Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
My apologies for missing out the infill seismic programme in my earlier post. A minor comment on the infill seismic, looking at the timeline, they started in early February with drilling scheduled for Mid-May. 3 and half months to do everything you need ahead of drilling (acquire seismic, do the processing, QC the data, velocity modelling, review static corrections, interpret the new seismic, integrate the legacy data, do the depth conversion, calculate prospective resources from the new data, peer review of the results, etc.), that looks super speedy to me for 3 and half months. You wonder a little bit on how things are being done in such tight timeframe.
A more important point. When talking about the infill seismic campaign, they mention it’s intended to provide improved resolution over the targets that have already been identified. And so, sounds like we already have some nice prospects there, we just need some extra info to optimize drilling locations. Well, as I mentioned in an earlier post, without the in-fill lines, you would hardly call these "prospects" at all, because with this little data the structures could be completely different, yet they are presenting to us prospective resources that have been calculated on the initial seismic, the legacy data.
The conventional way of doing this would have been to acquire the infill seismic lines first (if not a 3D), and then do a CPR, only after sufficient seismic is there you then present to people prospective resources that have been calculated on something that you can more confidently call “prospects”. So why they haven’t done it? Perhaps some logistical and operational issues. However, there is also another way to see this, a clever marketing strategy. It’s possible that additional data might highlight other targets, however it is also more likely that the “prospects” will became smaller and smaller, especially in this geological context these structures could be a lot more fragmented by numerous faults that you simply don’t see from the initial 4 by 4km grid of the legacy data. And so, without the integration of additional seismic, you may maximise your chances of showing people the biggest possible prospective resources at this stage, even though the interpretation is very uncertain, but not many people will question that. (PS, the top reservoir map from the April presentation is still the same as the old one, just different colour scheme and infill lines)
A final remark on the seeps, a lot of people get really excited by this. Yes, it proves there is helium in the area, a good indication no doubt, but if you compare it with oil and gas seeps, there are lots of examples where people drilled next to oil seeps at surface but failed to find commercial accumulations, and in many cases found nothing.
Interesting stuff no doubt, but I remain quite cautious too
Hi Everyone,
Many thanks you for all your comments and for the links. I started to look at the thesis, clearly some good work has been done there in terms of research and geochemistry. I’m still on the learning curve for helium, but if these systems behave similarly to typical conventional gas traps, again it doesn’t help that all the current prospects are 3 way dip closures and hence share the same risk from that perspective. I have seen prolific gas traps in tilted fault blocks with very recent structuration and big faults extending up to the surface similarly to this area (eg. Tazerka and Oudna light oil fields in Tunisia), but they are not that common and rely on significant present day active charge. It would be nice to see if there are any analogue fields in the area to prove that this kind of trap configuration can work. Whichever way you put it, that is a risk that also adds to other unknowns in this area such as reservoir effectiveness.
Anyway, I would also like to draw your attention to the current prospect definition, and I’m only mentioning the most obvious problems:
- Prospect Mbuni: where is the data that defines this prospect?? Go on page 106 of the pdf, figure 8-1, zoom it in, nicely. There is only one seismic line at the edge of the prospect (the white dashed line, as the yellow lines have not been acquired yet). Not even a single seismic line in the opposite direction across the prospect…having been in the oil industry from several years, this seems to me quite a bullish interpretation! Let’s look at this a bit better. Notice the western corner of the prospect (towards the left-hand side of the image), all the elevation contours within the prospect seem to converge into one point. This is an artefact created by someone to close the prospect and create the structure that you are seeing on this map, you have no data there!! As far as I’m concerned this could be a tiny pimple or a larger structure, or something completely different to what they are proposing, who can tell?? You have no data across the prospect.
Maybe they used gravity data for somewhat defining the area of this prospect? But gravity data is not a substitute for missing seismic data, you rather integrate seismic and gravity data.
Don’t get me wrong on this, I like the concept and also the geology, but I just don’t feel that this is something you would consider drill ready at this stage, and I do wonder why they are doing things in this order. To me it would have made more sense to acquire at least some infill 2D data first, then drill the wells and try to target at least one 4 way dip closure even if with a small volume (if fault seal is a risk, try to minimise your risk, don’t put all your eggs in one basket), then acquire proper 3D seismic and evaluate new targets.
Hi deepbluediver,
I fully agree with you they badly need 3D seismic or at least additional infill 2D lines. Looking at their prospect map on page 106 of the pdf, it seems the spacing between the existing lines is around 4 km. It would have been ok if this was an exploration well in a simple large anticline, but we are dealing here with tilted fault blocks, lots of faults and structural complexity, a lot could be going on within those 4km that we don’t get to see. The seismic quality for what I can see looks ok, these are shallow structures and so imaging shouldn’t be a problem. What concerns me here is also being able to accurately tie the stratigraphy from the wells to the seismic, as there are only two wells at this stage. Again, that’s ok if you a targeting a simple bump, but with this degree of structural complexity, you may easily drill a well that is not in an optimal position.
Relooking at the helium play system model (page 96 of the pdf), I can’t make full sense of the trapping mechanism they are invoking. Clearly, they recognise that faults are a migration pathway for helium (from the basement where it’s generated up to the surface helium springs), yet at the same time these faults are also preventing helium to migrate to the surface just by the right amount to fill a trap. Faults can have a dual behaviour but typically during different geological events, providing a barrier when they are not active (and not always), allowing migration when they are active. The slightest movement along these faults would cause fracturing, and even the smallest fracture would be enough to make everything leak out…and again we know that helium is leaking to surface because of the seeps….
Hi GLA,
Thank you for your comments, glad to hear that you feel strong about the management. I don’t know them and I might be too critical here, but so far I see a lot of problems and significant risks, unless I’m missing something. I agree if the management is well experienced, and with the help of additional data, eventually they might be able to find something quite valuable, but it might be a long ride…perhaps at this stage makes sense to me to invest a small sum that I can afford to lose and see how things develop...
The cross section shows that you can have a variety of different play types in this area which is good, however again I feel a bit uncomfortable about all this faulting. Most of these prospects seem to rely on sealing faults (providing an effective lateral barrier for the accumulation), however as you can see from this cross section some of these faults extend all the way up to the surface into young sediments, hence faulting has been active until very recently and may still be active at present day. In general, old faults that have not been active for a long time (geologically speaking) tend to provide better seals, hence again I see risk linked to leakage along faults, and the seeps whilst demonstrating the presence of helium, may also be indicative of a leaking system (at least around the big faults). In general, I feel these guys have done good technical work and have probably adequately captured the risk in the report, there is a case for being even more conservative but you can see from their work that the risked prospective resources are about a tenth of the non-risked resources, indicating that the chance of geological success here is just over 10%. Something that people don’t like to emphasize to shareholders but important to bear in mind when investing in this type of projects
I know there is a lot of enthusiasm but I feel a bit more cautious about big helium discoveries here. I’m new to this, but having looked at their CPR, no doubt there is a lot of helium in this area seeping out everywhere but the problem is how you trap it with the right geological configuration (reservoir and especially seal). Most of their prospects (although not all) are 3 way dip closures meaning they rely on a fault seal in the 4th direction and that’s quite risky already with common oil and gas prospects and probably even more risky with helium which requires really good seals (generally evaporites) and we know that helium is leaking to surface through faults. I’m not saying it’s impossible but I see significant risk there. Having said that I see good potential for the share price in the short-medium term, I guess they will probably encounter helium shows in the mud system during drilling enough to generate a lot of enthusiasm, but then the real assessment will be the well testing…