MAN selects two wells to re-enter and sample for lithium in USA
Our US based lithium Investment Mandrake Resources (ASX: MAN) has outlined its exploration program at its project in Utah, USA.
MAN’s plan is to:
- Re-enter two wells - MAN picked TWO out of the 84 available historic oil and gas wells based on the location, geology, brine reservoir potential and existing well data.
2). Test five different reservoir formations - MAN has already produced a detailed sampling program which will test ~five independent formations per well.
MAN’s first two wells were selected because:
- Geology - Both wells sit near fault lines in the region.
- Well depths - both wells were drilled to depths over 9,000 feet meaning there are more reservoir formations available to be sampled in the wells.
- Multiple targets - Five independent targets in each well.
- Strong historic data - data from the oil & gas wells suggest the wells could be suitable to pump brines back up to surface (this is what MAN means when it talks about porosity and permeability).
- Ready infrastructure - MAN already has access roads and power infrastructure available to it on both well sites.
- Well integrity - both wells are in decent condition which should mean lower technical risk for the sampling program.
The next step before MAN can get on the ground is to take official operatorship of the two wells - this is predominantly a paperwork exercise for the company.
Now the focus is on exploration and instead of drilling completely new wells to begin with, MAN is looking to re-enter old oil and gas wells in the area with a focus on lithium.
Ultimately, MAN is looking to emulate the success of its neighbour in the region Anson Resources which is capped at ~$212M and has a JORC resource of 1.04Mt of Lithium Carbonate Equivalent (LCE) and 5.27Mt of Bromine.
For context - Anson also put together its resource estimate by re-entering old oil and gas wells.
As long as MAN can deliver a resource of size/scale comparable to Anson, then we think the company can deliver on our Big Bet, which is as follows:
Our Man Big Bet:
“MAN returns 1,000%+ by making a lithium discovery significant enough to move into development studies, or attract a takeover offer.”
NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved, and it will require a significant amount of luck. There is no guarantee that it will ever come true. Some of these risks we list in our MAN Investment Memo.
What’s next for MAN?
Maiden exploration target 🔄
We are looking forward to MAN putting out an exploration target for its project.
Lithium sampling program 🔄
Once the exploration target is confirmed, it will be all about progressing the work needed to convert that exploration target into a maiden JORC resource estimate (e.g. sampling existing wells and potentially drilling a new well).
