The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Dai, that's what I mean. I find it pretty hilarious when I read posts about people saying they want to buy as much as possible before it goes over 8p or whatever but, as you say, if all goes well even £2/£3 might look really cheap one day. Granted, DME has 1/10th of the stocks but they've still seen a 15x increase, and are expected for a 20x. This is for a company that probably has less helium than Mbuni, Itubmula and Kasuka alone. Their area is nearly 1/20th the size of HE1's and potentially of lower concentrations (I believe they drilled at least 2 holes, one had a concentration of 7%, the other of 4%).
I would say 20p pre-drill, £1 post-drill and maybe £2-£3 once the appraisal comes through is a good shout, so long as the liquidity and attention is there for HE1. Even HE1's P90 is 5x more than Blue Star's P10. But I mean, £5 equates to an Mcap of £2.5 billion, doesn't sound much at all for a company that will/should have by faaar and wide the world's largest deposits of helium, a gas that can't be substituted, nor synthesised and is running out whilst demand is only ever grow, potentially really highly if the likes of SpaceX ramp up their operations
Thanks for added input dai. If we just reach £1, the money made from my investment would be life changing so I know how you feel :) I'm pretty confident it'll go well though!
P.S. I mean "chance of success" and "can be interpreted" before
Noob, I personally agree with him and believe the 20% chance of seems off given the evidence and past drilling in the area. He just seemed to be voicing this concern, not demanding why it's such a low number, begging people to tell him what to do etc. I just think people went a bit harsh on him, especially when he's probably new to here, but no worries; messages can't be interpreted in different ways.
Thanks for the replies though guys, again nothing serious just thought it would be a bit fun and interesting to see where everyone is at :) I'm excited for the Crux Investor interview this week, I sent a few questions to him to see if they can be answered!
Nothing too serious, just thought it would be a bit of fun. So, what SP does everyone have in mind pre-drill? Post-drill if successful? Once results from the appraisal are released? Once production commences? A few years down the line when production is at 100%, profits are more or less as high as they're going to get etc?
Here's my personal take, although maybe with some wishful thinking:
Pre-drill: 8/9p
Post drill: 90p - £1.40
Appraisal: £2.50 - £3
Fully operational: £5 - £7
Just my personal, pretty rough thoughts
DGU, I think it definitely will be once we prove helium to be there. At the minute it seems DME have taken that crown but I mean.. we sit on FAR more helium. I don't believe they've said how much they sit on (done a bit of researching but could find historic helium drilling amounts on their land) but given that their area is like 1/17th the size of HE1's, I can't see them having anywhere near the amount of potential helium HE1 has especially when we might have a slightly higher purity.
So hopefully, we prove helium is there and we get all of the attention and liquidity coming our way
Thanks for the link Troajan, much appreciated and adds some more useful knowledge to the bank! Very interesting about the cost for space rockets, just goes to show if Elon wants to really colonise Mars he's going to need a LOT of helium. I believe for every passenger launch, there'll be an unmanned launch carrying fuel and supplies as well. 50 passenger, 50 supply ships and that's $1.2 billion please Elon; or more than 1/10th of the global annual helium market of 2019
As always Dai, your hard work and dedication in researching all of this is very much appreciated by all of us, thank you.
This presentation below shows in detail what you've discussed, specifically on pages such as 11 and 14:
http://www.helium-one.com/wp-content/uploads/2021/03/21-02-26-Helium-One-Presentation_Feb21.pdf
I thought HE1 have already said that the helium at Rukwa has a 10.4% purity level. I'm sure that's only in the samples they've gathered at the surface thus far but I do know that there are no hydrocarbons present, so just CO2, nitrogen, helium and I think small amounts of argon. But I mean, at least it's one less thing that could be down there (by hydrocarbons, I'm assuming natural gas as would crude oil have a different signature seeing as it's more dense?)
Pretty surprised by the $4.25 target, just goes to show if we everything goes like it's expected to even £1, as expected by H&P, will look like a steal and as DM said himself, the 20p target formed by Canaccord should be the pre-drill target.
Big thanks to everyone adding more and more information, all greatly appreciated. I try to chime in with the little information I have discovered if it helps anyone but I don't know much compared to some of you so very much appreciated :)
Fair enough Dai, thank you for the reply. But there's 3, possibly 4, drills at just the Rukwa site; the other two aren't at this stage yet.
And thanks Trek, so I'm assuming they'll just find the greatest heat maps and drill in the centre of them? And yeah, I keep forgetting it could be other gasses under there. So the P50 estimate.. could that be 138 BCF of just nitrogen and CO2, potentially? Thanks for the information though. I assume they'll correlate this data with previous data with previous bits of data, such as soil samples containing helium, to better pin point where best to drill. I'm hopeful the drills will return good results given the potential scale of helium present, previous analysis and helium being recorded seeping from the ground!
Thanks again you two, much appreciated
I'm just looking to understand a bit more on what's going on at the moment. Obviously they're performing the infill seismic study to gain a better understanding of, essentially, where best to drill but how much certainty does this bring? By that I mean, after conducting this survey and analysing the data, how much further are they to knowing where best to drill? Is it still a fairly rough guess or can the drills be completed with high certainty or is there no definitive answer?
I'll just add on to what Magoo79 said.
As Magoo said, there is very high concentrations of helium in the Rukwa project. P90 of around 30 BCF, P50 of 138 BCF and a P10 of around 520 BCF; truly astonishing numbers especially when even the P90 is 5x higher than Blue Star Helium's P10. Of course, these are just estimates though.
On top of this, helium has already been found to be seeping from the ground, I believe in soil samples also, there's been small-scale helium extraction in the area in the past, there were studies in the 1950's and 80's I believe confirming helium, a team from Oxford University in 2016 confirmed this along with Helium One and at least one independent contractor have also confirmed helium to be present. It's also been found to have one of the highest purities in the world, at around 10.4% I believe far higher than 0.5% or so expected elsewhere.
Also, as Magoo said, the drill contractor have accepted the contract with 50% of the bill paid in shares, they'll be bringing in a larger drill (which now means less cost but also a quicker lead time between discovery to appraisal) and have also offered to perform a 4th drill.
Plus, HE1 brought on board Lorna Blaisse who I believe has 15 years of experience of subsurface petroleum analysis and discovery; perfect for what we need right now.
All of these points point to a successful discovery in my opinion and I think once a discovery is made; it's pretty much plain sailing
"I certainly wouldn't be going all in on this one. Better odds at the race track"
Unless you're talking about there being 2 horses and one's a sumpter, I struggle to believe you there. So many positive aspects of this company line up with more good news coming out seemingly by the week now
Personally, I found that price as very pessimistic. As you say, there's one or two other helium companies who have seen their SP sky rocket over numbers we would be very disappointed with (Blue Star Helium's potential supply is 3 BCF, HE1's is nearly 14 and that's just from the Rukwa project. HE1 have said the other two sites are of very similar composition to Rukwa so maybe add another 3 BCF on top of that, possibly. Blue Star's price has risen around 1150%. See: https://twitter.com/Belcourtoi/status/1374309150944071682/photo/1 )
Always good to check yourself and not get too giddy but, imo, this is an incredible stock. HE1 don't just have a supply of helium, they have the world's largest with one of the highest purities and you have to remember, the US cut their foreign sale of helium and most helium nowadays is extracted as a by-product from oil and gas wells so with them slowly going offline and helium demand growing, I don't think that's an issue at all
Trek
Thanks for the reply mate and the added information about Touchstone, much appreciated. As you and others have said, it's hard to really get a gauge as to how high the SP can go, how solid the revenue can be etc because there's little in the way of comparison so that's great to see. 11p to 140p just over 1TCF is pretty incredible, when HE1 has nearly 14TCF and that's only at their Rukwa licence. The other two are a bit under a third of the size so potentially may hold another 3TCF? Pretty incredible.
I keep looking at this stock and thinking it's simply too good to be true; so many positives that keep flowing out with very few potential negatives that I can see so it's reassuring to know that you've bought in so much (good on ya!) as I'm sat here wondering if buying another 25k is a lot haha I'm sure in 6 months/1 year's time I'll be kicking myself for not putting in even more haha hopefully we'll all plough in as much as possible, the more we buy and hold the higher the price goes and then we all win :)
Deep
Thanks for analysis mate, my thinking was basically the same when I read about that. The fact that they've brought in a bigger drill at no extra cost, are willing to perform a 4th drill and are willing to take 50% of the contract in shares speaks incredible volumes. Shows just how promising this all is. However I think 4x share price is pessimistic :) They're targeting £1.04 p/sh with just these three drills and I think they only account for 18BCF I believe? Looking at other companies like Touchstone and Desert Mountain Energy and given how much better HE1 is poised, I think even £1 p/sh will look pretty cheap one day!