Member Info for Clausewitz

Looks good... But clearly someone's phoning it in by using AI to write the RNS (the bullet point part at least).

Going through He1's past broker/analyst notes and presentations is better value than copy-pasting this generic material...

Calculating an upper bound to the share price is quite difficult. We should be able to take the pre-dilution 6p (i.e. 2p in current price) for granted as a bare minimum; where it will stop is anyone's guess.

2021 Analyst research note: helium-one dot com/wp-content/uploads/2023/02/21-05-24-Hannam-Note.pdf

Note that Itumbula alone is estimated to contain 4.6bcf (He1's share) of helium, which at $350/mcf is $1.6bn.

Investor presentation from 2021: youtube dot com/watch?v=A4zVkhSXlNw

Watch from 21:57 - talking about the potential value of the gas in the ground, former CEO David Minchin gives a figure of $35-50bn for the estimated 138bcf of helium in Rukwa, and notes that the total resource may be even larger than that. Tai does not seem to have lived up to expectations, and this number may have been an optimistic one from the beginning but even a third of the low estimate gives a >$10bn resource.

I have tried to work out the relationship between NAV (net asset value) and share price in the past, but didn't really get anywhere. Nevertheless, I'd think 10% of NAV, e.g. $1bn is a reasonable figure for an exploration company which is looking to sell on the licences? How thoroughly these have to be proved is another story... Note this is a very low estimate compared to what I could calculate with the other numbers they give.

There is the factor of lowering the global price of Helium given the large figures involved here. In any case, hopefully He1 gets another official analyst note out quickly to keep momentum up...

This board is like a pub after the town's third division team won a friendly against Real Madrid... There's a crowd of new faces wearing strips with the creases still in from the packet, multiple 'on the house' rounds from the lucky punters who put a bet on at 100/1 who are now dreaming of being promoted to the big leagues - and of course the tedious pub bores in odd-smelling donkey jackets have come out of the woodwork and are crowding out the bar, droning on about how this result doesn't mean anything and you're all in for a disastrous next season and back in my day etc. etc. Spare a thought for the supporters who were in from the beginning and who dug into their savings for the 'Save Helium Wanderers' drive last year.

Valuation-wise I think the pre-dilution 10p (2.7p adjusted?) is a very conservative target. That was based on having a rig, possibly being able to drill a possibly successful well, and some old-fashioned AIM optimism. We now have a rig, have definitely drilled a probably-succesful well, and sentiment is like a chimps' tea party on amphetamines. We have a huge amount of interest - more volume yesterday than Legal & General (which is being constantly featured on Motley Fool as a big FTSE 100 recovery tip this year) and apparently not far off Rolls-Royce. I'm not sure how sp affects this but I am sure it has got even more eyeballs on us than before.

Lorna (as I've said before) has no guile in her, and is inexperienced in the car-salesman aspects of the CEO role. This was a big problem when the City boys ruthlessly exploited the funding situation to get their 0.25p shares... However, I think this derisks her statements on the results - the excitement she showed (even through the speed at which she talked), and the possible slip of the tongue when she said 'rubberstamp' doesn't mean total certainty, but she's been doing oil and gas exploration for over 15 years and I'd guess she knows a good result when she sees one.

I'm not sure of the upper limit. There'll be takeover offers coming in thick and fast, but I imagine that to get the best figure He1 will need to do more exploration to prove up the basin further... I don't imagine a raise will be necessary under the circumstances (Lorna, if you are reading this do not listen to anything Sarah Cope says from this point on).

Good luck to (almost) all!

As we have moaned previously, Lorna is a geologist not a CEO, was played hard by unscrupulous financiers, should have stuck to looking at rocks etc etc. Previously, when we all loved her, we appreciated her straightforward, no fluff interview style. In short, she’s not exactly cut out to be a used car salesman type (rewatch the AGM if you can bear it) and her enthusiasm / relief in the interview is most likely genuine - the way she lit up when she talked about the hydrogen was especially interesting, though I know nothing about its significance myself. If she is excited now, so am I.

Back to the Helium readings - at Tai the figure was up to 6x background, and I believe the equivalent percentage of He in the sample was 0.8%. If this is over 20x background, that could give us around 3%, maybe more? I'm assuming "up to 6%" in some Tai samples means a rather lower figure, and "over 20%" here means not quite 21%.

I'm not savvy with the automated trade angle, but it is notable that practically every sell today has been an 'A' trade (though the 'ordinary' sells which have gone through have admittedly been bigger). Is it an algorithm tied to the natural gas price? That's up a bit today from what I can see, so I'm unsure what's going on.

Even if they're not needing a raise, it is surely good sense from the BoD to put out a statement or some good news to keep sp. healthy, reassure the market and discourage any takeover attempts...

This does look great, as far as the product is concerned - up to 10% savings on fuel for shipping just as everyone is taking the long way round Africa to avoid being blown up. I'm holding back a little because 1) surely a raise is incoming, especially with this jump in the price; 2) how exactly do they get buyers to use / lease / whatever this ultrasound kit needed for the shipping fuel elmulsification? 3) I'm not sure about the relationship the company has with RemNOX, a private company which owns part of SulNox and acts as a distributor (to distributors) and as a "a fully Independent Sales Organisation (ISO) for SulNOx" according to their website.

I am not too well-versed in corporate structues, but is there a chance that this company will be used to skim profits? It doesn't seem to be likely (much more money for the same people in generating a bigger sp for SulNox) but I thought I'd throw it out here. Otherwise there doesn't seem to be a lot wrong?

All this speculation depends on a lot of buys being made which don’t get sold for a quick 20% or even 10% profit by traders or the placees. Spud will come soon (knowing He1, this time it will be ahead of schedule) and before that happens there will be a frantic game of musical chairs as holders try to liquidate their positions before a possible duster announcement. Plenty of us planned to derisk before the last drill but there was no pre-spud spike then… Confidence in this drill / the company is even lower now so I don’t expect much movement.

I am at a 5p average just now (having bought some 0.25p shares) and I am sorely tempted to average further, but I can’t justify the risk given that I bought and averaged down previously with the same reasoning, dreaming of many multiple returns - if I threw all of my investment funds in I could actually get down to 1p, and ruling out the hope of getting even half of my initial investment out is painful.

What we need to know is the plan of the placees - are they churning everything, or will they hold onto a fraction of their shares through the drill? Impossible to know. As for the drill itself, I am crossing my fingers but it looks like the assumptions the company had about the geology at Tai were incorrect... The nearby surface seeps at Itumbula are a bit more reassuring but we could all do with keeping in mind the fact that everything we are told will have the most positive spin possible put on it.

Finally,

Canaries in the coal mine

Ambiguous: Ian Stalker leaving - he's getting on and has other companies to look after, but he may have simply written He1 off. It does seem like a lot of the original visionaries have also left for whatever reason.

Sarah Cope as non-exec Director - she had previous dealings with another AIM company which screwed over PIs, and though I'm not exactly sure whether she was incompetent or actively shady, a lot of posters have been very concerned to see her involved here.

Overall, I am pessimistic, with a little hope for pre-spud trading. I should not have invested so heavily in an exploration stock and it has been an expensive lesson... I'll consider myself very lucky if I only end up losing half of my initial stake.

Please share your own takes, and feel free to correct me if I had my head screwed on backwards at any point.

Cont.

If I were new to He1 I might do something along those lines - put in a few thousand quid, planning to win it back in instalments as the price climbs up to the likely spud date and get a free ride on the surplus shares. I'd probably not take any profit out pre-spud, but if past experience is anything to go by I would also get greedy and add more as time went on. Actually this is exactly what I did do in 2021. Here the promise of helium feels less sure, but the low mcap opportunity is a new dynamic at play.

Poor management

Lorna as a CEO is not experienced where it counts, and she seems out of her depth in a number of very important areas - specfically, fundraising; the fine details of rig ownership; and possibly project management on this scale. Rig-wise, owning one outright is good value for the long-term even if it needs repairs, but He1 has to survive in the short term and ownership hasn't helped with this at all. Buying it might have been a misjudgement, but in fairness Lorna didn't have many options here; similarly, a lot of things are/were out of her control, but keeping on top of cashflow and not leaving the company in such a vulnerable position for fundraising is a basic responsibility of being in charge, like keeping your king defended in chess. Overall a bad hand, played not very well, against seasoned card sharps. Note that Minchin was sacked for much less (though if he had plumped for an oil/gas rig first time round. who knows where we might have been now).

And in general: if it walks like a duck, quacks like a duck... He1 hasn't proven itself a tightly-run company with prudent management up to now. Assuming a spectacular result at Itumbula, how would this team fare with farm-out / takeover negotiations? Frankly, I suspect they'd get shafted, especially as they will need funding straight away. A new CEO might do better, but would still be in a weak bargaining position.

Helium

Pre-Tai-3 drill, the talk was of a discovery-in-all-but-name in 2021, but when it was drilled there was apparently nothing to shout about. The basement, which is the next promised land, is the place where the helium is produced - but I have always been under the impression we are searching for an oil/gas style trap and seal where free gas has been accumulating. I'm not a geologist, but it seems intuitive that the lower you go, the more diffuse the gas will be... Even if we see good percentages, what guarantee is it that there will be a good flow rate?

I am not so confident about my reasoning here, but I'm definitely far less optimistic about the geology than I was before (though I was entertaining unrealistic hopes of 5% geysers of gas etc.). Maybe if we had a half-dozen more drills to play with, we could find the sweet spot - but we don't. Itumbula does seem promising with its surface seeps, so I'm not writing the geology off entirely - but it's clear we only have one shot at this.

What I want to know is (as someone who is *very* deep into this stock): is there any hope to 

1) multibag from these low levels; 

2) recover our previous mcap;

3) reach previous mcap (not sp) targets on a significant discovery?

My guess is

1) quite probable;

2) not without a real discovery (which I think is unlikely) and personnel shake-up;

3) maybe, but it all rides on a successful next drill (again unlikely), and the exec team will be in a weaker position to negotiate farm-outs / a new raise even after a good Itumbula result.

My detailed thoughts below - an exercise for myself mostly, but I thought it would be of use to share them here.

Share price

We are at a quarter of a penny because the big boys who are friendly with the broker could ruthlessly dictate the price after He1 was left vulnerable due to mismanagement / overspend / our broker's excellent 'legal advice'. It is not at the 'true' value of the company (which is not to say that He1 is anything great at the moment, but it has assets and licences and now some drilling data)... The Sepember raise at 6p after a price slide following a month up in the 9s was also suspect. Obviously sentiment is a big part of the valuation, and this has been hit hard by the fleecing we have got as well as the apparent mismanagement of the whole affair; adding to that, the weaker the price, the more vulnerable He1 is to further exploitation.

Worst case: all shares in the raise were been forward-sold, and the buyers, content with risk-free >3x profit, have no interest in seeing the price rise further (and some might think of pulling the same trick again for the next fundraise, which must come very soon given that the last one raised the bare minimum to drill Itumbula). With so many shares floating, and most PIs/traders looking to grab a quick 3x profit or guarantee a claw-back of even a little value before spud, there will be insufficient buying pressure to raise sp to a decent level (1p) before a disappointing Itumbula drill; as with Tai-3, pre-spud hype does not have the same effect as in the 2021 drill and derisking is unfeasible for most.

Best case: the raisees have held on to at least a few of their shares and don't want to drop the price again; PR, greed, and existing investors with high averages to dilute send up the share price by double-digit percentages several days in a row (note that a week of consecutive 10% increase days would only bring us to 0.4p); new investors look at the daily 'riser' charts, see how far off even our previous lows we still are, and pile in further in hopes of jumping out before the music stops - winning their initial capital back quickly and throwing their profits back on the roulette wheel.

However, anything less than an unambiguous Itumbula success = dilution to oblivion or a wind-up of the company.

Thanks Jimmy. That is good to know… though it still leaves me (and you!) puzzled about the reason behind the low price. The bit about re-risking I got from reading others’ posts elsewhere, so it may be a widely-held misconception - were many PIs pinning their hopes on a fantastic deal with no further hurdles to go, and bailed out when that didn’t happen?

I hope it’s mostly down to a big seller needing the cash to cover some other liability, but who knows…

(Cont.)

5. Green / hydrogen etc. distraction

This is a big one for me - investing in South African energy infrastructure (and with a focus on renewables of all things) seems crazy given what I know of the place - transformers being ripped apart for copper wire and the like. In any case, surely the main effort should be on Anchois which could then generate cash for other ventures, rather than running off and starting new international Del Boy schemes. It feels the company is always trying to bite off more than it can chew, and the discovery at Anchois was just a lucky fluke which is not getting the care it deserves.

6. Re-emergent risk

The new deal really hinges on the flow test going through (which we were previously told was not necessary) and Anchois being all they have claimed it is when they revisit it. Thi seemed to make sense to me but I would have thought that this would be the case whatever the deal; if the gas doesn't flow in the right quantities then goodbye revenue from Char's share and goodbye accordingly high share prices. Perhaps this was the reason for a lack of a big jump in price on the deal.

That's all I can think of at the moment. I'm not trying to deramp, I am just genuinely confused as to why this share is not doing better and want to make sure I'm not missing something obvious.

Why is Chariot at so low (and falling) a price? I am in Helium One and the last week or so has been a lesson in not being greedy / out of my depth, so I really want to make sure that Chariot is not going to go the same way or anything like it. It seems to me that CHAR should be doing great (I topped up on the morning of the Energen deal), and I am not comfortable with things being so out of kilter with my own expectations. 

Here are my thoughts - please tell me why I am wrong / how things will improve / reply with your own ideas.

1. Automated trades keeping the price down

I'm not an expert in how this is done, but I've seen many posters complaining that CHAR is being targeted using this method. If this is the main reason for the low price then I suppose it is preferable to others, as the people behind the ATs will allow the price to rise eventually once they've had their fill of tree-shaken shares (unless they are priming things for a lowball takeover).

2. High expectations for the possible partner were disappointed

With lots of PIs dreaming of Total or another major coming in, the appearance of a relative unknown killed the buzz. The Israeli connection introduces a potential issue (but if the Moroccans are fine with it now I don't think this is too significant)

3. Confusing deal

I don't have the vocabulary to understand many of the aspects of the deal (possibly a sign that I should sell out now), and tbh even the bits I do 'get' are hard to convert into share value. Other analysts have said it's a good deal though, certainly underrated: https://www.investorschronicle.co.uk/ideas/2023/12/07/chariot-s-transformational-farm-out-is-underrated/ But I cannot believe that the company is worth less with a confirmed deal, than it was in the long period of uncertainty leading up to it.

4. Awful communication from the BoD / Execs

Possibly due to confidentiality clauses during the negotiations - but there should have been a lot more PR after the deal. Not drumming up the share price through PR makes future raises more expensive, and leaves us vulnerable to the kind of stuff that just hit Helium One.

Hello all - thanks for the insights being shared here! Pretty new to share-trading and AIM in particular, but I'm confident I'm in the company of people who know their stuff (for the most part...). He1 seems to be a great pic on every basis, apart from the uncertainty about drilling... Wish I'd been aware of it earlier, but I can hardly complain if things do go well.

Speaking of things going well, I am lusting after a £1+ value like everyone else, but I was wondering where you all actually expect the stock to rise to if all goes well in the next few months. If it does all go to plan, I'm inclined to hold for a couple of years, at least until production is up - I would expect the share price to be at its best when the operation gets going and starts to ship the gas out (though I can see Tanzanian politicians wanting a bigger slice if it gets that far).

But what price could this get to, in an ideal scenario? From what I can tell, there will be 600m shares in He1 including Thursday's dilution. I assume a company with a $38bn resource will not be worth that full amount, but it must factor in in a big way... And even a $5bn valuation would make each share worth about £6.25. When I start thinking about figures like that I begin to think I am in the realms of fantasy - does anyone with more knowledge of this sort of thing have more coherent thoughts?

Touch wood, of course... Potentially very dangerous to get carried away with these thoughts, so please don't invest more than you're prepared to lose... And I'll try to remember that myself!