Tlou Energy : OPERATIONAL REPORT - QUARTER ENDED 30 JUNE 2022

25 July 2022

Tlou Energy Limited

("Tlou" or "the Company")

Operational Report - Quarter ended 30 June 2022

Highlights

• Transmission line work continuing and on target
• Lesedi 3 and 4 production wells continue to flow gas
• New purpose-built field camp under construction
• Cash position of ~A$7.9m (unaudited) at the end of the quarter

Projects

The Company has three project areas in Botswana as outlined below.

• Lesedi Project - Gas & Solar Power Development, Hydrogen and Solid Carbon production
• Mamba Project - Exploration & Evaluation
• Boomslang Project - Exploration & Evaluation

Lesedi Project

Gas-to-Power project

The Lesedi Project consists of three Prospecting Licences (PL) and a Production Licence. The first stage of development is a 10MW power generation facility which will be located in the Company's Production Licence area. The Company voluntarily relinquished one PL (PL 35/2000) during the quarter as it was considered to be of low prospectivity.

Electricity generated at the Lesedi 10MW gas fired power facility will be sold under a Power Purchase Agreement (PPA) with Botswana Power Corporation (BPC), the national power utility in Botswana. Once in full production, 10MW of generation could provide annual revenue of approximately US$10m.

Transmission Line Construction

To connect to Botswana's power grid, a 100 km transmission line is being built from the Lesedi project area to join the grid near the town of Serowe. Work is underway on this project and the line is expected to use approximately 650 wooden poles and 80 steel structures. Construction involves excavation, positioning, assembly, dressing, planting, backfilling and compacting, and thereafter stringing, tensioning and regulation. This will be followed by testing and commissioning and ultimately line energisation.

Progress as at end of June 2022 is 6% against planned rate of 6%. Work on the transmission line is scheduled for completion in mid-2023, with the substations at either end of the transmission line expected to be completed in the second half of 2023. Sale of electricity can start thereafter.

Development Operations Facility

The Company has also acquired land in the Lesedi project area where work is underway on developing a new purpose-built operations facility including accommodation and associated infrastructure required for the initial 10MW development and to allow for rapid project expansion thereafter.

Gas production

Tlou's two production wells Lesedi 3 and Lesedi 4 continue to produce gas. These wells are dewatering in isolation and gas flow rates are expected to continue to increase, particularly when additional wells are drilled to assist with dewatering of the reservoir as part of a full field development. Tlou's current 2P gas reserves stand at approximately 41 billion cubic feet (~7.2m BOE).

Hydrogen and Solid Carbon production

Tlou is planning the development of a Hydrogen and Solid Carbon project at Lesedi alongside the Gas-to-Power development. The Company's hydrogen technology partner Synergen Met Pty Ltd ("SM"), a specialist in plasma torch and pyrolysis technology, is designing and building a prototype unit for shipment to Lesedi. In advance of shipment 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, cleaner 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 as transport fuel. Solid carbon will be made available for regional consumers that require the product. World markets for hydrogen and solid carbon or graphite may expand considerably over the medium term.

SM have postponed their planned IPO in Australia and the Company is working with SM to arrange the next steps to get a prototype unit to Lesedi.

Funding

The first stage of funding towards the construction of the transmission line and associated infrastructure was received earlier this year from Botswana Public Officers Pensions Fund, a long-term supporter of the Company and Tlou's largest shareholder. Further funding to cover items including substation construction, generators, drilling of gas production wells and seismic surveys will be required and the Company is actively engaged with a number of parties to secure these funds.

Flared Gas Monetisation Trial

Tlou is looking at monetising currently flared gas. One potentially viable option is the mining of crypto currencies and the Company has successfully completed a small crypto mining trial at its field camp and earned some initial revenue, albeit an immaterial amount.

The trial used excess field camp electricity to run crypto mining units to produce Bitcoin. This has established proof of concept and built in-house technical expertise. The next stage will involve powering the crypto miners using electricity generated from the Lesedi 4 production well, i.e. using gas which would otherwise be flared. Thereafter the Company can look at expansion of the project all else being equal.

The Company's primary objective remains gas and solar power generation and sale within Botswana followed by hydrogen and solid carbon production. Crypto mining is currently only planned to be conducted if excess gas or power is available.

EOI with GreenCo Power Services Limited

The 66kV transmission line currently under construction is expected to have a capacity of up to 25MW. With 10MW already committed under the PPA with BPC, the Company has been marketing the additional 15MW of power to other potential off-takers. Tlou has received an Expression of Interest (EOI) from the leading Zambian based

renewable energy organisation, GreenCo Power Services Limited, the Southern African Power Pool's (SAPP) only market participant member, which has expressed interest in supporting Tlou to market its surplus power from the Lesedi project via the SAPP competitive markets.

The status of the Lesedi licences is as follows:

PL renewal applications are submitted three months prior to the expiry of the current licence.

Mamba Project

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 seismic surveying and 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 licences is as follows:

Boomslang Project

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.

The status of the Boomslang licence is as follows:

Forward plan until first revenue

Note: This forward program is indicative only and the list is not exhaustive. The plan may change due to unforeseen circumstances and is subject to available funds and timely progress of third-party deliverables.

2H22

• Transmission line construction (on-going)
• Construct new purpose-built operational base on Tlou owned property adjacent to proposed power station
• Flared gas monetisation trial (on-going)
• Complete financial package for forward program to first PPA revenue
• Buy drilling rig to further reduce gas well drilling cost
• Seismic survey

1H23

• Drilling and dewatering to flow more gas
• Hydrogen and solid carbon prototype commissioning
• Lesedi Central Processing Plant construction
• Practical completion of Transmission Line

2H23

• Installation of electricity generation (gas & solar)
• Connection of gas to generators
• Connect substations
• Commission Lesedi power station
• First revenue from electricity sales under the existing PPA with BPC

Cash Position

At the end of the quarter the Company had ~A$7.9m cash on hand (unaudited). The aggregate value of payments to related parties and their associates of A$140k 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.

Shareholder Communications Options

Legislative changes made to the Corporations Act 2001 (Cth) effective from 1 April 2022 means that there are new options available to shareholders to elect how to receive shareholder notices.

These details as well as the Company's updated project montages and corporate presentation are available on the company's website at https://tlouenergy.com/reports