TMK Energy wraps up acquisition of Mongolian coal seam gas project

TMK Energy (ASX:TMK) has wrapped up its acquisition of Telmen Energy, which owns the Gurvantes XXXV coal seam gas (CSG) project in Mongolia’s South Gobi Basin.

This has massive potential for the company with the project having been independently assessed to host prospective resources of a feather or two from six (6) trillion cubic feet of gas.

Just to make things even more attractive for the company, the initial work program totalling US$1.5m will be fully funded by fellow Aussie Talon Energy (ASX:TPD), which is spending US$4.65m under a two-stage farm-in to earn a 33% working interest in Gurvantes XXXV.

It’s getting real for shareholders now

“On behalf of Telmen and its shareholders, I am delighted for us to be able to join with TMK and its shareholders in a truly exciting time in the exploration phase of the Gurvantes CSG Project, with the drilling program expected to commence in the next few weeks,” Tamaska’s new chief executive officer Brendan Stats said.

“I will be on the ground in Mongolia during the start of the upcoming drilling activities and am very much looking forward to delivering what we believe is a world class CSG project right next door to the largest growing gas market in the world, China.”

Separately, the company has completed a $1.96m placement, leaving it well placed for future activities with about $3.8m in cash.

Gurvantes XXXV potential and drilling

Gurvantes XXXV hosts multiple very thick, high-quality coal seams which outcrop at the surface and extend along an east-west strike.

It has undeniable coal content given that it hosts six active coal mining operations, 26 coal mining leases and numerous coal exploration licences with a significant amount of exploration drilling for coal having been completed, which provides a great head start with a high-quality data set available for targeting the CSG sweet spots.

Additionally, preliminary CSG exploration completed in 2004-2005 confirmed the high-gas content of the coal and other critical coal parameters needed for a successful CSG project.

The project is also close to the extensive Northern China gas transmission and distribution network and is close to several large-scale mining operations with high energy needs.

Farm-in partner Talon plans to drill at least four fully-tested core holes in its initial exploration to 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.

This article was developed in collaboration with TMK Energy, 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.