Tlou Announces Quarterly Activities Report for the Quarter Ended 30 September 2023

Source: 10/27/2023, Location: Africa

Ø Lesedi 6 production pod and the redrill of Lesedi 4 lateral wells completed successfully
Ø The 66kV overhead transmission line is ~94% complete
Ø Work on the electrical substations is ~36% complete

Tlou Energy has three project areas referred to as the:
§ Lesedi Project - focused on gas-to-power development as well as exploration and evaluation.
§ Mamba Project - focused on exploration and evaluation.
§ Boomslang Project - focused on exploration and evaluation.

Lesedi Project
The Lesedi project is Tlou's most advanced. At Lesedi the Company is developing a proposed 10MW gas-to-power project. The project area has four Prospecting Licenses (PL) and a Production Licence which is the focus area for the development of Tlou's independently certified gas reserves and contingent resources. The table below summarises the status of the Lesedi licences:

PL renewal applications are submitted three months prior to expiration. Renewal applications were submitted for PL001/2004 and PL003/2004 in June 2023 and the Company is awaiting confirmation of renewal.

Gas to Power Project
The first electricity to be generated at Lesedi is planned to go towards satisfying the 10MW Power Purchase Agreement (PPA) with Botswana Power Corporation (BPC) the national power utility. The Lesedi project currently has several components of the development process underway, including the construction of transmission lines, substations, a field operations facility and generation site as well as production well drilling.

Transmission Line Construction
The Lesedi project is approximately 100km from the nearest BPC substation connection in Serowe. To connect to the national grid, the Company is undertaking the construction and installation of a 100km 66kV transmission line. This, together with the ongoing drilling program should enable the Company to connect and provide electricity into Botswana's power network.

The construction of the 66kV transmission line is being carried out by Zismo Engineering Pty Ltd (Zismo). Completion of the line is currently expected to be around December 2023. The major outstanding items are the manufacture of the remaining steel poles, a road crossing and the relocation of an 11kV line that was constructed across Tlou's wayleave. Thereafter the line should be ready to be energised once the terminal substation works are completed and commissioned. Tlou Energy will not take ownership of the line until the substation work is complete and the line can be energised. Zismo's contract will therefore need to be extended for care and maintenance of the line until it is taken over upon energisation.

Substation Construction
Substations are required at either end of the transmission line, one to tie Tlou's generators to the transmission line at Lesedi and another to integrate the line with the existing BPC substation at Serowe. The planned substation at Lesedi is currently designed for an initial 5MW of power which can be upgraded to 10MW at a later stage with the project anticipated to be completed in early 2024. The Company is assessing options that may allow the current substation design to be adapted to facilitate expansion beyond 10MW.

The substation contract was placed with Optipower earlier this year. Optipower appointed SMEC as a sub-contractor for detailed engineering design and Makgarapa for civil engineering construction works. Makgarapa also completed the sites' geotech assessments, soil resistivity and topographical surveys. SMEC have produced the design schedule. Optipower has completed site establishment at both Serowe and Lesedi.

Drilling Operations
During the quarter the Company completed a redrill of both lateral wells of the Lesedi 4 production pod. The aim of redrilling the lateral wells was to provide straighter lateral sections using a specialist rotary steerable system (RSS). The lateral sections were drilled for approximately 700m and successfully intersected with the Lesedi 4P vertical production well. These straighter laterals are expected to assist with removing water from the reservoir to more efficiently dewater and flow gas.

In addition, drilling of a new production pod, Lesedi 6, was completed during the quarter. The RSS was also used for the lateral sections of this production pod. Post drilling, both Lesedi 4 and Lesedi 6 pods were flushed to clear the wells and have had production equipment installed to commence dewatering ahead of gas production.

Mamba Project
The Mamba project is in the exploration and evaluation phase with further operations required on the licences. It consists of five Prospecting Licences covering an area of approximately 4,500 Km2. The Mamba area is situated adjacent to Lesedi. In the event of successful drilling results at Mamba, it is envisioned that this area would be developed as a separate project from Lesedi. The Mamba area provides the Company with flexibility and optionality. The status of the Mamba licences is as follows:

PL renewal applications are submitted three months prior to expiration. Renewal applications for all Mamba project licences were submitted in June 2023 and the Company is awaiting confirmation of renewal. Further work on the Mamba project is proposed once the Lesedi project is in production. The next stage of operations is likely to include a seismic survey and the drilling of core-holes.

Boomslang Project
Prospecting Licence, PL011/2019 designated "Boomslang", is approximately 1,000 Km2 and is situated adjacent to the Company's existing licences. To date, the Company has not carried out ground operations in the Boomslang area. Like the Mamba project the first stage of operations is likely to include a seismic survey following by core-hole drilling.

Cash Position
At the end of the quarter the Company had ~A$1.87m cash on hand (unaudited). The aggregate value of payments to related parties and their associates of A$267k for the quarter (shown in item 6.1 of the Quarterly Cashflow Report appended below) relates to directors' salaries and fees (including tax and superannuation payments made on their behalf) and office rent. The Company will need to raise additional funds in the next quarter and the steps being taken to do so are set out in item 8.8 of the Quarterly Cashflow Report.

The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK law by virtue of the European Union (withdrawal) Act 2018. The information is disclosed in accordance with the Company's obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

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