Saber Energy gets 30-day loan extension

WANETSHA MOSINYI
Staff Writer | Thursday March 26, 2009 00:00

The original maturity date of the loan is March 24, 2009. 'The company will update shareholders when the discussions are concluded. In the event that the discussions do not result in a further extension to the loan and the interest earned being agreed upon, the loan would become immediately due,' Talon said in a statement.

Talon added that its due diligence review of Saber regarding a potential merger of the two companies is on. 'Saber has some important work underway at present, which, if successful, has the potential to increase the value of Saber's CBM properties in Botswana, and accordingly would bring value to all shareholders,' president and CEO of Talon, Stuart Comline said.

On September 25, 2008, Talon Metals signed a pre-merger agreement with Saber Energy to benefit from the former's expanding gas projects in southern Africa, and agreed to loan Saber up to C$6 million.

The loan is secured against Saber's assets, which include its land licenses in Botswana.

Talon said the interest on the loan is currently payable at a rate of 18 percent per annum. Talon will also receive three million common share purchase warrants of Saber as part of the heads of agreement.

Saber Energy is part of the Toronto-based Tau Capital group, which include CIC Energy, the company responsible for the development of the Mmamabula energy complex. Saber specialises on coal bed methane exploration and developing a CBM and shale gas field in the Karoo Basin. The company has over 90 drill holes. The wells it has drilled into the coal seams host the CBM.

Talon said preliminary stage de-watering and pumping of gas is in progress. The test work on gas flows and other characteristics of the coal and gas are underway.

CBM is methane found in coal seams. Often a coal seam is saturated with water, with the methane trapped in the coal by water pressure. CBM travels with ground-water in coal seams. Hence its extraction involves pumping the water from the seam in order to reduce the water pressure that holds the gas. 'This proposed transaction with Saber was entered into in order to realise Talon's goal to participate in a large project of merit, a strategic undertaking that has been underway since mid-2007,' Comline said.

Talon continues to investigate other opportunities and is currently undertaking due diligence reviews on a number of ventures that have been identified in the company's search for new resource projects. Talon is a Toronto Stock Exchange-listed company focused on the acquisition, exploration and advancement of high quality resource projects.