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And the official version

https://www.tumemadini.go.tz/local-content-csr-monitoring/

Brief explainer here of the requirements for an 'indigenous' company structure

https://investmentpolicy.unctad.org/investment-policy-monitor/measures/3209/united-republic-of-tanzania-adoption-of-mining-regulations-on-local-content-2018

Tanzania’s Mining (Local Content) Regulations of 2018. Tendering is required and preference should be given to local goods and services providers. It's not unusual in several countries. It is possible to propose alternative sole sourcing but it's probably not good politics.

Gogs - I think it's an ML requirement that they will need to tender preferentially with Tanzanian controlled companies for mining unless none suitable/available. I'll check.

The Rukwa project development timeline was to complete licensing and commissioning between September and March, and aim for first production by end 2025, so they’ll be keen to ensure that doesn’t slip. Given the seasonal window for main drilling operations, tendering now for EOIs, while waiting on the licence, makes sense to keep on track.

Give it a go Snorlax, tell us why a public tender to start drilling commercial development wells and building a processing plant is not good news?

I think the TZ banks might have some interest in a mix of loan and equity in Rukwa as a national resource. It would be like a farm as HE1 have done in Colorado, whereby an institutional investor or consortium takes a share of the ownership and of the revenue, while the remainder is financed on a cash repayment debt basis. For example, the funding consortium loans HE1 or the SPV $50m (secured on part of the asset) for cash repayment with interest over 5 years, and invests another $50m for a 50% stake in the project for 10 years or in perpetuity. There might also be options on forward selling gas to an off taker as a lump sum in exchange for a security of supply and discount agreement. There are other models of course.

Yes, if I understood correctly the ML can only be awarded to a Tanzania based company, and the government has to have their statutory share in that company, so that would be either one of HE1's existing TZ operating companies or a new company set up to fence the Rukwa project commercialisation specifically as an SPV. I'm not sure if the drill rig belongs to the local operating company or to East Africa Holdings, but it would make sense to retain that separate from the project, within HE1's company holding structure to protect the asset and ensure it can be used on other projects (Eyasi). The rig would be leased by its operating company to the SPV for drilling the Rukwa wells. My guess is they establish a new TZ operating company for the Rukwa project, with the government share in that, and a loan-equity agreement with the banks in that also. They might need to inject some HE1 resources into setting that up but we'll see.

Pete, it's just a personal view. CFO definitely referred to the likelihood of some shared equity but my view is that project funding would be project fenced in the company structure, through shared equity in the Rukwa SPV company rather than general shares in HE1 as a corporate (which also represent interests in Colorado and any future global projects). I can certainly imagine a shared equity deal for say 50% in the project though, and of course I wouldn't rule out specific placements for specific operational/development purposes.

You're deliberately misleading again. Of course it is relevant to the ML award. They simply would not be calling EOI tenders if they were not confident now in the process timeline. Of course it will take months, they won't be operational until the drilling season, maybe Q2-3 and we already know the projected timeline to production is roughly 12 months from licence award, so they are simply lining up those ducks to ensure minimal delay. We also know there is no plan to fund the operation through a share placement, that the budget is beyond the scope of that mechanism anyway, and that the BoD don't have authority to issue any new shares. It will be financed by project funding not company funding. That will be achieved through a debt plus equity split in the SPV, not in HE1.

I assumed it was tongue in cheek, referring to the inevitable 'bad news' interpretation that certain posters are likely to try and spin out of this once they get their scripts in order.

Yes, never was any doubt about commerciality, only about the potential scale and margin, and sources of funding. I suppose it's worth noting that they can of course tender at this stage for EOIs as a contingency, without having firm commitments in place, so they could work on costings and timings for potential financing discussions etc. But they wouldn't do that without a good degree of confidence. I don't think they're bound to RNS anything to market though, unless/until it's confirmed.

This looks like great news, tender contingency for an early start to development operations and including the provision of a helium production facility. That means they're either going straight to market development, or at least to a proof of concept production stage utilising ITW-1. However, the 20" conductor spec definitely suggests they're going straight on to drill new wells.

"given the current level of activity current circumstances, our obligations and committed liabilities we

are fully funded for the next 12 months"

https://youtu.be/kz5ETYz348U?feature=shared&t=2489

Snorlax, you repeat this false and misleading information every day. There is no operational need for a placement. There is no plan for a placement. The Board has ruled out any placement this quarter. The Board has no authority to issue any shares without prior approval of shareholders. It couldn't be any clearer.

The SP hasn’t been above 20p since 2021 and only then for three months.

"We hope to have that awarded sort of after around three months. That's what we know is sort of a timeline in country from other projects." (...hope, sort of, around, after...maybe).

https://youtu.be/s7T5h4qi28c?feature=shared&t=568

I wouldn't read too much into it, that was before the application was submitted and we should consider the more recent update at the AGM.

"whilst we obviously very much would would like it to be awarded sooner rather than later we do recognize that

this is this is new for Tanzania you know this is the first of its kind in country and we recognize that the government required time to to evaluate the feasibility study ...600 Pages worth that's not that's not going to happen overnight. We do know that other MLs in country for Commodities can take sort of from three months. We recognize it has been three months but like I say this is this is new and they will want to to do the right thing in understanding it before it's awarded."

https://youtu.be/kz5ETYz348U?feature=shared&t=2666

HE1 already put out a mirror RNS the same trading day as BNL, 23 December, as they're required to inform the market of notifiable developments at the earliest opportunity

https://www.londonstockexchange.com/news-article/HE1/development-drilling-update-galactica-project/16823497

As the CFO said at the AGM, there will almost certainly be a degree of equity share involved in financing the Rukwa project but that's not the same as issuing dilutive shares in HE1. After award of the ML, they have to set up a new company in TZ for the purpose of commercialising the project (the SPV). The TZ government takes a statutory share in that company (not shares in HE1), and that company agrees finance for the project with the banks (probably a mix of equity and debt repayment). Say, just for illustration, the $100m cost was financed with a 50-50 equity/debt split then the SPV might borrow $50m, and the financiers might take a 50% equity share in the SPV (not HE1). HE1 might retain 50% equity in the SPV (like they do in the Colorado project) and receive half the net income etc. None of that involves issuing new shares in HE1, so placement would not be necessary if all goes to plan (although I wouldn't rule it out for other purposes, particularly if they want to farm into other global development projects, or further explore Eyasi).

As with any AIM listed share, it's impossible to make these predictions. You could try to make some staging post estimates of fair value for mcap at different levels of commercialisation but it would be mostly wishful thinking, and the actual share price will always depend on market conditions, confidence and of course the number of shares in issue at each stage of development. It all looks very positive at the moment but best not to get too far ahead, and thinking about 'pounds not pence' (more than 10x) is a bit premature when there aren't yet any commercial sales. One step at a time.