One of the region’s advanced coal bed methane (CBM) developers, Tlou Energy said it needs to raise additional capital to expand and further develop the Lesedi project.
This comes after the Botswana Stock Exchange-listed company successfully raised P24 million to fund and meet working capital requirements for the country’s first CBM project.
The group’s managing director, Tony Gilby said the consolidated entity is in the process of investigating various options to raise the additional funds, which may include but not limited to an issue of shares or the sale of exploration assets where increased value has been created through previous exploration activity.
“Subject to the results of these operations we may need to raise additional capital,” he said. The energy company recently entered into an agreement with the Botswana Power Corporation to pilot a 2MW CBM at the firm’s holdings in the central part of the country.
According to Tlou Energy, there are plans to commence work on the transmission line to connect Lesedi project to the national electricity grid as soon as possible. This project is expected to lead Botswana into a new era of clean energy production tapping into billions of cubic feet in resources of unnatural gas.
However, the energy company does not expect the coronavirus (COVID-19) pandemic to adversely impact its ability to raise more capital noting that none of the fund-raising options have been concluded and no guarantee can be given that a successful outcome will eventuate.
“Because of the nature of the operations, exploration or pre-development companies, such as Tlou Energy Limited, find it necessary on a regular basis to raise additional cash funds for future exploration and development activity and meet other necessary corporate expenditure,” Gilby said.
Gilby added the consolidated financial statements have been prepared on a going concern basis, which contemplates that the Australian firm will continue to meet its commitments and can therefore continue normal business activities with the realisation of assets and settlement of liabilities in the ordinary course of business.
The directors have concluded that as a result of the current circumstances there exists material uncertainty that may cast significant doubt regarding the consolidated entity’s and the company’s ability to continue as a going concern and therefore the consolidated entity and company may be unable to realise their assets and discharge their liabilities in the normal course of business.
Throughout this period, the company received $68,000 grant funding from the Australian Taxation Office relating to COVID-19 assistance.