HeLIX Exploration PLC (AIM:HEX) has upgraded its helium reserves and economic estimates for the Rudyard Project, in Montanta, alongside plans to raise £4 million through an equity issuance.
It aims to raise £3.5 million in a placing, plus £464,500 in a share subscription, with new shares to be priced at 15p each.
Proceeds are earmarked to support spending on a gas processing plant,
"The decision to move forward with an equity raise comes after a detailed review of the economic model and terms of available debt finance,” Helix chair David Minchin said in a statement.
“Equity became preferable over debt considering the high cost of debt capital as well as onerous terms including long-term take-or-pay agreements that would have limited the company's ability to market produced helium to end-users and the wider USA market.”
Bolstering the estimates for Rudyard, Helix said that consultant Aeon Petroleum Consultants Corp has calculated helium reserves of 355 million cubic feet in the northern dome of the Rudyard Project.
Over a 12.5-year project lifespan, Aeon estimates potential net revenue of $115.2 million and sets an asset valuation an NPV8 valuation of $77.9 million, assuming a helium price of $500 per thousand cubic feet (Mcf).
The firm’s in-house models for the southern dome, meanwhile, which incorporates contingent resources, gives a net revenue estimate of $220 million and sets an estimated NPV of $146 million.
Bo Sears, Helix chief executive, meanwhile, added: “We are delighted to announce updated reserves and economic forecasts for Rudyard Project which demonstrate the potential to generate free cash flow of $15 - $25 million per year post-tax and post-royalty, and net revenue of $115 - $220 million over a 12.5-year life of field.”
"With the expected completion of the proposed fundraise, Helix will be fully funded to bring the Rudyard Project into production and positive cash-flow, targeting first production within Q2 of this year.
“Early cashflow gives Helix the freedom to pursue exploration and M&A, self-financing development and growing Helix into a strategic helium producer for the USA market."