Ann: Share Purchase Plan Prospectus, page-113

Fractures and faults at depth are closed or infilled with calcite, quartz or other mineralization.

Generally what happens is the fracture is closed and not taking mud until you start circulating which results in an increase in the equivalent circulating density of the mud (ECD). The increase in ECD opens up the fractures and they take a drink. If you stop circulating often the losses will cease.

Sometimes as faults close up with a drop in ECD they spit out some of the mud they've taken in along with a bit of formation gas. The result is sharp often high gas peaks one circulation time later. Sometimes the mud pits will show an increase and/or the well will exhibit flow on connections. This can often be mistaken for a kick and a full well kill operation then begins. I used to see this alot while drilling The Darwin Radiolarite up in the Timor Sea....its a highly fractured formation with fractures infilled with mineralization.