The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
@RJ "what would you opt for?"
I can't predict the future so in general in shares just try to free-carry in an ideal world where I can.
@RJ
"Should they go it alone Seek a JV Or seek a buyer."
Renergen went alone it peaked at £250m marketcap approx once they proved up larger reserves to underpin a large plant. Gone into an orphan period now due to delays on its pilot plant and yet to list on the nasdaq in order to start building the larger plant.. They are hoping for £250m in ebitda from like 2027 with only 145m shares today with some to be added for the nasdaq ipo.. So that's a case study for going it alone
A JV lessens risk if with a big guy like Linde who manufactures plant equipment and the iso containers for transport but lessens upside - Linde Air Products and Messer etc.. have a nice helium cartel and don't want new players competing against them in the spot market where the very high prices of over US1000/mcf can be obtained
A buyout is ok gets you profits back quickly from your investment and then eliminates the africa-Tanzania risk versus if holding long-term so that might appeal to some
@RJ
"we all know Helium is profitable at 0.5%"
To me that generalisation does not hold in a few cases the figure can be higher or lower depending on the project and key factors like the flow rate and whether there are substantial fuether revenues coming in from CO2 or methane etc..
As an example Air Products supply NASA for instance and their Model Dome gas has 0.4% helium (less than 0.5%) but their wells flows as high as 20mmcf/day = 20,000mcf/day of raw gas containing 0.4% helium so 80mcf/day of helium produced plus CO2 production also etc..
Compare that to Blue Star helium that were talking up a well with 8.8% helium with nitrogen the carrier gas for over a year.. When they finally flow tested it flow only 15mcf/day at 3% in reality so only about 0.5mcf/day of helium so basically not commercial unless they can remedy the flow issue..
Qatar supply like 30% of global helium and their helium percentage is like 0.1%. But Qatar is supplying huge amounts of nat gas so they get 0.1% helium mixed in with the nat gas to work.
HE1 talk of US$50m for a plant to me seems understated when NHE talked about US$300m for a plant. A mute point however if someone like Linde can provide a plant but then what's in it for them? Cheap helium I guess..
Noble and HE1 working together I agree would help eliminate the middleman like Linde potentially and open up more of the more lucrative spot market where prices can be double long-term contracts for instance.
I'm not saying big players aren't interested. There's global shortages of helium 4.0 so of course Linde etc.. are watching. What I'm saying is today NHE and HE1 are still at the prospective resource stage.. Things generally get more serious when at least there are contingent resources but even more so once it's commerciality is proven with proven reserves.
PS Hydrogen is a nice bonus for potential further revenues but sells for only a tenth the price of helium so a higher percentage than 2.2% would of been better I reckon - seen over 80% hydrogen with asx listed GHY
JV maybe with NHE but that restricts the ability to raise money for exploration exploration to only one exchange unless in such a scenario its dual listed on AIM and the ASX..
Serious players will see how expensive drilling has been for HE1 at Rukwa and just keep watching until it's proven up further ideally for them into commercial reserves. Today an official discovery hasn't been announced by HE1 and proof they can commercially extract with sufficient flow-rates and quantities the helium from the water.. Bear in mind by solubility there is a maximum of only 0.6% helium in the water I believe..
Https://hotcopper.com.au/asx/nhe/discussion/
@safpatel that's a link to the nhe discussion board on hotcopper in Australia..
They haven't declared a discovery yet and have more work to do
@EssexMatt didn't see that but did see somewhere recently that methane from dinosaurs could of been enough to warm the planet as per this article lol
https://www.reuters.com/article/idUSBRE8460PH/
Is it after 40-45 days the liquid nitrogen starts to create venting and helium starts to lost? Anyway the reason HE1 was targeting Asia and Europe where they can get to the customer within 40-45 days..
When I've checked unfortunately it's over 50 days by ocean freight from Tanzania to the USA
Hydrogen is only 2% for HE1 so not sure it's enough maybe let see
Methane when the carrier gas is like 95% of the gas stream so plenty of methane (nat gas) to sell to the market and use a portion of it for a gas to power plant to run production
You need to get to -269°C to liquify gaseous helium into liquid helium to fill iso containers for long distance transport ..
That takes a chunk of power. If the carrier gas is like 95% methane they have the advantage to use the methane to power the liquifier if they so choose..
However if nitrogen is the carrier gas power will need to sourced..
A key extract on HE1
"The Company has identified that the frequency of helium increases with depth and is preferentially carried in hot fluids out of the Basement and along fault conduits. As the helium rises through the well bore, the pressure decreases, and it is thought that the helium then comes out of solution and increases in concentration."
That is key indicates what HE1 has is water and only escapes the water once in the well bore.. So no free gas zone only water zones for HE1?
Per the solubility table best case is 0.6% helium in the water? So one well Tai 0.8% gaseous helium once exsolved from the water and then "upto" 4.7% at Itumbula once exsolved from the water.. So the 138bcf prospective resource was that based on free gas zones easily extractable through conventional means? What does HE1 have as its in water at best 0.6% and they still need to clearly demonstrate its extractable with flow-rates etc. The DST can read flow-rate potential but this information has not been shared with shareholders? A few questions still to be answered here in particular flow rate and independent verification from the likes of Sproule an updated resource potential at Itumbula.. Till then this HE1 share could wildly move on speculation..
https://en.m.wikipedia.org/wiki/Solubility_table
@batr the IDA Indiana Resources case is still ongoing against the Tanzania Government.. So it's in 2024 they'll need to make the US100 + claim award payment to IDA pending finally steps in the claim process.. IDA even threatened to seize Air Tanzania aircraft a few months ago
I believe HE1 ipo may of been delayed due to Tanzania putting a $190b tax bill on Acacia Mining in 2017 see the bbc article.. So projects may of stalled investing in Tanzania back then that's why maybe you see articles on Tanzanian helium as far back as 2016 but they didn't ipo for a few years later HE1. Also original founder(s) of HE1 now at Pulsar Helium may of moved on due to slow progress in Tanzania given the climate back then..
Better climate now maybe in Tanzania by the look of it
https://www.ch-aviation.com/news/126538-australian-miner-threatens-to-seize-air-tanzania-aircraft
https://www.google.com/amp/s/www.bbc.com/news/business-40714086.amp
The Tanzanian govt should be carefully monitored if investing there or at least be aware of stuff like the following..
The following article as an example they unlawfully expropriated a project of ASX listed IDA..
For reference expropriation means the act of taking away money or property, especially for public use without payment to the owner illegally.
Worst case Tanzania tries to basically steal the project of HE1 for nothing. But think they might be learning a lesson the Tanzanian Govt having lost it appears a claim over US100m to asx listed ida for trying to do that..
https://www.mining.com/tanzania-unlawfully-expropriated-ntaka-hill-nickel-project-tribunal-finds-awards-miner-109m/
Basil that's Next Investors trying to pump the shareprice back in December.. They had a 15.7bcf target yes worth plenty on paper but now they talk of 2bcf they hope could be free gas and an unknown amount that may have potential in the water zones..
Basically once Australian investors realised NHE had no confirmed free gas apart from a potential zone of 10-15m they didn't get a sample from it started to sell off.. They need some convincing Australian investors also that the water zones can be commercial and might be waiting for a proof of concept pilot plant to be designed built and tested in conjunction with the Uni of Qld.. which could take awhile and no further action now in terms of drilling too till after the wet season
Rubber stamp that fluid samples contain helium from the labs didn't mean much with Noble not declaring a discovery..
So now Noble is about 9.8c only about 20% above its all time low of 8.2c
HE1 investors appear to think what they have is better than NHE given the price action and marketcap.. HE1 did get helium to surface but the flow-rate is unknown it appears
For comparison 833,333 litres is maybe a third of the water in a 50m Olympic swimming pool
How much water does an Olympic sized swimming pool hold? 2,500,000 litres or 2.5 megalitres of water.
If you consider an iso container load of about 1000mcf worth about US450k at US450/mcf contains about 5000kg of liquid helium..
Does that mean if 1kg of water holds 6g of helium then you need to extract the helium from 833,333 litres of water to end up with 5000kg = 1000mcf approx of liquid helium..
The NHE guy described that what HE1 has is the same as what have. Also he mentioned HE1 managed to depressurise and exsolve the helium out of the water and have it flow to surface - something along those lines..
He said keys for NHE were returning to the potential free gas zone gas cap to determine if indeed it is free gas.. Then for all the water zones everywhere else they are working with the Uni of Qld on a cheap method to hopefully depressurise and exsolve helium out of the water..
Also of interest maybe thinking of all the water NHE and HE1 have to deal with to get to the helium
https://en.m.wikipedia.org/wiki/Solubility_table
6g helium per kg of water I think going off the wiki link is 0.6% helium in the water.. If that's accurate to how much helium is in the water HE1 has its only once it exsolved out into gas does it increase to 4.7% of the gas that exsolves out of the water..
So interesting to try to understand how much helium is in water versus once in a free gas state..
Https://www.asx.com.au/markets/company/NHE
New NHE presentation for RIU at the link
Noble presenting tomorrow as per the link
https://hotcopper.com.au/threads/live-free-livestream-of-company-presenting-at-riu-explorers-conference-tomorrow-wednesday.7847071/?post_id=72389773
Noble today 8.7c during trade not far off its all time low of 8.2c... Bear that in mind and the reasoning I believe is NHE talking up a large scale potential helium discovery during early drill results but given only fluid samples and once lab results were back rubber stamping helium content NHE did not declare a discovery and appear to wish to do more work needed to confirm a discovery for them should they be successful and it be forthcoming down the track
I know of two asx listed helium companies bnl in Colarado and gge in Utah - Paradox basin so maybe in or near that 4 corners area. Both have struggled recently..
Also there's Pulsar Helium in the US which has doubled its shareprice in 2-3 months and currently drilling.. Pulsar run by original founder(s) of HE1
So those and probably several more with projects in the US if you have a contact over there.