The Botswana CBM Project (formerly the Saber Gas Project) is a 1.2 million hectare (3 million acre) unconventional gas project targeting coal bed methane (CBM) and shale gas deposits in Botswana, Africa. The aim of this project is to explore, establish and commercialize CBM and shale gas production.

In November 2010 Talon closed a transaction with Tlou Energy Ltd (Tlou) , to transfer all of Talon's rights in the Botswana CBM Project licenses to Tlou in return for an approximate 30% interest in Tlou.

In October 2011, Talon participated in Tlou Energy’s rights offering which increased Talon’s shareholding in Tlou Energy to a total of approximately 22 million shares, or a 31% interest. This rights offering was priced at AUD$0.60 per share.

Tlou is a leading CBM exploration company in southern Africa with an experienced management team and the skills, technologies and resources to develop and commercialize unconventional gas projects.  Its strategy is to find areas in southern Africa with prospective CBM geology, potential significant reserves and a clear path to commercialization and to secure a meaningful stake with, where possible, operatorship and gas marketing rights. Tlou intends to pursue a listing on a recognized stock exchange in 2012.

Prior to this transaction, Tlou was continuing an exploration program at the Botswana CBM Project which includes initial drilling in the Masama and Kweneng (or Karoo West) blocks, along with follow-up drilling in the Kalahari (or Karoo Central) block.  This drilling program began in the fourth quarter of 2009 and was completed by the end of 2010.

In early 2011 Tlou began preparations for the drilling of four wells as part of a pilot well testing program at the Kalahari block (two pilot wells and two monitoring wells). The drilling of two pilot wells was completed in September 2011, and initial results are anticipated in early 2012.

Tlou is applying Mitchell Group's Integrated Exploration SolutionTM (a proprietary exploration methodology) and its own unique drilling technology at the project. This technology is expected to be best suited to maximize gas production and decrease the anticipated capital costs per standard cubic feet of gas.

Prior to Tlou's exploration program,  an initial exploration drilling program was conducted In 2008 by Saber Energy Corp  to evaluate the distribution, thickness, and gas content of coals and shales, principally in the Kalahari block. 

Resource Report*

The Botswana CBM Project licences contain an estimated contingent gas resource of between approximately 14 trillion cubic feet (tcf) and 34 tcf (on a low and high estimate basis), with a best estimate of 23 tcf. This estimate is based on a Canadian National Instrument 51-101 compliant resources report dated September 1, 2009 by Gustavson and Associates, independent reservoir engineers and geological consultants. 

* Contingent resources are defined as those quantities of gas estimated on a given date to be potentially recoverable from known accumulations, but are not currently economic. There is no certainty that it will be commercially viable to produce any portion of the resource.  Additional information with respect to the resources report can be found in Appendix "D" Saber Energy Corp. Information Brochure to the management information circular of Talon Metals Corp. dated February 2, 2010, which is available on Talon's SEDAR profile at www.sedar.com.

Potential Markets for CBM and Shale Gas

The Electricity Sector
Southern Africa is currently experiencing a shortage of electrical generation capacity and the required new capacity to meet demand is significant. CBM and shale gas can be used to fuel gas fired power stations and bring much needed power to the region.

The Fertilizer Sector
A key raw material needed to produce ammonia and other nitrogen fertilizers is natural gas or unconventional gas, such as CBM or shale gas. As African demand for fertilizer is expected to increase, a domestic, long term, stable gas supply is critical to local fertilizer production.

About Botswana
Botswana has been a stable democracy since becoming an independent nation in 1966. Its per capita gross domestic product is one of the highest in Africa, and its sovereign credit rating is the highest in Sub-Saharan Africa. As well, the Government of Botswana is extremely supportive of resource and infrastructure development, as well as foreign investment into the country.

About Tlou Energy (www.tlouenergy.com )
Tlou Energy is an unlisted public coal bed methane exploration company based in Australia and focused on southern Africa.   It was founded by the principals of Walcot Capital and Mitchell Energy Group. The principals of Tlou have a proven track record of creating shareholder value in CBM companies.

Walcot Capital (www.walcotcapital.com )
Walcot Capital ("Walcot") is a Brisbane based private venture capital business specializing in energy investment. The principals at Walcot have extensive experience in the upstream energy sector and have successfully founded developed and commercialized CBM companies in Australia and New Zealand. Walcot has a team of multi-skilled professionals across geological, engineering, legal and commercial facets of the energy sector.

Most recently the principals of Walcot were involved in the founding, developing and commercialization of Sunshine Gas Limited, a CBM company with licences in eastern Australia. Sunshine Gas was listed on the Australian Stock Exchange in 2002 at a market capitalization of A$5 million. In 2008, Sunshine Gas, which was a Top 200 ASX- listed entity, was acquired by Queensland Gas Company for approximately A$1.1 billion (US$722 million). 

Mitchell Energy Group (www.mitchellgroup.net)
Mitchell Energy Group was founded in 1969. In 1999 Mitchell Group started a multi-million dollar research and development program aimed at creating enhanced drilling techniques for varied coal reservoir properties. Its initial focus and test bench was the coal bed methane industry in Australia, but this quickly expanded into the international arena. Today Mitchell Group has projects in Africa, India, China, and the US and is continuing to investigate other global CBM opportunities.

- December 2011 -