Talon Petroleum (TPD) has secured an option to earn a 35 percent interest in the proposed Gurvantes XXXV Production Sharing Agreement (PSA) in Mongolia.

The company has signed an agreement with Telman Resources, which holds a coal bed methane (CBM) prospecting contract over the area of the proposed PSA. Notably, Telman has already completed initial prospecting work to help better understand the site’s potential.

Following the initial work, Telman finalised negotiations with the Mineral Resources and Petroleum Authority of Mongolia on the commercial terms of the PSA, which will now need approval from the Ministry of Mining and Heavy Industry and the Cabinet of Mongolia.

Gurvantes XXXV covers an area of 8400 square kilometres, along the Chinese-Mongolian border, in what is considered one of the most prospective basins for CBM globally.

Importantly, the future project is in an ideal place for future gas sales in Mongolia and China.

Talon already has the funds to acquire the interest and has received firm commitments from new and existing institutional and sophisticated investors to raise a minimum USD 4 million with USD 1 million accepted in oversubscription. Once the PSA gets the green light, work will commence including drilling of at least four coreholes.

Talon is up 11.1 per cent on the market this morning and is trading at 0.5 cents per share at 11:24 am AEDT. (The Market Herald)