Member Info for Blubay

There are two angles to consider, (a) the reallocation of forfeited prospecting licences, (b) the conversion of existing prospecting licenses into ‘mining’ licences (i.e. production licences). From the wording of the RNS, I assumed they were there to keep relations warm in preparation for expediting the latter, as that will be pre-requisite to getting anything commercial out of the ground, and delay would be path critical.

Yes, all very positive for the company and the likelihood of hitting their core strategic aim to become a helium producer before end of 2025. It's unlikely to help the share price in the short term as the market is dominated by trading and spread betting during periods of uncertainty.

“l if that RNS was meant to be a "fluffer" for a forthcoming raise PJ it crashed and burned dismally - the market still looking very flacid.”

There may be more to come but I thought the RNS did what it was supposed to do, maintaining the SP with sufficient headroom for a discount above 1p. It may also have enabled some of the 1.5p investors to recycle for that contingency (although I presume most of those were forward sold or churned after that raise). If they can get the funding away at or above 1p I think that’s likely a decent outcome. But I do think there is more news/fluff to come, depending on your viewpoint.

It's not "being supressed", it's just a very heavily traded share. People sell on news, regardless of what the news is, and traders aren't going to buy back in to lock up funds on a share during a slow news period. They're more likely to short it. No-one here is invested in the company, we all just trade second hand shares from each other. At this level on AIM, at least short term, you're betting mainly on the mood of the market not the fundamentals of the company (after all, it's still a loss making enterprise with zero income stream). That changes when the company becomes a going concern and long term investors might have that more in mind.

I don't disagree in terms of notional balance sheet value of the company, although the market impact of different forms of financing can range quite widely (at least short term). An announcement of share issue raise is almost always at significant discount to market price (e.g. equivalent to the dilution) resulting in short term price drop. An announcement of securing a finance deal for business development (e.g. debt) is often greeted with significant short term rise in share price.

Does not (oops)

Dilution literally means more shares, that is the definition of dilution, dividing the value of the company between more shares so that each share represents a smaller slice. Non-dilutive finance refers to any means that does involve the issue of new shares (although you could argue about convertible notes).

I think we should be clear to distinguish between ‘whether’ they have a commercial discovery and what that amounts to. I don’t think there’s any doubt they have a commercial discovery, which does need to be further quantified, and have now moved on to planning ‘Phase III’ of the strategy (development and commercialisation).

Liberum are the NOMAD for HE1, and the joint broker for fundraising, as well as one of the MMs for this share. They may be right on valuation but they also have a vested interest in talking the price (or at least the company’s interest).

Non-dilutive funding options would be more likely after finalisation of commercial resource and production estimates. At that point there is a quantifiable resource on which to leverage loans, or to negotiate a JV. It’s possible partial costs of the EWT could be offset by interim income from leasing the rig. I’m still unclear on the latter option as they were keen to announce that there were interested parties, while the rig has remained hot stacked and crewed during a non-drilling period. We know they wanted a rig manager to start April, and we know that Noble have just short listed ‘local’ (low cost) rig providers for their shallow appraisal. How many local rig providers are there?

That is the modelling. You have to move from estimates of reserves to estimates of the contingencies for extracting them (engineering and costs)

I think it says in the RNS that results and feasibility study would be planned to coincide, so roughly 6 months?

Significant funding will be needed for Phase III (commercial development/production), probably more than the current mcap of the company, which is to be expected. The mcap is still very small for this stage of discovery. Anyone who has followed the long term road map will notice the thing many seem to have missed - that ‘Phase III’ is here, in the RNS, and we’re no longer talking about Phase II. That’s great news.

They have found commercial quantities of helium. But they now need to model those reserves and flows in a way that the O&G markets can reliably understand. This isn’t straightforward as it’s a mixture of traditional and unconventional reserves. Hopefully the EWT should provide enough data.

Please tell us you understand the difference between SP and mCap 🤣

It’s a pity you didn’t manage to buy cheap before if you’re still holding an average of 5p. It was 0.2p in January.

The company’s aim has always been to commence commercial production in 2025,

Possibly, or at least to finance by non-dilutive means. I think all options have to be explored. With good EWT results they could expedite and self finance a pilot production site with a loan against proven NAV and a low environmental impact. That would establish them as a helium producer and provide proof of concept to market. Or they can go for the larger scalable production concept (drilling more wells and modular plant design) but that would require a JV or major strategic investment (e.g. TZ government). They will need to design and cost both options in order to explore the finance options.

I anticipate any raise to be most likely within the current price range 1p to 1.5p, and there are enough unknowns for me to hold at today’s price, which I can afford to do. I don’t expect the much vaunted JV any time soon but there are other possible interim announcements that might move the price up. I’m sticking for today anyway.

The JV rumour is a red herring. Not a cat in hell’s chance before EWT and modelling results, and costings for production plant design etc.