RE: Times Article20 Apr 2021 08:39
(yes here it is. Part 1) Bonkers, totally bonkers. That would be a reasonable reaction to what I have just done — especially if you said it in a squeaky, high-pitched voice.
Maybe I am suffering from a form of madness after months of lockdown, or perhaps recent rising share prices have turned bull run bravery into sheer folly. Either way, I just broke all the rules with my latest investment.
It’s a “penny stock”, which is high risk, engaged in gas exploration, which is even riskier. It is based in one of the world’s poorest countries, next door to another where an armed insurrection left decapitated bodies in the streets last month.
So, for the avoidance of any doubt, perhaps I had better emphasise that this column is not financial advice, and no recommendation is implied by what is merely the personal account of one DIY investor.
With drilling due to start next month, the shares I bought for 10.6p each could be worthless within weeks if the wells prove dry. This is what City suits call a binary bet. In plain English, it’s hit or miss and much closer to speculation than investment. So why did I do it?
Five years ago, academics from Durham and Oxford universities were seeking to solve global supply shortages of helium. As you may know — although I freely confess I did not — this gas is the second-most abundant element in the universe, but it is very hard to hold on to because it is so light and the molecules are so small it keeps disappearing into the atmosphere.
Unlike hydrogen, helium is inert, so we need not worry about explosions, and it has the lowest boiling point of any chemical element. Its super-cooling properties make it vital for cloud computing, data centres and magnetic resonance imaging (MRI) for medical scans.
Other characteristics make it useful for the production of semiconductors, the building blocks of almost everything digital. Three sources in the United States, Qatar and Russia account for three quarters of the world’s supply.
Most helium in current use is a byproduct of oil and hydrocarbon gas refining.
That means it increases carbon emissions, which more than 190 countries are committed to decrease via United Nations treaties and other pledges to cut pollution. So it was fortunate that the Durham and Oxford academics eventually discovered a pure or carbon-neutral helium field estimated to contain 138 billion cubic feet of the gas, or enough to match current global demand for 20 years.
Less fortunately, they found it in Tanzania, a country best-known for a dormant volcano, Mount Kilimanjaro, the highest peak in Africa. Tanzania qualified for “frontier market” status only last year, which means independent statisticians at FTSE Russell regard it as riskier than an “emerging market” but just about investable.
Africa’s only female political leader, Samia Suluhu Hassan, was sworn in last month and said she wants to encourage helium exploration.
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