Helium One Global Ltd on Tuesday said it agreed to acquire helium exploration assets in the US funded by a recent subscription of shares to an institutional investor.
The Tanzania-focused helium exploration company has entered into a conditional binding agreement to acquire a 50% legal and beneficial interest in the Galactica-Pegasus project in Colorado, US from Blue Star Helium Ltd.
Helium One shares were down 17% at 1.45 pence each in London on Tuesday afternoon.
Outlined in the agreement are provisions for Helium One to obtain ‘a similar interest’ in 246 square kilometres of acreage in the proven helium fairway of Las Animas County in Colorado’s southern region where discovery wells have flowed an average of 3% helium and reached highs of 6%.
Once the acquisition is complete Blue Star, through its local subsidiary, will remain as operator at the Galactica-Pegasus project.
The subscription of 590.0 million Helium One shares at a price of 1.09 pence each to Cynosure Capital Pty Ltd raised £6.4 million to fund the acquisition and development of the project.
Helium One will pay up to $2.6 million for its 50% interest and $1.5 million in respect of past costs incurred by Blue Star for the project. The remaining proceeds will be put towards associated fees and cover the cost of drilling wells.
‘The initial [Galactica-Pegasus] programme, which has been funded by the capital raise, will require the drilling of six development wells which are planned for Q4 2024. Once these are complete, it is forecast that the sale of He and CO2 from these initial wells, will generate sufficient cash to fund the drilling and tie-back the remaining nine wells as the project is close to existing helium processing facilities, associated infrastructure and downstream users,’ Helium One said.
The initial wells are expected to be on stream and producing in the first six months of 2025.
An independent third-party report indicates that an average of approximately $2 million per annum will accrue to Helium One over five years from the production of helium, with increases of up to 50% once sales of CO2 to local markets begin.
Chief Executive Lorna Blaisse commented: ‘We are very pleased to have entered into this partnership with Blue Star that allows us to build an expanding global footprint in the helium sector at such a pivotal time. Our projects in Tanzania remain our primary focus, but this development opportunity enables the company to potentially secure near-term cash flow to aid with progressing our Tanzanian asset. We now have a portfolio of two potential near term revenue projects in our portfolio.’
In other news, the first phase of extended well tests at Itumbula West-1 have concluded with helium flows to the surface reaching up to 7.6% compared with 4.7% in February testing.
Helium One said: ‘Over the five-day test period, the well flowed an average of 5% helium (uncorrected). It was also observed that the concentration of hydrogen decreased as helium increased, yielding a maximum measured hydrogen concentration of 1.2%.’
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