HeLIX Exploration PLC (AIM:HEX) on Thursday treated investors to a quick-turnaround, premium-priced equity raise that banks some £5 million.
It comes synchronised with an estimate of reserves and an upgrade to its estimated resources at the Rudyard project in Montana.
Crucially, the funds are intended to unlock Rudyard, a high-potential helium project, by putting It on a path to production – starting with a new two-well drill programme and the installation of a gas processing plant.
Helix chair David Minchin, in an interview shortly after the funding news, told investors that Thursday’s share will be sufficient for the company to bring Rudyard into cash-generative production without the need to go back to the market for more capital.
This is understandably a big deal for investors, not only does it mean further dilution isn’t expected but also, given the currently tight market for capital, it means a major project risk has been cleared.
Minchin, meanwhile, highlighted in the Proactive interview that the funding found strong support from investors.
“It's been a very well-supported raise, up to 15p, which is a slight premium to the market price,” he said.
“Mostly long-term shareholders who've are already invested in the company, following their money in and we're very pleased to be in a position now where we're fully financed to come and into production with a target of first production in Q2.”
“This gets us all the way to production at Rudyard.”
Bolstering the estimates for Rudyard today, 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 a 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 incorporate contingent resources, give a net revenue estimate of $220 million and set an estimated NPV of $146 million.
“Those are proven, discovered helium, recoverable helium in place, and it's commercial,” Minchin said in the Proactive interview.
“So that's a very important distinction compared to other companies, which might have some fanciful made-up perspective resources.
“We have got proven helium in place.”
In Montana, the work programmes are predicted to advance in the coming weeks, with the company targeting first production and revenues in the second quarter.
Bo Sears, Helix Exploration’s US-based chief executive, highlighted that the new project upgrades 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.
“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,” Sears said.
It is in this context, that Helix remains one of London’s most closely followed small-caps and why investors will be keeping eyes peeled for the next phase of the company’s growth story.