Blue Star Helium Ltd (ASX:BNL, OTC:BSNLF) will pocket A$15 million from its latest placement to accelerate an exploration and development strategy over its Colorado acreage.
The gas stock will issue nearly 268 million shares to sophisticated and institutional investors, who participated at A$0.056 per share for the war chest this week.
Both new and existing investors jumped on the offer, buying up shares at a 15.2% discount to BNL’s last closing price.
Canaccord Genuity (TSX:CF, LSE:CF) came on board as sole lead manager and bookrunner, while boutique firm Pamplona Capital Pty Ltd lent a hand as co-manager.
Settlement should occur on Thursday, November 4, while shares should hit the ASX the following day.
"Growing market recognition"
Speaking to the placement, Blue Star managing director and CEO Trent Spry said: “The strong support for this raising evidences the large-scale extent and expected high-grade helium content of our Las Animas landholding in Colorado.
“We are especially pleased to welcome a number of new institutional investors onto the Blue Star register.
“We believe that this shows a growing market recognition of the tightening fundamentals within the global helium market, and most particularly within the world’s largest helium market, the United States.
“Following the grant of our Form 2A OGDP approval for the Enterprise 16#1 well, we are excited to be in the final phase of approval to commence drilling of our maiden helium exploration well.
“We expect to commence drilling of this well promptly upon receipt of the approved final permit to drill (Form 2), which is typically received within 30 days of submission, which will happen shortly.”
Capital to support exploration and development
Blue Star’s latest cash injection will go towards:
- Expanding helium exploration well and water well drilling activities;
- Further key acreage leasing initiatives;
- Production development studies (surface, subsurface, resources, facilities); and
- Working capital.
Spry continued: “Blue Star continues to progress multiple further exploration well permits through the Colorado approvals process.
“The adoption of a rolling permitting strategy is designed to provide the business with significant flexibility around well selection and allow a sustained drilling program with a substantial degree of embedded responsiveness to respective drilling outcomes.
“Drilling of the next water well (BBB#1) is also expected to commence in November.
“This well is located close to Blue Star’s Voyager prospect, which is positioned approximately six miles north from the Model Dome field.
“Our water well drilling program not only offers significant community relationship benefits but is also a source of valuable additional data with respect to helium prospectivity across our acreage.”