As we’ve noted about Helium One Global (LON: HE1) before there are a number of stages that any junior miner has to go through before showing that it has an entirely viable operation to hand. Is there actually the presence of the target mineral in the first place? If so, how much of it is there? Then can the capital to extract be raised and finally, what is the market going to look like at the time when it can be produced? It’s only at the end of that long process that we can say that the project, or the company, is actually proven.
Helium One is creeping up on that second stage, showing that there’s enough helium in their prospecting area.
Helium is weird among elements in that it’s the only one we as humans use in any quantity that is continuously generated here on Earth. It’s the only one where there isn’t some fixed supply over time – however large that fixed supply might be. It is created by the radioactive breakdown of uranium and thorium. So, to find helium go look at rocks that hold lots of uranium and thorium, that’s where it should be. That’s what the area of Tanzania Helium One is exploring does hold. HE1 has also been able to show – those multiple anomalies – that there is helium in seepages of natural gas in the area. Up to 10% He in CH4 in fact.
So, Helium One has shown – not proven, that’s a word, in the mining world, with considerable legal implications and levels of proof – that the base idea works. There’s helium from the volcanic rocks containing U and Th in their prospecting area.
The next stage is to show how much of it there is. This is what today’s announcement is about. Not proof of it, but an encouraging sign. For if that helium is being created but just escapes up into the atmosphere then that’s not very useful. But, if it gets captured into a reservoir along with the natural gas then it’s possible to drill the reservoir, extract the helium and the gas, and there’s a business there. Probably at least there’s a business there.
What Helium One is telling us today is that it’s looking good for there to be those reservoirs. The layers of clay and rock and so on look as if they could well seal off the gases generated below from escaping up into the atmosphere. There could well be those desired reservoirs underneath, therefore.
None of this is proves anything, it’s all indicative. But then at this stage that’s what is being looked for, indications that there’s something more to prospect for. It’s an entirely normal stage for a junior miner to go through.
What might lead to a significant jump in the Helium One share price is an announcement not about the geology, but the actual proof of a heavily helium-containing – and large – natural gas reservoir. When that might arrive, whether it might, is the speculation in this stock.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage . 68 % of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money .
Tim Worstall is a freelance writer specialising in economics and the financial markets.