General Discussion Banter GLN, page-12065

A question came up the other day about risk of our brine resource dissappearing as our neighbours start to pump from their wells and there was a concern ours being at the margin of the salar , we might see some of our resource dissappearing. Previous reading I have done on this topic some years back led me to conclude it was a non-risk.

However in reading some Galaxy annoucements on Sal de Vida to answer spsampah's question on drainable porosity , I came across this section of text which is very relevant to that concern/risk posted by Mondy here on this forum on Sunday. This comes from page 24 of the April 4 2022 ASX/TSX release by Galaxy. I will cut and paste the entire section ;

Where previous methods were used to estimate the total amount of brine, and therefore lithium in
storage that could be theoretically drained in the entire mining concession, the method used for
reserve estimation is completely different and focuses on the potential for retrieval of lithium via
wellfield pumping in selected areas where pumping at relatively large abstraction rates have been
demonstrated. As the brine is a mobile fluid, it is necessary to use a calibrated numerical groundwater
flow model, respective of fluid density, to project future wellfield production and projected future
brine grade.

Due to various levels of uncertainty in conceptualizing any hydrogeological system, all groundwater
flow models necessarily incorporate inherent uncertainty. To lessen the effects of uncertainty, good
model calibration to observed field conditions is essential for judging confidence in model projections.
However, even with reasonable short-term model calibration to 30-day, hydraulic testing of the brine
aquifer that was conducted in late 2012 and in 2020, long-term model projections are less certain
because of outstanding variables.

These variables include locations of aquifer boundaries, lateral continuity of key aquifer zones, presence
of fresh and brackish water that have the potential to dilute the brine in the wellfield area, and the uniformity of
aquifer parameters within specific aquifer units.

Although the numerical model was constructed to be reasonably conservative when data are scarce
or assumed (i.e., law of parsimony), there is always a level of uncertainty associated with projections
of long-term outcomes. Therefore, it is appropriate to categorize the pumping from the first six years
of pumping at each wellfield as a Proven Brine Reserve. Although projections of long-term pumping
past the first six years from the wellfields are less certain. There is a reasonable understanding of the
hydrogeological system that over the long-term the projected pumped brine can be categorized as a
Probable Brine Reserve for the remaining 34 years of pumping at each wellfield.

It is standard in the industry to recalibrate and update numerical groundwater models after start-up
and during operation of the production wellfields. As the wellfields are pumped, long-term data for
pumping rates, water levels, and brine chemistry are generated; calibration to these new data will
improve the reliability and predictive capabilities of the model. Future probable reserve estimates
may also be modified based on production pumping results, and projections from the recalibrated
model may result in confidence category upgrades of Probable Brine Reserves to Proven Brine
Reserves.

So the brine moving to some degree is actually possible and this does add to uncertainty in the calculations. Though the uncertainty seems more associated with the outer years of the mine life . This is likely to lead to more of the M&I resource being categorized as "probable" not "proven" in the upcoming dfs. On the positive side , from reading the above a proper reserve calculation definitely will/does discount the number to some extent for this risk. Given this I am revising my estimate of the likely reserve back to something closer to 1.50-1.70 Mt range, not the 2.0 + Mt I was previously predicting which was working on a 40 % evaporation loss from the declared M&I resource.