Talon acquires 33% interest in Gurvantes CBM project in Mongolia
Sydney-listed Talon Energy has exercised the option to acquire a 33% interest in the Gurvantes XXXV coalbed methane (CBM) project in Mongolia after satisfying its stage one farm-in commitment. The project is operated by fellow Australian company TMK Energy.
The move comes just weeks after TMK delivered its maiden independently assessed contingent resource estimate of 1.2 trillion ft3 for the Nariin Sukhait area within the Gurvantes XXXV project. Upon the completion of the transfer of Talon’s 33% participating interest, about 400bn ft3 of the 2C contingent resource will be attributable to Talon.
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“The success at our Mongolian project caps a landmark year for Talon in 2022, with our Walyering project in the Perth Basin, Western Australia taking FID and moving rapidly towards production which will see Talon earning significant cashflows in the new year,” CEO Colby Hauser said. “Next year will see Talon both cement and build from the success in 2022 at our two flagship projects.”
In February 2021, Talon executed a binding agreement with Telmen Resource, a subsidiary of TMK, to acquire a 33% interest in the production sharing agreement over the Gurvantes project area.
Under the terms of the farm-in agreement, Talon was required to provide initial funding of $1.85mn to earn an option to be assigned a 33% interest in the Gurvantes PSA, and on the exercise of the option, commit to funding a further $3.15mn in exploration expenditure, and enter into a joint venture arrangement with Telmen.
The agreement between the parties requires each participant to fund their participating interest in the joint venture, being 67% TMK and 33% Talon. In addition to the 33% interest in Gurvantes earnt to date, Talon also holds a 3-year pre-emptive right (PEP) over the sale by Telmen of all or part of its retained interest (67%) in the Gurvantes project.
The PEP provides Talon with a first right of refusal over Telmen’s interest in Gurvantes and requires Telmen to not sell any of its retained interest without first offering the interest to Talon. The PEP is effective from February 2022.
Meanwhile, Talon in a separate statement said that it has received firm commitments for a A$12mn placement of new shares. The company will use the funds for its two flagship projects.