Royal Helium Ltd (TSX-V:RHC, OTCQB:RHCCF) in 2024 will be focused on the completion and testing of its existing wells at its Val Marie, Ogema and Steveville helium properties in Saskatchewan.
The company last week outlined its 2024 development plans, with this testing to gather information required for the company to decide where to place its next processing facilities now that its Steveville helium processing facility is operational.
In conversation with Proactive, Royal Helium CEO Andrew Davidson talks through the company’s development plans for its Saskatchewan assets, in addition to its plans for new drilling at its 40 Mile property in Alberta, which was acquired by the company last year.
Proactive: The company has laid out what 2024 is going to hold, but it’s prudent to talk about 2023 first which was a significant milestone year for the company.
AD: It sure was. It was the transition from exploring and theory into actual production and cash flow. It was as big a year as you can have as a junior resource company, transitioning into an actual cash-flowing entity. It’s a fundamental change for the company.
You’ve laid out what is an aggressive 2024 plan for well development in a number of different areas. Where do you want to start?
Let’s start with the rationale as to why we’re doing any of this: it’s to go from a one producing facility company to a multiple producing facility company. We are going to determine which field is the most immediately accretive for plant number two, then plant number three, and so on and so forth.
At Val Marie, where we drilled the well in 2020, the field is ripe for development. We will do some testing on the well we drilled and then eventually some infield drilling behind it. The nice thing about the program is that the well itself has already been drilled so it’s not a major capital expense. It’s a relatively inexpensive test that will lead to a pretty significant production facility, should the tests work out.
At the Ogema field, we drilled two wells there back in 2021. We were waiting on rights to test and upper zone, we have those rights now and we’re going to go back in and open up those vaults and test them. Anecdotally, they were zones that had some of the highest helium concentrations ever recorded in Saskatchewan, not by us but by historic testing of wells drilled in that area. We look forward to doing that, again, very inexpensive exploration methodology there because the wells have already been drilled.
This happens quite rapidly, correct?
For both fields, it’s a matter of two weeks. That’s it and you have all the information you’re going to need. From a cost perspective, it’s great. From a timing perspective, it lets us move quickly into the decision phase over where the next plant goes.
The same is not true at our asset in Alberta called 40 Mile where we have not drilled the well yet. That’s a project we picked up last year based on geological work in the area and the fact it had a well drilled on it historically which showed very high helium concentrates for Western Canada and exceptionally high flow rates. It’s a new drill project.
How good of a position do you feel the company is in considering you have cash flow coming in, putting you in a really unique position within the junior resource space these days?
It certainly differentiates us from most of our peers. We’re the only [public] Canadian company producing there, there’s a couple of private companies doing the same thing. Having cash flow actually coming back at us is a nice change. The operation of the plant is going well and we’re growing production daily. We continue to ship out product, so things are going quite well.
Quotes have been edited for clarity and style