Tlou Energy Limited, AIM and ASX listed says it has entered into conditional subscription agreements with investment funds managed by African Alliance Botswana Limited, a leading asset manager based in Botswana. The company said the proceeds of the subscription, along with existing cash, will be applied to complete the current seismic and core hole appraisal programme, commence first phase development dual lateral production pod drilling at the Lesedi project, fund the costs of the Botswana listing and Subscription and for working capital purposes.
Under the terms of the Subscription Agreements, Tlou will issue approximately 21.2 million new ordinary shares (representing 6.5% of the enlarged share capital of the Company) at an issue price of P1.56 (approximately £0.11 or A$0.20) per share to a number of investment funds in Botswana managed by African Alliance. The subscription shares will rank equally with Tlou’s existing ordinary shares on issue.
“Securing African Alliance managed funds as strategic long term acd committed local shareholders in Botswana and listing on the BSE is a significant milestone for the Company,” Tlou’s Managing Director, Tony Gilby said.
“Having local shareholders on our register confirms the support for the project from within the Botswana investment community and becoming a Botswana listed entity opens further development funding options to the Company. Tlou is focussed on building a new industry within Botswana, which will create new employment to support local communities.”
However, the subscription is conditional on Tlou listing on the Botswana Stock Exchange (BSE), which is expected to occur around mid-December 2017.
The subscription price represents a discount of approximately 15% to the 10-day volume weighted average price for Tlou’s shares traded on the AIM market prior to signing the Subscription Agreements. The Subscription shares will be issued within Tlou’s existing placement capacity and as such, shareholder approval will not be required.
“The proceeds of the Subscription, along with existing cash, will be applied by Tlou to complete the current seismic and core hole appraisal program, commence first phase development dual lateral production pod drilling at the Lesedi project, fund the costs of the BSE listing and Subscription and for working capital purposes,” the company said.
“The key objective of the ongoing appraisal and development program is to expand the gas reserves and contingent resources, thereby adding resource value to the Company, and to commence the first phase of project development early in 2018. This will ensure the Company stays on track with its plan to deliver first power sales in 2019.”
“As previously noted, the Subscription Agreements are conditional on Tlou listing on the BSE (given the investment mandate requirements of the Botswana based investment managers). Listing on the BSE has a number of advantages for the Company. One of the key advantages is that, as a BSE listed entity, the Company has access to the significant pension investment funds which are available for development of Botswana based projects. This could be invaluable as the Company progresses discussions on financing options for its planned CBM gas to power project.”
Tlou plans to submit its application to the Botswana Stock Exchange Committee for listing on the Main Board of the BSE this week. Listing on the BSE is expected to occur by mid-December 2017.
The Subscription is being managed by Integra Advisory Partners Pty Ltd with Motswedi Securities (Pty) Ltd in Botswana acting as Sponsoring Broker to the Subscription and BSE Listing.