Interim Results

RNS Number : 2483X

Tlou Energy Ltd

20 February 2017

 

20 February 2017

Tlou Energy Limited

("Tlou" or "the Company")

Interim Results

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') projects, is pleased to announce its interim results for the six months ended 31 December 2016.

Highlights

·     Tlou became the first company in Botswana to achieve independently certified CBM Gas Reserves and  subsequently expanded the reserves across both the Lesedi and Mamba Project areas

·     Received a detailed Request for Proposal from the Government of Botswana to develop up to 100MW of CBM  power

·     Environmental Impact Statement Approved

·     Completed an oversubscribed equity placement

Tlou Managing Director Tony Gilby said, "The past number of months have seen the Company achieve some very significant milestones.  The initial Gas Reserve certification coupled with the recent upgrade reinforces the commerciality of the Company's projects.  We are very pleased to have received Gas Reserves in both the Lesedi and Mamba Project areas, demonstrating the upside available within our portfolio.  We believe that the Lesedi and Mamba projects will continue to develop into a valuable resource as we work towards increasing the certified Gas Reserves in both areas.

The Request for Proposal received from the Botswana Government for up to 100MW of power highlights the support for CBM development in Botswana and provides a ready market for Tlou's gas.

The approval of Tlou's upstream Environment Impact Statement (EIS) is very good news for the Company, for the Lesedi project and for the people of Botswana.  The EIS is a prerequisite for the Mining Licence which, when granted, provides additional security of tenure over our licences.  Environmentally there is a need in Botswana for the development of a relatively clean, low carbon energy source to replace the use of diesel in the production of electricity.  CBM from Tlou's projects provide one component of a future clean energy mix. 

We are looking forward to the next phase of the project, with the Company on track to become the first gas to power producer in Botswana"

Chairman's Statement

I am delighted to be able to provide this update after what has been a very productive few months. We have achieved many of the targets we had set ourselves for this period. We remain the most advanced CBM project in Botswana, a fact now enhanced by our results during the half-year and we are well placed to deliver power to the market in the future. 

Tlou continues its focus on the development of its Lesedi CBM project in Botswana to deliver power in-country and regionally.  Chronic energy shortages remain in place across the southern Africa region which could provide us with multiple routes to market and an attractive pricing environment.

Results over the period have enabled the Company to focus on planning its field development, which includes work on pilot project design, well locations, orientation and transmission line assessments, all key items for development of a successful gas to power project.

Tlou has been selected to bid for the development of up to 100MW of power using CBM in Botswana as an Independent Power Producer and the Company has received a detailed Request for Proposal ("RFP") from the Ministry of Mineral Resources, Green Technology and Energy Security.  The ongoing field development planning flows into the RFP requirements.  The closing date for this tender is 12 July 2017.  The RFP requires details of the proposed field development, the installation of power generation facilities and supply of power into the grid in Botswana.

The Company is negotiating with numerous parties interested in collaborating with Tlou for development of this project.  These discussions are aimed at strengthening the Company's position with the introduction of a specialist power partner and providing funding options for the development of the Lesedi Project.

Subject to the outcome of negotiations with various parties, over the next 12 months, we expect to make further strides towards the successful commissioning of a gas to power project.  Our plan remains to have a scalable strategy for power generation in the region and we look forward to providing further updates as the project progresses.

Financial Review

The loss for the year was AUD$1,153,668 including a AUD$93,097 charge relating to the valuation of performance rights granted during the period. The loss for the six months ended 31 December 2015 amounted to AUD$1,993,250 and included AUD$779,310 of share issue costs related to the Company's listing on the AIM market during that period.

Excluding the performance rights expense this period and the share issue costs in the comparative period, the expenditure for the current six months has been reduced compared to the six months to 31 December 2015.

Cash at the end of the reporting period amounted to ~AUD$2.4m, an increase on the balance at 30 June 2016 following the successful placement completed during the half-year.

Exploration and evaluation assets increased over the period in line with the additional work completed on the Company's exploration licences in Botswana. All licences held are currently in good standing with no impairment during the period.  Other assets and liabilities are in line with expectations.

Outlook

Tlou's vision is to provide a gas to power solution for Botswana initially and thereafter, in the regional market.  2017 may prove to be a transformational year for the Company as we look to agree terms with a project partner for the delivery of up to 100MW of power, finalise a power purchase agreement with the Botswana government and conclude plans for implementation of the first phase of the gas to power project. In addition, the Company will continue planning further exploration and evaluation across the licence areas held.  The coming period is shaping up to be a very exciting time for the Company and we look forward to delivering on our plans. 

Thank you to all our shareholders, staff, consultants, advisors, and management for their support during the period. 

For further information regarding this announcement please contact:

Tlou Energy Limited	[phone]
Tony Gilby, Managing Director
Solomon Rowland, Company Secretary
Grant Thornton (Nominated Adviser)	[phone]
Samantha Harrison, Colin Aaronson, Harrison Clarke
Brandon Hill Capital (Joint broker)	[phone]
Jonathan Evans, Alex Walker
Optiva Securities Limited (Joint broker)	[phone]
Jeremy King, Christian Dennis
St Brides Partners Limited (Public Relations)	[phone]
Elisabeth Cowell, Lottie Brocklehurst
FlowComms Limited (Investor Relations)	[phone]
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, Tlou Energy provides investors with access to a compelling immediate and longer term opportunity using domestic gas to produce power and displace the expensive diesel and import market.

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 and made significant progress towards its goal to become a significant gas to power producer.  The Company has the most advanced CBM project in Botswana and flared its first gas in 2014.  It holds 10 Prospecting Licences covering an area of ~8,300Km² and the Lesedi Project already benefits from significant, independently certified Contingent Gas Resources of ~3.2 trillion cubic feet (3C) and independently certified Gas Reserves.

The Company is planning an initial scalable gas-to-power project in Botswana.  Following successful implementation of this first scalable project, the Company plans to expand to provide further power to Botswana and the southern African region.

Consolidated statement of comprehensive income 

for the half-year ended 31 December 2016

				Consolidated
			Note	Dec 2016	Dec 2015
				$	$
Interest income				801	19,849
Expenses
Employee benefits expense				(227,073)	(350,516)
Depreciation and amortisation expense				(133,147)	(130,206)
Foreign exchange loss				(55,446)	(83,791)
Share issue costs				-	(779,310)
Performance rights expense				(93,097)	-
Professional fees				(69,871)	(68,420)
Corporate expenses				(6,031)	(52)
Occupancy costs				(23,177)	(42,025)
Other expenses			3	(546,627)	(558,779)
LOSS BEFORE INCOME TAX				(1,153,668)	(1,993,250)
Income tax				-	-
LOSS FOR THE PERIOD				(1,153,668)	(1,993,250)
OTHER COMPREHENSIVE INCOME/(LOSS)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations				1,720,346	(2,422,898)
Tax effect				-	-
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS)				1,720,346	(2,422,898)
TOTAL COMPREHENSIVE INCOME/(LOSS)				566,678	(4,416,148)
Earnings per share
				Cents	Cents
Basic loss per share				(0.6)	(1.05)
Diluted loss per share				(0.6)	(1.05)

Consolidated statement of financial position 

as at 31 December 2016

			Note	Dec 2016	June 2016
				$	$
CURRENT ASSETS
Cash and cash equivalents				2,411,332	1,224,404
Trade and other receivables			4	85,429	290,431
Other current assets				62,715	43,969
TOTAL CURRENT ASSETS				2,559,476	1,558,804
NON-CURRENT ASSETS
Exploration and evaluation assets			5	48,645,866	46,183,722
Other non-current assets			6	995,921	946,675
Property, plant and equipment				338,398	444,358
TOTAL NON-CURRENT ASSETS				49,980,185	47,574,755
TOTAL ASSETS				52,539,661	49,133,559
CURRENT LIABILITIES
Trade and other payables				194,272	306,956
Provisions				155,201	160,874
TOTAL CURRENT LIABILITIES				349,473	467,830
NON-CURRENT LIABILITIES
Deferred tax liabilities				369,353	369,353
Provisions				94,000	94,000
TOTAL NON-CURRENT LIABILITIES				463,353	463,353
TOTAL LIABILITIES				812,826	931,183
NET ASSETS				51,726,835	48,202,376
EQUITY
Contributed equity			8	76,796,253	73,931,569
Reserves				(2,927,670)	(4,741,113)
Accumulated losses				(22,141,748)	(20,988,080)
TOTAL EQUITY				51,726,835	48,202,376

Consolidated statement of changes in equity 

for the half-year ended 31 December 2016

	Contributed Equity	Share Based Payments Reserve	Foreign Currency Translation Reserve	Accumulated Losses	Total
	$	$	$	$	$
Balance at 1 July 2015	71,606,519	2,062,745	(2,442,989)	(19,985,242)	51,241,033
Loss for the period	-	-	-	(1,993,250)	(1,993,250)
Other comprehensive income	-	-	(2,422,898)	-	(2,422,898)
Total comprehensive income	-	-	(2,422,898)	(1,993,250)	(4,416,148)
Transactions with owners in their capacity as owners
Share based payments	-	80,101	-	-	80,101
Shares issued, net of costs	2,325,050	-	-	-	2,325,050
	2,325,050	80,101	-	-	2,405,151
Balance at 31 December 2015	73,931,569	2,142,846	(4,865,887)	(21,978,492)	49,230,036
Balance at 1 July 2016	73,931,569	97,001	(4,838,114)	(20,988,080)	48,202,376
Loss for the period	-	-	-	(1,153,668)	(1,153,668)
Other comprehensive income	-	-	1,720,346	-	1,720,346
Total comprehensive income	-	-	1,720,346	(1,153,668)	566,678
Transactions with owners in their capacity as owners
Share based payments	-	93,097	-	-	93,097
Shares issued, net of costs	2,864,684	-	-	-	2,864,684
	2,864,684	93,097	-	-	2,957,781
Balance at 31 December 2016	76,796,253	190,098	(3,117,768)	(22,141,748)	51,726,835

Consolidated statement of cash flows 

for the half-year ended 31 December 2016

				Dec 2016	Dec 2015
				$	$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (inclusive of GST)				(1,057,500)	(1,959,245)
Interest received				801	19,849
GST and VAT received				48,331	410,946
NET CASH USED IN OPERATING ACTIVITIES				(1,008,368)	(1,528,450)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets				(1,003,834)	(4,839,853)
Payment for property, plant and equipment				(4,058)	(24,009)
NET CASH USED IN INVESTING ACTIVITIES				(1,007,892)	(4,863,862)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares				3,254,326	2,292,540
Share issue costs				(78,472)	(192,979)
NET CASH PROVIDED BY FINANCING ACTIVITIES				3,175,854	2,099,561
Net increase/(decrease) in cash held				1,159,594	(4,292,751)
Cash at the beginning of the period				1,224,404	7,197,813
Effects of exchange rate changes on cash				27,334	10,024
CASH AT THE END OF THE PERIOD				2,411,332	2,915,086

Notes to the consolidated financial statements 

for the half-year ended 31 December 2016

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 2016 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 modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The financial report is presented in Australian dollars.

The accounting policies and methods of computation adopted are consistent with those of the previous financial year and corresponding interim reporting period except for the impact of the Standards and Interpretations described below. Where required by Accounting Standards comparative figures have been adjusted to conform to changes in presentation for the current financial year.

New or revised accounting standards and interpretations that are first effective in the current reporting period

The group have adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board that are relevant to their operations and effective for the current reporting period. This adoption has not resulted in any changes to the group's accounting policies and has no effect on the amounts reported in the current and prior periods.

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 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 liabilities approximate their carrying value. No financial assets or 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.

Note 2.    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 in southern Africa.

Segment revenue

As at 31 December 2016 no revenue has been derived from its operations (2015: $nil).

Segment assets

Segment non-current assets are allocated to countries based on where the assets are located as outlined below.

								Dec 2016	June 2016
								$	$
Botswana								49,979,179	47,574,122
Australia								1,006	633

Note 3.    Expenses

Loss before income tax includes the following specific expenses:								Dec 2016	Dec 2015
								$	$
Other expenses
●	Stock exchange and secretarial fees							19,833	73,157
●	Insurance							29,212	33,708
●	Travel and accommodation							119,259	111,857
								168,304	218,722

Note 4.    Trade and other receivables

								Dec 2016	June 2016
								$	$
Current
Other receivables								13,424	244,369
GST/VAT receivable								72,005	46,062
								85,429	290,431

Note 5.    Exploration and evaluation expenditure

								Dec 2016	June 2016
								$	$
Exploration and evaluation assets								48,645,866	46,183,722
								48,645,866	46,183,722
								Dec 2016	Dec 2015
								$	$
Movements in exploration and evaluation phase
Balance at the beginning of period								46,183,722	43,559,315
Exploration and evaluation expenditure during the half-year								747,506	3,982,616
Foreign currency translation								1,714,638	(2,134,834)
Balance at the end of period								48,645,866	45,407,097

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.    Other non-current assets

								Dec 2016	June 2016
								$	$
Inventory and well consumables								995,921	946,675
								995,921	946,675

Note 7.    Contingent liabilities

The Directors are not aware of any contingent liabilities at 31 December 2016.

Note 8.    Contributed equity

						Dec 2016	Dec 2015	Dec 2016	Dec 2015
						Shares	Shares	$	$
Opening balance						205,619,292	187,156,319	73,931,569	71,606,519
Issue of ordinary shares during the year						31,578,947	18,462,973	3,000,000	2,584,816
Share issue costs						-	-	(135,316)	(259,766)
Ordinary shares ‑ fully paid						237,198,239	205,619,292	76,796,253	73,931,569

Performance shares

Details of performance shares issued, exercised, and expired during the financial year are set out below:

					Movements
Vesting Date			Exercise Price		01/07/2016	Issued	Exercised	Expired	31/12/2016
31 January 2017			$0.21		-	2,275,000	-	-	2,275,000
31 January 2017			$0.28		-	2,275,000	-	-	2,275,000
					-	4,550,000	-	-	4,550,000

The performance shares have the following key terms and conditions:

Tranche	Number	Performance condition
1	2,275,000	The first tranche will only vest once the share price of the Company's securities listed on the ASX reaches $0.21 and closes at that price or above for a period of 10 consecutive trading days.
2	2,275,000	The second tranche will only vest once the share price of the Company's securities listed on the ASX reaches $0.28 and closes at that price or above for a period of 10 consecutive trading days.
Forfeiture		The Performance Shares will lapse if: ·      None of the pricing conditions are met; or ·      the participant does not meet the service conditions.

Note 9.    Commitments

Exploration expenditure

In order to maintain an interest in the exploration tenements (Prospecting Licences) in which the group is involved, the group is committed to meet the conditions under the agreements. The timing and amount of exploration expenditure and obligations of the group are subject to the Prospecting Licence conditions and may vary significantly from the forecast based on the results of the work performed, which will determine the prospectivity of the relevant licence area. Subject to agreement with the appropriate government department, continued development of the area and renewal of the Prospecting Licences, expenditure and work program obligations may be carried forward and incurred in subsequent renewal periods. The obligations are not provided for in the financial statements.

Minimum expenditure requirements

								Dec 2016	June 2016
								$	$
●	not later than 12 months							26,351,205	25,668,594
●	between 12 months and 5 years							816,819	-
								27,168,024	25,668,594

Note 10. Events occurring after balance date

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.

 

END

 

 

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