Talon Energy Ltd (ASX:TPD) has delivered a maiden contingent resource certification for the Gurvantes XXXV Coal Seam Gas Project in Mongolia which it has described as "game-changing" and resulted in higher share prices.
The company received the best estimate of 2C contingent gas resource of ~1.2 trillion cubic feet (TCf) certified by highly regarded petroleum consultants, Netherland, Sewell & Associates, Inc. for the Nariin Sukhait area of the Gurvantes XXXV exploration permit.
Notably, the Gurvantes Project has delivered what it describes as outstanding results within nine months of the commencement of the stage one exploration program, demonstrating the world-class nature of the project.
What’s more, Talon holds an option to acquire a 33% participating interest in the Gurvantes XXXV production sharing agreement (PSA).
The news has been welcomed by investors with shares as much as 12.13% higher intraday to $0.185.
Latest milestone
Talon managing director Colby Hauser said: “The past year has been an extremely exciting time for Talon and its shareholders, with the completion of a number of value catalysts validating the company’s growth strategy.
“The independent certification of the Contingent Gas Resource at Gurvantes has been the latest milestone for the company, adding to its success at the Walyering Gasfield in Western Australia, which is forecast to be in production early next year.
“The exploration success at the Gurvantes Project to date has far exceeded Talon’s initial expectations and has led to what is now the largest independently certified Contingent Resource for a coal bed methane project in Mongolia, of any ASX-listed company."
He said: “These results bode well for the upcoming Stage 2 pilot well program, which is being designed to further understand the commerciality of this world-class resource.
“With the certification of the Contingent Resource at Gurvantes, and a better understanding of the project’s potential, Talon is now in a far better position to make a decision on its continuing investment in the project.”
Gurvantes XXXV farm-in
Talon is party to a farm-in agreement with Telmen Resource LLC, a subsidiary of TMK, to acquire a 33% participating interest in the Gurvantes Project.
Having completed its initial expenditure obligations under its farm-in agreement with TMK, Talon holds an option to be assigned this participating interest and expects a final decision as to whether to exercise the option to be made in the coming weeks.
Under the terms of the Gurvantes XXXV farm-in agreement, on certification of a 2C Contingent resource of greater than 0.5 TCF, Talon is required to pay TMK an additional farm-in amount based on the size of the certified resource estimate.
Based on the 1.214 Tcf independently certified 2C Contingent Gas Resource noted above, Talon is required to pay TMK US$809,333, which can be settled in cash or Talon shares at TMK’s election.
About the project
The Gurvantes XXXV PSA covers 8,400 square kilometres and is in what is considered one of the most prospective coal seam gas basins globally.
Gurvantes XXXV is less than 20 kilometres from the Chinese-Mongolian border and close to the extensive Northern China gas transmission and distribution network.
It is also proximate to several large-scale mining operations with high energy needs. Gurvantes is therefore ideally placed for future gas sales to satisfy both local Mongolian, as well as Chinese, energy requirements.