Channel Resources (CVE:CHU) unveiled Monday a maiden NI 43-101 compliant resource estimate for its Fox Creek mineral brine project near the town of Fox Creek in Alberta, sending shares up more than seven percent in early morning trade.
The company is developing the Fox Creek project for its potential to produce a package of industrial mineral products, including salt, potash, calcium, magnesium, boron, bromine, and lithium carbonate from deep saline formation water, which is currently being produced as a waste by-product of natural gas production.
The resource estimate reports an inferred total in-place volume of brine of 4.1 billion cubic metres, from which contained industrial minerals were calculated.
The total in-place resource was calculated at 245 million tonnes for sodium, 18.8 million tonnes for potassium, 54.8 million tonnes calcium, 11.6 million tonnes for magnesium, 694,000 tonnes for boron, 1.33 million tonnes for bromine and 362,000 tonnes for lithium.
The total recoverable inferred resource estimate was also calculated, using an applied 20-year yield of 1.2 percent, or 47.7 million cubic metres of brine.
The recoverable resource was estimated at 2.85 million tonnes for sodium, 219,000 tonnes for potassium, 638,000 tonnes for calcium, 135,000 tonnes for magnesium, 8,070 tonnes for boron, 15,500 tonnes for bromine, and 4,210 tonnes for lithium.
The company said the baseline estimate of the inferred recoverable volume of brine of 47.7 million cubic metres represents the maximum calculated deliverability to lower the aquifer fluid level by 100 percent of the available drawdown within the Fox Creek project over 20 years.
This recoverable yield of around 1.2 percent of the inferred total in-place volume is estimated using transmissivity and storativity estimates of 0.5 square metres per day (m²/day) and 1.3 x 10-5 respectively, based on calculated water levels and pressure survey levels reported in 1994 and 1997.
Storativity is defined as the volume of water expelled per unit surface area as a result of a change in head pressure.
The company said, however, that data is available from drill-stem tests and core analyses that indicate a potential range of regional transmissivity in the BHL Aquifer System at the project of between 0.18 m²/day to 18.2 m²/day.
Using these values in calculating the volumes of formation water that could be pumped over a 20-year period would result in a range from 23.8 million m3 (0.6 percent of the resource in place) to 671.5 million m3 (16.4 percent of the resource in place).
This means that using the applied 20-year yield of 16.4 percent, the recoverable sodium resource would be as high as 40.1 million tonnes, with a potassium resource of 3.08 million tonnes and a calcium resource of 8.98 million tonnes.
Channel Resources said recoverable yield values will be subject to change when further data from the Fox Creek project is collected, and can be influenced by a number of factors including the redefinition of transmissivity and storativity through advanced aquifer pressure tests, as well as recovery methodology and regulatory extraction policies.
The Fox Creek property encompasses an area of 369 square kilometres, situated over aquifers associated with producing oil and gas pools, hosted in the Devonian-age Beaverhill Lake and Woodbend/Leduc formations, at a depth of approximately 3,200 metres below surface.
Together, these aquifers are known as the BHL Aquifer System, and are believed to contain some of the highest concentrations of lithium in Alberta formation waters, with the "most favorable porosity and permeability characteristics" in the region, Channel said.
Channel has a right to acquire a 100 percent interest, subject to a two percent NSR royalty, in the metallic and industrial minerals claims comprising the Fox Creek property.
The NI 43-101 compliant resource estimate was done by APEX Geoscience, and was based on publicly available data from oil and gas well databases, the results of Channel's 2009-2010 formation water sampling program, and a review of saline formation water availability at the project by third party consultants.
Production, operating agreements and permits have yet to be put in place governing a brine processing facility at Fox Creek. It is expected though that such an operation would be able to capitalize on the existing infrastructure within the permit boundaries, including access to existing wells, pipelines, an operating gas plant, grid-connected electricity, and rail lines.
The company said that preliminary metallurgical testwork has already indicated that existing processing technologies can be deployed on the brine to recover saleable industrial minerals, and Channel Resources is now finalizing a process-flowsheet that is intended to maximize the overall economic recovery of each of the mineral products.
Channel Resources is a Canadian mineral exploration company, which also has a 90 percent interest in the Tanlouka Gold project in Burkina Faso, West Africa.
At Tanlouka, the company has recently discovered multiple mineralized zones that are now being explored and expanded through a 15,000 metre core drilling program, with a maiden resource estimate for the Mankarga 5 deposit expected in the spring of this year.
The company's shares rose more than 7.1 percent Monday morning, to trade at around 15 cents.