Key points:
- A crucial measure for any start-up is how long can they run for?
- This is the run rate – losses – measured against the cash pile
- Helium One seems to have 4 years worth – is this enough?
- Helium One Global Stock Forecast
Helium One Global (LON: HE1) shares are down 4% this morning on the release of their half-year unaudited results. We’d probably not say because of those results as 4% is a pretty normal move for the share price here anyway.
As to what is in the half-year results at Helium One there’s not a lot of news. Which is, of course, why the share price hasn’t moved very much. As we know from economic theory, the efficient markets hypothesis is at least mostly true. Information that we’ve already got is already in share prices that is. It’s new information that moves prices. So, as Helium One is pretty good at releasing information to the market there’s little new in the results and so little movement in the share price.
The results do though enable us to check progress. Seeing all the information at once does enable us to think through what is going on logically.
As with every junior miner – defined as one not producing yet – Helium One has no income other than what they gain by issuing shares. This capital must then be deployed to find something worth mining, prove that it’s worth mining, then mine it in order to produce some income.
Also Read: Natural Gas Trading Guide
Helium has historically been produced from a selection of natural gas wells in the US. This system, and the Federal govt storage system, is closed and so there are a number of companies- Helium One is only one of them – exploring for more supplies. Helium itself is a product of the radioactive breakdown of thorium and uranium in rock this then collects – sometimes it collects – into the same reservoirs as natural gas.
So, explore an area known to be rich in thorium and uranium – not deposits, but spread through the rock. The first level of exploration is to look for higher than normal levels of helium in the atmosphere itself, from seeps. Then, check any local gas reservoirs to see whether they are enriched in helium.
This is exactly what Helium One is doing, Prospecting an area of Tanzania with exactly those conditions. They’ve identified seeps high in He, some gas reservoirs, the next stage is to confirm everything that is so far shown by indiction from the available evidence.
All of this we already know from previous information releases, so seeing it all in one place doesn’t, as above, move that Helium One share price.
The one thing we do want to confirm though is that they’ve enough capital to complete this work. Losses are running about some £1.8 million per 6 months. The cash position is some £9.7 million. So, yes, losses can and will change as activities ramp up but we can see that current levels of activity can be supported for some years.
So, the value of Helium One shares is going to be determined by the outcome of their further exploration efforts. There’s helium there, that’s known, there’s some natural gas containing decent enough levels of helium. The next proof is exactly how much is there and will it be economic to extract? Proving this being exactly the work that Helium One is continuing to do.
