Helium One Global Ltd (AIM:HE1, OTCQB:HLOGF) chief executive Lorna Blaisse earlier this week talked with Proactive about the company’s latest strategic move to diversify its portfolio and generate near-term cash flow.
Blaisse elaborated on the recent acquisition of the Blue Star Helium project in Colorado, emphasizing its potential to position Helium One as a major player with successful geological operations across two continents.
In the interview, Blaisse explained the significance of this acquisition, particularly its role in providing early cash flow, which she believes will greatly benefit the company and its shareholders.
Proactive: We're joined by Helium One Global CEO, Lorna Blaisse. Lorna, very good to speak with you again. So could you tell us what you're buying or farming into and why you're doing it?
Lorna Blaisse: Good morning, Stephen. Yes, absolutely. As a company, we've been reviewing a number of opportunities globally for a while now, and when the Blue Star opportunity came up, it looked very attractive to us.
We knew we had to move quickly to secure it. Although the timing is not necessarily ideal, given our current operations in Tanzania with the extended well test, I think we're all aware that good deals don't hang around for long. We certainly weren't prepared to lose it.
Having a diverse portfolio is very important to spread our risk, and in this case, it's very attractive as it would deliver some near-term cash flow.
We have a great asset in Tanzania, and this will continue to be our primary focus, but the strategic move here to diversify and generate that near-term cash flow will benefit the company as well as our shareholders.
It's a proven helium play in Colorado, already in the development phase, and we believe this will position us as a major player with successful geological plays across two continents.
Proactive: This seems a bit of a move away from your focus, gaining a foothold in the US, Lorna?
Lorna Blaisse: Helium is and remains our focus, so it's certainly not a move away from our strategy at all.
It's more about expanding and growing the company for the future. The US is already an established major helium producer, and this Galactica-Pegasus project is already in the development phase, close to existing infrastructure and all-important downstream helium users.
As we're all aware, the helium space is gaining momentum, with several recent IPOs. This is an opportunity for us to gain a foothold now and position ourselves well for the future.
Proactive: How does this project compare or contrast to what you have in Tanzania?
Lorna Blaisse: That's a great question.
Besides geographical diversification and the spread of risk, there's also significant geological diversification.
Blue Star is targeting more conventional type structures and trapping styles in Colorado, which are overlain by robust, extensive salt seals, and they have proven free gas. It's already in the development stage, with a number of discovery wells drilled and up to 15 development wells planned, the first of which will commence later this year. We're confident this will be cash generative from next year onwards, so it's a very exciting phase.
We're confident we'll be generating a lot of news over the coming months. Although we're encouraged by our results from the faulted Karoo extended well test at Itumbula, it's worth noting that the first gas from this project is likely to be about 12 months from the approval of the mining license.
Early cash flow from the Galactica-Pegasus project is very positive and will put the company in a strong position.
Proactive: You've done another cash box fundraise to complete this deal. How come?
Lorna Blaisse: Yes, we have, and we're very aware of the criticism regarding our use of cash boxes and recognize the dilution effect. Initially, we intended to raise money for the acquisition through a normal placing.
However, we had to act very quickly, or we would have lost the opportunity.
It's not a huge dilution, but we're confident that the benefits of this acquisition, particularly the near-term cash flow stream and the attributable reserves, will outweigh the dilution effect in the longer term.
Proactive: So when would you expect this all to complete, Lorna?
Lorna Blaisse: We've signed a binding heads of terms agreement, and the main condition precedent will be the necessary regulatory approvals, expected in late September to mid-October. So, hopefully, quite soon.
Proactive: You mentioned the Tanzania project. Now that you've completed the first extended well test across the faulted Karoo, what did these results tell us?
Lorna Blaisse: Yes, absolutely. We've now completed the first phase of the extended well test, so we're partway through. We've finished testing the faulted Karoo section at Itumbula West-1 and have moved on to testing the fractured basement.
The Karoo results are very encouraging, especially as we've been able to flow high concentrations of helium—7.6%, higher than what we'd previously flowed during the drill stem test earlier this year.
This justifies why that longer flow period with an extended well test is required. It's also important to note that the well has been flowing by itself without stimulation, which is very good news. The subsurface teams are still evaluating all the data coming out of the well, and there's a lot of technical work to do.
We'll be looking to integrate the results of the fractured basement well test upon completion to have a broader understanding of the maximum flow rates, best performance, and important gas-water ratios. These data sets are crucial for determining the project's commerciality.
While we're only halfway through, we're looking forward to making further announcements in due course, but these initial results are very encouraging.
Proactive: And when do you expect to finish the basement EWT and be able to announce those results?
Lorna Blaisse: We've only just started the basement test, so we are on track. We anticipate testing this interval for at least the rest of this week, and as I mentioned, we'll then be assimilating the results from these two zones.
I think it's worth emphasizing the uniqueness of this helium play in Itumbula, in southern Rukwa. The helium is in solution, and it's a pure helium-nitrogen mix. We believe it to be migrating along deep-seated faults and fractures, sourced from deep within the basement.
We're not aware of any other helium projects quite like this globally, and we're working extensively across a number of disciplines to establish the full potential here. We're very much looking forward to integrating the basement results into what we've already seen in the Karoo.
Proactive: Are you on track with your planned feasibility study? And will you still be submitting a mining license application to the Tanzanian government?
Lorna Blaisse: Absolutely. That is certainly a key milestone for us, and we aim to file the submission ahead of the deadline on the 17th of September.
Proactive: Lorna, I hope you'll keep us appraised on both of those projects. Congratulations on the new one, and thank you for speaking with us today.