Botala Energy : INTERIM REPORT - 31 DECEMBER 2023

Botala Energy Ltd

ABN 41 626 751 620

Interim Report - 31 December 2023

Botala Energy Ltd Directors' report 31 December 2023

The Directors present their report, together with the financial statements, on the consolidated entity ('Group') consisting of Botala Energy Ltd ('Botala', the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the half-year ended 31 December 2023.

Directors

The following persons were Directors of Botala Energy Ltd during the whole of the financial half-year and up to the date of this report, unless otherwise stated:

Dr Wolf Gerhard Martinick	Director and Chairman
Mr Craig Basson	Director, Chief Financial Officer and Company Secretary
Mr Peter Desmond Grant	Non-executive Director

The Directors have been in office since the start of the financial year to the date of this report.

Mr Kris Francis Martinick is the Company's CEO.

Principal activities

The principal activity of Botala during the period was focused on coal-bed methane (CBM) exploration and development of renewable energy in Botswana.

No significant changes to the nature of Botala's activity occurred during the financial period.

Dividends

There were no dividends paid, recommended or declared during the current or previous financial half-year.

Review of operations

The loss for the Group after providing for income tax amounted to $990,679 (31 December 2022: $663,336).

A review of Botala's operations during the financial period, and the results of those operations, is as follows:

Fund Raising

Botala completed an A$805,000 Institutional Placement in September 2023 to advance it's drilling and flow-testing programmes. The Botala Board participated in this placement with an investment of A$525,000 in November 2023.

In addition, Botala secured A$2.4 million through an oversubscribed placement in December 2023, receiving strong backing from both new and existing investors, of which A$1,658,200 was receipted at 31 December 2023. This additional financial injection, with the issue price representing an 8.4% premium to the 10-day VWAP, is earmarked to support the completion of the commercial pilot programme and planning of renewable energy projects, including a Solar Panel Manufacturing Plant in Botswana. The Botala Board participated in the second placement by contributing A$775,000 which is subject to shareholder approval.

Dual Listing on the Botswana Stock Exchange

During the period Botala completed a dual listing on the Botswana Stock Exchange (BSE) by way of introduction to the BSE Foreign Main Board, effective 22 November 2023. This strategic move broadens Botala's investor base and enhances liquidity. Botala will adhere to the ASX Listing Rules for all announcements on the ASX and BSE. Botala's shares are tradeable on both the ASX and BSE, with Computershare Investor Services Pty Ltd overseeing reconciliation of share registers between the two exchanges.

Botala appointed Imara Capital Securities (Pty) Ltd as its sponsor and sponsoring broker on the BSE. A waiver from the BSE was received, eliminating the need for a public offer of shares concurrent with the dual listing.

Drilling

During the period Botala commenced its inaugural Commercial Pilot Programme, Project Pitse. Project Pitse is a 5-Pilot Well programme around the Serowe 3-1 well (formally Serowe-3). The decision to proceed with drilling four additional wells was based on continuing build-up of gas at Serowe 3-1 which was subsequently flared. The temporary gas flow indicated the coals are at their desorption pressure point and demonstrated good permeability. Serowe 3-1 successfully flared for 22 minutes measuring a change in pressure of 22psi. The test on this well was 'open hole' meaning that the well is open to all three coal seams in the area. All well testing on Project Pitse going forward will be part of developing Project Pitse for commercial production.

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Botala Energy Ltd Directors' report 31 December 2023

Botala completed three of the four planned Pilot Wells. Drilling of the remaining well was deferred to the new year after core sampling. The three wells intercepted significant coal sections, with Serowe 3-2,3-3 and 3-5 intercepting 35M, 24M and 31M respectively of net coal across the targeted 3 seams. Successful completion of these wells on time and under budget underscores Botala's operational efficiency and the high potential of the Serowe CBM gas project.

The Serowe Coal Seam (the primary target) showed the same characteristics as the initial Serowe 3-1 well. The logging results extend the area of the targeted coals in the upper seams within Botala's ~420,000ha tenement area.

Project Pitse, as Botala's first Commercial Pilot Project, demonstrated promising results with Serowe 3-1's initial flaring producing an unstabilised peak flow rate of 42 thousand standard cubic feet of CBM per day. This bolsters confidence in achieving the target commercial flow rate from the 5-well cluster.

Geophysical surveys

Botala completed geophysical surveys over the exploration well sites. The objective being to identify and avoid small faults, fractures and igneous intrusions not identified on Botala's regional database. Logging results provided important information and improved the understanding of geophysical structures and ensured suitable positioning of Botala's well locations.

EIA progress and stakeholder engagement

Environmental approval was expected from the Department of Environmental Affairs (DEA) via an Environmental Impact Assessment (EIA) in December (and subsequently granted in early January 2024) for commercial development of the Serowe CBM gas field, complete with on-site compression and liquefication of CBM into Compressed and Liquefied Natural Gas (CNG and LNG), and a ~100km pipeline to deliver CBM from the gasfield to the proposed Leupane Energy Hub and Industrial Park near the town of Palapye, on Botala's 1520ha sublease from the local community based Ngwato Development Trust.

Botala's EIA for development of its Serowe Energy Hub is in the final stages of appraisal by DEA. This requests approval for establishment of a standalone 4MW solar farm to supply electricity to Botswana Power Corporations (BPC) substation in Serowe, plus a 10MW solar/10MW CBM gas hybrid power plant that will also feed into BPC's local grid; storage and distribution facilities for LNG to be produced from CBM; offices, workshops and storage facilities; and a small market gardening operation to generate additional employment.

The EIA for development of Botala's Leupane Energy Hub and Industrial Park is also at an advanced stage of appraisal by DEA. This seeks approval for the staged development of a 700MW solar/gas hybrid plant, and further LNG facilities, development of an Industrial Park with access to reliable and affordable electricity, a solar panel manufacturing plant, and a mineral beneficiation plant to annually process 450,000 tonnes of copper concentrates. Botala's interest in the mineral beneficiation plant, should it be developed, is to provide land identified in an independent separate prefeasibility study as a suitable site for such a plant, environmental approvals, and gas and electricity for mineral processing.

Solar energy and renewables

During the period Botala further developed its relationship with Solar Finland Ltd (Solar Finland) to jointly investigate providing photovoltaic (PV) panels for future solar developments and complete a business model to establish a PV panel manufacturing plant in Botswana. This is in line with the Botswana's aspirations to develop new high technology manufacturing industries in Botswana.

Botala and Solar Finland have developed a business case for establishing a PV panel manufacturing plant in Botswana. Botala secured an Economic Zone Licence for this plant on its Leupane Energy Hub and Industrial Park, giving it significant taxation and tariff benefits. The companies have focused on identifying potential partners and customers to rapidly grow the solar and energy business.

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Botala Energy Ltd Directors' report 31 December 2023

Schedule of leases at 31 December 2023

All CBM licences within Botswana are in good standing having satisfied the required commitments.

PL Number	Expiry Date	Status
016/2018	31/03/2025	Current
018/2018	31/03/2025	Current
019/2018	31/03/2025	Current
356/2018	30/09/2025	Current
357/2018	30/09/2025	Current
400/2018	30/09/2025	Current
055/2021	31/03/2024	Being reviewed

Significant changes in the state of affairs

There were no significant changes in the state of affairs of the Group during the financial half-year.

Matters subsequent to the end of the financial half-year

The following matters were announced to the market subsequent to the end of the period:

• Environmental approval for the development of CBM was granted by the Department of Environment in January 2024.
• Coring and desorption testing programme commenced at Project Pitse in February 2024, with the geophysics campaign for three exploration wells completed.
• On 23 January 2024, A$375,000 was receipted by the Company for a share capital application totalling A$750,000, with the remaining A$375,000 being receipted on 8 March 2024.

No other matter or circumstance has arisen since 31 December 2023 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

Likely developments and expected results of operations

Likely developments in the operations of Botala, and the expected results of those operations in future financial periods, have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to Botala.

Environmental Issues

Botala's operations are not regulated by any significant environmental regulation under a law of the Commonwealth of Australia, or of a State or Territory in Australia.

Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this Directors' report.

This report is made in accordance with a resolution of Directors, pursuant to section 306(3)(a) of the Corporations Act 2001.

On behalf of the Directors

___________________________

Wolf Gerhard Martinick

Executive Chairman

12 March 2024

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AUDITOR'S INDEPENDENCE DECLARATION

As lead auditor for the review of the consolidated financial report of Botala Energy Ltd for the half- year ended 31 December 2023, I declare that to the best of my knowledge and belief, there have been no contraventions of:

1. the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
2. any applicable code of professional conduct in relation to the review.

Perth, Western Australia	B G McVeigh
12 March 2024	Partner

Botala Energy Ltd

Contents

31 December 2023

Condensed consolidated statement of profit or loss and other comprehensive income	6
Condensed consolidated statement of financial position	7
Condensed consolidated statement of changes in equity	8
Condensed consolidated statement of cash flows	9
Notes to the condensed consolidated financial statements	10
Directors' declaration	22
Independent auditor's review report to the members of Botala Energy Ltd	23

General information

The financial statements cover Botala Energy Ltd as a Group consisting of Botala Energy Ltd and the entities it controlled at the end of, or during, the half-year. The financial statements are presented in Australian dollars, which is Botala Energy Ltd's functional and presentation currency.

Botala Energy Ltd is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business are:

Registered office	Principal place of business
24 Hasler Road, Osborne Park WA 6017	Unit 2, 22 Mounts Bay Road, Crawley WA 6009

A description of the nature of the Group's operations and its principal activities are included in the Directors' report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of Directors, on 12 March 2024.

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Botala Energy Ltd

Condensed consolidated statement of profit or loss and other comprehensive income

For the half-year ended 31 December 2023

		Consolidated
		31 December 31 December
	Note	2023	2022
		$	$
Other income
Interest received		17,250	43,843
Expenses
Share of loss of equity accounted investee	6	(495,618)	(167,469)
Employee benefits expense		(136,643)	(300,948)
Finance costs		(37,395)	(2,900)
Consultancy costs		(104,978)	(33,544)
Marketing costs		(13,914)	(48,113)
Depreciation		(8,045)	-
Administration costs		(211,336)	(107,818)
Loss before income tax (expense)		(990,679)	(616,949)
Income tax (expense)	4	-	(46,387)
Loss after income tax (expense) for the half-year attributable to the owners of
Botala Energy Ltd		(990,679)	(663,336)
Other comprehensive (loss)/income
Items that will not be reclassified subsequently to profit or loss
Gain on the revaluation of equity instruments at fair value through other
comprehensive income, net of tax		-	30,952
Joint venture foreign currency translation		145,337	(41,648)
Exchange differences arising on translation of foreign
operations		3,614	-
Other comprehensive (loss)/income for the half-year, net of tax		148,951	(10,696)
Total comprehensive (loss) for the half-year attributable to the owners of Botala
Energy Ltd		(841,728)	(674,032)
		Cents	Cents
Basic loss per share		(0.69)	(0.49)
Diluted loss per share		(0.69)	(0.49)

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the

accompanying notes

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Botala Energy Ltd

Condensed consolidated statement of financial position

As at 31 December 2023

		Consolidated
		31 December	30 June
	Note	2023	2023
		$	$
Assets
Current assets
Cash and cash equivalents		1,926,484	1,866,802
Trade and other receivables	5	121,377	150,427
Other assets		69,697	53,622
Total current assets		2,117,558	2,070,851
Non-current assets
Investments in joint venture	6	13,220,316	11,622,225
Other receivables	7	258,401	-
Property, plant & equipment	8	506,148	85,721
Right-of-use assets	9	545,775	557,592
Total non-current assets		14,530,640	12,265,538
Total assets		16,648,198	14,336,389
Liabilities
Current liabilities
Trade and other payables	10	1,111,091	474,940
Total current liabilities		1,111,091	726,769
Non-current liabilities
Lease liabilities	11	596,864	585,280
Total non-current liabilities		596,864	585,280
Total liabilities		1,707,955	1,060,220
Net assets		14,940,243	13,276,169
Equity
Issued capital	12	15,745,051	13,372,240
Reserves	13	959,701	677,759
Accumulated losses		(1,764,509)	(773,830)
Total equity		14,940,243	13,276,169

The above consolidated statement of financial position should be read in conjunction with the accompanying notes

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Botala Energy Ltd

Condensed consolidated statement of changes in equity

For the half-year ended 31 December 2023

	Issued		Accumulated
	capital	Reserves	losses	Total equity
Consolidated	$	$	$	$
Balance at 1 July 2022	13,388,571	1,150,541	100,288	14,639,400
Loss after income tax expense for the half-year	-	-	(663,336)	(663,336)
Other comprehensive loss for the half-year, net of tax	-	(10,696)	-	(10,696)
Total comprehensive loss for the half-year	-	(10,696)	(663,336)	(674,032)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 12)	(16,331)	-	-	(16,331)
Transfer from disposal of financial assets through other
comprehensive income	-	(425,988)	425,988	-
Balance at 31 December 2022	13,372,240	713,857	(137,060)	13,949,037
	Issued		Accumulated
	capital	Reserves	losses	Total equity
Consolidated	$	$	$	$
Balance at 1 July 2023	13,372,240	677,759	(773,830)	13,276,169
Loss after income tax expense for the half-year	-	-	(990,679)	(990,679)
Other comprehensive income for the half-year, net of tax	-	148,951	-	148,951
Total comprehensive income/(loss) for the half-year	-	148,951	(990,679)	(841,728)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 12)	2,372,811	-	-	2,372,811
Options issued to brokers	-	132,991	-	132,991
Balance at 31 December 2023	15,745,051	959,701	(1,764,509)	14,940,243

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes

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Botala Energy Ltd

Condensed consolidated statement of cash flows

For the half-year ended 31 December 2023

	Consolidated
	31 December 31 December
	2023	2022
	$	$
Cash flows from operating activities
Payments to suppliers (inclusive of GST)	(323,396)	(493,946)
Interest received	17,249	43,843
Net cash used in operating activities	(306,147)	(450,103)
Cash flows from investing activities
Payment for joint venture costs/interest	(2,538,149)	(2,037,619)
Proceeds from disposals of financial assets at fair value through other comprehensive income	-	625,328
Net cash used in investing activities	(2,538,149)	(1,412,291)
Cash flows from financing activities
Proceeds from issue of shares	2,988,199	-
Share issue transaction costs	(84,221)	(455,060)
Net cash (used in)/generated from financing activities	2,903,978	(455,060)
Net (decrease)/increase in cash and cash equivalents	59,682	(2,317,454)
Cash and cash equivalents at the beginning of the financial half-year	1,866,802	5,825,416
Cash and cash equivalents at the end of the financial half-year	1,926,484	3,507,962

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes

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