Tamaska succumbs to the lure of multi-Tcf Mongolian CSG play
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Tamaska is turning its attention towards Mongolia with the execution of a binding term sheet to acquire Telmen Energy, which owns the Gurvantes XXXV coal seam gas project.
This has the potential to be hugely lucrative given that the 8,400sqkm project in the South Gobi basin has been independently assessed to host prospective resources of about 5.96 trillion cubic feet of gas less than 20km from the border with gas-hungry China.
Adding further interest, Tamaska Oil & Gas (ASX:TMK) will get to enjoy the fruits of the initial exploration program that is already underway at no cost as fellow Australian Talon Energy (ASX:TPD) is spending US$4.65m under a two-stage farm-in to earn a 33% working interest in the Gurvantes XXXV CSG Project.
The first phase of this program includes the drilling of at least four fully-tested core holes that will gather important data such as coal thickness, gas contents, gas composition and permeability. That will enable the estimation of contingent resources and allow for the design of a pilot well.
Managing director Brett Lawrence said the acquisition is an exciting near-term opportunity in a highly prospective and underexplored area for CSG that will complement its 20% interest in the Napoleon prospect in the Dampier Basin of Western Australia’s North West Shelf.
Within the Gurvantes XXXV project area, multiple very thick, high quality coal seams outcrop at the surface and extend along an east-west strike.
It hosts six active coal mining operations, 26 coal mining leases and numerous coal exploration licences with a significant amount of exploration for coal having been completed.
Preliminary CSG exploration completed in 2004-2005 had highlighted the high gas contents of the coal.
However, all the gas in the world will do you no good if the project is inaccessible, so it is a good thing that Gurvantes XXXV is the closest Mongolian CSG project to the extensive Northern China gas transmission and distribution network.
The project is also close to several large-scale mining operations with high energy needs.
Under the term sheet, Tamaska will acquire Telmen through the issue of 1.6 billion shares and 1.6 billion performance shares, which will be issued in three tranches when certain conditions are met.
It has also agreed to issue 200 million performance rights to the management and certain board members of Telmen under the same terms as the performance rights.
To assist in the ongoing funding of the proposed acquisition, the company has sought and received firm commitments to raise $1.96 million (before costs) with Chieftain Securities acting as lead manager to the capital raising.
As part of the acquisition, Telmen chief executive officer Brendan Stats will take up the same role for the combined company while Tamaska managing director Brett Lawrence will step down and assume a non-executive director role.
Telmen directors Gema Gerelsaikhan and Stuart Baker will also be appointed to Tamaska’s board while Logan Robertson will resign.
Additionally, Telmen’s major shareholder Tsetsen Zantav, who will be the largest shareholder of Tamaska following the acquisition, will be appointed as an advisor to the board.
This article was developed in collaboration with Tamaska Oil & Gas, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.