Member Info for Blubay

Absolutely, it’s a report of developments up to end of last year so expecting ‘new news’ is a bit unrealistic and all was confirmed at the AGM anyway. The only real bonus was to see the cash position quantified here.

I think that depends how much of the August raise still sits in cash (spent/committed/uncommitted?). By 31 December they may have paid BNL the initial consideration for Galactica but they won’t have paid out anything for the delayed drilling operation, or at least very little by then, so I’d assume much of the cash balance at end Q4 is committed expenditure within H1.

“..it does show that the city have an upward trajectory for the company.”

It shows nothing of the sort. Liberum is the company’s joint share broker and Nomad, it’s hardly an independent analysis representing the city. They’re maintaining the same price target as their previous note, before the ML offer, which is positive but take it with a pinch of salt.

It takes a lot of trading volume to move the SP with 6bn shares in issue and there seems to be consistent sellers every time at 1.1p (e.g. taking 10% from 1p?) but they’ll exhaust in the end, hopefully before bigger news lands.

The explanation is all there all in the link you’ve already posted, in esssence….

“no financial contribution shall be required from the Government on account of its shares, even in the case of an increase in share capital and free carried interest shares shall not be diluted even when shareholders increase or on account of the borrower.”

Correct me if I'm wrong but those are the specific areas of conditions that may be attached to a mining licence offer, are they not?

"More than likely the offer includes involvement from the TZG as a JV or some other type of contract partner."

There's no reason to infer that at this stage. It's just a mining licence not a JV agreement. The licencing conditions will include the legal provision of mineral rights (which minerals and under what conditions of ownership), annual reporting conditions, payment of rent, royalities, minimum expenditure obligations, environmental bonds, rehabilitation conditions etc, which are likely to be complicated in this case by the massive issue of large scale water usage or pollution in a tightly regulated water management zone, and mining activity in a national wildlife reserve, etc etc. There could be all kinds of licence conditions that present potential liabilities for the company to consider.

Once the licence of mineral rights is awarded then HE1 can also transfer those rights or use them as security, sell them or enter a JV etc. Project finances won't be negotiated in the mining licence, that's more about establishing the SPV operating company to do the mining (presumably a new subsidiary company).

There's nothing unusual or unexpected in the offer of the mining licence, other than the slight increase in the area covered by the licence offer. It's the first helium mining licence to be offered in the country and it's an unusually large scale area for any kind of mining project development in the country. Normal pattern of licence application, review, recommendation (current status), acceptance and award. Nothing of any exception to comment on so far.

That seems an odd set of assumptions Wyndrum. Back when the new board and LB took over, the plan was that Tai would lead to a fairly easy to exploit project (6 wells) but the drilling campaign showed that the prospect was more challenging and costly (‘geologically unique’). The failure to tap shallow free gas at Tai and the relatively low flow rates from deeper gas in solution at Itumbula made Rukwa a longer term project and they needed a shorter term revenue stream to hit their 2025 production goal. We know they’d been looking at acquisitions for over a year, so Colorado wasn’t entirely surprising and it looks like a good return for only 10% dilution. Personally, I think a business strategy of near to market project acquisitions is a smarter way to go for the company to become a leading industry player over time. Rukwa may be large but it’s also expensive and difficult for a small company like HE1 to realise. Hopefully it’ll be a success in time.

Yes, but that’s a different RNS about a different well. The post is about yesterday’s news, which is in Lincoln County not in Las Animas

This news has nothing to do with Galactica or HE1. It’s confusing as it’s a similar we’ll name but it’s in a different part of the state altogether.

“2.8 bcf helium = 1 billion pound roughly 💪”

Exactly!

Honestly, it doesn't help to keep repeating the "138bcf" claims. It's an estimate of 'prospective' resources before any drilling or subsurface testing. It's not an estimate of 'recoverable' or 'contingent' reserves. The 2021 Hannam research note gave a gross NAV estimate of about 25bcf for Rukwa, or about 20bcf net (subtracting the 16% share). That covered prospects at Kasuku, Itumbula, Mbuni and Tai (plus the Lake Beds, licence relinquished I think before the ML). The 2023 ERCE CPR gave a 2U prospective of 2.8bcf for Tai.

That’s right, and I think the SPV is obliged to give the TZ national banks first dibs on their financing options, with the Gov also having to approve the terms.

Aargh typos, ITW1 not EWT 😂

No chance they’ll go it alone to raise $100m project funding, there has to be some combination of loans and equity sharing with partners. But as they’ve already said they would prefer to go it alone for as long as possible down the road towards that goal. It will be much easier to raise finance on better terms with less pain if they can progress the initial appraisal phase on their own terms. The rig is ready to go and the well service tenders prepared. They’d probably only need to fund one well appraisal using a pump, either at EWT or deepening Tai, plus the cost of the CPR.

We know their own feasibility study indicates positive economics with 30 wells at a cost of $100m. The market will need independent verification of that claim, hence the CPR.

I’m sure they’re credible, just that the market and larger investors will need that confirmation.

It would be interesting to know, but I suspect we won’t know until it’s a done deal. Hopefully they’ve now lined up all the tenders for well drilling services, ready to go in Q2 or Q3, and they have a plan to raise capital to enter the appraisal stage (hopefully with less dilutive capital). I have a feeling they might be hoping to prove up the commercial feasibility on their own first, to raise the value, before doing bigger deals. I might be wrong.

That’s an assumption you’re making. We had the EWT results, which resulted in a significant price movement. What hidden number do you think will move the share price significantly? Up or down? I think what we’re waiting for is independent confirmation that the EWT results (driving the feasibility study) are credible, which requires a CPR and probably a well appraisal to test artificial lift. I’m not sure if we’re expecting any different numbers from the discovery well?

They certainly talk a good talk. They’re in a battle for survival at this point with a share price near zero and therefore little chance of raising more equity unless that improves. But they’ve broken the back of their recovery strategy if they can get their projects into production before their cash runs out. If not, then I wouldn’t be surprised if HE1 bailed them out again for a larger share of Galactica.