Member Info for Blubay

“Surely someone Whois willing to put 10 million in knows they are onto a winner?”

They’re not investing £10m in the project. They’re putting £10m into the market for share trading to make a marginal return on capital.

It’s a fair analysis. The board were clear at the AGM that they wished to avoid dilutive finance if possible and committed to consult with shareholders if that was needed, which they’re now doing. It just means that they tried all the options for project funding Rukwa and weren’t able to secure loans, investors or JV partners at this stage (or not on good enough terms). If the CPR had come in with a commercially viable verdict then different story but further appraisal needed so self funding required. Then they’ve tried to raise the money on the share market and been able to build enough of a book that way, so they’ve reverted to convertible notes (or the broker and Nomad simply have them over a barrel). It happens all the time on AIM. The interesting part is Colorado. As you say, it was fully funded now it isn’t. There’s no way £4.5m is just cost slippage so something bigger is on the cards (either to buy out BNL’s project interest or the stage 2 development) which is potentially exciting news but we need to know more.

The proposal to shareholders is accept the raise at the meeting or it gets done anyway using a cash box. It gets done either way, as it’s the only option currently available for realising the projects.

JH - Because, like some previous capital raises, they have little choice at this point. That’s just how it is for small cap AIM companies pre-revenue. They will have hoped the CPR would give them enough ammunition to persuade Rukwa investors of the commercial viability but it came in slightly short of that benchmark, requiring more appraisal work to prove that they have recoverable reserves. So they have to fund the first stage themselves, which is challenging. The hidden bonus is Colorado. If they get £4.5m for that then happy days!

Yes, when the processing plant and pipe laying are designed and built out. It looks like the raise will fund much more than this, either acquiring a larger share or funding phase two development.

With £4.5m allocated to Colorado I think there’s every chance they’ll be going alone and taking BNL’s share in the Galactica project (not BNL the company). That would be very good outcome, as Rukwa will be a much longer term prospect.

Daffy, it’s just a standard AIM cash raise, they are not ‘investors’ in the project. They will trade the shares for marginal profit enabled by the brokers.

Sorry Toffers, I wasn’t being disingenuous. I also think it’s great for the company at the stage they’re at. I was hoping they could get a start up loan from the TZ banks to do the ESP appraisal rather than this route, but needs must.

“What is the cash box option?”

Jersey cash box. If you can’t persuade your shareholders to vote for an equity for cash raise by dilution then you set up a temporary offshore company, owned by the ‘investors’ cash, then you buy that company out in exchange for shares rather than cash. The result is the same but gets around the AUM shareholder consultation problem.

With all due respect, I don’t think you’ve understood the RNS. This means they’ve been unable to raise early stage funding through the JV/SPV structure alone, on the basis of the CPR, so they need to fund more of the appraisal work themselves to prove up the commerciality before that investment decision. They are doing that in the usual AIM mechanism of persuading venture capital to trade new shares.

The hats not a realistic estimate

Yes, will give clear security for a year and provides sufficient contingency to bring Colorado into commercial production without relying on BNL, if necessary. In the short term the new ‘investors’ will likely short as hard as they can to try and get the cheapest price over the ten day average.

No, the Colorado project was never expected to fund Rukwa. Both projects require project funding, at different stages of development.

Yep, similar story to previous, allowing the market to decide whether to boost the SP on positive news or short it for the new investors. Shareholders can choose to either accept the proposal or have it done anyway by cash box. The joy of AIM when you have limited options. Appraisal work needed in Rukwa before the CPR, off takers and banks will commit to FID. But the numbers also look like HE1 might be funding all of Galactica, which is very interesting. Great to have this nearly done anyway. Tough call but a necessary one.

The one on the company website, and previous for comparison

https://www.helium-one.com/news/cpr-documents/

Hi Expo, in this context a ‘sidetrack’ would mean entering the existing well head to a certain depth and then deviating to the side (saves drilling a new well from surface but not entirely without risk of messing the one they have). The rationale would be to see if fluid flow to surface could be increased by opening up the well more to the reservoir at depth. There’s no mention of it in the CPR though. For example, the CPR notes significant uncertainty about gas/water ratios from different samples and recommends further appraisal on that. Was the well head already engineered with a two way separation of flow from the intermediate and basement levels at test stage?

I can’t see why it would be moved. It’s stacked, there would be significant mobilisation costs. The CPR says they haven’t identified the well locations yet, with a view to starting in Q4, and CEO says they’ve commissioned further preparatory studies. On the other hand, they would need it where it is now at Itumbula if they want to insert a submersible pump or to try the side tracking (the two mentioned possibilities).

It's on the pad at Itumbula West 1. Here's a video of it in situ...

https://www.instagram.com/reel/DI0rbwsJMil/?hl=en

Sure, we're agreeing so I'm not sure what the problem is. Just back of an envelope estimates. Like I said, "Very roughly", and given the low dollar cost of local labour (plus the ESI benefits of training and employing local staff, which the company has made prominent in its pitch to government) warm stacking might well be cost efficient for a suspension of a few months, and at least until getting the licence (I'm guessing 9-12 months). Then there's the gain from rapid mobilisation , which may be task and time critical to the next phase of appraisal (such as installing an ESP).

There was a basic crew retained with the Predator rig Punter, as advised in RNS, and as per Tanzanian local content regs that should be mostly local employees. Very roughly, that might be cost efficient for a suspension of 9-12 months but not much longer (although the local benefits of maintaining a Rukwa based rig business may have been also used as part of the ESIA case?).