Helium One Global Ltd (AIM:HE1, OTCQB:HLOGF) made a significant announcement on Tuesday, news that initially sent the AIM-quoted share up as much as 30% in opening deals.
It was thanks to the latest update from the Itumbula West-1 (ITW-1), at the company’s potentially world-class helium project in Tanzania.
Here’s a breakdown of what’s happened and why it matters.
What happened
Helium One reported that it successfully deepened the well, advancing 168 meters into the fractured basement zone.
During this process, the team encountered near-continuous helium and hydrogen shows, with levels notably higher than in previous drilling phases.
Currently, operations are ongoing to case the well, after which they will conduct a well test across both the fractured basement and the previously encountered faulted Karoo Group zones.
Why it mattered
For any exploration company, the primary objective is quite obviously to find the resources the well is designed to target – so by default this is an obvious positive.
More importantly though the indication of potentially more helium and hydrogen than seen at the project before is a clearly a bigger positive, indicating an improvement over past results.
The well is a crucial step towards building out Helium One’s results in Tanzania and it is gathering important technical details needed to plan a commercial development.
But, as yet, the results are quantified, so the economic implications still need to be determined by the upcoming well tests.
The impact
The share price tells its own story.
It had an immediate impact. The shares surged from £1.204 last night to £1.503 on this morning’s open, before pulling back to £1.390 by the afternoon’s trade, marking a 12% gain for the session.
At this level, Helium One is valued at around £75 million.
Clearly this reflects a positive market reaction, summing up prevailing investor optimism about a project that’s been in focus for speculative investors for some time.
Who said what
Chief Executive Lorna Blaisse emphasised that the drilling program had gone as planned and highlighted the encouraging helium and hydrogen shows encountered in the deep section.
“It has been very encouraging seeing the helium and hydrogen shows continuing whilst drilling this deeper section, and we look forward to evaluating the results further through the EWT,” she said.
Future Catalysts: What happens next?
The next crucial step is the extended well test, which will provide necessary data to quantify the current findings.
Investors and stakeholders are eagerly awaiting these results to better understand the economic and commercial viability of the project.
Moving forward, the focus will be on transitioning from the initial exploration and evaluation phase towards a larger, more advanced commercial development phase.
In the run-up to this important catalyst, investors can keep up with events via Proactive, as we bring news and insights to the well-testing and what comes next.