George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
I am perplexed. I thought that this would be moving up fast. A 'cheap' IPO pricing, small m/cap, prospect drill ready, super-experienced management team, great jurisdiction, product in fashion and highly lucrative, etc, etc, etc. All this going for it and the share price has just got stuck.
Even HE1 rose sharply on their IPO in December 2020, despite no one knowing much about Helium at the time, from an IPO placing price of 2.84p to over 8p within the first week of dealing. That took the m/cap of HE1 up from the IPO £14.2M to over £40M, where it stayed for a couple of months before rising further to 20p pre-spud for a m/cap of over £100M. The m/cap here is still a paltry £12.8M.
Come on market!! Buck up!!
"The Konkola West Project is targeting deep down-dip and along-strike extensions of the contiguous Lubambe-Mingomba-Konkola copper deposits to the east of the Licence and which extend north into the Musoshi mining complex in the Democratic Republic of the Congo. Together these deposits comprise a 15 kilometres long continuous zone of mineralisation that contained a pre-mining endowment of over 775 million tonnes grading 2-3% copper. Konkola West is located approximately 2,000 metres southwest of the Mingomba deposit, which lies between the Konkola and Lubambe mines, and currently has a resource of 250 million tons at 3.8% copper."
0.10p paid - make that 0.1032p. I think that around 0.16p/0.17p would be a good target pre-spud, which is where the share price was on the day the earn-in was announced. It could go higher though.
Then, of course, if the high-grade copper is there in abundance, where it should be, then the sky really is the limit. The m/cap is still only £2.5M - trifling - and in this scenario 1p or even 2p would easily be possible. 250M/tons of copper at 3.8% right next door!!
Maybe the only hope for this one will be in drilling KON-16 next year. At least if they hit oil it's guaranteed to still be there and not all used up like looks likely with KON-11. And CRCL are the operator so they might not take 4 months to drill a couple of wells to less than 1000 metres each and then struggle for another 3 to 4 months trying to get the oil to flow.
So much for state-owned Sonangol - they are pathetic at best.
It says that some of their drill holes are as deep as 1800m to 2000m. The earn-in with Tertiary is for a minimum of 2000m over 2 holes so I would assume that if they hit copper at depth they will continue drilling until it runs out. That could be 2 very big holes. Imagine what that would do to the share price and m/cap.
I'm very surprised that this hasn't kicked off by now. So many boxes are ticked: Helium exploration is huge on the AIM market, with HE1 the most traded and chatted about share on the index; they are operating in the USA, where they are drilling into a proven basin; very reasonable drill costs; experienced management who are happy to face the camera and answer questions; hugely over-subscribed IPO placing; small m/cap, etc etc.
Even Microsalt (SALT), who recently listed with a m/cap of £18.5M and an IPO placing of £3.1M and a share price of 43p (and a not-very exciting product), nearly doubled within the first 4 days and 3-bagged to £1.20p within the first 3 weeks.
This hasn't really started to move as yet which is a bit strange.
I think that one of the best of this whole host of podcasts was the one on the first day with both Bo Sears and Dave Minchin. I have included the link below.
https://www.youtube.com/watch?v=WPBVtIHacJM
The reason I find this interesting is because they go into the figures a lot more, both for drilling and testing as well as some early ideas of how they could take a commercial discovery into production. It becomes quickly apparent that operating in the US is going to work out considerably cheaper than operating in Tanzania. It is hard to believe that so far Helium One has raised a total of £42.9M for just drilling costs and Noble Energy are not far behind with yet another discounted placing today. For a poor third-world country, Tanzania is proving to be an extremely expensive place to operate.
Anyway, drill costs in Montana are quoted as being around $2.5M (just over £2M) with a very good availability of rig choice. Coming from Dave Minchin that sounds extra special as he had more than his share of troubles over rigs in Tanzania.
More interesting though is the early and 'subject to making a commercial discovery' planned route to production. The best fast option is to build a Pressure Swing Absorption Plant, which is projected to cost between $12.5M and $15M. I seem to remember Dave Minchin proposing a similar plan for HE1 a year or so ago, though I am sure that the cost in Tanzania was projected to be about $50M, which seems to reflect the difference in costs between the US and Tanzania.
According to the podcast, such a plant could produce 55,000 mcf of compressed helium per annum, to sell at $550 per mcf with a $50 per mcf Opex cost. This will give a cash flow of around $25M before royalties and taxes and could be ready for first production by the end of 2025.
Dave Minchin adds that because of the rapid payback and high margin post appraisal, there would be various options for funding the plant (apart from an equity raise) which would include debt, leasing or pre-selling the helium. Of course, looking at the over-demand of the IPO placing raising the equity might not be much of a problem anyway.
(I can't believe that HE1 has raised £42.9M so far - that is almost the whole m/cap.)
Just got a call back from IG. They have now corrected the error. I have done a dummy trade and Stamp Duty is no longer being added to the buy price. They've said they will have to wait for the trades to settle before the refunds can be applied back on to all of the accounts affected. Cheers.
The main difference here is that HEX are talking about production from the off. They are quite confident that they will hit the Helium as this is a producing basin. With HE1 it was all about making a discovery and even that took several years.
For anyone here who has bought these shares on IG, I have spent the best part of the last 2 hours trying to get through to anyone who is working in the London office to query why they are adding Stamp Duty charges to these buys. I have now spoken to someone who has looked into this and who agrees that this has been set up incorrectly and hopefully the stamp duty charges will soon be refunded and not applied to new buy trades.
ATB
The problem with IG these days is that all of the staff are based in some far-off foreign land and even though they are very pleasant, helpful and well-trained they still cannot address any problems in the way they sometimes need addressing. I get a lot of calls go through to South Africa, some to India and my latest one this morning to Krakow.
Of course, I requested that they put me through to someone in the London office but despite waiting for another 10 minutes no one was available. I have been promised a call back from someone in London - I can only live in hope.
I'll repeat some of one of my posts from yesterday:
"The IPO seems to be reasonably priced, considering they are drill-ready including the funding. HE1 IPO'd at 2.84p with 497M shares for a m/cap of £14.2M. HEX IPO's at 10p with 122M shares for a m/cap of £12.2M. On checking I see that HE1's share price rose very quickly after listing despite being little known at the time and was over 8p within the first week of trading for a m/cap peak of over £40M. It then stayed in the 7p/8p range for 4 or 5 months until they started drilling."
Also in the run-up to drilling, as HE1 secured a rig and mobilised it to the site, the share price rose sharply from the 7p/8p range to settle around 20p for a m/cap of over £100M. Oh, and that share price/m/cap included that HE1 did a £10M placing at 10p a share despite raising £6M at the IPO. Somehow I can't see that happening here with the large availability of rigs and the cheaper hire rates.
ATB