Helium One Global (LON: HE1) shares aren’t reacting quite the way we might expect them to. The company seems to be doing the right things and yet the share price doesn’t seem to break out of its recent trading range. The puzzle then becomes well, what will make it move substantially?
Those right things include getting on with the main job of a junior miner which is continuing to show that there’s something worth mining. As we’ve said before about Helium One their main concept looks entirely valid. The world wants more helium, so go look for it. Helium is the product of the radioactive breakdown of uranium and thorium, so go look for gas pockets in U and Th containing rock. This is exactly what they’re doing in Tanzania. Helium One has found those anomalies which indicate the presence of helium.
As with every junior miner Helium One’s next task is to show that the helium is there in the quantity and position that is worth extracting. Whether it will be is an unknown – that’s why the testing – but we’ve no indication that the world is being done in anything other than exemplary fashion.
So, we’d rather assume that the share price should be going well. Yet it doesn’t seem to be breaking out of that recent trading range. Perhaps it’s not the mining part that’s the problem, maybe it’s the stock market part?
Yet Helium One seems to be doing well there too. They’ve just appointed Liberium to be joint broker and NOMAD. This works the other way around from how we might think. It’s a struggle to be allowed to appoint a respected NOMAD, not something just called in like a takeaway curry. Getting a decent company to agree to be appointed NOMAD is an achievement.
It’s also true that Liberium initiated coverage of Helium One at the same time – this being a pretty normal outcome, not just a coincidence. The target price is 19p – a significant upgrade from today’s market price of just under 10p.
So, why isn’t that price rising up to meet that target? If the mining side is progressing as well as can be expected at this stage, the stock market management side seems to be being done well, why aren’t we seeing that breakout?
The answer is almost certainly the inherent risk of this stage of a junior mining company’s life. We’re awaiting the news – the proof – that there is indeed mineable amounts of helium for Helium One to extract. That’s what this stage of development is all about. So, that’s the news that will provide any breakout in either direction. Indications one way or another are useful, but it’s actual news we’re awaiting now.
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Tim Worstall is a freelance writer specialising in economics and the financial markets.