Botala Energy Ltd (ASX:BTE)

Botala Energy Ltd (ASX & BSE: BTE) is transforming its 100% owned Serowe CBM Project from an exploration asset into a commercially viable and development-ready coal bed methane (CBM) project. The Company has established itself as a first mover in Botswana’s emerging CBM industry, having secured key milestones which have significantly de-risked the project, paving the way for future production.

Botala Energy’s Serowe CBM Project is set to play a critical role in addressing Southern Africa’s energy crisis. By advancing from a pilot phase to full-scale production, Botala aims to become a Tier 1 energy producer, delivering reliable and sustainable energy to a region in dire need of new gas supplies.

The phased development approach Botala is undertaking, combined with strategic partnerships and market alignment, ensures that Botala is well-positioned to meet the growing energy demands of Southern Africa, contributing to regional stability and economic growth.

The energy landscape in Southern Africa, particularly in South Africa, is undergoing dramatic changes due to the forecasted gas shortages by mid 2028. This shortage is expected to create a substantial demand for alternative gas sources.

The Serowe CBM Projects in Botswana presents a significant opportunity to address regional energy shortages in Southern Africa by developing a scalable, reliable Liquified Natural Gas (LNG) supply. Botala Energy aims to transition the Serowe CBM Project from a pilot phase to full-scale LNG production, ultimately positioning the Company as a Tier 1 energy producer.

The Serowe CBM Project is unique in that Botala Energy aims to create opportunities within both the LNG and solar sectors, in addition to other opportunities as the Project progresses.

Botala Energy plans to develop its Serowe CBM Project to successfully establish a robust gas supply chain from Botswana to high-demand markets in Southern Africa.

The development of the Serowe CBM Project has been broken into several stages:

The initial focus of the Serowe CBM Project is the development of the Pitse commercial well pilot program –Pitse Pilot Project. This phase involves delivering gas flow rates from a central dewatered well.

Key milestones for this phase include:

• Pitse Commercial Gas Flowrate Targeting low (40mscfd), medium (80mscfd), and high (100mscfd) flow rates by late 2025, with an estimated expenditure of AUD 1.5m.
• Production Wells Developing Production wells to test new areas within the prospecting licences by late 2025, with an expenditure of AUD $150k per well.
• Bankable Feasibility Study Currently ongoing with an estimated cost of AUD 1.0m and completion by late 2025.
• Conclusion of Conditional Gas Sales Agreements (GSAs) GSAs are currently under negotiation, with Botala securing first commercial offtake customer SCAW South Africa
• Mining Licence Secured Regulatory approval to transition to commercial production received in March 2025

The successful completion of these activities will allow recertification of the resources to reserves, setting the stage for the transition to the next phase of production development.

The current appraisal phase includes the drilling of 4 new appraisal wells with geographical information being used to accurately determine their locations.

These 4 new wells have been drilled and tested with a 350-500m spacing in a square pattern around Serowe-3.1 well, plus further testing of Serowe-3.1 well.

Based on the successful outcome of the Pitse Pilot Project, the well field will initially be developed to produce adequate CBM to feed a 200 ton per day LNG production facility. This will include the conclusion and conditions attached to Gas Sales Agreements (GSAs) and is anticipate for the end of 2026.

Following this initial commercial LNG production, Botala plans to further develop the wellfield, aiming to produce over 60 million standard cubic feet (mmscf) of CBM per annum by 2028 (with up to 800tps LNG being produced). The production rates from the Pitse Commercial stage will be aligned to market demand and additional GSAs secured by Botala. This phase includes:

• Wellfield Development Scaling up wellfield operations to achieve the targeted production rates, with additional investments in infrastructure to support expanded gas output.
• Midstream Infrastructure Decisions Evaluating the options between a physical pipeline to Leupane or expansion of LNG production at the wellhead to optimise gas transport from the wellfield to downstream markets.

Once gas was discovered, the team at Botala understood the need to determine how to commercialise the gas discovery. A search was conducted to find downstream locations suitably close to existing infrastructure that would be used to provide a pathway to markets. Botala was able to secure two locations:

Botala is actively developing multiple solar energy projects in Botswana, aiming to enhance the country’s renewable energy capacity. The Company’s initial focus within this space is a phased approach starting with a 4MW pilot project Phuthi in the town of Serowe and scaling up to a large project 500MW at the Leupane Energy Hub.

Botala conducted a prefeasibility study that demonstrated sufficient value to Botala, in partnership with Solar Finland (MoU), to proceed with ongoing studies to build a state-of-the-art, fully automated plant to produce high quality solar PV panels, which  will significantly benefit Botswana and Southern Africa.

Botala is leading the PV Studies and would own the manufacturing plant jointly with Solar Finland and other funding partners, with Botala being the lead operator.

Key attractions include:

• Supply high quality solar PV panels to solar projects within Southern Africa.

• Promote and establish hybrid solar/gas energy plants and supply the gas and solar panels.

• Cooperate with Scandinavian Green Energy Funds and companies in Africa.

In March 2025 Botala achieved its largest commercial milestone to date, securing its first major industrial customer, SCAW South Africa Proprietary Limited (SCAW), with the signing of a binding letter of intent (LOI) in relation to the negotiation of an LNG offtake agreement.

The agreement provides SCAW with exclusive rights to procure up to 3.5 PJ/a (100% of Phase 1 Gas) of LNG from the Serowe CBM Project’s first phase, with an option to expand to 4.7 PJ/a as production scales up.

This commitment significantly assists in de-risking the Serowe CBM Project, establishing a contracted customer and supporting commercial viability as Botala advances towards development.

Importantly, the agreement integrates SCAW into Botala’s ongoing Bankable Feasibility Study, by attending to aligning infrastructure developments, logistics, and delivery optimisation. The BFS findings will guide the final LNG Sale and Purchase Agreement (SPA)/Gas Sales Agreement (GSA).

With the demand for gas in South Africa intensifying, Botala’s agreement with SCAW is a clear demonstration of the strong demand appetite for reliable LNG supply.

By securing SCAW as an anchor customer, Botala positions itself as a key LNG supplier in a high demand market.