A formulation for use as a lost circulation preventive material is a cement-forming aqueous fluid comprising water, a viscoelastic surfactant (VES), a monovalent or multivalent salt, a magnesium powder, a retarder, a weighting material, and a dispersant. The formulation is used in a method of drilling into a subterranean formation that includes introducing into a wellbore passing at least partially through the subterranean formation the cement-forming aqueous fluid, and further increasing the viscosity of the aqueous fluid with the VES; where the monovalent salt is present in an amount effective to pseudo-crosslink the elongated VES micelles to further increase the viscosity of fluid. The formulation further forms a cement by reacting the magnesium powder and the water which reaction is retarded by the retarder. The water may be saline water. When the fluid density is greater than 14 pounds per gallon, a dispersant is required, such as a sulfonated copolymer.