Proactive Investors -
Rukwa’s resource is enough to supply the entirety of global demand for 20 years. We’re at least fifty times larger in terms of resource than any other helium company currently listed anywhere in the world
David Minchin, chief executive
What it owns
Helium One is an explorer with a portfolio of helium gas deposits in Tanzania.
Rukwa is the flagship in Helium One’s portfolio. The project spans some 3,590 square kilometres in south western Tanzania.
It is described as the largest known primary helium resource in the world based on >1,000km of seismic data, high resolution gravity surveying, micro-seep and macro-seep analysis.
The company listed in London as a drill-ready explorer and it appears to be one to watch for investors seeking some differentiation and exposure to an in-demand natural resource.
Helium: Essential and in-demand
Helium is essential in many high-tech applications that are far removed from party balloons. The inert gas has many uses, not least as an irreplaceable element in vital products such as MRI systems, medical treatments, computer components, fibreoptics, and microscopes.
It is an important natural resource because of its chemical properties – for example it has a low boiling point, and it behaves as a superfluid – but, it has been and continues to be undersupplied across the global marketplace.
Natural sources of helium are rare and locations were the gas is trapped in appropriate geology is rarer. Alternatively, most commercial Helium production comes as a by-product of natural gas extraction.
The US accounts for about 55% of the world’s supply, followed by Qatar which provides just over 30%, after that Algeria and Australia yield 6% and 3% respectively. Stockpiles exist in US, Russia, Qatar, Algeria, and Iran. Meanwhile, newer and growing supplies are seen in Australia, Canada, and Tanzania.
Open supplies are tight and that presents an attractive backdrop for Helium One.
“Not only is Helium One among the few companies with a globally significant resource seeking to address the current helium supply crisis, it could also become the only company on AIM where investors can get involved with the exciting and expanding helium space,” David Minchin said in a statement.
Opportunity in Tanzania
Helium One is pursuing the development and continuing exploration of resources in Tanzania.
It currently has some 138bn cubic feet of un-risked helium resources, at the ‘best’ estimates, and the broader resource estimate range is pitched at 30bn to 521bn cubic feet. The company does, however, see much further running room to increase its helium resources. At present the company has a portfolio spanning some 4,512 square kilometres, and, its prospect inventory to date comprises 21 prospects.
Efforts are underway to progress funding and a stock market listing, in order to give the company the wherewithal to advance the assets – by confirming resource volumes and by progressing the commercial case for development.
The campaign Kicks off in 2021
Chief executive David Minchin highlighted to Proactive that only cUS$50mln of upfront capital could fund a helium plant capable of handling some 350,000 mcf (3.5mln cubic feet) of annual helium production, which would in turn generate something like US$95mln in sales.
Operating costs, meanwhile, have been estimated at about US$15 to US$20 per mcf and Minchin says most of that would be power costs.
“One of the advantages we have over hydrocarbons is that the capital costs of project development are infinitesimal, that’s because the gas is just a helium and nitrogen mix,” Minchin said in an interview with Proactive.
“It’s really pure and you can simply vent nitrogen into the atmosphere, which is already 70% nitrogen.” Moreover, it is also comparatively simple and cheap to transport the high-value gas cargo for export.
In the case of Rukwa, Minchin explains that a trucking operation (which could see each truck carry over half a million dollars of helium, or around 1,000 mcf) would be sufficient to move the product to the port at Dar es Salaam for export.
These models remain conceptual at present. Aside from anything else Helium One must first confirm the valuable gas deposits are indeed where the geologists believe they are.
First, an exploration well will seek to achieve this discovery. The plan would then be to follow-up with an appraisal in an offset location, to enable effective production testing, before detailed 3D seismic is deployed to accurately define the dimensions of the deposits. Thereafter, the company expects to have the technical insights and wherewithal to advance a more comprehensive field development plan and feasibility study.
Minchin reckons a discovery well in mid-2021 could put the company on a track to have a development phase by mid-2022 and possibly see production from the first helium plant by 2023.