Tlou Energy Ltd (AIM:TLOU, ASX:TOU, BSE:TLOU) should see its share price rise following further de-risking of its gas-to-power, solar and hydrogen projects, K1 Capital believes.
The broker expects construction of the Lesedi power project in Botswana to commence shortly, with existing approvals for 20 megawatts (MW) of gas and solar photovoltaic (PV) generation. The 10 MW power purchase agreement (PPA) with the Government of Botswana provides the foundation for development, with later expansion likely, K1 added,
The broker values Tlou at A$0.24, with upside to A$0.36 upon de-risking of its projects, using a discounted cash flow model for the Lesedi gas and power projects backed by reserves and 2C contingent resources and applied enterprise value to resource multiples for 3C resources and exploration prospects.
“We estimate Tlou will require AS$10-15mln of debt and equity in 2022 to commence the initial 2 MW of capacity, with support from existing shareholders likely,” the broker said.