REG - Tlou Energy Ltd - Interim Results
08/03/2024 07:00
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RNS Number : 1381G Tlou Energy Ltd 08 March 2024
8 March 2024
Tlou Energy Limited
("Tlou" or "the Company")
Interim Results
The Company is pleased to announce its interim results for the six months
ended 31 December 2023. The report is available on the Company's website:
tlouenergy.com/reports.
The Company has made excellent progress over recent months and remains on
track to get gas fired power into the grid in Botswana later this year.
Highlights:
Ø Lesedi production wells continue to flare gas as dewatering progresses
Ø The 100km 66kV transmission line, connecting Tlou's Lesedi project directly
to both Botswana's power grid and the Southern African Power Pool is complete
Ø Connection to Serowe substation achieved, Lesedi no longer isolated from
primary Botswana electricity market
Ø Lesedi substation which will connect Tlou's power generators to the
transmission line is approximately 38% complete
Ø Generation and sale of power remains on track for later this year
Tlou's Managing Director, Mr Tony Gilby commented, "The Company has made
excellent progress over recent months and we are getting very close to first
revenue. Having direct access to the power grid opens up our gas field to a
huge market. It has taken hard work and significant investment over many years
to get to this point and we look forward to delivering power and earning first
revenue for the Company as soon as possible."
Lesedi Power Project
Tlou is developing a 10MW power generation facility at its Lesedi operations
base in central Botswana. The Company plans to sell electricity into the power
grid later this year and then expand rapidly.
Tlou is flowing gas and has a fully functional operations base about 100km
west of Serowe. The operations base is located on Tlou's own 4,000-hectare
property. The recently constructed 100km 66kV power line allows direct access
into the regional power grid.
Key remaining items to completed prior to first power sales include finishing
the substation at the Lesedi site, installation of generators, completing the
short gas gathering line (from the gas wells to the generators), energising
the power line and sale of first electricity. Minor finishing works on the
transmission line and the addition of switchgear at Serowe will also be
completed prior to first power.
The initial target is ~2MW of power, followed by rapid expansion to 10MW,
generating approximately $10m in revenue per annum (i.e. approx. $1m per MW
p.a.)
All key approvals are in place including environmental assessments, production
licence, power generation licence and the Power Purchase Agreement.
Electricity will be generated using gas from Tlou's gas field. Tlou has a
significant gas resource which has been certified by independent experts SRK
Consulting (Australasia) Pty Ltd.
Tlou holds a 100% interest over approximately 9,000km(2) of exploration
permits including a 900km(2) production licence. There are two main coal seams
that Tlou are focused on, the Lower Morupule and the Serowe play - each
covering about 1,800km(2) within Tlou's 100% owned acreage. The Company is
currently concentrating on the Lower Morupule play. Tlou has an extensive
geological database including well data, seismic data and reprocessed
aeromagnetic data.
The Government of Botswana remains very supportive and Tlou's power can help
to reduce reliance on expensive imported power. In addition to supplying power
in Botswana, the Company may sell electricity regionally via the Southern
African Power Pool, opening up an even bigger market for Tlou's electricity.
Tlou is aiming to be a vertically integrated gas to power company owning 100%
of both the upstream (gas production) and downstream (generation) sides of the
operation.
Post period end the Company raised $1,139,403 via an entitlement offer. In
addition, the Company is in discussions with several strategic parties to
secure the remaining funds required for project completion.
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.
By Authority of the Board of Directors
Mr. Anthony Gilby
Managing Director
****
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
Zeus Capital (UK Broker) +44 (0)20 3829 5000
Simon Johnson
Investor Relations
Ashley Seller (Australia) +61 418 556 875
FlowComms Ltd - Sasha Sethi (UK) +44 (0) 7891 677 441
About Tlou
Tlou is developing energy solutions in Sub-Saharan Africa through gas-fired
power and ancillary projects. The Company is listed on the ASX (Australia),
AIM (UK) and the BSE (Botswana). The Lesedi Gas-to-Power Project ("Lesedi") is
100% owned and is the Company's most advanced project. Tlou's competitive
advantages include the ability to drill cost effectively for gas, 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.
****
Directors' report
The Directors present their report, together with the financial statements, on
the consolidated entity (referred to hereafter as the 'consolidated entity' or
the 'Group') consisting of Tlou Energy Limited (referred to hereafter as the
'Company' or "Tlou") and the entities it controlled at 31 December 2023.
Directors
The names of the directors who held office at any time during the half-year
and up to the date of this report are:
Martin McIver Non-Executive Chairman
Anthony Gilby Managing Director & Chief Executive Officer
Gabaake Gabaake Executive Director
Colm Cloonan Finance Director
Hugh Swire Non-Executive Director
Directors have been in office since the start of the half-year to the date of
this report unless otherwise stated.
Principal Activities
The principal activity of the consolidated entity is to explore and evaluate
power solutions in Sub-Saharan Africa through Coalbed Methane (CBM) gas-fired
power. No revenue from these activities has been earned to date, as the
consolidated entity is still in the exploration and evaluation or
pre-development stage.
There have been no significant changes in the nature of the group's principal
activities during the half-year.
Review and results of operations
The loss for the half-year after income tax amounted to $1,821,374 (December
2022 loss $2,245,259). Information on operations and results during the period
are set out below.
Lesedi Project
The Lesedi Project consists of four Prospecting Licences (PL) and a Production
Licence. The first stage of development is a 10MW power generation facility
which will be located in the Company's Production Licence area.
The status of the Lesedi licences is as follows:
Licence Expiry Status
Production Licence 2017/18L August 2042 Current
PL 001/2004 TBA Awaiting renewal
PL 003/2004 TBA Awaiting renewal
PL 035/2000 March 2025 Current
PL 037/2000 March 2025 Current
PL renewal applications are submitted three months prior to expiration.
Renewal applications were submitted for PL001/2004 and PL003/2004 in June
2023. The Company has been informed that following a processing delay at the
relevant department the renewed licences are expected to be issued in March
2024.
Lesedi Gas-to-Power project
The Lesedi project is Tlou's most advanced. At Lesedi the Company is
developing a proposed 10MW gas-to-power project. The first electricity to be
generated at Lesedi is planned to go towards satisfying the 10MW Power
Purchase Agreement (PPA) with Botswana Power Corporation (BPC), the national
power utility. The Lesedi project has several components of the development
process either completed or ongoing including the construction of transmission
lines, substations, a field operations facility and generation site as well as
production wells.
Transmission Line Construction
The Lesedi project was approximately 100km from the nearest BPC substation
connection in Serowe. To connect to the national grid, the Company had to
construct a 100km 66kV transmission line. This, together with associated
infrastructure and gas production wells should enable the Company to connect
and provide electricity into Botswana's power network. Construction of the
66kV transmission line has been completed by the contractor Zismo Engineering
Pty Ltd (Zismo). Minor finishing works and the addition of switchgear at the
Serowe substation will be done prior to the line being energised. The line is
planned to remain under care and maintenance until energisation, which is
expected around mid-2024.
Substation Construction
In addition to the transmission line, an electrical substation is required at
the Lesedi end of the transmission line whereas at the opposite end the line
has been connected to the existing BPC substation at Serowe. The substation at
Lesedi was initially designed for the first 5MW of power, however during the
half year the Company changed the design to facilitate expansion beyond 10MW.
This will be beneficial as the projects grows. The connection at Serowe is
complete and the Lesedi substation is approximately 38% complete. It is
currently anticipated that the work will be completed around mid-2024.
Future gas production
The Company has two gas production pods, Lesedi 4 and Lesedi 6 currently
flaring gas. During the reporting period, the Company completed a redrill of
both lateral wells of the Lesedi 4 production pod. The aim of redrilling the
lateral wells was to provide straighter lateral sections using a specialist
rotary steerable system (RSS). The lateral sections were drilled for
approximately 700m and successfully intersected with the Lesedi 4P vertical
production well. These straighter laterals are expected to assist with
removing water from the reservoir to more efficiently dewater and flow gas.
Also during the period a new production pod, Lesedi 6, was completed. The RSS
was also used for the lateral sections of this production pod. Post drilling,
both Lesedi 4 and Lesedi 6 pods had production equipment installed to commence
dewatering ahead of gas production.
Lesedi 6 experienced a rapid increase in casing pressure in both lateral wells
with first gas production to surface occurring soon thereafter. The rapid
build-up of casing pressure and production of first gas to surface in a
relatively short time was very encouraging. This was the fastest gas to
surface in the Lesedi field to date.
Lesedi 4 and Lesedi 6 continue to flow gas as the water level is being
gradually lowered to just above the coal. Once the wells stabilise and stop
surging (gas and water), gas flow rates will be measured. Tlou is confident
that with the in-house knowledge gained from previous drilling efforts,
extracting more and more gas out of the coal reservoir will become
progressively simpler and more cost effective due to economies of scale.
Mamba Project
The Mamba project is in the exploration and evaluation phase with further
operations required on the licences. It consists of five Prospecting Licences
covering an area of approximately 4,500 Km2. The Mamba area is situated
adjacent to Lesedi. In the event of successful drilling results at Mamba, it
is envisioned that this area would be developed as a separate project from
Lesedi. The Mamba area provides the Company with flexibility and optionality.
The status of the Mamba licences is as follows:
Licence Expiry Status
PL 237/2014 December 2025 Current
PL 238/2014 December 2025 Current
PL 239/2014 December 2025 Current
PL 240/2014 December 2025 Current
PL 241/2014 TBA Awaiting renewal
PL renewal applications are submitted three months prior to expiration. A
renewal application for PL 241/2014 was submitted in June 2023. The Company
has been informed that following a processing delay at the relevant department
the renewed licence is expected to be issued in March 2024. Further work on
the Mamba project is proposed once the Lesedi project is in production. The
next stage of operations is likely to include a seismic survey and the
drilling of core-holes.
Boomslang Project
Prospecting Licence, PL011/2019 designated "Boomslang", is approximately 1,000
Km2 and is situated adjacent to the Company's existing licences. To date, the
Company has not carried out ground operations in the Boomslang area. Like the
Mamba project the first stage of operations is likely to include a seismic
survey following by core-hole drilling. The status of the Boomslang licence is
as follows:
Licence Expiry Status
PL 011/2019 June 2024 Current
PL renewal applications are submitted three months prior to expiration.
Significant changes in the state of affairs
During the half-year ended 31 December 2023, there were no other significant
changes to the state of affairs of the consolidated entity other than those
stated above and disclosed in the financial report and notes thereof.
Matters subsequent to the end of the half-year
In February 2024, the Company issued 32,554,360 ordinary shares at $0.035 per
share, raising $1,139,403. The total number of issued shares following this
capital raising is 1,076,536,717. Also, on 31 January 2024, 2,275,000
performance rights lapsed.
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.
Likely developments and expected results of operations
The Company has drilled two wells in the Lesedi project area which have
produced CBM gas. These wells are planned to be the first two gas producing
wells that will be used to generate power at the Lesedi project. These wells
were designed to achieve enhanced gas flow rates in the area proposed for the
Company's initial project development. The gas flow rates from these wells are
vitally important to assess the viability of the Lesedi project and the
Company is yet to confirm commercial gas flow rates and there is no guarantee
that the required rates can or will be achieved. In addition, further wells
flowing commercial gas volumes will be required to produce sufficient gas for
the planned Lesedi project.
The Company is advancing plans to develop ancillary projects in addition to
the gas-fired power project. These projects may be subject to regulatory
approvals. No guarantee can be given in relation to the results of the
Company's operations, gas flow rates, regulatory approvals being granted or
the ability to secure the funds required to progress all or any of the
Company's existing or planned operations.
The Company is subject to risks which may have a material adverse effect on
operating and financial performance. Tlou's Risk Management Policy can be
found on the Company's website. It is not possible to identify every risk that
could affect the business or shareholders. Any actions taken to mitigate these
risks cannot provide complete assurance that a risk will not materialise or
have a material adverse effect on the business, strategies, assets or
performance of the Company. A list of risks currently considered material and
mitigation strategies are set out below. This is not an exhaustive list and
risks are outlined in no particular order.
Risk Description Mitigation
Funding The Company will need to raise additional debt and/or equity funds to support The Company has operated in Botswana for over a decade with extensive local
its ongoing operations or implement its planned activities and strategies. and international relationships with investors who have supported the Company.
This includes but is not limited to funding to complete the infrastructure
necessary to connect to the power grid and generate electricity at the Lesedi
project and funds to facilitate drilling of additional gas wells to deliver
sufficient gas for development of the proposed 10MW power project. There can The Company actively manages its capital requirements and maintains close
be no assurance that such funding will be available when required or on relationships with potential investors. The Company continues to explore
satisfactory terms or at all. Inability to find sufficient funds may result in sources of both equity and debt capital.
the delay or abandonment of certain activities which would likely have an
adverse effect on the Company's progress.
Health and Safety The project operations are in a remote location, in a sometimes-harsh The Company employs highly skilled and experienced personnel where possible.
environment and involves the use of heavy machinery and equipment. The Chief Operations Officer is supported by a dedicated Safety, Health and
Environment (SHE) officer and a paramedic is also on duty at all times at the
field operations. The Company has a training and safety management system and
external audits of the safety management system are conducted. All visitors to
site are given a safety briefing.
Freedom to Operate The Company has licences to operate over 8,000 square km and has had continued The Company continues to support regular and extensive Government engagement
access to key licence areas when required. Negative sentiment towards the activities to interest and educate lawmakers to the country's natural resource
project or industry may impair Tlou's freedom to operate. Changes to key opportunities as well as keep up to date with changing national power
Government personnel and/or national policy could also impact ability to strategies and requirements.
operate effectively.
Tlou supports and interacts with a wide network of local stakeholders
including farmers and landowners to try and ensure that the needs of the
community are being met and that the project can provide benefits for all
stakeholders including providing long term and sustainable employment
opportunities.
Environment Botswana's natural habitat, water and wildlife needs to be protected. Botswana Tlou has full environmental approval in place for development of the
rigorously enforces its environmental regulations so the risk of fines or gas-to-power project. The Company aims to not just meet environmental
other liabilities for noncompliance is commensurately high. requirements but exceed them.
The Company uses local specialists to support its ongoing permit renewals,
environmental assessments and licence applications. Continual monitoring of
actual and potential impacts on the environment is practiced to try and ensure
that any impact on the natural habitat is eliminated or minimised.
Climate Climate change initiatives could have an impact on Tlou's operations in the Tlou's Lesedi gas-to-power project aims to be part of a power market in
future. Climate initiatives could have a material impact on fossil fuel sub-Saharan Africa that will move away from carbon intensive coal and diesel
projects such as Tlou's Lesedi gas-to power project. fired power generation. While also a fossil fuel, gas is viewed as a
transitional fuel that can assist with providing base load power until such
time that sustainable and/or renewable power sources can provide reliable
24-hour base load power.
The Company is aware that it may need to adapt its process to meet future
climate needs and will continue to assess new information as it becomes
available.
Power Sales The Company has signed a 10MW Power Purchase Agreement (PPA) with Botswana The Company works closely with its contractors and engineers to progress
Power Corporation (BPC) with the aim for first power to be supplied into the infrastructure projects in a timely manner.
national grid in 2024. There is a risk that the grid connection infrastructure
could be delayed thereby postponing first power sales. No other agreements are
currently in place for sale of power or gas to other parties.
Management continues to explore opportunities with other potential customers
across the region, potentially via the Southern African Power Pool or within
Botswana. The Company also aims to diversify its products including
potentially producing solar power, hydrogen, carbon black/graphite and crypto
currencies.
Geological Risk The Company has over 8,000 square km of licence areas part of which has not Tlou has invested in seismic surveys and core hole drilling to identify areas
had significant CBM operations to date. There remains significant geological of lower risk prior to conducting further exploration and evaluation. This
risk in these areas and subject to operational results these areas may not be strategy is planned for undeveloped areas of the project. After a decade of
commercial. operating in the region and supported by external resource certifications, the
operations team have and continue to develop an excellent knowledge of the
geological area to help de-risk future exploration and evaluation operations.
Remote Operations The Company operates over 100km from established medical and engineering The Company has on-site paramedic support and has invested in its own stock of
support facilities in the closest urban area which increases costs and risks equipment so that it can operate as autonomously as possible over a greater
as well as requiring adequate insurance. range of activities. A purpose-built field operations camp is close to
completion and will be suitable for development of the 10MW project and for
further expansion.
People The Company may lose key executives and management. The Company operates in a The Company continues to search for skilled staff to grow the team to satisfy
competitive environment in relation to talented corporate and technical the Company's needs and ideally to have a lead person and back-up support
personnel. person for all key positions. In addition, implementation of appropriate staff
training and succession plans is a key target. The Company offers incentives
and development opportunities for key executives and management to attract the
best talent to the Company.
Auditor's Independence Declaration
The auditor's independence declaration for the half-year ended 31 December
2023 has been received and is attached to this report.
Signed in accordance with a resolution of the Board of Directors.
Anthony Gilby
Managing Director
Brisbane
8 March 2024
Consolidated statement of comprehensive income for the half-year ended 31
December 2023
Consolidated
Note Dec 2023 Dec 2022
$ $
Interest income 11,383 6,351
Foreign exchange gain 207,437 189,605
Expenses
Employee benefits expense (640,430) (564,644)
Depreciation expense (56,351) (147,104)
Interest expense (484,393) (296,013)
Share based payment expense (28,751) (76,369)
Professional fees (144,539) (271,658)
Occupancy costs (7,800) (6,746)
Other expenses 2 (676,181) (1,032,014)
Fair value gain/(loss) on financial instruments (1,749) (46,667)
LOSS BEFORE INCOME TAX (1,821,374) (2,245,259)
Income tax - -
LOSS FOR THE PERIOD (1,821,374) (2,245,259)
OTHER COMPREHENSIVE INCOME/(LOSS)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations (1,877,010) (1,009,425)
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS) (1,877,010) (1,009,425)
TOTAL COMPREHENSIVE INCOME/(LOSS) (3,698,384) (3,254,684)
Earnings per share
Cents Cents
Basic loss per share (0.2) (0.3)
Diluted loss per share (0.2) (0.3)
Consolidated statement of financial position as at 31 December 2023
Note Dec 2023 June 2023
$ $
CURRENT ASSETS
Cash and cash equivalents 729,731 6,848,717
Trade and other receivables 3 1,089,187 1,311,444
Other current assets 4 337,406 1,140,791
TOTAL CURRENT ASSETS 2,156,324 9,300,952
NON-CURRENT ASSETS
Exploration and evaluation assets 5 66,405,934 60,442,961
Other non-current assets 516,164 483,775
Property, plant and equipment 2,204,532 1,399,531
TOTAL NON-CURRENT ASSETS 69,126,630 62,326,267
TOTAL ASSETS 71,282,954 71,627,219
CURRENT LIABILITIES
Trade and other payables 1,863,317 2,405,713
Lease liabilities 17,172 15,968
Provisions 468,297 417,158
TOTAL CURRENT LIABILITIES 2,348,786 2,838,839
NON-CURRENT LIABILITIES
Convertible notes 6 11,989,824 8,086,011
Long term loan 7 - 2,000,000
Derivatives 123,754 122,005
Lease liabilities 27,832 37,797
Provisions 134,000 134,000
TOTAL NON-CURRENT LIABILITIES 12,275,410 10,379,813
TOTAL LIABILITIES 14,624,196 13,218,652
NET ASSETS 56,658,758 58,408,567
EQUITY
Contributed equity 8 122,124,218 121,509,325
Reserves (9,888,096) (9,344,768)
Accumulated losses (55,577,364) (53,755,990)
TOTAL EQUITY 56,658,758 58,408,567
Consolidated statement of changes in equity for the half-year ended 31
December 2023
Contributed Equity Share Based Payments Reserve Foreign Currency Translation Reserve Convertible Equity Reserve Accumulated Losses Total
$ $ $ $ $
Consolidated
Balance at 1 July 2022 106,763,927 1,157,804 (7,873,820) - (49,514,782) 50,533,129
Loss for the period - - - - (2,245,259) (2,245,259)
Other comprehensive income, net of tax - - (1,009,425) - - (1,009,425)
Total comprehensive income - - (1,009,425) - (2,245,259) (3,254,684)
Transactions with owners in their capacity as owners
Share based payments - 76,369 - - - 76,369
Transfers - Options exercised (189,017) - 189,017 -
Shares issued, net of costs 5,000,500 - - - - 5,000,500
5,000,500 (112,648) - - 189,017 5,076,869
Balance at 31 December 2022 111,764,427 1,045,156 (8,883,245) - (51,571,024) 52,355,314
Balance at 1 July 2023 121,509,325 1,257,455 (10,602,223) - (53,755,990) 58,408,567
Loss for the period - - - - (1,821,374) (1,821,374)
Other comprehensive income, net of tax - - (1,877,010) - - (1,877,010)
Total comprehensive income - - (1,877,010) - (1,821,374) (3,698,384)
Transactions with owners in their capacity as owners
Share based payments - 28,751 - - 28,751
Conversion feature of the convertible loans - note 6 - - - 1,304,931 1,304,931
Shares issued, net of costs 614,893 - - - 614,893
614,893 28,751 - 1,304,931 - 1,948,575
Balance at 31 December 2023 122,124,218 1,286,206 (12,479,233) 1,304,931 (55,577,364) 56,658,758
Consolidated statement of cash flows for the half-year ended 31 December 2023
Note Dec 2023 Dec 2022
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (inclusive of GST and VAT) (1,514,733) (1,977,025)
Interest received 11,383 6,351
GST and VAT received 134,212 165,550
NET CASH USED IN OPERATING ACTIVITIES (1,369,138) (1,805,124)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets (8,102,594) (4,557,013)
Payment for property, plant and equipment (126,548) (573,151)
NET CASH USED IN INVESTING ACTIVITIES (8,229,142) (5,130,164)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 564,977 5,000,500
Proceeds from borrowings 6 3,000,000 -
Issue costs (64,084) -
Payments of lease liabilities (9,328) (10,757)
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,491,565 4,989,743
Net (decrease)/increase in cash held (6,106,715) (1,945,545)
Cash at the beginning of the period 6,848,717 7,875,025
Effects of exchange rate changes on cash (12,271) 225,299
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 729,731 6,154,779
Notes to the consolidated financial statements for the half-year ended 31
December 2023
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 2023
consists of the Financial Statements of Tlou Energy Limited and the entities
it controlled during the period ('Consolidated Entity' or the 'Group').
Compliance with accounting standards
The half-year financial report has been 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 for the
year ended 30 June 2023 and any public announcements made by Tlou during the
interim reporting period in accordance with the continuous disclosure
requirements of the Corporation Act 2001.
Basis of preparation
The financial statements have been prepared on an accruals basis and are based
on historical costs except for derivative financial instruments which are
measured at fair value through profit and loss. 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 2023, 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 consolidated entity 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.
For the period ended 31 December 2023, the Group incurred a loss of $1,821,374
after income tax and net cash used in operating activities was $1,369,138 and
net cash used in investing activities was $8,229,142. At 31 December 2023 the
Group had net current liabilities of $192,462 and commitments due in the next
12 months of $3,734,747. Subsequent to balance date the Group raised
$1,139,403 from the issue of shares.
The ability of the Group to continue as a going concern is dependent upon
completing a capital raise or securing other forms of financing within the
next two months. This is in addition to amounts already raised subsequent to
balance date. These funds are required to continue development of planned
power projects and to meet the consolidated Group's working capital
requirements. The ability of the Group to continue as a going concern is also
dependent upon future capital raises.
These conditions give rise to material uncertainty which may cast significant
doubt over the Group's ability to continue as a going concern. Whilst
acknowledging these uncertainties, the Directors have concluded that the going
concern basis of preparation of the financial statements is appropriate
considering the following circumstances:
· Management is in discussions with a number of parties to provide
funding for completion of work to connect the Group's power project to the
electricity grid, a key target which would enable the Group to generate first
revenue;
· The Company's largest shareholder continues to support the
company and has provided a $1m loan facility that can be drawn down as
required. This amount may also be increased in future subject to agreement
with the shareholder; and
· Funds could be raised through the equity markets as supported by
recent successful capital raisings.
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 consolidated entity's and the Company's ability to
continue as a going concern and therefore the consolidated entity and Company
may be unable to realise their assets and discharge their liabilities in the
normal course of business. Should the Group be unable to continue as a going
concern, it may be required to realise its assets and extinguish its
liabilities other than in the ordinary course of business, and at amounts that
differ from those stated in the financial report. This financial report does
not include any adjustments related to the recoverability and classification
of recorded asset amounts or classification of liabilities and appropriate
disclosures that may be necessary should the Group be unable to continue as a
going concern.
Fair values
The fair values of the 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
The consolidated entity performs regular reviews on each area of interest to
determine the appropriateness of continuing to carry forward costs in relation
to that area of interest. These reviews are based on detailed surveys and
analysis of drilling results performed to reporting date.
Management has considered whether Tlou is still in the exploration and
evaluation (E&E) phase or has moved into development. The projects should
still be classified as E&E as the technical and commercial feasibility has
not been established. In particular:
• whilst there has been independently certified gas
reserves and contingent resources whether or not these reserve gas flow rates
will be of a commercial quantity has not been established;
• funding for the commercialisation of reserves and
for a commercial level of production has not been confirmed; and
• a final investment decision has not been made.
At the date of this report the Directors consider that Tlou is still in the
E&E phase. While the Company has made significant progress during the
reporting period, the three points above are still relevant, i.e. (i)
commercial gas flow rates are yet to be established, (ii) agreed funding to
commercialise the project is not yet in place, (iii) the Company has not
reached a final investment decision. Based on these facts and despite the
progress made to date the project remains in the E&E stage.
Note 2. Expenses
Loss before income tax includes the following specific expenses: Dec 2023 Dec 2022
$ $
Other expenses
● Stock exchange and secretarial fees 215,486 197,608
● Engineers and consultants 114,277 190,204
● Investor relations 110,036 320,463
Note 3. Trade and other receivables
Dec 2023 June 2023
$ $
Current
Other receivables 13,607 23,443
GST/VAT receivable 1,075,580 1,288,001
1,089,187 1,311,444
Note 4. Other current assets
Dec 2023 June 2023
$ $
Prepayments 337,406 346,121
Prepayments for material and equipment for new field operations facility - 794,670
337,406 1,140,791
Note 5. Exploration and evaluation expenditure
Dec 2023 June 2023
$ $
Exploration and evaluation assets 66,405,934 60,442,961
66,405,934 60,442,961
Dec 2023
Movements in exploration and evaluation assets $
Balance at the beginning of period 60,442,961
Exploration and evaluation expenditure during the period 8,128,922
Foreign currency translation (2,165,949)
Balance at the end of period 66,405,934
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 6. Convertible notes
The parent entity has convertible notes and loans as follows:
Dec 2023 June 2023
$ $
Convertible notes 8,204,344 8,086,011
Convertible loans 3,785,480 -
11,989,824 8,086,011
Convertible Notes
The parent entity issued convertible notes totalling US$5,000,000 on 24
January 2022. The notes are convertible into ordinary shares of the parent
entity, at the option of the holder at the higher of:
(a) A 10% discount to the weighted average traded price of the Company's
shares on the ASX over the 90 days prior to the Conversion Date; and
(b) A$0.06
The notes incur interest at 7.75% and the Company may capitalise interest for
the first 18 months with interest payments due at six-month intervals
thereafter. The notes expire on 24 January 2027, being 5 years after issue.
Dec 2023
$
Opening Balance 8,086,011
Interest expense 319,461
Effect of foreign exchange movement (201,128)
Non-current host liability 8,204,344
Convertible Loans
ILC Investments Pty Ltd ("ILC") and ILC BC Pty Ltd ("ILCB") have provided
loans to the Company, made up of a converted ILC term loan along with an
additional $2m loan from ILC and a separate $1m loan from ILCB. ILC is Tlou's
largest shareholder. Interest on the loans is charged at 10% per annum. The
convertible loans are repayable at the earlier of 30 April 2026 or 60 days
after the date the Company first generates and supplies electricity into the
grid from its Lesedi project. At any time during the term, ILC and ILCB may
elect to convert the whole or part of the loan into shares in the Company at
$0.035 per share.
Dec 2023 June 2023
$ $
Opening balance - -
Loans advanced 3,000,000 -
Recognition of financial liability 2,090,411
Conversion component on initial recognition (1,304,931)
Interest expense 90,959 -
Interest accrued (90,959) -
3,785,480 -
With the inclusion of the convertible option on the loans, the company
undertook a valuation of the loans to include the financial liability and the
conversion feature of the loan.
The convertible loans comprise: (a) a debt instrument; and (b) a conversion
feature to exchange the loans for a fixed number of equity instruments. In
valuing the convertible loans it was necessary to determine the fair value of
the liability component and subtract this value from the face value of the
convertible loans to determine the equity component.
$ $ $
ILC Loan ILCB Loan Total
Valuation Date 08-Nov-23 03-Nov-23
Face Value 4,090,411 1,000,000 5,090,411
Financial Liability Component 3,043,980 741,500 3,785,480
Conversion Feature Component 1,046,431 258,500 1,304,931
Total 4,090,411 1,000,000 5,090,411
The financial liability is classified as a non-current liability and the
conversion feature is classified as an equity reserve.
Note 7. Long term loan
Term Loan
Dec 2023 June 2023
$ $
Opening balance 2,000,000 -
Loans advanced - 2,000,000
Interest capitalised 90,411 32,876
Interest accrued - (32,876)
Derecognition of loan (2,090,411) -
- 2,000,000
ILC Investments Pty Ltd ("ILC") provided a loan to the Company during the year
ended 30 June 2023. In November 2023 the terms of the loan were amended with a
conversion option added. The balance at the date of amendment and accrued
interest up to date of amendment were then reclassified as a convertible loan
as outlined in Note 6.
Note 8. Contributed equity
Dec 2023 June 2023 Dec 2023 June 2023
Shares Shares $ $
Opening balance 1,024,583,025 600,199,039 121,509,325 106,763,927
Issue of ordinary shares during the year 19,399,332 424,383,986 678,977 14,853,721
Share issue costs - - (64,084) (108,323)
Ordinary shares ‑ fully paid 1,043,982,357 1,024,583,025 122,124,218 121,509,325
Ordinary shares issued during the half-year
Issue Date No. of Shares Issue Price (AUD)
Placement 12-Oct-23 19,399,332 $0.035
Options
At 31 December 2023, there were no options for ordinary shares in Tlou Energy
Limited on issue.
Performance rights
The following table shows the number, movements and exercise price of
performance rights for the period ended 31 December 2023.
Issue Date Hurdle Price Expiry date 1/07/2023 Issued Exercised Lapsed 31/12/2023
31/01/2017 $0.28 31/01/2024* 2,275,000 - - - 2,275,000
19/10/2018 $0.165 31/01/2025 2,175,000 - - - 2,175,000
19/10/2018 $0.22 31/01/2025 2,175,000 - - - 2,175,000
15/12/2021 $0.10 31/01/2025 3,000,000 - - - 3,000,000
15/12/2021 $0.165 31/01/2025 3,000,000 - - - 3,000,000
1/02/2023 $0.165 31/01/2025 2,000,000 - - - 2,000,000
1/02/2023 $0.22 31/01/2025 2,000,000 - - - 2,000,000
1/02/2023 $0.28 31/01/2025 2,000,000 - - - 2,000,000
18,625,000 - - - 18,625,000
*These rights expired on 31 January 2024.
Note 9. Contingent liabilities
The Directors are not aware of any contingent liabilities at 31 December 2023.
Note 10. 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 2023 no revenue has been derived from its operations (2022:
$nil).
Segment assets
Segment non-current assets are allocated to countries based on where the
assets are located as outlined below.
Dec 2023 June 2023
$ $
Botswana 69,100,814 61,802,339
Australia 25,816 31,726
69,126,630 61,834,065
Note 11. Commitments
Exploration expenditure
To maintain an interest in the exploration tenements in which it is involved,
the consolidated entity is required to meet certain conditions imposed by the
various statutory authorities granting the exploration tenements or that are
imposed by the joint venture agreements entered into by the consolidated
entity. These conditions can include proposed expenditure commitments. The
timing and amount of exploration expenditure obligations of the consolidated
entity may vary significantly from the forecast based on the results of the
work performed, which will determine the prospectivity of the relevant area of
interest. Subject to renewal of all prospecting licences, and variations to
agreements the consolidated entity's proposed expenditure obligations along
with obligations under contracts related to the construction of transmission
lines and associated infrastructure which are not provided for in the
financial statements are as follows:
Dec 2023 June 2023
Minimum expenditure requirements $ $
● not later than 12 months 3,176,610 5,630,270
● between 12 months and 5 years 558,137 263,181
3,734,747 5,893,451
Note 12. Events occurring after reporting date
In February 2024, the Company issued 32,554,360 ordinary shares at $0.035 per
share, raising $1,139,403. The total number of issued shares following this
capital raising is 1,076,536,717. Also, on 31 January 2024, 2,275,000
performance rights lapsed.
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 2001including:
(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 2001and 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 2023 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 8th day of March 2024
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