Why I'm here21 Apr 2025 12:52
Just reminding myself re previous valuation of HEX. Oak Securities analysis and report in June 2024 set a price target (risked) of 93p. At that time the sp was 22.5p, market cap of about £30m, around 133 million shares in issue. Their target price equates to a market cap of £124 million. There are now 157 million shares in issue, so retaining the Oak Securities target market cap equates to a target sp of about 79p. The foundation for the valuation was stated as the acquisition of Rudyard to which they attributed a contingent resource of 0.48 bcf of helium.
BUT … things have moved on A LOT since then. In his interview last week Bo referred to the 1977 US Bureau of Mines study which indicated a resource for Rudyard of possibly 2.6 bcf. He now believes it could be ‘a whole lot larger’ than even that, so possibly several times larger than the figure OS used to calculate their targets. We’ll know more about this quite soon when Bo’s team pulls together new analyses from Darwin #1 + Weil #1 + Linda #1.
Also, as Bo mentioned, most helium plays in the US have 1 well per field, which may have been the assumption in the OS study. I am quite sure they would not have envisaged Bo’s vision of up to 20 producing wells across the field, or the establishment of a liquefaction unit!
The ‘up to 20 wells’ scenario means annual production, sales and profit should be way higher than ever envisaged by Oak Securities.
And the anticipated expansion in the resource means that the higher rate of production is likely to have a longer lifetime than previously expected.
All of which IMHO points towards a sp target very much higher than that proposed by Oak Securities nearly a year ago.
Exciting prospects! GLA investors.
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