of cash flows
Consolidated
Dec 2021 Dec 2020
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (inclusive of GST and VAT) (1,049,650) (819,217)
Interest received 9 399
Other receipts - 50,000
GST and VAT received 21,891 19,548
NET CASH USED IN OPERATING ACTIVITIES (1,027,750) (749,270)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets (959,344) (512,549)
Payment for property, plant and equipment (49,771) (38,972)
NET CASH USED IN INVESTING ACTIVITIES (1,009,115) (551,521)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares - 3,000,754
Share issue costs - (280,271)
Payments of lease liabilities (11,319) -
NET CASH PROVIDED BY FINANCING ACTIVITIES (11,319) 2,720,483
Net (decrease)/increase in cash held (2,048,184) 1,419,692
Cash at the beginning of the period 6,385,384 1,576,471
Effects of exchange rate changes on cash (50,799) 35,794
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 4,286,401 3,031,957
Notes to the consolidated financial statements
Note 1. Significant accounting policies
Introduction
Tlou Energy Limited (Tlou) is a company domiciled and incorporated in
Australia. The Financial Report for the half-year ended 31 December 2021
consists of the Financial Statements of Tlou Energy Limited and the entities
it controlled during the period ('Consolidated Entity').
Compliance with accounting standards
The half-year financial report is a general purpose financial report prepared
in accordance with the requirements of the Corporations Act 2001 and
Australian Accounting Standard AASB 134: Interim Financial Reporting.
The half-year financial report does not include all the notes of the type
normally included in an annual financial report and shall be read in
conjunction with the most recent annual financial report of the group.
Basis of preparation
The financial statements have been prepared on an accruals basis and are based
on historical costs. The financial report is presented in Australian dollars.
The accounting policies and methods of computation applied by the Consolidated
Entity in the consolidated interim financial report are the same as those
applied by the Consolidated Entity in its consolidated financial report as at
and for the year ended 30 June 2021, except as noted below.
New and revised standards
A number of new or amended standards became applicable for the current
reporting period. The impact of the adoption of these standards did not have
any impact on the group's accounting policies and did not require
retrospective adjustments.
Going Concern
The consolidated financial statements have been prepared on a going concern
basis which contemplates that the group will continue to meet its commitments
and can therefore continue normal business activities and the realisation of
assets and settlement of liabilities in the ordinary course of business.
Because of the nature of the operations, exploration companies, such as Tlou
Energy Limited, find it necessary on a regular basis to raise additional cash
funds to fund future exploration activity and meet other necessary corporate
expenditure. At the date of this financial report, the ability of the group to
execute its currently planned development, exploration and evaluation
activities requires the group to raise additional capital within the next 12
months. Accordingly, the group is in the process of investigating various
options for the raising of additional funds which may include but is not
limited to an issue of shares or the sale of exploration assets where
increased value has been created through previous exploration activity.
At the date of this financial report, none of the above fund-raising options
have been concluded and no guarantee can be given that a successful outcome
will eventuate. The directors have concluded that as a result of the current
circumstances there exists a material uncertainty that may cast significant
doubt regarding the group's and the Company's ability to continue as a going
concern and therefore the group and Company may be unable to realise their
assets and discharge their liabilities in the normal course of business.
Nevertheless, after taking into account the current status of the various
funding options currently being investigated and making other enquiries
regarding other sources of funding, the directors have a reasonable
expectation that the group and the Company will have adequate resources to
fund its future operational requirements and for these reasons they continue
to adopt the going concern basis in preparing the financial report.
The interim financial report does not include adjustments relating to the
recoverability or classification of recorded assets amounts nor to the amounts
or classification of liabilities that might be necessary should the group not
be able to continue as a going concern.
Fair values
The fair values of Consolidated Entity's financial assets and financial
liabilities approximate their carrying values. No financial assets or
financial liabilities are readily traded on organised markets in standardised
form.
Accounting estimates and judgements
Critical estimates and judgements are continually evaluated and are consistent
with those disclosed in the previous annual report.
Exploration & evaluation assets
In a prior period the Consolidated Entity converted a prospecting licence into
a mining licence. A mining licence allows the commencement of commercial
development. Despite this management believe that it is not practical to
commence amortisation of the exploration and evaluation assets held in
relation to the mining licence as the Consolidated Entity has not yet entered
into production of a commercially viable resource.
Note 2. Expenses
Loss before income tax includes the following specific expenses: Dec 2021 Dec 2020
$ $
Other expenses
● Stock exchange and secretarial fees 140,890 135,919
● Engineers and consultants 210,491 196,764
● Investor relations 136,327 10,156
Note 3. Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of
each identifiable area of interest. Such expenditures comprise net direct
costs and an appropriate portion of related overhead expenditure but do not
include overheads or administration expenditure not having a specific nexus
with a particular area of interest. These costs are only carried forward to
the extent that they are expected to be recouped through the successful
development of the area or where activities in the area have not yet reached a
stage which permits reasonable assessment of the existence of economically
recoverable reserves and active or significant operations in relation to the
area are continuing.
Accumulated costs in relation to an area no longer considered viable are
written off in full in the year the decision is made. Regular reviews are
undertaken on each area of interest to determine the appropriateness of
continuing to carry forward costs in relation to that area of interest.
Dec 2021 June 2021
$ $
Exploration and evaluation assets 48,339,519 48,855,466
48,339,519 48,855,466
Dec 2021 Dec 2020
$ $
Movements in exploration and evaluation phase
Balance at the beginning of period 48,855,466 48,163,968
Exploration and evaluation expenditure during the half-year 1,002,050 418,103
Foreign currency translation (1,517,997) (844,131)
Balance at the end of period 48,339,519 47,737,940
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phase is dependent on successful development
and commercial exploitation, or alternatively, sale of the respective areas of interest.
Note 4. Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated
depreciation and impairment. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost
of each item of property, plant and equipment (excluding freehold land) over
their expected useful lives as follows:
Plant and
equipment
3-7 years
Leasehold
property
25 Years
The residual values, useful lives and depreciation methods are reviewed, and
adjusted if appropriate, at each reporting date.
An item of property, plant and equipment is derecognised upon disposal or when
there is no future economic benefit to the consolidated entity. Gains and
losses between the carrying amount and the disposal proceeds are taken to
profit or loss.
Dec 2021 June 2021
$ $
Property, plant and equipment at cost 4,116,391 4,249,527
Accumulated depreciation (3,539,119) (3,405,191)
577,272 844,336
Movements in Carrying Amounts Dec 2021 Dec 2020
Movement in the carrying amount of property, plant and equipment between the $ $
beginning and the end of the current period:
Balance at the beginning of year 844,336 1,273,953
Additions 49,773 73,074
Disposals (1,551) -
Depreciation (277,555) (286,999)
Foreign exchange movements (37,731) (32,842)
Carrying amount at the end of year 577,272 1,027,186
Note 5. Contingent liabilities
The Directors are not aware of any contingent liabilities at 31 December 2021.
Note 6. Contributed equity
Issued and paid up capital is recognised at the fair value of the
consideration received by the consolidated entity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Dec 2021 June 2021 Dec 2021 June 2021
Shares Shares $ $
Opening balance 600,199,039 450,180,185 106,763,927 99,753,504
Issue of ordinary shares during the year* - 150,018,854 - 7,725,754
Share issue costs - - - (715,331)
Ordinary shares ‑ fully paid 600,199,039 600,199,039 106,763,927 106,763,927
*Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the
proceeds on the winding up of the Company in proportion to the number of, and
amounts paid on, the shares held. The fully paid ordinary shares have no par
value. On a show of hands every member present at a meeting, in person or by
proxy, shall have one vote and upon a poll, each share shall have one vote.
The Company does not have authorised capital or par value in respect of its
issued shares.
Options and performance rights
At 31 December 2021, the following options for ordinary shares in Tlou Energy
Limited and performance rights were on issue.
Options
Issued to: Grant Date Exercise Price Expiry Date 31/12/2021 31/12/2020
Shareholders 20-Jul-20 $0.08 20-Jul-22 37,509,400 37,509,400
Service providers 20-Jul-20 $0.08 20-Jul-22 20,000,000 20,000,000
57,509,400 57,509,400
Performance rights
The following table shows the number, movements and exercise price of
performance rights at 31 December 2021.
Issue Date Hurdle Price Conditions 1/07/2021 Issued Exercised Expired 31/12/2021
31 January 2017 $0.28 See (i) 2,275,000 - - - 2,275,000
19 October 2018 $0.165 See (ii) 2,225,000 - - - 2,225,000
19 October 2018 $0.22 See (iii) 2,225,000 - - - 2,225,000
24 November 2021 $0.10 See (iv) - 3,000,000 - - 3,000,000
25 November 2021 $0.165 See (v) - 3,000,000 - - 3,000,000
6,725,000 6,000,000 - - 12,725,000
The outstanding performance shares have the following key terms and
conditions:
Number Performance condition Expiry date
(i) 2,275,000 The shares will only vest once the share price of the Company's securities 31/01/2024
listed on the ASX reaches $0.28 and closes at that price or above for a period
of 10 consecutive trading days.
(ii) 2,225,000 The shares will only vest once the share price of the Company's securities 31/01/2025
listed on the ASX reaches $0.165 and closes at that price or above for a
period of 10 consecutive trading days.
(iii) 2,225,000 The shares will only vest once the share price of the Company's securities 31/01/2025
listed on the ASX reaches $0.22 and closes at that price or above for a period
of 10 consecutive trading days.
(iv) 3,000,000 The shares will only vest once the share price of the Company's securities 31/01/2025
listed on the ASX reaches $0.10 and closes at that price or above for a period
of 10 consecutive trading days.
(v) 3,000,000 The shares will only vest once the share price of the Company's securities 31/01/2025
listed on the ASX reaches $0.165 and closes at that price or above for a
period of 10 consecutive trading days.
The Performance Shares will lapse if:
· None of the pricing conditions are met; or
· the participant does not meet the service conditions.
Note 7. Share-based payments
Share Options and Performance Rights may be granted to certain personnel of
the Company on terms determined by the directors or otherwise approved by the
Company at a general meeting.
Share options are granted for no consideration. Options and entitlements to
the options are vested on a time basis and/or on specific performance-based
criteria such as share price increases or reserves certification. Options
granted as described above carry no dividend or voting rights. When
exercisable, each option is convertible to one ordinary share.
Performance Rights are linked to the share price performance of the Company,
ensuring alignment with the interests of the Company's shareholders. For the
Performance Rights that are issued but not yet exercised at the date of this
report to vest and, therefore, become exercisable by a participant, certain
performance conditions are required to be met as set out below. On vesting,
holders of Performance Rights will be entitled to acquire Tlou Energy Limited
ordinary shares at nil cost.
Note 8. Segment information
Identification of reportable segments
Operating segments are identified on the basis of internal reports that are
regularly reviewed by the executive team in order to allocate resources to the
segment and assess its performance. The Company currently operates in one
segment, being the exploration, evaluation and development of coalbed methane
resources and power generation in southern Africa.
Segment revenue
As at 31 December 2021 no revenue has been derived from its operations (2020:
$nil).
Segment assets
Segment non-current assets are allocated to countries based on where the
assets are located as outlined below.
Dec 2021 June 2021
$ $
Botswana 49,513,349 50,321,772
Australia 3,234 4,382
49,516,583 50,326,154
Note 9. Events occurring after balance date
Post the half-year end the Company received funds under the convertible note
agreement with BPOPF.
Other than the matters discussed in this report, there has not arisen in the interval between the end of the half-year and the date of this report any item,
transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect significantly the operations of the group, the results of
those operations or the state of affairs of the group in subsequent financial periods.
Directors' declaration
In the directors' opinion:
(a) the attached financial statements and notes are in accordance with the
Corporations Act 2001 including:
(i) the
attached financial statements and notes thereto comply with the
Corporations Act 2001, Australian Accounting Standard AASB 134 'Interim
Financial Reporting', the Corporations Regulations 2001 and other mandatory
professional reporting requirements;
(ii)
the attached financial statements and notes thereto give a true and fair view of the consolidated entity's financial position as at 31 December
2021 and of its performance for the financial half-year ended on that date;
and
(iii) there are reasonable grounds to believe that the
Company will be able to pay its debts as and when they become due and payable.
Signed in accordance with a resolution of directors made pursuant to section
303(5)(a) of the Corporations Act 2001.
On behalf of the directors
Anthony Gilby
Managing Director
Dated at Brisbane this 2(nd) day of March 2022
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