Member Info for Blubay

Good news that the rig is moving straight on to Jackson 29, now the first wells are complete. Before starting 31 and 4 they reserved announcement in the schedule after that. So this is very good, 29, 27 and 2 to go, then maybe the mystery additional we’ll, onwards and upwards.

“Soluble gas in water under pressure isn't the worst case scenario,”

Helium is not soluble in water. No gas has less solubility than helium.

“maybe late Q3 before we see any revenue. Or am I reading it wrong?”

That depends on the schedule of drilling. They could just as easily bank the first year of cash and drill the second phase in 2026.

"A year has passed since Itumbula results & we still know very little about the results ."

It was 27 August, it's only half a year, and we know plenty about the results of the well test, both at the Karoo and basement levels. We know less about the subsurface modelling done for the ML application.

Deep - “I find it hard to believe that one has not been done yet”

As they’ve not yet entered the appraisal phase, I don’t think that’s hard to believe. A CPR might offer more bang for buck to the market if HE1 could prove up (derisk) their optimised production flow claims first. That could be relatively low cost with the rig ready to go and a submersible pump, or maybe they’d want to try deepening Tai to test. AIM companies don’t often go to the bother of paying for independent validation reports unless they’re preparing to raise capital, so if they were rushing into a CPR it might be noteworthy but they seem fairly confident to proceed without one at the moment. Might be wrong.

We don’t agree.

"...given the current level of activity current circumstances are obligations and committed liabilities we are fully funded for the next 12 months and ... we have a we have essentially a clean bill of health from the Auditors, ...there was a sign off on the working capital review and that actually didn't include references to the working capital and funds that will acrue to the Bluestar Galactica project so they're kept on one side and ring fenced but we are fully funded for the next next 12

months"

https://youtu.be/kz5ETYz348U?feature=shared&t=2491

Q "...what is your funding position how much cash have you got and how long will it last?

A ...as I said on the on the finance slide, we have sufficient cash reserves to see us through our current obligations for 12 months"

https://youtu.be/kz5ETYz348U?feature=shared&t=2980

By end December? I would think so. The ML prep involved a 6 month process of preparation from March/April 2024 (ESIA etc) which was costed into the previous equity raise, there was a sub-surface modelling team and technical specification of the processing plant, then there was the EWT, well services etc but all was completed by September so it would be surprising if it wasn't paid for by year end. There would be legal due diligence on the Galactica acquisition deal in October. But again, just to revert to the statement at the AGM in December, the CFO was categorical that there was free cash for 12 months in addition to planned operational costs.

"Has all this money been spent or is it included in the €10m left ?"

Yes, planned operation expenditure was included in the cash balance at end December. But to be clear, the statement at the AGM also made it very clear to distinguish that there was 12 months free cash remaining to run the business, in addition to planned operations in year (so that could mean anywhere between say $3-5m), which fits, e.g. $8m for Galactica minus $1.5m spent = $6.5m left to spend from a cash balance of $10m = c.$3-4m free cash remaining for the half year to end June, or to end December 2025, or somewhere in between.

"it doesn’t seem to add up"

It adds up fairly easily. We knew they had basic working capital for at least 12 months back last summer (accounting year runs June-June). We also knew they raised capital last year for acquisition and operational developments (EWT and Galactica), and that they topped up the working capital at the same time (don't know how much). They raised $8.2m at the end of August, on top of whatever cash balance they had going into Q4. We know they spent at least $1.5m in the initial payment to BNL in November but even so, it's perfectly in line to imagine they had $10m remaining at end December. Why doesn't it add up?

Of course you can, you can sell anytime you like if you feel uncomfortable with your timescale or that there’s a better bet elsewhere. Never be trapped in a share.

That’s not a charade though is it? They’ve been completely open about the project costs for years, in the region of $100m. The feasibility study demonstrates positive economics at that cost and the commission has offered the ML on that basis. The company has said they’ll hope to raise that through a combination of debt and equity sharing. Where’s the charade?

What's a charade? Are HE1 pretending to have a cash balance, or BNL pretending to have commercial gas flows, or the TZ government pretending to offer a mining licence?

It's a bit confusing because there are 16 development wells marked on BNL's project map (including State 16) but they've labelled two different locations as Jackson 29. If the first phase is 1+6 wells and they're clustered together to tie in then State 9 looks like the likely candidate to add to the list (it's just North of State 16 and doesn't seem to have a Form 2). That would solve the puzzle anyway.

Sorry, yes it does look that way, the 6 well programme plus State-16, but it's unclear where the other well is on BNL's Galactica-Pegasus development map

Jackson 31, 4, 2, 27 and 29

That's my reading of the payment schedule, an up front consideration then funding per well, up to a maximum of $450k per well (after that 50-50 additional cost sharing). If they've struck a careful deal that will be on completion per well.

The first production well was already completed at State-16 (the discovery well is prepped as a production well), so the five permits cover the whole first phase of drilling (Jackson 31, 5, 2, 27 and 29) i.e. 6 wells in total, three completed, three more to go.

Yep, I assume at least $1.5m was paid out by end December and possibly more, which might increase assumptions about working capital remaining. They clearly said at the AGM they had cash for at least 12 months.

Net cash position at end December (half year results from June-June) confirms the statements at the AGM that the company remains fully cash funded for all planned operations and working capital until at least the financial year end in June if all goes to plan.

$10m cash balance remained in December, after raising $8.2m end of August - we don't know how much of the raise capital was spent by end December, but completion of farm-in deal was early November so seems possible/likely that at least the initial consideration of $1.5m was paid out to BNL before then. If so, then maybe up to $7.5m remained for Galactica development and at least $2.5m remained for working capital (but could be more if more of the raise was paid out to start drilling)?

Interim period loss of $1.9m (£1.1m) for the half year (impossible to know, but if that's an approximate cash burn rate then roughly double by full year end in June, say another $2m needed in this period (although they did implement some significant cost savings)

First income revenues due before end June, but unknown yet how quickly these might be needed to be reinvested in the next drilling programme (9 wells, presumably at half the cost per well to HE1, split with BNL, maybe $250k per well?)

All a bit back of the envelope but looks fine for now, with new revenue, borrowing or capital anticipated by the end of this accounting period?

It’s an AIM broker’s note, useful insider analysis and context but I’d be surprised if you can find one that talks down the prospects of any share they’re engaged to represent. The whole point of publishing broker notes is to whip up interest from prospective equity investors (e.g. prior to book building or just to maintain market buzz). I think it’s a decent aspirational price target for where we are, with current share numbers, if things go to plan. I’m optimistic.