Talon Petroleum Ltd., Perth, plans to explore for coal seam gas in southern Mongolia. The company has executed a binding offer with Telmen Resource JSC to farm into a 33% interest in the proposed Gurvantes XXXV production sharing agreement (PSA) near the border with China.
Talon has received firm commitments from investors to raise a minimum of $4 million (Aus.) with $1 million (Aus.) accepted in oversubscriptions to fund the coming work program on the Gurvantes coal seam gas project and earn its interest.
Telmen holds the prospecting contract over the area of the proposed PSA and has completed an initial exploration program to define prospectivity of the region. The company also has concluded negotiations with the Mongolian Mineral Resources and Petroleum Authority on commercial terms for the PSA. Approval for award of the PSA is expected in the coming months.
The permit covers an area of 8,400 sq km and lies about 20 km from the Mongolian-Chinese border, close to the Northern China gas transmission and distribution network and west of Elixir Energy’s recent Nomgon coal seam gas discoveries.
Initial work on the ground—to include drilling at least four coreholes to gather data to confirm gas content and gain an understanding of permeability—is expected to begin upon receipt of the PSC award.
Under the terms of the farm-in, Talon can terminate the deal at the conclusion of the initial drilling program or commit to further operations. Talon also will hold the right to match any offer to Telmen for the transfer or sale of an additional interest in the PSA.