AFRICA’S LARGEST CBM COMPANY PRESENTATION Tony Gilby, Non Executive Director January 2012
DISCLAIMER This document has been prepared by Tlou Energy Limited to provide existing and prospective investors in Tlou Energy Limited with an update on the Company and its operations. Extent of Information This presentation, including the information contained in this disclaimer, does not constitute an offer, invitation or recommendation to subscribe for or purchase any security and neither the presentation, disclaimer nor anything contained in the forms the basis of any contract or commitment. This presentation does not take into account your individual investment objective, financial situation or particular needs. You must not act on the basis of any matter contained in this presentation, but must make your own assessment of the Company. No representation, express or implied, is made as to the fairness, accuracy, completeness or correctness of information contained in this presentation, including the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns or statements in relation to future matters contained in the presentation (“forward-looking statements”). Any such forward-looking statement that are contained in this presentation or can be implied by the same are by their nature subject to significant uncertainties and contingencies associated with the gas and energy industry and are based on a number of estimates and assumptions that are subject to change (and in many cases are outside the control of Tlou Energy Limited and its directors) which may cause the actual results or performance of Tlou Energy Limited to be materially different from any future results or performance expressed or implied by such forward-looking statements. To the maximum extent permitted by law, none of Tlou Energy Limited’s, or related corporations, directors, employees, or agents, nor any other person, accepts any liability, including, without limitation, any liability arising from fault or negligence, for any loss arising from the use of this presentation or tis contents or otherwise arising in connection with it. Exclusion of Financial Product Advice This Presentation is for information purposes only and is not a prospectus or other offering under Australian Law or under any other laws in the jurisdictions where the presentation might be made available in. Nothing herein constitutes investment, legal, tax or other advice. This Presentation is not a recommendation to acquire shares and has been prepared without taking into account the investment objectives financial situation or needs of individuals. Independent Advice Before making an investment decision, prospective or existing investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek appropriate advice, including financial legal and taxation advice appropriate to their own jurisdiction. Tlou Energy is not licenced to provide financial advice in respect of its shares.
BACKGROUND COAL BED METHANE SOUTHERN AFRICA Coal Bed Methane (“CBM”) in southern Africa is a critical component in the energy mix for the region. CBM allows Botswana; to develop a distributed energy solution to remote large mines and communities that can not be connected to the traditional grid; an alternative income model, providing diversification from diamond mining; alternative source of energy for South Africa to Mozambique gas supplies. Tlou Energy has the most advanced CBM project in the region and is rapidly progressing its Botswana fields. Reviewing other profitable commercial opportunities in the region. Fully funded to meet committed expenditure in 2012, asset exploration, appraisal / pilot drilling and early development. High quality portfolio of coal and unconventional gas projects where significant upside exists. Electrical network interconnection in southern Africa. Data source: http://www.africa-energy.com/html/Public/map_library/Atlas%2011/SAPP.html
BACKGROUND BOTSWANA OVERVIEW Political & Financial Stability Stable multi-party democracy GDP per capita of US$ 5,995 Average GDP growth of 5% (2003-2009) US$ 9 billion foreign currency & gold reserves Favourable foreign investment culture • No exchange rate controls • Low tax rate A2 credit rating by Moody. Transparency International Rates Botswana as having on the of the lowest corruption indexes in the world, 36 th out of 180 countries (2008) Fraser Institute Botswana rated as being one of the most favourable environments for mineral investment, 14 th out of 78 countries ranked (2011) Data source: AON 2008 Political and Economic Risk Map.
BACKGROUND SUPPLY/DEMAND DYNAMICS CONTINUE TO IMPROVE… The country’s favourable geologic environment, mineral investment climate, low tax rates, and political stability are expected to continue to make Botswana a foreign mineral investment magnet. Several proposed transmission projects have been proposed however the mining industry is dispersed with no easy access to the electrical grid. At present Botswana imports approximately 75% of its energy needs from Eskom in South Africa. Data source: Botswana Government 2011. Electric power consumption has grown 528% since 1981. Eskom will no longer supply energy in 2012. Morupule B has been delayed 18 months and will not come online as shown on Botswana Government chart opposite. Energy supply is reaching a critical point for the country. Data source: Botswana Government 2011.
AUSTRALIA COMPARISON COMPARISON TO AUSTRALIAN TRANSACTIONS Queensland’s CBM Industry reserve growth can be seen opposite. Having been part of the CBM industry in Australia, we estimate the CBM industry in Botswana is estimated to be six years behind Australia. Tlou Energy can grow its energy assets through further funding for exploration and drilling activities. Data source: Queensland Government 2011. Tlou Energy’s current and future valuation can be linked to CBM transactions completed in Australia. The value range of corporate transactions is $0.16 – 0.21 per 3P and 2C resources based on NSAI estimates as at 31 st Dec 2009. Tlou Energy has strong relationships with companies that can provide the mining industry with generators on a tolling arrangement that utilizes CBM. This means that Tlou Energy can offer mining companies a complete energy solution.
MAJORS ENTERING BOTSWANA LARGE MULTINATIONALS DEVELOPING CBM PERMITS Botswana’s energy landscape is moving through a rapid transformation with larger companies taking an active role within the country. Tlou Energy has a first mover advantage over the new entrants, in terms of; Political Choice of permits Relationships Technology Geological Partnerships Tlou Energy Permits Exxaro Permits Sasol / Origin Energy Permits Anglo Coal Permits
PROXIMITY TO MARKET DISUCSSIONS FOR GAS SALE AGREEMENTS WITH SEVERAL PARTIES Botswana’s mining industry is heavily reliant on heavy fuel oil / diesel. The diesel cost as a gas equivalent ranges from AUD 20/GJ to AUD 26/GJ. Strong incentive for industry / mining companies to convert to gas. Aggreko offers a distributed power model for the commercialisation of gas to industry and mining operations in the region. Discussions between both companies are ongoing. Gas sales to South Africa are an option. Sasol / Origin Energy are seeking to diversify South Africa gas imports from Mozambique. Recent gas outages highlighting gas shortage issues: http://sundayexpress.co.ls/?p=5422 Orapa power station is planned to convert to coal bed methane from diesel as soon as possible, expected fuel cost saving of 60%; www.trademarksa.org/news/orapa-power-station-set-grand- launch http://www.bpc.bw/latest_news04.php http://www.mmegi.bw/index.php?sid=4&aid=768&dir=2011/Oct ober/Monday17
KEY MILESTONES MEETING MILESTONES Achieve first gas flow from wells in 1H 2012 – ramp up profile key deliverable of this program Continue discussions with downstream parties about potential short-term gas commercialisation and off-take
PROJECTS MOST COMPREHENSIVE EXPLORATION DATASET IN SOUTHERN AFRICA This extensive exploration and testing program has allowed Tlou Energy to high grade our project areas and move to the next phase of evaluation Wells drilled; Core holes: 30 from which the gas content and its quality were tested Stratigraphic holes : 41 to determine the lateral extent of the coal and the shale Pilot Production wells: 20, consisting of 4 five-spot patterns Data Collated; 1000+ Gas Desorption samples 18 Adsorption isotherm Analysis samples 170 Relative Density and Proximate Analysis samples 255 Chromo Gas Analysis samples 20 Drill Stem Tests (DST’s)
PROJECTS KAROO CENTRAL PROJECT 5 wells completed and tested in last program Karoo Central was primary target for Saber Tlou introducing new testing methods to assess CBM suitability 18 DST’s completed delineating fair to good permeability 200+ Coal and shale tests complete Pre-Pilot testing imminent
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