REG - Tlou Energy Ltd - Quarterly Activities Report q/e 30 September 2024
30/10/2024 07:00
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RNS Number : 1300K Tlou Energy Ltd 30 October 2024
30 October 2024
Tlou Energy Limited
("Tlou" or "the Company")
Quarterly Activities Report for the quarter ended 30 September 2024
Ø Tlou's downstream activities including the grid connection power line,
Lesedi & Serowe substations and generators are nearing completion
Ø Lesedi electrical substation is ~85% complete with expected completion by
the end of the year
Ø Tier 1 power generation provider lined up to deliver infrastructure at
Tlou's Lesedi Project when required
Ø Focus is now turning to the upstream to provide higher and more consistent
gas flow rates
Ø Dr Ian Campbell (Tlou's largest shareholder) has indicated that he is
willing to to provide funding during this time
Lesedi Substation Construction - October 2024
Lesedi Project
Lesedi is Tlou's most advanced project. Work has been ongoing at Lesedi for
some time with the project targeting first power generation expected in
mid-2025. Lesedi remains at the forefront of Botswana's gas to power sector,
making substantial progress in the development of the proposed 10MW
gas-to-power project.
The Lesedi development is located on Tlou's 40 Km(2)property. This property
forms part of Tlou's 800 Km(2) mining (production) licence, which remains
valid until 2042. Additionally, all prospecting licences due for renewal in
the past year were successfully renewed. Tlou's prospecting licences span
~8,000 Km(2), ensuring our continuing exploration and development potential
across a vast area. The Lesedi development involves the following key
elements:
· Gas production
· Electricity generation
· Substation construction
· Transmission and sale of electricity
The status of each of the above at the end of the reporting quarter is
outlined below.
Gas production
Coalbed methane gas from the Company's gas field in central Botswana will be
used for power generation.
To produce gas, the Company drills dual lateral production wells referred to
as "pods" which consist of a vertical production well and two lateral wells
that intersect the production well. The Company currently has two production
pods, Lesedi 4 and Lesedi 6 which have produced gas at fluctuating rates.
Once drilled, a pod needs to be dewatered which involves removing water from
the target coal seam and thereafter gas flow increases. As more and more pods
are drilled the coal will get progressively dewatered which should aid future
gas production.
Lesedi Gas production status
Ø Coal fines (or particles) produced as part of the drilling and dewatering
process have caused issues with the downhole pump and pod dewatering
Ø Tlou is now focusing on methods to maintain maximum water drawdown
Ø The objective of this process is to produce higher and more consistent gas
flows for power generation over the coming months
Ø Once gas flow rates are maximised and generation is commissioned, the
Company is of the opinion that it will be in a stronger position to seek
external capital for expansion
Lesedi 4 and Lesedi 6 continue to flow gas however, rates fluctuate due to
surging water and coal fines. The Company is investigating methods to manage
the influx of coal fines which can jam the downhole pump making dewatering
inconsistent. Well data, different pumping methods, pumps and pod
configurations are all being reviewed by our operations team.
The next phase of production well drilling will then commence once the
preferred method of dewatering and handling coal fines has been agreed and
additional funding is in place.
Maintaining steady and consistent dewatering should allow the coal reservoir
to deliver the highest and most consistent gas flow possible.
Generation
Tlou is in advanced discussions with a Tier 1 power generation provider to
install a 10MW power generation facility using reciprocating 1,375 kW Cummins
branded gas engines with GE generators.
It is envisaged that these units will be delivered, installed and commissioned
by the provider, who will also handle ongoing operations and maintenance.
Power Generators are planned to be supplied and installed in phases,
commensurate with gas production capacity.
Transmission Line
The 66kV power line connecting Lesedi to the Serowe substation is virtually
complete and is designed to take up to 25MW of power.
Some minor finishing works, such as the addition of switchgear at the Serowe
substation, will be carried out prior to the line being energized.
The power line is effectively under care and maintenance until Tlou is ready
to bring it online. It will provide the Company with access to both the
Botswana power market as well as the Southern African Power Pool.
Lesedi Substation
At the end of September 2024, the Lesedi substation was approximately 85%
complete and Serowe extensions are ready for commissioning, with final
completion anticipated later this year.
The Lesedi substation is designed for rapid expansion, enabling Tlou to scale
from 10MW to 25MW as gas production increases, and subject to additional power
purchase agreements.
Botswana Power Corporation is supplying the first 5MVA transformer to Tlou.
Future expansion will require Tlou to procure and install larger transformers,
such as two 20MVA transformers, which would allow up to 25MW of power with
some system redundancy.
Lesedi Substation and Transmission Line connection
Power Sales
The power station is anticipated to be installed, commissioned and tested
ready for approval by BPC ahead of first generation in 2025.
This is subject to receiving adequate financing and flowing sufficient and
consistent gas from existing and proposed production wells.
Lesedi project licences
The project area has four Prospecting Licenses (PL) and a Production Licence
which is the focus area for the development of Tlou's independently certified
gas reserves and contingent resources. The table below summarises the status
of the Lesedi licences:
Licence Expiry Status
Production Licence 2017/18L Aug-42 Current
PL001/2004 Mar-26 Current
PL003/2004 Mar-26 Current
PL035/2000 Mar-25 Current
PL037/2000 Mar-25 Current
****
Other Project Areas
In addition to the Lesedi project the Company has two other areas of interest
adjacent to Lesedi known as the Mamba and Boomslang projects.
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 Km(2). 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 are as follows:
Licence Expiry Status
PL 237/2014 Dec-25 Current
PL 238/2014 Dec-25 Current
PL 239/2014 Dec-25 Current
PL 240/2014 Dec-25 Current
PL 241/2014 Mar-26 Current
Further work on the Mamba project is proposed once the Lesedi project is in
production with initial work likely to include a seismic survey and the
drilling of core-holes.
Boomslang Project
Prospecting Licence, PL011/2019 designated "Boomslang", is approximately 1,000
Km(2). 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 Jun-26 Current
PL renewal applications are submitted three months prior to expiration.
****
Cash Position
At the end of the quarter the Company had ~A$944k cash on hand (unaudited).
The aggregate value of payments to related parties and their associates of
A$187k for the quarter (shown in item 6.1 of the Quarterly Cashflow Report)
relates to directors' salaries and fees (including tax and superannuation
payments made on their behalf) and office rent.
Dr Ian Campbell of ILC Investments Pty Limited, Tlou's largest shareholder,
has indicated that he is willing to provide a loan facility to the Company up
to A$5m to advance gas production operations. Further details will be released
once the agreement is in place.
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, Elliot Peters
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 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.
Appendix 5B
Mining exploration entity or oil and gas exploration entity
quarterly cash flow report
Name of entity
Tlou Energy Limited
ABN Quarter ended ("current quarter")
79 136 739 967 30 September 2024
Consolidated statement of cash flows Current quarter Year to date (3 months)
$A'000
$A'000
1. Cash flows from operating activities
1.1 Receipts from customers
1.2 Payments for
(a) exploration & evaluation
(b) development
(c) production
(d) staff costs (263) (263)
(e) administration and corporate costs (571) (571)
1.3 Dividends received (see note 3)
1.4 Interest received 1 1
1.5 Interest and other costs of finance paid
1.6 Income taxes paid
1.7 Government grants and tax incentives
1.8 Other (provide details if material)
1.9 Net cash from / (used in) operating activities (833) (833)
2. Cash flows from investing activities
2.1 Payments to acquire or for:
(a) entities
(b) tenements
(c) property, plant and equipment
(d) exploration & evaluation (1,740) (1,740)
(e) investments
(f) other non-current assets
2.2 Proceeds from the disposal of:
(a) entities
(b) tenements
(c) property, plant and equipment
(d) investments
(e) 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)
2.6 Net cash from / (used in) investing activities (1,740) (1,740)
3. Cash flows from financing activities 996 996
3.1 Proceeds from issues of equity securities (excluding convertible debt
securities)
3.2 Proceeds from issue of convertible debt securities
3.3 Proceeds from exercise of options
3.4 Transaction costs related to issues of equity securities or convertible debt
securities
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) (5) (5)
3.10 Net cash from / (used in) financing activities 991 991
4. Net increase / (decrease) in cash and cash equivalents for the period
4.1 Cash and cash equivalents at beginning of period 2,517 2,517
4.2 Net cash from / (used in) operating activities (item 1.9 above) (833) (833)
4.3 Net cash from / (used in) investing activities (item 2.6 above) (1,740) (1,740)
4.4 Net cash from / (used in) financing activities (item 3.10 above) 991 991
4.5 Effect of movement in exchange rates on cash held 9 9
4.6 Cash and cash equivalents at end of period 944 944
5. Reconciliation of cash and cash equivalents Current quarter Previous quarter
at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts
$A'000
$A'000
5.1 Bank balances 944 2,517
5.2 Call deposits
5.3 Bank overdrafts
5.4 Other (provide details)
5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above) 944 2,517
6. Payments to related parties of the entity and their associates Current quarter
$A'000
6.1 Aggregate amount of payments to related parties and their associates included 187
in item 1
6.2 Aggregate amount of payments to related parties and their associates included
in item 2
Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity
report must include a description of, and an explanation for, such payments.
7. Financing facilities Total facility amount at quarter end Amount drawn at quarter end
Note: the term "facility' includes all forms of financing arrangements available to the entity.
$A'000
$A'000
Add notes as necessary for an understanding of the sources of finance available to the entity.
7.1 Loan facilities 1,000 480
7.2 Credit standby arrangements
7.3 Other (please specify)
7.4 Total financing facilities 1,000 480
7.5 Unused financing facilities available at quarter end 520
7.6 Include in the box below a description of each facility above, including the
lender, interest rate, maturity date and whether it is secured or unsecured.
If any additional financing facilities have been entered into or are proposed
to be entered into after quarter end, include a note providing details of
those facilities as well.
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8. Estimated cash available for future operating activities $A'000
8.1 Net cash from / (used in) operating activities (item 1.9) 833
8.2 (Payments for exploration & evaluation classified as investing activities) 1,740
(item 2.1(d))
8.3 Total relevant outgoings (item 8.1 + item 8.2) 2,573
8.4 Cash and cash equivalents at quarter end (item 4.6) 944
8.5 Unused finance facilities available at quarter end (item 7.5) 520
8.6 Total available funding (item 8.4 + item 8.5) 1,464
8.7 Estimated quarters of funding available (item 8.6 divided by item 8.3) 0.6
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7.
8.8 If item 8.7 is less than 2 quarters, please provide answers to the following
questions:
8.8.1 Does the entity expect that it will continue to have the current
level of net operating cash flows for the time being and, if not, why not?
Answer: The net operating cash flow can fluctuate depending on operational
requirements in a specific quarter. Is it expected that the next quarter will
be similar to the level of net operating cash flows in this reporting period.
8.8.2 Has the entity taken any steps, or does it propose to take any
steps, to raise further cash to fund its operations and, if so, what are those
steps and how likely does it believe that they will be successful?
Answer: The company is working on raising additional capital in the near term.
Discussions are ongoing with potential funding partners that are interested in
providing capital for the company to achieve its stated target of getting
connected to the power grid in Botswana and selling electricity. Negotiations
with potential partners has been positive but the company cannot guarantee
that sufficient capital will be raised. The Company is also in advanced
discussions with its largest shareholder to increase the current loan facility
from ILC BC Pty Ltd from A$1m to A$5m to support the Company's ongoing gas
production operations until another funding partner is secured.
8.8.3 Does the entity expect to be able to continue its operations and
to meet its business objectives and, if so, on what basis?
Answer: The company expects to be able to continue operations and meet
business objectives based on support from its largest shareholder or from
funds raised via alternative sources. Any delay in funding may result in a
delay or postponement of planned activities until sufficient capital becomes
available.
Note: where item 8.7 is less than 2 quarters, all of questions 8.8.1, 8.8.2
and 8.8.3 above must be answered.
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.
Date:
.....30/10/2024...............................................................
Authorised by: ....By the
Board.............................................................
(Name of body or officer authorising release - see note 4)
Notes
1. This quarterly cash flow report and the accompanying
activity report provide a basis for informing the market about the entity's
activities for the past quarter, how they have been financed and the effect
this has had on its cash position. An entity that wishes to disclose
additional information over and above the minimum required under the Listing
Rules is encouraged to do so.
2. If this quarterly cash flow 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 cash
flow 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.
4. If this report has been authorised for release to the
market by your board of directors, you can insert here: "By the board". If it
has been authorised for release to the market by a committee of your board of
directors, you can insert here: "By the [name of board committee - eg Audit
and Risk Committee]". If it has been authorised for release to the market by a
disclosure committee, you can insert here: "By the Disclosure Committee".
5. If this report has been authorised for release to the
market by your board of directors and you wish to hold yourself out as
complying with recommendation 4.2 of the ASX Corporate Governance Council's
Corporate Governance Principles and Recommendations, the board should have
received a declaration from its CEO and CFO that, in their opinion, the
financial records of the entity have been properly maintained, that this
report complies with the appropriate accounting standards and gives a true and
fair view of the cash flows of the entity, and that their opinion has been
formed on the basis of a sound system of risk management and internal control
which is operating effectively.
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