Operational Report Quarter Ended 31 December 2021

Tlou Energy Limited is developing power solutions in Sub-Saharan Africa through gas-fired power, solar power and hydrogen projects. The company is listed on the ASX (Australia), AIM (UK) and the BSE (Botswana). The Lesedi Power Project ("Lesedi") is the Company's most advanced project. Tlou plans to develop gas and solar power generation assets at Lesedi with electricity to be sold into the power grid.

 Project Areas

The Company has three project areas in Botswana:

·    Lesedi Project - Gas & Solar Power, Hydrogen production

·    Mamba Project - Exploration & Evaluation

·      Boomslang Project - Exploration & Evaluation

 Lesedi Project Area, Botswana

Licences:              Production Licence 2017/18L, Prospecting Licences 001 & 003/2004 and 35 & 37/2000

Ownership:        Tlou Energy Limited 100%

 The Lesedi licenses covers an area of approximately 3,800 Km2 and consists of four Prospecting Licences (PL) and a Production Licence. The Lesedi Power project is located in the Company's Production Licence area (~800 km2).

 The Lesedi project has all approvals in place to allow development to commence. The first phase will be a 10MW power project with electricity to be sold to Botswana Power Corporation.  Once in full production, 10MW of generation could provide annual revenue of approximately US$10m.

 During the quarter the Company signed a 10MW Power Purchase Agreement (PPA) with Botswana Power Corporation (BPC). Under the terms of the PPA, BPC will purchase up to 10MW of power generated at Tlou's Lesedi power project.

 The Company also signed a Convertible Note Agreement with  Botswana Public Officers Pension Fund (BPOPF).

The principal terms of the Convertible Note Agreement are as follows:

·    Amount:              BWP 50m

·    Maturity:             5 years

·    Interest rate:     7.75% per annum

·    Conversion:        Conversion to shares at a 10% discount to the 90-day VWAP

The funds are planned to be used to finance construction of transmission line infrastructure to connect the Lesedi Project to the power grid, installation of generation assets, and ancillary costs to facilitate power generation and sale of electricity.

 The status of the Lesedi area licences is as follows:

 Mamba Project Area, Botswana

Licences:              Prospecting Licences 237-241/2014

Ownership:        Tlou Energy Limited 100%

 The Mamba project consists of five PL's covering an area of approximately 4,500 Km2. The Mamba area is situated adjacent to Lesedi. In the event of a gas field development by Tlou, the Mamba area provides the Company with flexibility and optionality.  

 The Mamba project is in the exploration and evaluation phase with further operations required on these licences. The next stage of exploration is likely to be core hole drilling. Positive results from operations at Mamba could expand the reserves footprint across Tlou's project areas.

 In the event of successful development at Mamba, it is envisioned that this area would be developed as a separate project from Lesedi, with the potential for gas-fired power, solar power and hydrogen production.

 The status of the Mamba area licences is as follows:

 Boomslang Project Area, Botswana

Licence:                Prospecting Licence 011/2019

Ownership:        Tlou Energy Limited 100%

 Prospecting Licence, PL011/2019 designated "Boomslang", is approximately 1,000 Km2 and is situated adjacent to the Company's existing licences.  

 To date, the Company has not carried out ground operations in the Boomslang area having only received environmental approval to commence exploration activities in 2021. A renewal application for the Boomslang licence was submitted in December 2021.

 The status of the Boomslang area licence is as follows:

 Hydrogen

The Company's hydrogen technology partner Synergen Met Pty Ltd ("SM"), a specialist in plasma torch and pyrolysis technology, has informed the Company that during the quarter, preliminary engineering for their hydrogen-carbon production process was completed. The plasma torch will be tested and configured to optimise hydrogen and solid carbon production.

 The use of plasma technology for hydrogen production will be a first for the sub-Saharan region and could be advantageous for the production of low emission, clean energy across the region as well as in the related fields of waste-to-energy and waste disposal.

 Tlou and SM intend to use the hydrogen produced from the prototype to generate electricity and possibly for transport fuel. Solid carbon will be made available for regional consumers that require the product. World markets for hydrogen and solid carbon black are predicted to expand considerably over the short and medium term.

 SM considers that their process meets the definition of green hydrogen production via their plasma torch gas pyrolysis design.

 Crypto Mining

During the quarter the Company held discussions with an international crypto mining organisation to use Tlou's electricity to mine crypto currencies such as Bitcoin. The Company is evaluating the merits of this possibility which could lead to another avenue to generate income from Tlou's gas. The potential exists to generate revenue from this project while the grid connection infrastructure is being built.

 Cash Position

At the end of the quarter the Company had $4.28m cash on hand (unaudited). The aggregate value of payments to related parties and their associates of $129k for the quarter (shown in item 6.1 of the attached Quarterly Cashflow Report) relates to directors salaries and fees (including tax and superannuation payments made on their behalf) and office rent.