Transmission Line and Funding Update

Source: 8/26/2020, Location: Africa

Tlou Energy Limited is an ASX, AIM and BSE listed company focused on delivering power in Botswana and southern Africa through the exploration and development of gas and solar. The Company is pleased to provide an update following a recent site visit by Botswana Power Corporation (BPC), Mott MacDonald and the Company, conducted in relation to the proposed transmission line to connect Tlou's Lesedi Power project to the BPC electricity grid.

Transmission line detailed design
The Company has engaged Mott MacDonald engineering consultants to work on the detailed engineering and design of the proposed 66kV transmission line and steady progress has been made thus far.

To date a significant amount of work on the transmission line has been completed including:
- Successful definition of transmission line route in consultation with BPC and the relevant land boards;
- Conclusive results from route survey completion, confirmation of line route corridor width and surveying and recording of ground elevation along the route;
- Securing a wayleave (right of way) from the Serowe Substation to the proposed Power Plant; and
- The Environmental and Social Impact Assessment Plan for the project has been completed and the necessary statutory approvals obtained allowing the project to be implemented.

Implementation stage
Mott MacDonald are now working on the implementation stage of the proposed 66kV transmission line which includes:
- Detailed design of the 66kV Line, Serowe Extension substation and Power Plant intake substation; and
- Tender document specification including preparation of Pre-qualification (PQ) documents with the objective of Tlou selecting a short-list of pre-qualified bidders who will be invited to bid for construction.

Project finance
The Company is in discussion with potential providers of project finance including the Botswana Development Corporation (BDC) as announced previously. This has been and remains a slow process as the Company awaits a revised term sheet from BDC. Tlou will continue to pursue efforts with BDC to a logical conclusion because of the significant potential mutual benefits in partnering with the Government of Botswana's main agency for commercial and industrial development.

Simultaneously, several parties both within and external to Botswana are also engaged in discussions for development finance with a view to agreeing a suitable memorandum of understanding (MoU).

Securing this finance is the key objective for the Company at this point in time. Management are focused on getting the best possible deal either with BDC or another party and are also mindful of our shareholder's desire to see progress in the near term.

Tlou Energy MD Tony Gilby commented: "Mott MacDonald have been doing an excellent job and we are very pleased with progress to date. The lifting of some COVID-19 related restrictions enabled a recent productive site visit with Mott MacDonald and BPC and activity is increasing across both public and private sectors in Botswana.

The detailed design and engineering work is primarily desktop based and it is very pleasing to see the project coming to life as the technical work progresses. Our recent successful capital raising, strongly supported by our existing shareholders, means that we are fully funded to complete the detailed engineering and design, service corporate overheads and any necessary finance related due diligence costs if required by financiers and upon agreement of terms.

Project finance remains a key objective for the Company and we remain very focused on securing the necessary development funds to enable the construction of transmission lines and development of the power plant at Lesedi. Whilst we have been in advanced discussions with BDC for some time and await a response, shareholders should note that these financing conversations are not exclusive and that there are a number of ongoing positive discussions with other parties as well.

With regards to being able to sell power within Botswana and supplying to the grid, we are very well positioned at present: we agreed an interim 2MW Power Purchase Agreement with Botswana Power Corporation some months ago; the full 10MW tender has progressed to the Attorney General's chambers for legal review; in June we received our formal generation license from the Botswana Energy Regulation Authority for the generation of gas and solar power at Lesedi. Additionally, our grid Connection Agreement is also in the process of being finalised. We look forward to further progress in the coming months"

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