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Tlou Energy has opportunity to develop regionally significant gas project believes Shore Capital

The house broker has a price target of 20p per share

Tlou Energy Limited -
The first phase of funding for a 10Mw pilot project might be in place by the end of this year

Shore Capital sees the signing of a power purchase agreement (PPA) for its Lesedi project in Botswana as a catalyst for funding and a re-rating of Tlou Energy PLC (LON:TLOU).

Tlou hopes to finalise both the PPA and development financing as soon as possible, with first electricity sales targeted towards the end of next year.

The first phase of funding for a 10Mw pilot project might even be in place by the end of this year (2019) and Shore Capital believes a successful project financing (likely mixing equity with debt) has the potential to act as a powerful kicker to the share price.

The house also sees an opportunity for Tlou to become a key power player in-country and to develop a regionally significant CBM project.

“Lesedi would be the first such project in Botswana to move into commercial production, offering strong potential for the supply of power domestically and via the Southern African Power Pool.

South Africa, meanwhile, has an Integrated Resource Plan 2019 that targets an additional 3,000MW of gas-fired generation capacity by 2030 and supports strategic power projects in neighbouring countries.

Shore Capital has a price target of 20p per share compared to the current market price of 4.7p.

Quick facts: Tlou Energy Limited

Price: 2.1 GBX

Market: AIM
Market Cap: £10.78 m

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