SHARE PUNT OF THE WEEK

PRICE: 11.75p

WHO IS IT? Australia-based Tlou Energy supplies electricity in southern African countries by extracting methane, or natural gas, trapped in unmined coal seams underground. Founded in 2009, it has designs on becoming a major ‘gas-to-power’ producer in Africa and has focused on Botswana because of its severe energy shortage and reliance on expensive or imported power sources.

WHAT’S THE LATEST? Tlou, which listed on the AIM in 2015, has completed two new core holes in Botswana and this month listed on the Botswana Stock Exchange, raising £2.4m.

WHO BACKS IT? A main backer is African Alliance Botswana, a leading asset manager. Individual UK-based investors make up the majority of shareholders. WHY SHOULD YOU INVEST? Since it floated, its share price has risen nearly 80pc. Experts hope it will increase in value. Graham Spooner, an investment research analyst at The Share Centre, believes the future prospects for coal-bed methane in the region is ‘encouraging for the business’.

He adds: ‘The hope for early 2018, after a review of the information gathered from this drilling project as well as a seismic survey, is that it can expand its existing gas reserves and contingent resources.’ He also likes that Tlou has an experienced management team.

. . . AND WHY YOU SHOULDN’T Investing in mining is high-risk. Disappointing drilling expeditions, a dip in demand and political instability can hamper projects. Spooner says: ‘The biggest risk is that this isn’t a profitmaking company. There is the possibility that more money could be needed to complete projects and drive operations forward.’