Member Info for Blubay

You need to update your legislative searches and look at the Act in conjunction with the revised 2022 mining and local content regulations. You’re confusing royalties with equity. Yes, Songwe will have to pay taxes and % royalties on gas sales, but that has nothing to do with the equity split.

No, the “free carry” (preferential non diluted share) is the statutory component. 83% plus 17% equals 100%, that’s the split

No, the free carry is the preferential statutory share. It clearly says HE1 retain 83% of Songwe and the government 17% (so they agreed an additional 1% in negotiation).

They’ve confirmed what we knew, that the ML conditions were accepted, fees paid, the SPV company named, and negations in final regulatory approvals. The ‘news’ information is that HE1 retained 83% equity, and the government didn’t take any significant additional free carry. It’s a good starting position. No third party holder yet, but plenty of scope for one later.

Finance comes later. Project financing would usually come from the TZ national banks in the form of loans and/or shared equity, hopefully backed by guarantees from an offtaker. The retention of 83% equity at initial signing stage is good (only 1% extra for the government). It means there’s no third party stakeholder to start with, but it will allow Songwe to negotiate up to 33% future equity for finance, when needed, while HE1 retains at least 50% control. Hopefully we’ll see an early loan of some kind to start progressing the appraisal stage. So far so good.

That kind of imaginary isn’t helpful or constructive.

The project development summary is positive, following an exemplary drilling campaign, but the ‘news’ within it is disappointing. As far as I can see, they’ve announced below expectation helium concentration for the State 9 well (but helped by a strong flow rate). They’ve announced a 6 month extension to the key milestone for entering first production (hopefully it will be less). They’ve provided no timeline even for the first step of designing the processing plant (which only a few weeks ago the market was reassured would be up and running by the end of this month). There’s no agreement yet with a buyer for the helium. The CO2 processing/revenue appears to be deferred to a later stage of development. There’s no mention of any cost/budget implications. So yes, still a good project but not a good news day. But would welcome alternative views if I’m reading it harshly or incorrectly.

It's not subtle negative. It was less than good news so I sold some shares, hardly a crime.

Interesting day. Good effort from BNL in crafting a very positive news summary, albeit slightly less than optimal results and some delay to production. The primary objective of the acquisition was to generate near term revenue from H1 2025, and to mitigate the risks associated with Rukwa as a longer term project. As things stand, the CO2 + He processing plant remains on the drawing board, and the delay extends the cash burn so there’s plenty to keep an eye on. Still great potential, but some uncertainty for now.

On the plus side, flows seem good overall, indicating an average of more than 6 mcf/d helium per well initially, potentially more to come. The CO2 also looks valuable, but now suggested as a later stage. More future well locations added to the development plan too, possibly a second processing plant. All looks very promising but still jam tomorrow for the moment. News of the EBT probably encouraging in terms of confidence in company management success. On balance, due to the increased cost and risk, I sold some early on to preserve capital but I’ve held onto my free ride shares. I’ll buy back more when there’s concrete news from either project. GLA

It wasn’t a “massive dilution” at all Happy. It was only 10%, which should prove great value if and when they get the project on stream.

More than 3 months and less than 6 months I guess 😊

The original objective for Colorado was to generate near term revenue by end of H1 2025. That’s now H2 in BNL’s news release and more specifically Q4 in the HE1 version, so currently 4-6 months delay there.

Broomtree - you are misinformed. HE1 acquired a 50% legal interest in the entire Galsctica project, which is currently developed to 7 wells with a further 9 planned. They acquired this by paying BNL cash for their previous work up to State 16, and then funding the drilling of 6 new wells, plus half of the infrastructure cost.

Exactly. That’s why HE1’s licence areas are there, based on observation of helium surface seeps going back decades and then the initial survey work by the Oxford team and the TZ national geological survey. Initially Minchin (and then Noble) tried to tap shallow reservoir targets, then HE1 went for intermediate layer reservoirs, then LB switched tack to the basement fractures themselves. All backed by the evolving science (although the author of that paper led the surveying for the competitor company).

That’s right. It’s not about replenishing a gas reservoir, it’s about tapping into a flow of geothermal fluid carrying helium in suspension from source. The Rukwa rift is estimated to produce helium within a very wide margin of uncertainty (could be as little as a few hundred to as much as a few hundred thousand mcf per year). The fractured basement play is HE1’s attempt to intercept that transported helium in its carrier fluid, before it permeates up to traditional trapped gas reservoirs (in addition to drilling those reservoirs). The source is obviously not infinite but it is perpetual and the proposed extraction is not going to exhaust the flow of carrier fluid in the way that a typical trapped reservoir would be exhausted. In that sense, the discovery is believed to be a longer term helium prospect. It’s a hypothesis that’s still at the appraisal stage but which has the potential to be globally significant. Hopefully the market gets excited by that potential.

Fingers crossed for a helium concentration at the higher end of the range from that part of the field 🤞

Don’t worry, if he believes AIM exploration companies commission CPRs “to keep PIs happy” then so be it 🤣

With respect Punter, if you genuinely believe they have no need of a CPR then why on earth do you think they’re currently spending their vital cash on commissioning one? They didn’t need one for the licence application. They do need one to raise significant capital (and probably they’ll need an off taker commitment too). The project is now entering the appraisal stage and the CPR is a key part of that. We’ve known for months they were trying to identify a suitable person for the task, someone who could assess the hydrology. I don’t really understand why this is contentious.

Yes, they will need an independent CPR to independently validate their internal modelling, just like every other O&G exploration company seeking finance. Essential requirement for banks and finance institutions. That’s why they’ve commissioned one, which is currently in process.

PS. although the thesis he’s referring to was from Durham