Member Info for Blubay

Cope and Carver are AIM capital market and governance veterans, both former Nomads and finance gurus. If she’s brought in Carver then there’s may be a significant corporate transition or capital event in play. Whether that’s an investment strategy, acquisition, sale, merger, takeover we’ll have to wait and see.

Old playmates, Carver was Head of Corporate Finance at AIM broker Seymour Pierce while Sarah Cope was a Director of Corporate Finance.

Anyway, no one is suggesting any kind of takeover or farm in to HE1. The farm in is for the Rukwa project which is operated by Songwe Helium Ltd, in which HE1 own 83% of the equity.

Stan - LTIP terms are detailed in the company’s remuneration rules and summarised in the annual report. As is normal

“ Long-Term Incentive Plan (LTIP) awards will be capped at 75% of salary, with vesting subject to continued service and/or performance targets”

“To drive and reward the achievement of longer-term objectives, support retention and promote share

ownership. Share options and/or conditional shares. Vesting is normally subject to the achievement

of performance conditions.”

The LTIP has a minimum three year lock in, which seems like a fair timeframe to judge return on investment

Yes, Sinopec are the first outfit in the world producing helium from ground water in the absence of hydrocarbons, although they're doing that as a seasonal byproduct from a geothermal heating and energy plant, which covers the operating costs. We don't know how much helium they're producing at what cost, it's a pilot project but if successful then a model for what's possible. They're also actively working on advances in membrane separation technology that should improve future processing speed/capacity/cost.

It's always been a long term project. Targeting a new appraisal well, either at Itumbula or Tai or somewhere in between, or up to Ivuna. Stripping down the rig and moving it, drill pad and service roads, contracting well services and long lead items, drilling, conducting an extended well test and electrical submersible pump test. If successful confirmation of discovery and an improvement in gas ratio to commercial levels, then commission a revised CPR confirming bookable reserves, then seek larger financing for an early stage production pilot, to drill five wells and commission a modular processing plant into rural Rukwa. If that proved the concept commercial then moving to a final investment decision for phased financing into larger scale field development.

It depends what the model for farming is. If it's a proposed deal for equity split (or convertible share) in Songwe Helium Ltd then they'll have to administer that through Tanzanian entities.

I think your assumption of 'Month 3' in that sequence is optimistic.

Honestly, no reasoned investor is going to hold any significant stake passively in an early stage AIM exploration share for the long term. That would be contrary to all historical market evidence and advice. I accept that some people do it, we've all lost out at time either holding to long against better judgement or as a gamble, or possibly even being misled by serial rampers on public discussion boards. That's just how AIM capital event funds work, your buying is usually their exit liquidity.

I imagine that if /when they can get the company on a stable footing then they'll deal with the historic liquidity gap by doing 100/1 share consolidation.

From a company perspective the board and management have done well. They've transformed an early stage exploration company with no bookable reserves and zero income for a decade, to the point where there's revenue generation and investment for commercial growth in the USA, plus a discovery, a strategic mining licence and their own drill rig in Tanzania, with cash in the bank and zero debt or loss of equity share. They managed to raise tens of millions of dollars on the capital markets to do this without any bargaining collateral to work with. Obviously that comes at a cost to anyone passively holding shares throughout those developments but it's not unusual. No-one expects to hold early stage small cap AIM shares long term without significant loss, and there have been several opportunities to make fortunes trading the cycles. I agree it looks like a ruthless game but you don't get to swim in a shark pool for long without hiring a shark or two. Most of the management options awarded in the past have become worthless and I think three years is a reasonable time frame to try and incentivise management continuity in hope of some return on investment through commercial development.

Stan - there is no reason whatsoever for Rukwa to be considered a ‘zombie licence’. Utterly absurd. HE1 has spent millions on appraising Itumbula during the past year, and hired lots of local people in the process. Why on earth would it be considered inactive?

LSE Rule 1 notwithstanding

“You will only have one login account. Registering with multiple accounts is not allowed. Any user found to have more than one account on this site will have all, and any future accounts suspended permanently.”

Although it’s completely unenforceable these days with disposable email addresses and IP masking

Onsite liquefaction has also been suggested as part of the longer term development for Galactica, which could pitch their offtake sales into a higher value market if proved economical (cutting out the middle man).

And ‘positive mind’ seems to have forgotten that they only opened a new account here last week 🤔

The shares are awarded as part of a Long Term Incentive Plan (LTIP), so they would be at no cost but can't be taken for at least three years. Basically, it's an incentive for the key people to see that through and to make the shares worth something in the future (usually there are some performance targets attached to LTIP awards). They also have a bunch of options but most of those entitlements are offered well above current share price (1p, 6p etc), so those share they could buy but would only act as incentives if the share price rose accordingly.

I think Rukwa is a tough project to manage, they did absolutely the right thing in diversifying their business risk strategy to near market opportunity in a more easily developed jurisdiction as soon as they got the EWT results from Itumbula. The suboptimal ESP results vindicated that decision and it's played out well, give or take the kind of delays and overspends that are common in the industry. I always felt they needed to hold out long enough to provide the market with production revenue from Galactica before showing their hand in Rukwa. It's still a brilliant narrative flagship project for playing on AIM capital markets speculation but a challenging one on the ground to establish an entirely new industry, reliant on novel technology, in a remote region of a sometimes messy business jurisdiction. If they pull it off then it's a global industry game changer but it will take time and deep pockets. Personally, I find the business strategy of diverse near market acquisitions more compelling than costly exploration/appraisal, if less exciting, but if they can pursue both then great.

The future plans for Galactica-Pegasus include possibility of building out liquefaction facilities onsite, which would put them in a great position if they can develop the capacity to support it.

The CO2 is the hidden bonus value from Galactica phase one, at higher volume and quality than anticipated. With luck the first phase of helium output should cover the opex with the CO2 being nearly clear profit. If there’s also a sustained price rise then great. Adding more wells to bring the plant up to full capacity with no debt then really starts to add up.

Triple - they’re not selling premium grade helium to high tech manufacturers. They’re selling low grade helium to the ‘lift market’ (balloons) and/or supplying local purification and liquification plants that produce higher grade helium for domestic or export demand. There will be increased demand on the purifiers but whether that translates into higher spot prices for their low grade suppliers depends whether they have extra production capacity or a shortage of suppliers.