Tlou Energy Ltd – TLOU – Interim Results

Tlou Energy Ltd – TLOU – Interim Results

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

Dec 2020

Dec 2019

$

$

       135,919

       140,801

       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

$

$

47,737,940

48,163,968

47,737,940

48,163,968

Dec 2020

Dec 2019

$

$

48,163,968

60,896,127

  418,103

  1,053,501

  (844,131)

    166,383

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

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

Exercise Price

Expiry Date

30/12/2020

31/12/2019

$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.

Hurdle Price

Conditions

1/07/2020

Issued

Exercised

Expired

31/12/2020

$0.28

See (i)

 2,275,000

                   –  

                    –  

                       –  

           2,275,000

$0.165

See (ii)

 2,475,000

                   –  

                    –  

                       –  

           2,475,000

$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

$

$

49,453,611

50,142,417

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 26th day of February 2021

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