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There are both rampers and derampers talking their book here. The project has commercial potential yes, but it’s also at an early stage. The company states that the discovery is “globally unique” because of the geology and lack of hydrocarbons, and that “with the addition of artificial lift in the production phase this becomes a globally significant helium project”. It states that the company has potential to become a strategic player in global helium supply, if the potential in its modelling is realised, and that “This project is considered to be entering an appraisal and development stage”. That’s the current basis for investment.

The project budget of $75-100m includes both the plant and the well drilling, as the CFO stated at the AGM (also, $100m is the max project cost for an ML application anyway, otherwise it would be SML). As clearly stated in RNS, their own internal modelling demonstrates positive economics for the company with 25-30 wells and artificial lift, and this project is now entering the appraisal and development stage. I think that’s pretty clear and the market is fully aware of those parameters.

Sorry, shouldn’t be texting and drinking on a weekend. The bottom line is right despite the arithmetic confusion 😉

You’re taking a very conservative view. First the project is costed in dollars not pounds, so that’s $100m for round numbers).

Second, the feasibility study will be based on optimised flow rates, so let’s say $500 per mcf, at 5 mcf per day per well = $2500

30 wells = $750k per day

350 productive days per year, allowing a good bit of slack and opex = $25m

Project costs paid off in 4-5 years, or in 2 years if the bank loan is $50m.

Say -$5m per year for loan payments throughout the ten year licence and split the net income 50-50 with investment partner (e.g. $10m per year to HE1).

All entirely hypothetical of course.

I think the CFO was fairly clear in hinting towards 30 wells in the $75-100m plan, so we can probably guess the feasibility study uses that upper assumption. But you can’t make assumptions about the financial model as we don’t know the splits between debt and shared equity. For example, maybe the banks lend $50m to the venture company over a ten year ML and they (or other partners) invest another $50m for 50% lifetime equity. Then then you’re only looking to return $5m a year debt repayment, plus interest, plus opex, and HE1 retains half the profits.

For example, HE1 acquired a 50% legal ownership in BNL’s operation of the Colorado project and earns 50% of proceeds.

I think it’s simply the law in TZ that the operating mining company is established in TZ and that the government owns at least 16% of the equity, and can acquire a larger stake up to 50% (relative to value of tax subsidy). The mining company must also give first option to the TZ national banks if further debt finance is needed, and the government must agree those financial terms.

Remember that previous CPRs addressed prospective (unproven) resources, weighed against geological and commercial chances of success. What we are looking for are post discovery (proven) estimates of recoverable and contingent reserves. The total NAV in the ground will be relevant but for the ML development we really need commercial projections of annual gas volumes versus recovery costs etc.

It will be completed for Jackson-31, just waiting for results, should be next week

I think he’s being ironic gogs, a day without an RNS is a rarity at the moment 😉

It’s a bit abstract though as everyone knows there aren’t 138bcf of recoverable reserves. The last independent assessment of gross ‘prospective’ reserves for Rukwa (before any drilling) suggested around 25bcf, with a range of15-30% geological chance of success across five prospects (not all of which HE1 now retains under licence). So, for example, if Itumbula comes in anywhere higher than 5.4bcf or Tai more than 5.9bcf then that’s fantastic news.

State-1 lab results were back yesterday, and we know they took those samples while they were at it on the new well, so Jackson-31 results can’t be far behind. Maybe tonight or Monday perhaps?

There’s no ‘delay’, don’t be ridiculous. The lawyers and the Board will do DD, CEO will be travelling back from USA, no rush.

Just to be clear, this refers to share/equity in the new mining company that HE1 will establish in TZ to operate the development project, under its mining licence (it does not mean shares in HE1 Global).

The statutory agreement is that the state participates in 16% of that mining venture, and may acquire up to a maximum of 50%, in a similar way that HE1 and BNL share in the Colorado project operated by BNL’s local mining company). But that acquisition right (not obligation) would extend only to the value of aid the government gave to the company. I think?

BNL have hinted at the higher concentrations from the adjacent Red Rocks field, which is already producing, so it would be very positive if the Jackson development wells came in closer to those results.

Yep, and almost 30% additional profit as the existing revenue estimates already include the costs of recovery

This is coming out of the ground, which part of well head flow do you not understand? State-16 is completed and ready to tie into production.

There is no hydrogen at Galactica, the secondary cash asset there is CO2

Basil - wrong country, wrong discussion thread. This is news of increased helium flow from the discovery well in Colorado after maturing.

Either you don’t understand what you’re talking about or you’re scared of good news. This is great.