Tlou Energy Ltd* 23 January 2017tlouenergy.com/wp-content/uploads/2017/02/170123... · Coal Bed...

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The most advanced CBM play in Botswana Tlou Energy is a Coal Bed Methane (CBM) gas exploration development company with

significant interests in Botswana. The company’s core asset is the Lesedi CBM project

in southeast Botswana which contains the first certified gas reserves in Botswana.

Tlou’s initial plan is to develop a staged 50MW gas to power solution at Lesedi and

generate electricity at the wellhead in order to alleviate an appreciable proportion of

Botswana’s major electricity supply deficit.

CBM is a method for extracting methane from coal deposits generally at depths of less

than 1,000 metres. It is a particularly suitable solution for extracting hydrocarbons from

coal seams that are otherwise too deep to be open-pit mined or too thin to be deep

mined economically. CBM projects have proved to be commercial in the US, Canada and

Australia where CBM comprised over 20% of the country’s gas production in 2015.

Lesedi is the most advanced CBM project in Botswana. Independent expert SRK

Consultants has certified 3C contingent resources of 3.2 TCF at Lesedi at this early stage

from all coal seams. SRK also ascribed Botswana’s first certified reserves to Lesedi in

October 2016. Initial 3P reserves were estimated to be 52.9 BCF from a single coal seam,

a number that we expect to be enhanced substantially as drilling and flow testing

continue in 2017.

In July 2016, the Botswana government approved the development of a 50MW power

plant for the Lesedi CBM project and in January 2017 requested that Tlou submit a

proposal to provide up to 100MW of generating capacity from Lesedi. This expansion is

hugely important given that Botswana is heavily dependent on electricity imports from

South Africa, which are estimated to comprise c.80% of Botswana’s requirements.

This reliance on imports is compounded by the fact that Botswana has a large electricity

supply deficit and the country’s main coal fired power station at Morupule operates

significantly below capacity. Other power stations, located at Orapa and Francistown,

are currently diesel fired and are considerably more expensive to operate than

comparable gas fired power stations. As such, Tlou has identified the longer term

opportunity to supply gas to Orapa as production capacity at Lesedi expands.

Tlou is currently in discussions with the Botswana government with regards to a power

purchase agreement for the approved 50MW project. Although details have yet to be

announced, this discussion will incorporate power prices and the length of the

agreement which will all be factored into a definitive offtake agreement.

Lesedi is a major project and Tlou has established a cooperation agreement with global

leader in the development of power solutions, General Electric. We believe that GE’s

expertise will prove invaluable with regards to the power generation segment of the

Lesedi project.

Using a range of core assumptions, we have established that a staged 50MW gas to

power project at Lesedi could be worth over US$104m on a 100% basis. Naturally, such

a project requires a substantial long term capital investment, the scale of which may

be challenging for a company of Tlou’s size to undertake alone. However, should Tlou

be able to expedite an agreement with a suitable partner in return for an equity

interest, we believe that the company would be able to lock in a highly significant

proportion of the potential value of Lesedi.

BUY

Stock Data

Share Price: 6.25p

Market cap.: £14.8m

Shares in issue: 237.2m

Fully diluted equity 239.2m

Company Profile

Sector: Oil & Gas

Exchange: AIM/ASX

Ticker: TLOU/TOU

Activities

Coal bed methane (CBM) exploration and

development in Botswana

Performance Data

Source: LSE

Directors

Martin McIver: Chairman

Anthony Gilby: Managing Director

Gabaake Gabaake: Executive Director

Colm Cloonan: Finance Director

Major Shareholders

HSBC Custody Nominees: 7.2%

JP Morgan Nominees: 4.9%

Mitchell Group Holdings: 4.7%

Gilby Super Pty Ltd: 4.5%

Barclayshare Nominees: 3.5%

BNP Paribas Nominees: 3.4%

Citicorp Nominees: 3.2%

IK Botswana Investments: 3.0%

*Optiva Securities acts as broker to Tlou Energy

Limited

Tlou Energy Ltd* 23 January 2017

Barney Gray (Research Analyst) +44 (0) 20 3137 1906

Graeme Dickson (Dealing Desk) +44 (0) 20 3411 1880

Hal Norwood (Dealing Desk) +44 (0) 20 3411 1882

Vishal Balasingham (Institutional Sales) +44 (0) 20 3411 1881

Christian Dennis (CEO/Corporate Broking) +44 (0) 20 3137 1903

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Contents

Introduction to Tlou Energy 3

Company strategy 3

The Lesedi CBM project overview 4

Coal Bed Methane explained 6

Tlou’s development preference 11

Development of the Lesedi CBM project 12

The Selemo pod 13

Contingent resources established 14

Initial gas reserves certification attained 14

Current activity on Selemo 15

Progress in 2016 15

Tlou’s partners 17

Lesedi CBM project valuation 18

Aggregate valuation 20

Botswana: a country profile 21

Electricity market dynamics 25

Demand driven market 26

Gas to power solutions 27

CBM is highly scalable 28

Value of Botswana’s electricity market 29

Appendix - Directors’ Biographies 31

Disclaimer 33

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Introduction to Tlou Energy

Tlou Energy is a Coal Bed Methane (CBM) gas company with substantial interests in Botswana in southern

Africa. The company was established in 2009 with a core strategy to develop prospective CBM assets in

Botswana. The group listed on the ASX in 2013, raising an initial A$10m of new money at IPO. The

management subsequently dual listed Tlou on AIM in November 2015 raising a further A$2.9m. An additional

round of fund raising in August 2016 provided the company with further proceeds of A$3.2m. (Earlier fund

raisings were also conducted on the ASX prior to Tlou’s introduction to AIM). The company currently operates

the Lesedi CBM project; the most advanced CBM projects in Botswana with contingent 3P resources estimated

to be as high as 3.2 TCF of gas.

Location of the Lesedi CBM project in Botswana

Source: Tlou Energy

Company strategy

Botswana is a stable and democratic economic success story in the African context. However, in spite of large

coal reserves, the country has a major electricity supply deficit and imports approximately 80% of its electricity

requirements, predominantly from South Africa.

Tlou’s aim is to develop the Lesedi CBM project in order to provide gas-to-power solutions and generate

electricity at the well head for delivery into the existing electricity grid in Botswana. In particular, the

management is keen to replace diesel fired power generation with cheaper, cleaner and more efficient gas

fired generation. Longer term, Tlou is also keen to export gas to South Africa which also suffers significant

electricity shortages and is not a reliable exporter of electricity to Botswana.

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The Lesedi CBM Project overview

Tlou holds a portfolio of CBM assets in central Botswana within the eastern region of the Kalahari Desert which

covers most of the country. Its core assets are five permits which together comprise the Lesedi Project. Within

this portfolio, the group’s activities are concentrated currently on permits PL 001/2004 and PL002/2004 where

pilot testing and appraisal work is ongoing.

The other permits which together constitute the Mamba Project are likely to offer major long term upside to

the Lesedi Project but at this stage, these are exploration prospects and we are not providing an assessment of

these permits in this report. The location of all the assets is provided in the map overleaf.

Tlou’s CBM asset portfolio

Asset Phase Operator Interest Area Square Expires

Lesedi Project % (km2) miles

PL 001/2004 Appraisal Tlou 100% 898 347 Mar-17

PL 002/2004 Pilot testing Tlou 100% 899 347 Mar-17

PL 003/2004 Exploration Tlou 100% 757 292 Mar-17

PL 035/2000 Exploration Tlou 100% 561 217 Sep-18

PL 037/2000 Exploration Tlou 100% 897 346 Sep-18

Mamba Project

PL 237/2014 Exploration Tlou 100% 958 370 Jun-17





Source: Tlou Energy

Highly strategic location

Tlou’s assets have a highly attractive strategic location. The Lesedi Project in particular is located within close

proximity to the Orapa Power Station which provides comparatively expensive diesel-fuelled electrical power

for the Orapa diamond mine, the largest in the world by area. Orapa is dual fired in that it can run on gas or

diesel. However, as yet the operators have not had any gas available and so it has been running 100% on diesel

to date.

The permits are also located within 200 km of the existing Morupule power station, Botswana’s main coal fired

source of domestic electricity production. Morupule is believed to be generating power well below its

nameplate capacity and a major factor in the large domestic electricity supply deficit in Botswana.

Tlou’s key licence is located in the path of a Tlou proposed pipeline from Orapa to the proposed site near

Mahalapye and branches of the local electricity transmission grid are located within easy connectivity of the

Lesedi licences. The licences are depicted in the context of local energy infrastructure in the map below.

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The Lesedi project and regional infrastructure

Source: Tlou Energy

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Coal Bed Methane (CBM) explained

Coal Bed Methane (CBM) is a method for extracting methane (CH4/natural gas) from coal deposits generally at

depths of between 300 metres and 1,000 metres. It is a particularly suitable solution for extracting

hydrocarbons from coal seams that that are otherwise too deep to be open-pit mined or too thin to be deep

mined economically.

In geological terms, methane is formed through bacterial action or chemical reactions along with the process

of coalification and the methane is absorbed in the solid matrix of the coal seam. CBM is classified as an

unconventional resource given that the coal represents both the source and the reservoir rock in a similar

fashion to shale oil and gas.

Although the CBM process generates small amounts of other hydrocarbon and non-hydrocarbon gases,

methane generally comprises 90%-95% of the gas volume within the coal.

The commerciality of CBM is derived from the fact that the coal bed is a micro porous matrix with a huge

surface area as a function of the presence of innumerable fractures within the coal matrix and larger ‘cleats’

within the coal seam (see right hand picture below). As such, coal can store up to six or seven times more gas

than the equivalent volume of rock in a conventional reservoir. It is estimated that an average coal matrix can

hold over 600 cubic feet (cf) per tonne of coal.

As with other unconventional resources, the unexploited coal deposit is highly porous but not permeable given

that the methane in the coal matrix is held in contact with the coal as a consequence of very high water

pressure within the cleats of the coal bed (see left hand picture below). This water pressure is usually referred

to as ‘hydrostatic pressure’.

Coal bed matrix illustrating gas surrounding the coal bound by water and rock

Source: Trident Limited Partnership, Slideshare

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Releasing the methane

As indicated by the pictures above, coal has a dual porosity structure comprised of:

• Micropores within the coal matrix of (< 2nm)

• Macropores: natural fractures or ‘cleats’ separating the matrix blocks (>50nm)

Generally speaking, the greater the hydrostatic pressure within the coal bed matrix, the larger the number of

methane molecules that are attached to the coal. The process of molecular attachment of the methane gas to

the coal is called ‘adsorption’.

In order to release the molecular attachment of the methane from the coal and recover the gas from the coal

bed, the hydrostatic pressure in the reservoir must be reduced by removing the water via wells (often

horizontal) drilled into the coal seam. This process is called ‘desorption’.

As the coal seam is dewatered, the hydrostatic pressure within the coal bed is reduced and methane desorbs

from the coal and travels through the microporous matrix. Natural cleats or macroporous fractures provide

pathways for the methane to travel to the wellbore and ultimately to the surface for recovery. Without a

system of cleats within the coal bed, there is no natural pathway for methane to flow and it becomes very

difficult to produce gas regardless of the gas content of the coal deposit.

It is important to note that the thickness of the coal seam is not necessarily proportional to the amount of gas

produced but rather volumes of gas are related to the intrinsic characteristics of the coal and its natural

permeability after the hydrostatic pressure has been reduced.

In summary, CBM production is structured over three main phases during the lifetime of a reservoir:

1. Dewatering phase as hydrostatic pressure is released from the coal seam

2. Stable production phase as water production declines and methane molecules are released from the

coal matrix to be recovered by production wells

3. Declining phase as desorption and therefore methane production reduces

The charts below depict a generic CBM profile compared to a conventional gas reservoir production profile.

The characteristic of note is that peak production from a conventional reservoir is from initial production and

output declines thereafter as natural reservoir pressure declines. By contrast, maximum production from a

CBM well is reached after the initial dewatering phase has enabled the gas to desorb from the coal seam.

Gas recovery profiles over time

Conventional CBM

Source: Optiva estimates

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The dewatering phase

During the dewatering phase, water production is relatively constant and gas production is negligible. This

phase is essential given that water occupies the principal network of fractures and cleats within the coal and it

must be removed in order to produce gas.

The number of days required for dewatering can vary widely. There are examples of ‘dry’ cleat systems in the

Horseshoe Canyon Formation in Alberta, Canada where the fractures are already full of methane rather than

water and gas production can begin as soon as the formation is drilled. However, in general, CBM is ‘wet’ and

the length of the dewatering phase can be difficult to estimate and the amount of produced water can vary

enormously. The principal method of establishing the time required for this phase it to run a pilot well to

determine the length of the dewatering phase.

As stated earlier, the principal drivers of the efficiency of this phase are related to the properties of the coal

and include permeability of the seam, adsorbed gas content and relative permeability.

Stable production phase

This phase is characterised by a dramatic reduction in the water production and an increase in the gas

production rate as it is desorbed from the coal matrix due to falling hydrostatic pressure. Gas production is

stabilised for a relatively short period and then experiences a long term decline trend as outlined previously.

Declining production phase

During this phase, the well is considered to be dewatered and water production is low or negligible. The gas

and water permeability do not change significantly over the productive life of the phase and methane

production declines steadily during this period. The comparative production profiles for both water and

methane over the three phases of a CBM well are summarised below.

Production stages of a CBM well

Source: Kansas Geological Survey, Public Information Circular

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Developing CBM

Exploration drilling

CBM projects commence with an exploration drilling phase in order to establish a resource in place. Compared

to conventional resource exploration, initial drilling risk is mitigated by a significant degree given that it is

usually conducted in areas where the regional geology is well understood and there are already known coal

resources as in the case of Botswana.

All projects are different in scale and nature. However, the map below depicts the scale of exploration that has

been undertaken to date on Tlou’s core Lesedi permits. A sufficient density of exploration wells will establish

whether there is a substantial coal resource in place. Given that these wells are often drilled to depths less

than 1,000 metres, exploration drilling for CBM is considerably cheaper than conventional exploration drilling.

Well locations on Tlou’s licences

Source: Tlou Energy

Samples taken for analysis

Multiple well bores are taken from the exploration sites and the gas in place is established by measuring the

gas desorbed from the bore samples in a controlled environment such as a laboratory. These tests also

determine the methane absorption capacity of the coal and the permeability and porosity of the coal matrix

which are all essential dynamics in determining the likely commerciality of a development.

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Although this description greatly simplifies the process, a gas in place estimate can be calculated from this

early work and potential recovery rates for the gas can also be established leading to early prospective

resource estimates. In Tlou’s case, the company established a best case prospective resource of 3.2 TCF based

on a gas in place number of 7.65 TCF for the Lesedi Project in December 2012.

Pilot phase drilling

Pilot phase drilling is then embarked upon in order to establish a range of factors including dewatering phase

characteristics, gas desorption rates and indicative gas flow rates. Tlou completed its first pilot phase drilling

programme on the Lesedi permits over 2014 and established peak flow rates of 395,300 cfpd of gas in

December 2014 from short term production tests.

Pilot phase drilling and long term production testing continued over 2015/16 and the results of this

programme are outlined in more detail in the next section of this report.

Development phase drilling

Once a coal resource is established and pilot phase drilling has confirmed the productive dynamics of the coal,

an operator can them move towards a development programme.

A typical CBM recovery well is outlined below. As is clear from the diagram, the water is drawn from the coal

seam and removed to a separator or discharged. The subsequent gas is then produced from a discrete unit

within the well bore and removed to a separate pipeline. As outlined previously, the gas production increases

as the dewatering phase declines.

Vertical CBM recovery well

Source: Montana State University

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Tlou’s development preference

As can be inferred from the diagram below, Tlou’s development preference is to drill two lateral wells in

conjunction with a vertical production well in order to create a single production unit and access a far greater

surface area of the coal seam to maximise gas desorption.

The company has been adopting this well configuration for its Lesedi pilot phase drilling and flow testing

activities and envisages rolling this configuration out across the coal seam to establish a linked network of such

wells in a staged development as additional gas is required.

Horizontal pilot well schematic

Source: Tlou Energy

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Development of the Lesedi CBM Project

Focus on the Selemo Pod

Tlou began the pilot testing phase on its Lesedi licences in 2013. The initial focus of activity was on permit PL

002/2004. The company elected to drill two ‘pods’; the Selemo Pod and the Lesedi Pod both initially intended

to comprise two horizontal and one vertical well in each pod as illustrated in the schematic on the previous

page. The map below depicts the key well locations and additional detail related to initial pilot testing on the

Lesedi permits. Since drilling activity commenced in 2013, Tlou’s primary focus has been on the Selemo Pod

where current testing is ongoing.

Activities on permit PL 002/2004 in detail

Source: Tlou Energy

Drilling commences

Drilling commenced in May 2013. Tophole drilling was completed by the end of June 2013 and the Selemo 1A-

R well which intersected the Selemo 1P well was completed in August 2013 following the abandonment of the

Selemo 1B well. The company noted that the path of the Selemo 1A-R well remained within a good quality coal

seam without intersecting any major fault lines.

The lateral Selemo 1B commenced drilling in August 2013. However, this well encountered problems which

eventually led to the drill string becoming stuck in the hole at 536m measured depth. This well was

subsequently suspended and Selemo was completed as a single lateral pilot pod. At this point activity moved

to the Lesedi pod which was designed to be completed as a dual lateral pod.

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Production testing commences

Production testing on the Selemo Pod commenced in the quarter ended December 2013 and the process of

gas desorption continued over the following first quarter of 2014. While this was ongoing, Tlou also

commenced the drilling of three infill core-hole wells in order to ascertain important infill data on the coal

quality around the pilot pods. These wells will be instrumental in determining reserves and also establishing

sites for future well locations as the drilling programme expands. This sub-programme was completed by July

2014.

The Selemo pod

The Selemo pod reached critical gas desorption in July 2014 although operations were temporarily halted in

order for Tlou to attend to a casing integrity issue on one of the wells which was completed in September

2014. Shortly after this work, Selemo reached critical gas desorption (CDP) and gas was flared in November

2014 while dewatering operations continued. A short term flow test was conducted in December 2014 and

Tlou published the results in early January 2015. The pod was subsequently shut in to allow pressure to build

up with a view to a longer term production test.

Selemo pod pilot well test data

Selemo flow test results Variables Result 1 Result 2

Flow time Minutes 16.5 15.0

Gas produced during flow m3 53.2 57.7

Water produced litres 357 509

Peak gas rate observed during test cfd 395,300 371,800

Average gas rate for the period cfd 164,000 196,000

Average water rate litres/day 31,156 48,864

Casing regulator pressure drop during flow test kPa 452 511

Downhole gauge pressure drop during flow test kPa 192 187

Source: Tlou Energy

Other activity

At the Lesedi Pilot Pod, pump capacity was upgraded in May 2014 to enhance the dewatering process.

However, the new configuration did not lead to the expected drawdown of water levels in the pod due to an

anomalous water influx. Consequently, Tlou discontinued pumping the well in order to investigate the source

of the water influx and establish a remediation plan. The objective of the remediation plan was to enable

operations to recommence with a dewatering profile more consistent with that of the Selemo pod.

Future production wells

At the same time as the testing of Selemo and Lesedi, Tlou began workover operations on the vertical pilot

well Mopani 2P which was drilled originally in 2011. This work was completed in September 2014 and

dewatering began immediately with CDP being reached later in that month. Since CDP was reached, the well-

head pressure continued to rise steadily and as with the Selemo Pod, once a maximum casing pressure is

reached, flow-testing of the well will begin to establish a flow-rate forecast.

Tlou also drilled and completed for production testing a new single vertical pilot well called ‘Lesedi 2P’

adjacent to Lesedi 1P. This decision was based on the encouraging results at Mopani 2P. The drilling of Lesedi

2P was completed in October 2014 and testing operations were initiated in November 2014.

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Contingent resource established

As a result of the flow test data from the Selemo pod, Tlou published a certified Contingent Resource for the

Lesedi CBM Project in April 2015. These resources represented a significant upgrade from the initial

prospective resource estimates published in 2012 as part of the ASX listing rules. It is very important to note

that these contingent gas resources also represent the first 1C certified gas resources in Botswana.

Lesedi CBM Project Contingent Resources (as of March 2015)

Contingent Resources (31-Mar-15) OGIP Unrisked recoverable

Estimate (BCF) (Net to Tlou – 100%)

Low (1C) 7.6 4.9

Best (2C) 367.8 239.1

High (3C) 5,347.5 3,295.5

Prospective Resources (31-Dec-12) OGIP Unrisked recoverable

Estimate (BCF) (Net to Tlou – 100%)

Low 2,459.5 644.1

Best 7,653.1 3,239.0

High 14,326.8 8,596.1

Source: Netherland Sewell and Associates

Initial gas reserves certification attained

Further progress was made in October 2016 when SRK Consulting (Australia) Pty Ltd ascribed an initial

Independent Reserve Certification for the Lesedi CBM Project coupled with a small adjustment to the

contingent resources estimates. For the Lower Morupule coal seam only at this stage, SRK indicated a 2P gas

reserve of 2.7BCF and a considerably higher 3P number of 52.9 BCF. It is important to note that this is an initial

reserve certification and Tlou’s plan is to continue to upgrade these reserves and their categories as further

production data from Lesedi is collected. As such, we expect a series of enhancements to these initial totals as

drilling and flow testing on Lesedi continues.

Initial reserves established

Gas reserves (BCF) Contingent resources (BCF)

Category 1P 2P 3P 1C 2C 3C

Sep-16 0.1 2.7 52.9 4.8 236 3,243

Mar-15 - - - 4.9 239 3,296

Change 0.1 2.7 52.9 (0.1) (3) (53)

Source: SRK Consulting (Australia) Pty Ltd

An initial assessment

The 2P number is an initial assessment based on the production data obtained from the three pilot production

wells on the Selemo Pilot Pod only. This represents a very small proportion of the overall licence and further

testing of these wells, in addition to potentially testing other existing wells in the Lesedi area, has the potential

to convert a considerably greater proportion of the 3.2 TCF of 3C contingent resources ascribed to the licence.

SRK Consulting is also assisting in the identification of the most prospective areas of the licence on which to

base the expansion of the Lesedi project. SRK is engaged to review Tlou’s geological model, seismic and drilling

data and well performance data and make recommendations for future development activities. The results of

this work are expected to be completed in early 2017.

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Current activity on Selemo

Following the positive test data from Selemo, Tlou drilled an additional two lateral wells on the Selemo pod;

Selemo 2P and Selemo 4P adjacent to the existing Selemo 1P well. This work was completed in September

2015 and dewatering and production testing operations commenced in the final quarter of 2015.

In particular, the two additional wells are shielding water ingress into the 1P well which represents the main

producing well currently. The schematic below depicts this but also represents an initial blueprint for a

sustained development plan where additional lateral wells can be drilled in an extended row in order to shield

adjacent wells from water and establish them as producing wells.

Additional horizontal wells drilled on the Selemo pod

Source: Tlou Energy

Progress in 2016

In July 2016, Tlou outlined that the main producing well, Selemo 1, has achieved sustained gas flow with the

shielding wells, Selemo 2 and 4, functioning effectively by shielding water from the coal formation successfully.

Drawdown from all the wells commenced in April 2016 and the most northerly well, Selemo 4 also

demonstrated sustained gas flow. The company stated that this is a promising outcome and Selemo 4 has far

exceeded the company’s expectations.

Remedial work to clear coal fines from the intersection of the vertical and lateral wells at Selemo 1 was also

completed in mid-2016. This work involved pumping water down the vertical well along the coal seam and

through the lateral well in order to improve communication between the wells.

Pumping and metering equipment has been installed on the lateral end of Selemo 1 in order to facilitate gas

production from both the vertical and lateral sections if necessary. This is advantageous to the company as gas

flow can be recorded from the opposite end of the lateral section even if there is reduced communication

between the vertical and lateral well sections.

Selemo 2 was drilled as a shield to keep water out of Selemo 1 and has also flown gas. However, this well is not

expected to be as prolific as Selemo 1 as it intersects less coal than the other two wells.

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50MW power project approved by the Government - 100MW proposal requested

Also in July 2016, Tlou announced that the government of Botswana had approved a 50MW power plant for

the Lesedi CBM Project. This represents very good news given that this approval is five times larger than the

10MW pilot power plant for which Tlou originally applied.

There is further upside to government’s approval in that it also requested that Tlou submits a proposal to

provide up to 100MW of power from the Lesedi CBM project in January 2017. This expansion is particularly

important given that the country's main power station, Morupule, is still undergoing unsuccessful remedial

work and is believed to be largely offline and Botswana continues to import significant amounts of power from

South Africa.

The Government has proposed a power purchase agreement (PPA) which will assist in fast-tracking the

development of the gas industry in the country and creates a new market for Tlou's gas.

In July 2016, Tlou was one of two companies selected to bid for the development of up to 100MW of power

using CBM in Botswana. The company has now received a detailed Request for Proposal (RFP) from the

Ministry of Mineral Resources, Green Technology and Energy Security with a closing date for the tender of 12

July 2017. The RFP requires details of the proposed field development, the installation of power generation

facilities and supply of power into the grid in Botswana.

The Botswana Government has developed this initiative to allow companies such as Tlou to develop pilot

plants and facilitate the development of their CBM resource to levels which may lead to the supply of gas to

the Government owned 90MW Orapa Power Plant, which is situated approximately 150km to the north of

Tlou's Lesedi CBM Project.

Staged development

Tlou has been approved by the government to develop a 50MW project to be delivered on a staged basis from

10MW to 50MW. This project can be divided into three distinct development sections; upstream, midstream

and downstream and Tlou indicates that progress in being made in each section of the project.

The upstream development plan, which includes the drilling of wells, gas gathering and compression, is

focused on developing the process and determining the capital and operating costs for an initial 10MW

project. This early work will provide a project execution plan to illustrate how the project will be delivered in

additional stages and on time.

The downstream work is focused on the construction of power transmission lines or gas pipelines. This plan

will focus on the lowest cost options, the most feasible route and the optimum integration points for delivery

of power into the BPC electricity network. The work will also assess the potential for upgrades to the BPC grid

and is expected to take three months to complete.

The midstream development work relates to the design and development of the power generation units on

the Lesedi project. This part of the plan is well underway and Tlou is in partnership with GE (extended for a

further three months on 28 November 2016) which has identified suitable equipment for the initial project in

addition to capex and opex calculations on which to base development decisions.

Discussions are continuing with the Botswana government with regard to a power purchase agreement for the

approved 50MW project. This is likely to be an extended discussion incorporating power prices and the length

of the agreement which will all be factored into a definitive offtake agreement.

17

Tlou’s partners

Tlou’s activities have attracted a significant degree of international attention and the company has established

several potentially exciting cooperation agreements with experienced global operators.

General Electric (GE)

Tlou has an agreement with General Electric (GE), recently renewed in November 2016 and extended to 28

February 2017, to collaborate with Tlou in the power generation segment of the Lesedi project. In particular,

GE is a world leader in the design, construction, operation and maintenance of power generation facilities and

its expertise is likely to be invaluable to Tlou when plans to develop and commercialise Lesedi accelerate. GE

has been involved in every LNG project in Australia to date and has a wealth of operating and project

maintenance experience.

Tlou’s agreement with GE provides the framework for co-operation between the parties in relation to sharing

of infrastructure and technical support for the delivery of the 50MW power project, gas supply to the existing

90MW Orapa power station owned by Botswana Power Corporation and a proposed 300MW gas-fired power

project to be developed by IK Holdings and GE.

IK Holdings

Tlou’s cooperation agreement with IK Holdings was also extended to the end of February 2017 in November

last year. IK is a private Australian company with a strategy to develop new gas fired power projects in

Botswana. IK’s management has extensive experience of delivering gas to power projects and is the only

operator prequalified to deliver a tender offer for a 300MW greenfield power plant in Botswana.

SRK Consulting

SRK is an independent specialised geological consultant to Tlou and as outlined previously, has been

responsible for assessing and certifying Tlou’s contingent gas resources and initial reserves. SRK has a

substantial amount of experience in developing geological and hydrological model in CBM basins. The group’s

clients include several of the world’s mining and exploration companies and the company has an international

presence with offices in over 20 countries.

18

Lesedi CBM project valuation summary

We have endeavoured to generate an indicative valuation for Tlou Energy on the basis of its existing 100%

interest in a 50MW CBM gas to power project. Within this valuation is a raft of assumptions, most of which will

be subject to either confirmation or adjustment as such a project advances.

Core assumptions

We have calculated that a 50MW project operating at 90% capacity to account for occasional maintenance and

downtime would require feedstock of nearly 4 BCF of gas per annum at peak output based on the assumption

that 99 KWh of electricity is generated per 1,000 cubic feet of gas. This equates to peak gas production of

more than 10.9 mmcfpd.

We do not anticipate that 50MW of generating capacity will be established at once and therefore we have

rolled out our capacity increases at 10MW every year over the first five years of the project.

In order to supply the gas for generating capacity, we have assumed that each gas production “unit” comprises

two lateral wells and one vertical well drilled for a combined cost of US$1.175m per unit. We have also

assumed that each well produces 50 mcfpd of gas implying that each unit produces 100 mcfpd on day one and

declines thereafter at a rate of 5% per annum. This is at the low end of expectations and we believe that

production rates per unit could increase as the Tlou’s understanding of the coal seam improves with additional

drilling.

Within our model we have assumed that drilling activity is continuous in order to provide sufficient gas for the

expanding generating capacity and also to offset well production decline rates.

Capital expenditure requirements

In our model, we have assumed a total capex of approximately US$307m, with the majority of this represented

by US$236m on continual drilling activity over a 20 year period. Should the units deliver more than the base

assumption of production per unit or decline at a slower rate than expected; the upside for the project will be

substantial. The chart below depicts annual number of units drilled against the ramp up in generating capacity

over time, conveniently on the same scale. Should well performance be better than expected, the rate of units

drilled over the long term will be reduced as will a significant proportion of capex.

Production units drilled and generating capacity (MW) over 20 year period (same axis)


19

Other capex

Within our capex assumptions, we have factored in US$50m over the first five years for power generating

capacity on the assumption that the gas to power units will be owned by the company rather than leased from

a third party. We have also included US$20m for power lines to connect to the local grid. The company has

indicated that ownership of these transmission lines may transfer to Botswana Power Corporation (BPC) upon

completion. However, we believe that the company could be compensated through an incremental increase in

the price BPC pays Tlou for electricity in the early years of the project.

Revenue projections

We have assumed that Tlou receives approximately US$0.15 per kWh when electricity production commences

in year 3 of the project. We have escalated pricing by approximately 5% per annum over the life of the project.

We believe that this is a modest assumption given that electricity prices in Botswana have increased at an

average of 10.1% per annum since 2011 across all consumer sectors. It is noteworthy that in basing our

assumptions, we have excluded the 30% across the board increases instigated by BPC in 2011 in order not to

skew our price inflation to unrepresentative levels.

With the full 50MW of capacity installed, we estimate that annual revenue will commence at almost US$71.7m

escalated by subsequent electricity price increases therefrom.

Other cost factors

Once the generating infrastructure is in place for this project, we assume that variable costs will be modest.

Nonetheless, we have factored in variable opex of US$4.25 per mcf at the start of the project declining to

US$3.00 at peak output when 50MW capacity is installed. Once maximum capacity is installed, we have

escalated variable opex by 5% per annum.

Our cost estimates also include US$1.00 per mcf of gas production for G&A costs and US$0.25 per mcf to

account for costs associated with maintaining transmission lines. With this assumption, we have assumed peak

capacity variable opex of US$19m per annum escalated annually when the full 50MW is operational.

We have assumed that this project will generate substantial tax losses in the early years of operation as drilling

and equipment costs are sunk. However, we anticipate that Tlou will start paying full corporation tax of 22%

from around year ten as tax losses expire and substantial free cash flow is generated. The chart below depicts

clearly the investment phase of the project and the rapid ramp up in revenue and cash flow as full capacity is

reached.

Revenue against net cash flow (US$m) over a 20 year period


20

Aggregate valuation

We have generated at indicative valuation of US$104.4m for the 50MW project described previously based on

an NPV (10% discount rate) of the net cash flows generated from our assumptions. As implied earlier, our

valuation is highly sensitive to changes in particular variables including;

• Electricity prices

• Unit gas production rates

• Unit production decline rates

• Electricity price escalation

• Variable opex

• Operational efficiency of the generating equipment

However, where possible, we have endeavoured to be conservative and we are confident that Tlou is the

custodian of a potential long term project worth several multiples of the company’s current market

capitalisation.

We have adjusted our project valuation to account for corporate overheads and the dilutive impact of a small

number of options in issue. We have discounted the cash balance of A$3.3m at the end of September 2016 as

we assume that most of this will have either been spent or earmarked for expenditure in the ensuing period.

With an assumed cash burn of A$1.0m per quarter, we believe that Tlou may return to the market for

additional funds before the middle of 2017. Alternatively, the company are also conducting ongoing

discussions in regard to SPV (Special Purpose Vehicle) funding, which may contribute capital for the project in

addition to corporate overheads and exploration/appraisal work.

Assuming 237.2 million shares in issue and a further 2.0 million options outstanding, we believe that the

shares could be worth over 33p assuming 100% ownership of the project adjusted for minor corporate items.

It is very important to note at this stage that this early assessment of the value of Tlou’s assets relates only to

the establishment of an initial 50MW power project and places no value on the establishment of future power

projects which could be established as the company’s gas reserve base increases.

Adjusted company valuation

Valuation Valuation Undiluted Diluted

Item Description US$m £m p p

Lesedi CBM Project Asset 104.4 83.7 35.3 35.0

Overheads Corporate -5.0 -4.0 -1.7 -1.7

Cash (debt) Corporate 0.0 0.0 0.0 0.0

Options Corporate 0.28 0.16 0.0 0.1

Total 99.7 79.8 33.6 33.4


Strategic partner potential

It is clear that such a project as described requires substantial financial resources, cash contingencies and high

level project management capabilities. As such, we believe that Tlou may take steps to identify a larger

strategic partner and farm down its interest in the Lesedi project in order to gain a smaller interest in a larger

project possibly with a free carry. Alternatively, Tlou may seek to demonstrate the potential of the project

through initial drilling and flow test rates and exit the project at an acceptable proportion of its indicative net

present value. We believe that either strategy will enhance shareholder value.

21

Botswana: A country profile

Botswana is located in sub-Saharan Africa immediately to the north of South Africa. The land surface area of

this land locked state is dominated by the Kalahari Desert which covers approximately 70% of the country.

With a population of only 2.2 million people in an area of 224,610 square miles, Botswana’s population density

is very low at less than 10 people per square mile. It is considerably less than this in the southwest Kalahari

region of the country where population density is negligible over large areas. The majority of the population

lives in the southeast of the country near the border with South Africa.

Botswana location map

Source of data and maps: CIA World Factbook, Glogster

An emerging middle income country

Botswana is a regional economic success story. Economic growth rates averaged nearly 9% per annum

between independence in 1966 and 1999. The country endured a period of relative stagnation at the

beginning of the 21st century and growth slowed between 2005 and 2008. This was followed by global

recession in 2009 which contracted the economy by more than 10% in that year. Subdued global demand for

metals and minerals since then has tempered recent growth rates since then and according to Focus

Economics, GDP shrank by approximately 0.3% in 2015 before stabilising in 2016. Nevertheless, Focus

Economics has forecast GDP growth of 3.6% in 2017 and 4.0% in 2018 predominantly as a consequence of

government policies of fiscal expansion and looser monetary policy.

22

Botswana annual GDP growth rate

Source: Trading Economics, Central Statistics Office, Botswana

The Botswana economy faces the same internal and external pressures

Similar to its regional neighbours with the exception of South Africa, Botswana is a predominantly agrarian

economy with the agricultural sector providing the core livelihood for at least 80% of the population. However,

in terms of value, the mining of natural resources such as coal, diamonds, copper, nickel and potash remain

the most important sectors of the economy in terms of value despite the recent weakness of global

commodity prices. It is important to note that Botswana currently has no domestic hydrocarbon production

and the majority of the country’s comparatively modest requirements for fuel and electricity are imported,

mostly from South Africa.

The country shares many of the problems faced by developing countries in Southern Africa, including

persistent government budget deficits, occasional high inflation (although less than 3% in November 2016),

unemployment and underemployment and at least 20% of the population living below the poverty line as

judged by international standards. The country also has the second highest HIV infection rate in the world,

equivalent to 17.9% of the adult population (UNDP). However, this has declined from 25.4% in 2005 and the

government has demonstrated a strong commitment to reducing HIV prevalence with 69% of adults in the

country on retroviral treatment according the UN AIDS Gap Report (2014).

With a small population, Botswana is unlikely to be a regional economic powerhouse on the scale that South

Africa represents (see below). However, on a per capita basis, the country is considerably more advanced than

its near neighbours and very much in the middle income bracket in a global context.

Regional GDP and GDP (Purchasing Power Parity) per capita, 2015E

Country GDP US$bn GDP $ (nominal) GDP $ (PPP) Estimate

Botswana 14.4 7,080 14,876 Dec-15

South Africa 313.0 7,575 12,390 Dec-15

Namibia 11.6 6,014 9,801 Dec-15

Zambia 22.1 1,625 3,658 Dec-15

Zimbabwe 13.9 819 1,688 Dec-15

Mozambique 14.7 510 1,116 Dec-15

Source: Trading Economics

23

Africa’s least corrupt country

Despite global commodity price pressures in recent years, we believe that Botswana offers a significant

number of economic attributes which make the country a compelling investment case for the exploitation of

CBM resources. Additional to this, the country is democratic and stable, it has a comparatively well educated

workforce and corruption levels are adjudged to be low by Transparency International.

Botswana stands out as having low corruption levels on a par with Western Europe and the US. In 2015

Transparency International ranked Botswana 28th

out of 167 countries on its global corruption perceptions

index making it the highest ranked African country by some distance. This represents improvement on 31st

out

of 175 countries ranked the previous year.

Corruption perceptions index (2015)

Source: Transparency International

Modern infrastructure in place

With a highly developed mining sector, Botswana already has a complex mineral extraction infrastructure in

place and the ability to support sophisticated exploration activities. The country’s major main towns and cities

are connected by a developed road network and a legacy of coal mining has provided several rail links, with

others planned.

24

Road and railway infrastructure in Botswana

Source: Walkabout Resources

Electricity infrastructure is key

We concede that road and rail links are secondary importance In the context of the exploitation of CBM, as are

major fuel pipelines given that demand for a natural developed gas grid is limited by a small domestic market.

However, Botswana has significant electricity supply shortfalls and relies heavily on imports.

Given that the infrastructure required to generate electricity from gas at the well head is very straightforward

and widely available, we believe that the onsite generation of electricity from gas subsequently delivered

directly into the electricity network provides an attractive solution to Botswana’s energy needs.

25

Electricity market dynamics

Outlined below is Botswana’s electricity grid in detail. The network is concentrated in the southeast of the

country where the majority of the population lives. However, it is important to note that there are at least 15

points of entry for imported electricity from five neighbouring countries, primarily South Africa but also

Zimbabwe and Angola. The key South African entry points are depicted on the map below.

This key point illustrates how dependent Botswana is on imported energy. As such, we estimate that Botswana

imports approximately 80% of its electricity, primarily from South Africa.

A major electricity line extends to the north of Tlou’s acreage connecting the Orapa power station

approximately 149km north of the company’s permits. Another major line running southwest to northeast is

located a similar distance from Tlou’s licences and connects the Morupule power station to population centres

in the southeast of the country.

Botswana’s electricity grid

Source: Botswana Power Corporation

26

Demand driven market

The chart below depicts the large and persistent electricity supply deficit that exists in Botswana. However, we

believe that the supply deficit is greater than exhibited on this graph given that the Morupule power station,

Botswana’s main domestic generator of electricity, is operated significantly below capacity.

Botswana electricity supply and demand projection (MW)

Source: Norconsult 2013

Domestic power generation

Morupule consists of four units of 150 MW each. However, the track record of reliability for the units which

were installed by China National Electric Equipment Corporation (CNEEC) is poor with three of the four units

reported to have broken down in October 2014. Two units were reported as running in mid-2015. However, in

June of that year it was reported in The Business Weekly and Review that the government was considering

shutting down the plant entirely. Although we understand that this has not yet happened, we estimate that

output from Morupule is currently less than 250 MW which leaves a current estimated supply shortfall of up to

750 MW for the whole country according to Felix Chivapi of Australian company, Solahart Industries Pty Ltd.

It should be noted that South Korea’s leading energy producer POSCO Energy Co. has been contracted by the

BPC to construct and operate the fifth and sixth power plants of a 300 MW capacity Morupule B Phase II near

the Morupule coal mine some 280km northeast of Gaborone.

The Korean energy producer in November last year was selected as a preferred bidder in the international

procurement auction on power plant construction and operation project launched by the Ministry of Minerals,

Energy and Water Resources of Botswana. POSCO won as part of a 50:50 consortium with Japanese general

trading company, Marubeni Corp.. It has been agreed that the two companies will jointly operate and maintain

the power plants which are estimated to be operational in 2020 and function for up to 30 years.

Other domestic supply options are limited

There is a smaller 90 MW capacity generation facility at Orapa in central Botswana which is operated through

twin diesel generators. However, this is dedicated supply for mining activities and any diversion of supply from

Orapa is unlikely to make a significant impact on the overall deficit.

27

The same scenario is true of the 70 MW of capacity available from the twin diesel powered generators at

Matshelagabedi in northeast Botswana. London listed company, APR Energy also operates two small sites in

Botswana including a 70 MW diesel power facility in Francistown in the eastern region (planned to be

increased to 105 MW). Again, these are dedicated facilities and do not contribute sufficiently to the country’s

overall electricity deficit.

Diesel is unlikely to provide a long term solution

It is feasible that that Botswana could continue to sanction diesel generated power projects in order to keep

up with increasing demand. However, this is an expensive way to generate power and is one of the reasons it

is often a solution for remote sites where grid power is unavailable and a local power supply is required.

Lazard’s findings are outlined below with regard to the production cost spreads of generating electricity by

various plant types. This list has omitted several categories of solar power generation which are more efficient

than the category outlined. However, classifications such as thin film technology are currently single building

type solutions and are too small scale for our comparative requirements.

Production costs for electricity generation (selected categories).

US$/MWh USȼ/kWh US$/MWh USȼ/kWh

Plant type Low Low High Low

Wind 32 3.2 77 7.7

Gas combined cycle 52 5.2 78 7.8

Geothermal 82 8.2 117 11.7

Nuclear 97 9.7 136 13.6

Coal 65 6.5 150 15.0

Fuel cell 106 10.6 167 16.7

Solar thermal with storage 119 11.9 181 18.1

Diesel 212 21.2 281 28.1

Source: Lazard 2015

The table above depicts clearly that power from gas combined cycle is one of cheapest solutions available. Gas

combined cycle relates to the generation of electricity through the burning of gas in a turbine. The process also

captures exhaust heat which would otherwise escape and creates steam from water to power a secondary

steam turbine.

Gas-to-power solutions

We do not believe that the process of converting CBM into electricity will prove to be any impediment to the

development of a gas-to-power sector in Botswana. Mobile gas-to-power solutions are widely available,

modular and highly scalable and are ideal for stranded gas or the absence of a gas distribution network.

For example, a single 20 feet long single containerised unit with a capacity of 0.35 MW – 1.3 MW can be

deployed rapidly and a full turnkey installation can be up and running within weeks with connection to the

electricity grid simultaneously implemented.

28

At this stage, Tlou has an option to become an electricity supplier in its own right or outsource the installation,

operation and maintenance of generating capacity to third party suppliers. The first solution would require

significantly increased initial expenditure for the company although we would expect that the long term

economics of supplying power to the grid rather than gas to a local generating company are more favourable.

We believe that both solutions represent a sustainable long term solution which is appropriate for Botswana’s

nascent unconventional gas resources given that private sector power supply solutions alleviate the economic

burden to the government of constructing permanent power plants.

CBM is highly scalable

Gas-to-power projects are highly scalable given that generation units can be added continually as CBM supply

increases with a rolling drilling programme. Illustrated below is an example of a 40 MW modular gas-to-power

project in Tanzania undertaken by the Tanzania Electric Supply Company using Aggreko generating units. It is

clear from this depiction that that to increase generating capacity, it is a straightforward matter of adding

further modules to the foot print of the temporary power plant.

Gas-to-power project in Tanzania

Source: Aggreko

Hardware market is highly developed

The international market for mobile turbines is highly developed. For example, Australian entity, APR Energy is

one of several global companies that provide turnkey solutions for energy producers and providers. The

company is able to provide scalable power supply from 25 MW up to 500 MW, the latter of which is sufficient

to power entire cities.

APR provides modular and compact mobile turbines which can be shipped by road, sea and air and take only

days to install. Once in operation, they can reach full power in less than 10 minutes. We would expect that

overall lead times to assemble a modular gas generation solution including delivery and installation would be

expected to be less than 60 days.

29

APR states that its gas turbine solutions also take up only one third of the space of a diesel engine plant.

Although we do not expect Tlou to experience problems with its development footprint in a sparsely

populated region such as central Botswana, it is a major consideration given that environmental sensitivities

will be very important in areas with a delicate ecosystem.

Value of Botswana’s electricity market

We alluded to Norconsult’s estimate that the Botswana’s power demand could be 1,200 MW by 2025. We are

comfortable using this projection as the basis of a total available market within 10 years. Botswana Power

Corporation published the chart below in 2013 with data extrapolated up to 2020. We have extrapolated this

data further to 2025 using an average annual projected growth rate of 5.8% and we also arrive at a peak

demand projection of approximately 1,200 MW by 2025. This trend of persistent increasing demand is a strong

indicator that electricity prices will also rise at comparable rates in order to satisfy pent up demand over the

next ten years.

Projected peak power demand in Botswana (MW)

Source: Botswana Power Corporation and *Optiva estimates

Projected annual market value in 2025

We have based our assumptions on electricity pricing data published by Botswana Power Corporation (BPC)

between 2010 and 2015 in order to calculate an indicative size for the Botswana electricity market within ten

years. This is summarised below. As of the publication of this report, we are not aware that BPC has reviewed

its electricity tariffs since April 2015.

30

Estimated annual electricity market value in 2025

Scenario Pula per KWh Pula per MWh BWP/USD USD/MWh Market (US$bn)

Base case: 2015 pricing 0.90 903 10.75 84 US$0.88bn

High case 2.34 2,344 10.75 218 US$2.3bn

Mid case 1.59 1,587 10.75 148 US$1.6bn

Source: BPC, Optiva estimates

Base case

In order to calculate our potential market, we have applied three scenarios. For the base case, we have applied

an electricity tariff, excluding all fixed charges, based on an average across all users including domestic, small,

medium and large businesses and government based on prices established in April 2015. To this we have

converted from Botswana Pula into US dollars at the average rate for January 2017 in order to derive an

indicative market size.

High case

BPC’s electricity tariffs are highly unlikely to be at their current levels in 10 years. Based on detailed historical

data between 2010 and 2015, electricity tariffs have increased by between 6.5% and 15.8% per annum

depending on the customer sector. If we apply the average tariff increases over the last five years to each

segment of the market over the next ten years, we arrive at a substantially larger market valued at

approximately US$2.3bn p.a. in 2025.

Mid case

Although BPC has instigated significant price increases in recent years including increases of 30% across larger

consumers in 2011, we have applied a more modest increase of 5.8% per annum to all customer classifications

for our mid case assumptions to reflect our assumptions relating to the growth in electricity demand until

2025. With this criterion, we arrive at a total market valuation of US$1.6bn p.a. within ten years.

Exports would provide huge upside

It is very important to note that this is an annual valuation and the net present value (NPV) of these escalating

values over the years before and after 2025 would be very substantial indeed. In addition, these projections

account for domestic demand in Botswana only at this stage. Given that there is a much larger market in South

Africa with its vastly bigger population and industrial economy, we believe that all gas produced for electricity

generation beyond domestic requirements will have a ready market across the border for which a delivery

infrastructure is already in place.

31

Appendix – Director’s Biographies

Martin McIver – Chairman

Martin has over 14 years’ experience as General Manager for several mining services companies including bulk

and dangerous goods logistics and drilling services. He was the Executive General Manager of the Mitchell

Group, a vertically integrated coal and coal seam gas company with investments and operations across

Australia, Asia and Africa. Prior to joining the Mitchell Group, Martin was a Director in Mergers and

Acquisitions with PricewaterhouseCoopers.

Martin was appointed Non-Executive Director in September 2010 and is also currently the Chief Financial

Officer of the Workpac group. He holds an MBA (International) from the American Graduate School of

International Management, a Graduate Diploma in Applied Finance and Valuations (FINSIA/Kaplan) and a

Bachelor of Business (Marketing) from the Queensland University of Technology.

Anthony Gilby – CEO and Managing Director

Anthony (Tony) Gilby was awarded a Bachelor of Science (First Class Honours) degree in Geology from the

University of Adelaide in 1984 and also won the University Medal in Geology. He began his career as a

geologist for Delhi Petroleum in the Cooper Basin. He subsequently held a series of positions and with ESSO

(after the Delhi acquisition). His roles included exploration geology, geophysics, petrophysics and working in

the Exxon Production Research Centre in Houston.

On his return to Australia, he continued to work with ESSO prior to relocating to Brisbane where he worked for

MIM Petroleum and the Louisiana Land and Exploration Company (LL&E). In 1996, he left LL&E to take on a

variety of consulting roles as well as the acquisition of prospective Queensland acreage in a private capacity.

This work culminated with the founding of Sunshine Gas where he remained Managing Director until its sale

for US$1.1bn in late 2008. He is a founding director of Tlou Energy and took over the role of MD and CEO in

early 2012.

Gabaake Gabaake – Executive Director

Gabaake graduated with a B.Sc. in Geology from the University of Botswana in 1986 and with a Master’s

degree in groundwater hydrology from the University College of London in 1989. He is a highly accomplished

former Botswana Government Senior Public Servant with a track record for outstanding results delivery and

good leadership qualities.

For the last two and half years of his public service career, he headed the key Ministry of Minerals, Energy and

Water Resources and led it to become the No.1 Ministry in terms of performance in the Botswana Public

Service. Gabaake is a professional geologist with a high level of knowledge in policy formulation, analysis and

implementation in the minerals, energy and water sectors. He oversaw the successful development and

implementation of a strategy to overcome Botswana’s worst power crisis between 2008 and 2010 and

implementation of a comprehensive review of the water sector institutional framework in Botswana.

He has served in various private company boards such as De Beers, Debswana and DTC in various capacities.

Gabaake also authored two chapters in the Botswana National Atlas and has presented many technical papers

at various international conferences. He is also a highly skilled public speaker and writer.

32

Colm Cloonan – Finance Director

Colm is a Fellow of the Association of Chartered Certified Accountants (FCCA) with over 16 years’ experience in

various finance roles. He began his career in Ireland working with clients in different industries with a specific

focus on the construction industry. He moved to Australia in 2005 and commenced working with an audit and

business services firm in Brisbane then later as an independent consultant providing financial and

management accounting services. Colm has significant experience working with clients in retail, travel, motor

and power generation industries.

Colm joined Tlou in 2009 at the very early stages of the company’s activities and has been with the company

through all phases of its operations and development to date. This includes being a key member of the team

involved in the company’s successful 2013 ASX listing. Colm studied accountancy at the Galway-Mayo Institute

of Technology in Ireland.

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