RE:RE:RE:NetworkNewsBreaks – Lithium Chile Inc. (TSX.V: LITH) (OTCQB:The purpose of a drill program is to establish a resource.
To do that you need to determine the areal extent of the reservoir, the thickness, the porosity and the grade. So far they've managed to outline some area but without drilling through the reservoir there is no definite thickness. While the grades may increase with depth, by their own admission, what samples they have gathered may be diluted due to invasion of drill fluid or by crossflow from fresher water acquifers while drilling.
They have to revisit their drilling program/personnel in order to get the information required to establish a Li resource.
The fluid volume of the reservoir (area x thickness x porosity) needs to be established. The geolgist must select well depths that fully penetrate the reservoir. The EM/seismic tools and regional information can be used to determine depths and dips, and even edges of the pay zone. There are tools and sampling techniques to establish porosity (the ratio, expressed as a percentage, of the volume of the pores or interstices of a substance, as a rock or rock stratum, to the total volume of the mass).
Their drilling engineer needs to select a competent rig and crew capable of executing the program. The other and most critical aspect is the program itself. It must be designed in a manner that ensures a) getting to total depth without losing the hole and b) acquiring fluid and rock samples which are truly representative of the reservoir. Having lost two of four holes suggests that the lithology is unconsolidated and wellbore support in the form of casing is needed to avoid collapse. Fluid sample contamination must also be addressed. Crossflow from freshwater acquifers above the payzone will be mitigated by drilling with casing strong enough to prevent collapse. Fluid loss must be controlled while penetrating the reservoir to avoid invasion of the near wellbore radius to facilitate accurate sample grades.
The final aspect of a resource is production. It doesn't matter how much product you have if it can't be produced economically. These are exploratory holes so drilling for sustained production will come later when the resource is proven to be economical. It would be a bonus to establish some inflow capacity while drilling.
It will likely cost more money to drill these holes than previously planned. However, why spend any money if you can't achieve your objective, ie establish the resource. There is profitable Li brine production in Chile by other operators. They've solved the problems already. This company should investigate how those operators did it or simply farm out and let them do it.
AIMO