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The off taker wouldn’t receive equity as a partner in the JV (unless they were also the farm in partner). They would receive a guarantee of exclusivity for their guarantee of future sales, and possibly make a goodwill down payment towards advance sales. They would require a CPR, as would the lending banks. My question is whether a CPR would be sufficiently complete before proving up the artificial lift hypothesis, or whether that part of the appraisal (submersible pump install) might be needed?

I think you’re jumping ahead Toffers. The initial estimate was that they might aim for first production approximately 12 months after mining licence award, which we don’t have yet. So best to assume that’s the second half of 2026 at this point. There was suggestion of commissioning a pilot plant as one option but we’re not in development phase just yet. The project is now entering the appraisal phase.

For sure, signing off the ML is a given at this point, although there’s some added value now in knowing they retain 83% equity in the SPV. That’s a good de-risk as it gives them maximum equity to play with in financing. Otherwise we’re waiting for the same news we’ve been waiting for since early March (and really since submitting the licence application in September), hence the long term price trading range still appears to hold for now. Volume is great and new buyers coming in but I’d still be watching for any signs of a break above 1.1p or 1.2p for confirmation.

It’s unlikely anyone is going to come in with $100m Wyn and it wouldn’t be needed. The project would most likely be developed in phases, like Colorado, with early development possibly reinvested to fund later stages. What they need is a fraction of that sum to prove up the appraisal. That would raise the value of the venture substantially. I’d expect to see tranches of bank loans and potentially a farm in partner after appraisal. But just a guess.

Read the RNS Wyndrum. At this point the JV is established solely between HE1 and the government. HE1 retain 83% and the government carry 17%, making up the totality of the equity in the project vehicle. That means there is zero equity sharing with any other JV partner, and HE1 retain substantial control. The usual finance model for project development in Tanzania is loans from the national banks, backed by future off taker sales guarantees, and relying heavily on independent expert opinion (such as CPR). The project is just entering the appraisal phase so there will be some initial work to do on this before it moves into development phase. At that point you might see changes to the partnership and share equity distribution, such as a third party joining the JV or an equity raise for a portion of its stock (e.g. hypothetically they could leverage 33% of the equity and still have 50% under HE1 control). For now, it’s more likely Songwe gets an initial bank loan for appraisal or maybe a sweetener from an off taker to secure exclusivity. No idea but we’ll know soon enough.

It was a correction, ordinary trade incorrectly reported as OTC

Yesterday they announced delay to first production revenue dates in Colorado by up to six months, and without a timeline for the first step to get there. The purpose of the Colorado acquisition was to mitigate the near term revenue risk created by Rukwa turning out to be a larger scale and longer term project in 2023-4 (originally for 2025, now 2026). So the Colorado delay from Q2 to Q4 means a low likelihood of any revenue in 2025. But it’s already funded so that’s OK if there’s an alternative hedge against cash burn. We just need to know more, but it’s not great news when the market was reassured in an RNS just a few weeks ago that it was still on schedule, then the site permit granted, and now to be told even the design stage is not complete. I’m sure they have a plan and we’ll hear about it soon enough. Not a catastrophe, just a delay, but it would be good to maintain transparency.

It's good news, presumably released early to counter yesterday's bad news. Seems to have worked in stabilising the share price anyway, which is great. We're all still looking forward to the real news.

The announcement is very welcome and reassuring but doesn't add much news. They announced acceptance of the licence offer back in early March, and payment of fees. Approval of the licence application was then published on the Ministry portal a few weeks ago, along with the name of the joint venture company. The rest is all regulatory process apart from the confirmed equity splits and director appointments, which are also largely as expected. So signing the licence will be great PR but on its own might be largely priced into the recent trading range. Hard to know. The publicity could really help bring in new investors but then the bigger news is probably more about resources, development plans and finance.

6 wells x $450k is $2.7m not $4.5m (saved you another $1.8m there)

I have no problem with Punter, it's a public discussion forum so he's free to do what he does on every other discussion board as far as I'm concerned.

Great to see progress towards establishing Songwe Helium as the new SPV company that will develop and operate the Rukwa project as a joint interest between HE1's local subsidiary company and the TZ government (already named in the mining licence approval a while ago but we didn't know the equity split). The splits seem to back up HE1's preferred business strategy outlined by the CFO at the AGM in December, where HE1 hoped to proceed alone with the project as far as possible to maximise value and return. The fact there are no other shareholders in the framework agreement, other than HE1 and the government, means they haven't traded any equity for a finance partner at the outset (but plenty of scope to do that in the future, which is great if they can add value before doing that). The government's 17% free carry can't be diluted but a good bit of HE1's 83% could be used to leverage future debt security or to raise equity capital in Songwe when needed. In practice, I guess they'll want to maintain at least 50% shareholder control and a majority of voting board members. But that still leaves up to 33% of Songwe equity to play with (about 40% of HE1's dilutable interest). If they can minimise what they give away now to fund the appraisal stage then they should be in a strong position once they get on to the development stage. Hopefully a modest interim bank loan might be enough to kick off the project? Exciting times.

Nothing foolish about it. If others want to trade let them. I hold the same number of free ride shares I held a month ago at the same price they were a month ago, which I'm quite happy with (also same number I had a year ago at double the price, and the same number I had 18 months ago at 4x the price). That's sufficient risk on for me. I did buy a third more shares recently at 0.8p in anticipation of an imminent production schedule in Colorado and then sold them at 0.82p when that was delayed. I'll happily buy more shares when there's more concrete news on either project. What I'm not going to do is invent imaginary multiples for imaginary scenarios or extend my capital risk on bad news. We're all waiting for the same news we were waiting for yesterday. GLA

Yes, lots of potential tax deductibles and concessions available to Songwe.

Tax on the mining company should be flat 30% of net, so you’d need to first consider the gross margin, minus opex (including the water management and processing), gross royalty, any debt repayments or reinvestment, tax on net proceeds, and lastly the equity split on any distribution between Songwe shareholders. So the government should get their % pretax gross royalty, 30% tax on net earnings, and 17% of any post tax distribution or dividend. They’ll be happy enough.

The statutory free carry negotiation must reflect actual government contribution, so at this early stage 1% seems fair and reasonable, plus they get the minimum two director nominations on the Songwe board.

The economic agreement setting out all these terms should be annexed to the framework agreement as indicated in the RNS, but most of it should be formulaic in accordance with the laws and regulations. Royalties and fees should be tax deductible anyway. The kind of additional liabilities they may have negotiated will include any environmental costs and land restitution etc, including the water management plan arising from the ESIA.

That’s right, if I remember rightly it’s 12.5% on natural gas, 6% on precious mining and 3% on other mining.

If you’re a lawyer then you’ll understand the difference between royalties and share equity. They are not additive. Songwe Helium will develop the project and sell the helium. They will pay costs, fees, taxes and royalties. If they make a net profit, it will benefit the shareholders in proportion to their holding, 83:17 (unless they bring in another shareholder in exchange for capital investment, in which case it might be 50:33:17 or some other proportion).

Colorado processing plant is already funded ($2.25m contribution due from HE1’s fund raise last year)