Interim Results

RNS Number : 4321Q

Tlou Energy Ltd

26 February 2021

 

26 February 2021

Tlou Energy Limited

("Tlou" or "the Company")

Interim Results

Tlou Energy Limited is focused on delivering cleaner energy solutions to Botswana and southern Africa using gas and solar to alleviate some of the chronic power shortage in the region.  Tlou's objective is to be the first carbon neutral power producer in Botswana.

The Company's half year report for the six months ended 31 December 2020 is available on the Company's website at www.tlouenergy.com/reports

By Authority of the Board of Directors

Mr. Anthony Gilby

Managing Director

For further information regarding this announcement please contact:

Tlou Energy Limited	[phone]
Tony Gilby, Managing Director
Solomon Rowland, General Manager
Grant Thornton (Nominated Adviser)	[phone]
Colin Aaronson, Harrison Clarke, Samantha Harrison, Seamus Fricker
Shore Capital (Broker)	[phone]
Jerry Keen, Toby Gibbs, John More

Company Information

Tlou Energy is focused on delivering Power solutions in Botswana and southern Africa to alleviate some of the chronic power shortage in the region.  Tlou is currently developing projects using coal bed methane (CBM) natural gas and plans to combine this with solar power to provide a clean base load power source. 

Botswana has a significant energy shortage and generally relies on imported power and diesel generation to fulfil its power requirements.  Tlou's Lesedi Power Project provides investors with access to a compelling opportunity to displace expensive, carbon intensive diesel and imported electricity with a local clean, green and more environmentally friendly alternative.

In addition to plans for clean energy, the Company is also committed to developing community projects in Botswana adding real value to peoples' lives in a region with sparse services and where few opportunities exist for the local population.  This includes work to assist communities to become self-sustaining, develop business opportunities, improve access to education, and create opportunities for self-employment and wealth creation.

The Company is listed on the Australian Securities Exchange, London's AIM market and the Botswana Stock Exchange and is led by an experienced Board, management and advisory team.

The project is significantly de-risked.  The Company produced its first gas in 2014, has a Mining (or development) Licence valid to 2042 and 10 Prospecting (or exploration) Licences.  The Company's project acreage covers a vast area spanning approximately 9,300 Km² in total.

Tlou's 'Lesedi' and 'Mamba' projects already benefit from significant independently certified 2P gas Reserves of ~41 BCF.  In addition, 3P gas Reserves of ~427 BCF and Contingent Gas Resources of ~3,043 BCF provide significant additional potential.

The Company is planning an initial scalable power project.  Following successful implementation of this first scalable project, the Company looks forward to evaluating longer-term prospects for the delivery of additional electricity in Botswana and to neighbouring countries.

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.  Tlou Energy Limited undertakes no obligation to update any forward-looking statements.

Consolidated statement of comprehensive income  

for the half-year ended 31 December 2020

				Consolidated
			Note	Dec 2020	Dec 2019
				$	$
Interest income				399	340
Other income				50,000	-
Expenses
Employee benefits expense				(264,897)	(624,243)
Depreciation expense				(286,999)	(311,775)
Foreign exchange gain/(loss)				(35,300)	42,885
Share based payment expense				-	(49,881)
Professional fees				(98,305)	(67,730)
Occupancy costs				(15,427)	(30,748)
Other expenses			2	(417,717)	(528,535)
LOSS BEFORE INCOME TAX				(1,068,246)	(1,569,687)
Income tax				-	-
LOSS FOR THE PERIOD				(1,068,246)	(1,569,687)
OTHER COMPREHENSIVE INCOME/(LOSS)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations				(935,201)	167,611
Tax effect				-	-
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS)				(935,201)	167,611
TOTAL COMPREHENSIVE INCOME/(LOSS)				(2,003,447)	(1,402,076)
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 2020

				Consolidated
			Note	Dec 2020	June 2020
				$	$
CURRENT ASSETS
Cash and cash equivalents				3,031,957	1,576,471
Trade and other receivables				254,672	206,799
Other current assets				48,286	87,682
TOTAL CURRENT ASSETS				3,334,915	1,870,952
NON-CURRENT ASSETS
Exploration and evaluation assets			3	47,737,940	48,163,968
Other non-current assets				691,568	708,908
Property, plant and equipment			4	1,027,186	1,273,953
TOTAL NON-CURRENT ASSETS				49,456,694	50,146,829
TOTAL ASSETS				52,791,609	52,017,781
CURRENT LIABILITIES
Trade and other payables				251,490	161,463
Provisions				202,775	236,010
TOTAL CURRENT LIABILITIES				454,265	397,473
NON-CURRENT LIABILITIES
Provisions				114,000	114,000
TOTAL NON-CURRENT LIABILITIES				114,000	114,000
TOTAL LIABILITIES				568,265	511,473
NET ASSETS				52,223,344	51,506,308
EQUITY
Contributed equity			6	102,284,970	99,753,504
Reserves				(5,861,951)	(5,115,767)
Accumulated losses				(44,199,675)	(43,131,429)
TOTAL EQUITY				52,223,344	51,506,308

Consolidated statement of changes in equity  

for the half-year ended 31 December 2020

	Contributed Equity	Share Based Payments Reserve	Foreign Currency Translation Reserve	Accumulated Losses	Total
	$	$	$	$	$
Consolidated
Balance at 1 July 2019	99,753,504	686,706	(1,858,760)	(30,180,828)	68,400,622
Loss for the period	-	-	-	(1,569,687)	(1,569,687)
Other comprehensive income, net of tax	-	-	167,611	-	167,611
Total comprehensive income	-	-	167,611	(1,569,687)	(1,402,076)
Transactions with owners in their capacity as owners
Share based payments	-	49,881	-	-	49,881
	-	49,881	-	-	49,881
Balance at 31 December 2019	99,753,504	736,587	(1,691,149)	(31,750,515)	67,048,427
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

Consolidated statement of cash flows  

for the half-year ended 31 December 2020

				Consolidated
				Dec 2020	Dec 2019
				$	$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (inclusive of GST and VAT)				(819,217)	(1,271,026)
Interest received				399	340
Other receipts				50,000	-
GST and VAT received				19,548	306,397
NET CASH USED IN OPERATING ACTIVITIES				(749,270)	(964,289)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets				(512,549)	(1,078,191)
Payment for property, plant and equipment				(38,972)	(151,196)
NET CASH USED IN INVESTING ACTIVITIES				(551,521)	(1,229,387)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares				3,000,754	-
Share issue costs				(280,271)	-
NET CASH PROVIDED BY FINANCING ACTIVITIES				2,720,483	-
Net (decrease)/increase in cash held				1,419,692	(2,193,676)
Cash at the beginning of the period				1,576,471	5,204,948
Effects of exchange rate changes on cash				35,794	(53,388)
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD				3,031,957	2,957,884

Notes to the consolidated financial statements  

for the half-year ended 31 December 2020

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 2020 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 2020, 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 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 2020	Dec 2019
								$	$
Other expenses
●	Stock exchange and secretarial fees							135,919	140,801
●	Engineers and consultants							196,764	20,760

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 2020	June 2020
								$	$
Exploration and evaluation assets								47,737,940	48,163,968
								47,737,940	48,163,968
								Dec 2020	Dec 2019
								$	$
Movements in exploration and evaluation phase
Balance at the beginning of period								48,163,968	60,896,127
Exploration and evaluation expenditure during the half-year								418,103	1,053,501
Foreign currency translation								(844,131)	166,383
Balance at the end of period								47,737,940	62,116,011

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 2020	June 2020
								$	$
Property, plant and equipment at cost								4,072,780	4,101,326
Accumulated depreciation								(3,045,594)	(2,827,373)
								1,027,186	1,273,953
Movements in Carrying Amounts								Dec 2020	Dec 2019
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								1,273,953	1,867,025
Additions								73,074	137,874
Depreciation								(286,999)	(311,775)
Foreign exchange movements								(32,842)	7,061
Carrying amount at the end of year								1,027,186	1,700,185

Note 5.   Contingent liabilities

The Directors are not aware of any contingent liabilities at 31 December 2020.

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.

								Consolidated
						Dec 2020	June 2020	Dec 2020	June 2020
						Shares	Shares	$	$
Opening balance						450,180,185	450,180,185	99,753,504	99,753,504
Issue of ordinary shares during the year*						75,018,854	-	3,000,754	-
Share issue costs						-	-	(469,288)	-
Ordinary shares ‑ fully paid						525,199,039	450,180,185	102,284,970	99,753,504

*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 2020, the following options for ordinary shares in Tlou Energy Limited and performance rights were on issue.

Options

Issued to:	Exercise Price	Expiry Date	30/12/2020	31/12/2019
Shareholders	$0.08	20 July 2022	37,509,400	-
Service providers	$0.08	20 July 2022	20,000,000	-
			57,509,400	-

Performance shares

The following table shows the number, movements and exercise price of performance rights for the period ended 31 December 2020.

Issue Date			Hurdle Price	Conditions	1/07/2020	Issued	Exercised	Expired	31/12/2020
31 January 2017			$0.28	See (i)	2,275,000	-	-	-	2,275,000
19 October 2018			$0.165	See (ii)	2,475,000	-	-	-	2,475,000
19 October 2018			$0.22	See (iii)	2,475,000	-	-	-	2,475,000
					7,225,000	-	-	-	7,225,000

The outstanding performance shares have the following key terms and conditions:

	Number	Performance condition
(i)	2,275,000	The shares 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.
(ii)	2,475,000	The shares will only vest once the share price of the Company's securities listed on the ASX reaches $0.165 and closes at that price or above for a period of 10 consecutive trading days.
(iii)	2,475,000	The shares will only vest once the share price of the Company's securities listed on the ASX reaches $0.22 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

Options may be granted on terms determined by the directors or otherwise approved by the company at a general meeting.  The options are granted for no consideration. Options and entitlements to the options are vested on a time basis and/or for services provided or on specific performance-based criteria. Options granted as described above carry no dividend or voting rights. When exercisable, each option is convertible to one ordinary share.

During the half-year 20 million options were granted for the performance of services. The amount recognised for the period under the share-based payment reserve in relation to share based payments amounts to $189,017. The fair value of options at grant date is determined using generally accepted valuation techniques that take into account exercise price, the term of the option, the impact of dilution, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk-free rate for the term of the option/performance right and an appropriate probability weighting to factor the likelihood of the satisfaction of non-vesting conditions.

Inputs used to calculate the value of options granted during the year are as follows:

Grant date	20/07/2020
Dividend yield (%)	-
Expected volatility (%)	81
Risk-free interest rate (%)	0.26
Expected life of options (years)	2
Exercise price ($)	$0.08
Model used	Black Scholes

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 2020 no revenue has been derived from its operations (2019: $nil).

Segment assets

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

								Dec 2020	June 2020
								$	$
Botswana								49,453,611	50,142,417
Australia								3,083	4,412
								49,456,694	50,146,829

Note 9.   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.

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 2020 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 26^th day of February 2021

 

END

 

 

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