Water well drilling As previously advised, Blue Star agreed to...

Water well drilling As previously advised, Blue Star agreed to fund the drilling of three low-cost water wells for local ranch holders (see BNL ASX releases dated 29 July 2021, 10 September 2021 and 30 September 2021). In the process of drilling these wells, Blue Star would seek to gather data from the wells that might aid in the further definition of its helium prospects.

The wells are drilled and owned by the ranchers and Blue Star does not have any interest in them.

However, the Company does own a mineral lease interest at each of the well locations.

Hill#1 water well
The drilling of the first of these water wells (Hill#1) commenced during the June 2021 quarter, however remains incomplete. Significant shallow water was encountered in a known shallow aquifer, which required the delivery of additional equipment to complete drilling to target depth (see BNL ASX release dated 29 July 2021). There have been ongoing delays in the delivery of this equipment, which remains pending. However, and as also previously reported, the initial data obtained to current depth from this well supports the Company’s stratigraphic interpretation of the area around its Galileo prospect.

Hill#2 water well
The drilling of the second water well (Hill#2), interpreted to be located downdip from Blue Star’s Enterprise 16#1 application was completed during the quarter. Neutron and density wireline logs run in the well show approximately 26 feet of gas effect at the top of the high-quality Lyons formation, with a free water level interpreted in the well at the base of the gas effect. The resistivity logs across the gas effected part of the Lyons formation suggest a transition zone above the free water level. The composition of the free gas in the Lyons formation could not be determined due to the nature of the water well configuration which resulted in the return gas being highly diluted by air. Historical offset wells, including a well interpreted to be within the Model Dome field boundary that was reported to be blowing low pressure gas after abandonment, have shown similar low resistivity responses on logs. The Lyons formation play in this area is proven by the historic helium production from Model Dome, which had an average helium content from the Lyons formation of 8%, and at the historic Gov. Cynthia True well, which tested 8.8% helium. The Hill#2 water well is located approximately 1.5 miles to the north-east, and interpreted to be down dip from, Blue Star’s planned Enterprise 16#1 helium exploration well (see Figure 1).

BBB#1 water well
Drilling of the third water well (BBB#1) is expected to commence in November. This well is located close to Blue Star’s Voyager prospect, which is positioned approximately six miles north from the Model Dome field (see Figure 1).