Tlou progresses funding discussions for Lesedi project

Tlou Energy updated the market on funding for the Lesedi power project on Tuesday, outlining the two phases in which the project would proceed.

The AIM-traded firm said the first phase would involve transmission line construction, transformers, grid connection, electricity generators and potentially the drilling of additional gas wells.

It said the 100 kilometre transmission line would run from the Lesedi project to the town of Serowe, where it would connect to the existing power grid.

Initial generation was proposed to be up to 2MW of electricity, with funding required for that phase being around $10m.

Phase two funding would be for the expansion of electricity generation up to 10MW.

That, the board said, would involve drilling additional gas wells and the purchase of additional electricity generators.

Funding required for the second phase would be about $20m.

“Upon successful completion of phase one and two, the company plans to expand the project beyond 10MW,” the board said in its statement.

“This expansion is expected to be completed using project revenues and debt.”

Current funding discussions were mainly related to phase one, and had been progressing well, the board said.

The company said it was in discussion with a number of groups, some more advanced than others, including institutions with a focus on infrastructure development within Botswana, and cleaner energy groups looking to see a move away from traditional coal-fired generation.

Discussions with Botswana Development Corporation (BDC) had been ongoing for several months, the directors said.

“The company understands that BDC is seeking internal investment approval and the company continues to work with BDC to successfully conclude a funding proposal that fits within BDC's investment parameters.”

In addition, Tlou said it had recently received an indicative term sheet for transmission line and transformer funding from a new potential financier.

“The company will assess this offer alongside other potential financiers to evaluate the best possible option and funding partner going forward.”

At 1100 GMT, shares in Tlou Energy were down 2.33% at 4.2p.