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") from its Lesedi Project is pleased to announce the results of a report completed by SRK Consulting (Australasia) Pty Ltd ("SRK") on existing Aeromagnetic data which has provided critical data for future Reserves assessments and field development.
Aeromagnetic report received from SRK
Tlou engaged SRK to undertake re-processing and re-interpretation of aeromagnetic geophysical data over the Company's Lesedi and Mamba Projects in Botswana. This has resulted in a series of new geophysical images for the projects
The purpose of this work was to provide an updated geological/structural model of the Tlou Project areas and support future gas Reserve assessments. This geological work is extremely important as it is increasing Tlou's knowledge of the CBM properties of the Lesedi and Mamba project areas and will provide important inputs to future Reserves assessments and field development.
A structural interpretation has been made and depth to basement mapping undertaken. The key conclusions are:
· The local structure is characterised by the presence of highly magnetic sills and dykes composed mainly of dolerite.
· Although these intrusive bodies have been intersected in many wells, they have minimal negative impact on gas production or coal continuity;
· The observed local structure conforms to the trends in aeromagnetic geophysical images;
· Coal continuity and occurrence will be clarified by the acquisition of new 2D seismic data; and
· The integration of new 2D seismic data and selected core-holes with the current reprocessed aeromagnetic dataset will provide the potential to further clarify structural trends as well as constrain coal seam continuity and quality variations.
Updated project montages are available on the Company's website at http://tlouenergy.com/investor-centre.
Further Information on the Lesedi CBM Project
The Lesedi project consists of five CBM prospecting licences in Botswana covering an area of approximately 3,800km2. Lesedi is the most advanced CBM project in Botswana and has independently-certified gas reserves and significant contingent gas resources of ~3.2 trillion cubic feet (3C).
In December 2016 Tlou received a request for proposal from the Botswanan Government to provide up to 100 MW of CBM power from its Lesedi project. This follows the Government's announcement in June 2016 that the delivery of 100 MW of CBM power be incorporated into its future generation supply plans.
As announced on 27 February 2017, Tlou signed a Heads of Agreement ("Agreement") with Independent Power Corporation PLC ("IPC") to jointly develop Tlou's proposed (up to) 100 MW CBM to power project ("IPP Project"). Tlou has summarised below the key benefits of this Agreement to the Company:
· IPC is an experienced power station developer and will internally prepare the detailed feasibility study (at their cost) to support the RFP tender submission to the Botswana Government for the initial 10 MW project and larger (up to) 100 MW project;
· IPC will fund 50% of external costs required to prepare the feasibility and RFP tender (capped at US$200,000);
· Tlou and IPC will jointly submit the RFP tender as co-sponsors of the IPP Project (this relationship is not related to the ultimate IPP Project ownership);
· IPC have introduced funding partners who have provided letters of interest for in-principle funding support for the downstream infrastructure requirements of the IPP Project;
· In effect, IPC and its funding partners plan to facilitate the building and funding of the necessary power generation and network access assets, enabling Tlou to commercialise its vast gas resources;
· Following execution of all necessary IPP contracts, IPC will project manage the installation of the downstream components of the project, and may operate these assets for a period of time prior to handover to the assets owners. IPC will be remunerated for these services under contract (to be agreed) by the asset owners;
· Tlou retains 100% of the Lesedi CBM Project, including current and future gas Reserves;
· Tlou plans to fund and develop the gas field once appropriate offtake agreements are in place; and
· Tlou also has retained the right to be a meaningful equity participant (up to 50%) in the power generation assets.
Tlou believes the agreement with IPC is a major step forward in commercialising its gas resources with highly experienced power developers, funding groups and equipment suppliers.