Elixir delivers seven successful wells in 2020, with 2021 even more promising

Elixir Energy Limited (ASX:EXR) has provided a promising update on its 100% owned Nomgon IX CBM PCS, located in the South Gobi region of Mongolia, just north of the Chinese border.

Harking back to the group’s recent progress, early in the month the Nomgon 5S re-drill appraisal strat-hole well reached a total depth of 450 metres this and it has since been logged and remediated.

A total of 47 metres of net coal was intersected.

At this point, the Hutul 1S exploration well was drilling ahead with management anticipating that it should reach total depth and be logged by mid-November.

The Hutul 1S strat-hole well (located 19 kilometres to the East of Nomgon-1) was drilled to test a possible extension of the Nomgon sub-basin.

It reached a total depth of 560 metres and intersected 6 metres of coal.

Further tests and analysis are required to better define the resource and whether it is an extension of Nomgon, but on the face of the facts available at present management views this as ‘’a promising find.’’

Yangar 1S well intersects 27 metres of gassy coal in new sub-basin

In an extremely important development, the Yangar 1S strat-hole well (see map below), currently being drilled in a potential new sub-basin located some 24 kilometres to the north-west of Nomgon-1, has intersected 27 metres of coal to date.

As of Thursday morning, the well was at 344 metres and is drilling ahead.

Elixir’s well site geologist has observed very active gas bubbling from coals recovered to surface and in the mud-pit.

This is considered unusual and highly promising in coals at relatively shallow depths, and this may extend upwards the company’s overall view on the potential CBM window in the PSC.

Management will now follow up with an appraisal program in the Yangir sub-basin next year, likely commencing with a fully tested core-hole.

Elixir delivers seven successful wells in 2020

Elixir’s drilling program in 2020 has delivered seven wells that successfully intersected material coals over a total west to east distance of 43 kilometres.

COVID prevention measures in Mongolia have recently been escalated following instances of community transmission for the first time in the country.

At this stage, the situation is somewhat fluid but it seems likely that the company’s planned final strat-hole for 2020 will be delayed.

Commenting on Elixir’s achievements in 2020 and fleshing out what lies ahead in 2021 managing director Neil Young said, ”Elixir’s vision is to discover material quantities of gas just north of the Chinese border.

‘’Our strategy to achieve this is to utilise low-cost CBM exploration and appraisal tools in potential multiple sub-basins in our vast PSC.

‘’In the course of 2020 alone we have now identified two such sub-basins and made material progress in appraising one of these.

‘’We look forward to continuing to implement this successful ‘rinse and repeat’ process in the years ahead.”

China focus becomes increasingly relevant

Regarding Elixir’s strategy of building a portfolio of resources that could provide a platform to sell gas into China, a recent announcement by the country’s President is extremely encouraging.

With China being a leader in energy usage, President Xi Jinping’s statement in October in which he committed to net zero emissions by 2060 was embraced by those striving for a transition to carbon-neutral energy solutions.

China currently generates more than half of its electricity from coal, but natural gas is increasingly being used in the country for heating and transport.

An uptick in demand for natural gas in China would be extremely positive for Elixir Energy.