Multiple share price catalysts in the mix at Elixir’s Nomgon Project
As Elixir Energy’s (ASX:EXR) largest seismic acquisition program to date commences, management has provided an update on the current exploration/appraisal program underway across its 100% owned Nomgon IX CBM PSC in Mongolia.
Given this backdrop and the fact that the exploration wells in two new sub-basins are due to spud later this month, it isn’t surprising to see the company’s shares trading at an eight-year high as its much anticipated program delivers a raft of new data that could support a significantly higher valuation.
Management said that drilling and seismic programs were progressing despite some COVID-19 lockdowns that were occurring in Mongolia.
Most importantly, the first well in the 2021 drilling program, Yangir 2, has just been finished.
The Yangir depocenter has to date proven to be highly fractured and hosting of gaseous rocks, which is encouraging for permeability and gas content respectively, but has made for more complex drilling operations.
The well reached a total depth of 578 metres and in the first 300 metres logged 17 metres of coal - logging beyond 300 metres was not feasible due to hole conditions.
Pipeline specification gas composition
Nine coal samples from 288 to 301 metres were placed in the desorption laboratory and these recorded raw gas contents ranging from 4.2 to 7.0 scm/t (average 5.3 scm/t).
The desorbed gas was chromatographically analysed and contained 99% Methane (on an air and nitrogen-free basis).
Following normal water removal, this gas composition is essentially of pipeline specification.
From a technical perspective, three Injectivity Fall Off Tests (IFOT) were conducted in the well, and whilst it was possible to maintain packer seats, because of the highly fractured nature of the coal and surrounding lithologies, no buildups were possible.
Very high fracture permeability was inferred from this, but not proven.
In providing some detail and relevance around the technical procedures undertaken at Yangir 2, managing director Neil Young highlighted the key takeaways in saying, “Elixir’s ‘rinse and repeat’ model for the repeatable and low cost discovery and appraisal of gas on the Mongolian/Chinese border continues to roll out in 2021.
"Especially pleasing recent news is the pipeline specification gas (and strong gas content) from Yangir-2."
Analysis of the results of Yangir 2 will be completed before planning the next appraisal steps in what appears to be a highly gaseous but structurally complex depocentre.
Just weeks away from targeting a new well
The ErdeneDrilling rig that drilled Yangir-2 now moves some 60 kilometres to the east to the Temee 1S well where the target is coals interpreted from previously recorded/interpreted 2D seismic amplitudes.
Another drilling rig, from a new Mongolian drilling contractor will move to the Cracker-1S well location in the next few weeks, targeting another new depocenter in the north-west of the PSC.
The company’s 2021 2D Seismic Program has also just commenced, comprising of 220 kilometres of 2D seismic, making it the largest Elixir has undertaken to date.
Multiple depocentres are targeted, both new and as follow-ons to the seismic work in previous years.
Management has been undertaking a number of measures in order to maintain a ‘’business as usual’’ approach despite ongoing community transmission of COVID-19 in Mongolia.
These have included vaccinations for staff and contractors, as well as strong isolation procedures in the field, ensuring full compliance with all government directions.