Botswana-based energy company Tlou Energy has released a partially underwritten entitlement offer of up to 75-million new offer shares at a price of A$0.04 apiece to raise A$3-million.

Tlou generates electricity in Botswana for supply into the local and regional power markets and is developing projects using gas and plans to combine this with solar power to provide a cleaner baseload power source.

Eligible shareholders may subscribe for one fully-paid ordinary share for each six fully-paid ordinary shares held.

In addition to offer shares, participants will be granted one unlisted option for every two offer shares allotted (new options). New options will have an expiry date of two years from the date of issue and are exercisable at any time prior to expiry at a price of A$0.08 apiece.

The net proceeds of the entitlement offer, along with existing cash, will mainly be applied towards detailed engineering and design of the proposed 66 kV transmission line to connect the Lesedi project to the electricity grid, due diligence costs in relation to the provision of development funding for the Lesedi project, the continuation of current field operations and general working capital.

However, the company also notes that the timing and execution of these activities may be impacted on by Covid-19 pandemic restrictions.

The company plans to start work on the transmission line to connect the Lesedi coalbed methane natural gas project to the electricity grid, as soon as possible.

The environmental- and social-impact assessment for the line has been completed as have route alignment and associated surveys. Going forward, Tlou plans to progress the design and engineering of the 66 kV overhead line and 66 kV line feeder bay extension at the Serowe substation.

The company is in advanced discussions with development finance institutions interested in providing debt and/or equity capital to fund the next stage of the Lesedi project. This work includes, but is not limited to, drilling of additional wells, installation of generation assets, purchase of capital equipment and installation of associated infrastructure to develop up to 10 MW of power.

In addition, Tlou reports that negotiations with investment arm of the government of Botswana, Botswana Development Corporation (BDC), are advanced.

The company is negotiating a term sheet with BDC, which is progressing through the BDC’s internal corporate processes. Once the term sheet is signed, due diligence covering commercial, technical, legal, reputational, and environmental, social and governance can be completed. The costs of this will be borne by Tlou.

The company has been advised that the due diligence process is expected to take 8 to 12 weeks from the execution of the term sheet.

Meanwhile, Tlou’s operations are continuing in Botswana with gas being produced at the Lesedi 4 production pod.

Subject to funding, the company plans further exploration work over the Mamba project area and upon receipt of regulatory approval, work can commence on the Boomslang project – the company’s most recently acquired project area.