Helium One Global Ltd Stock Forecast

Are you an investor who likes to speculate on start-ups, especially those that concentrate on mining a valuable commodity and then bring it to market? If so, you would have likely been alerted to the quick trajectory of the shares for Helium One Global Ltd (LON: HE1).

In a short space of time, after its IPO in 2020, Helium One Global shares jumped before a significant decline. Investors often display a tendency for being early adopters and pounced upon this stock in a big way. ‘Piling on’ may be a better description, but hype in the stock market can drive share values beyond reason in a flash, only to plummet when reality sets in. Some analysts refer to it as a ‘tortoise shell’ formation. You want to be on the front end, not the latter. HE1, however, is in the latter phase, but can it rise again?

Who Is Helium One Global Ltd?

Helium One Global Ltd is a relatively young company, founded in 2015 and only recently listed in December 2020 on AIM on the London Stock Exchange. The firm’s focus is on the helium commodity market. Its plan is to become a major producer of this non-renewable commodity for the world market, where it is used in modern technologies that range from the medical sector to all manner of high-tech solutions.

HE1 is supposedly sitting on not one but three valuable Helium fields. Helium is a necessary ingredient in a variety of manufacturing processes, most of which are new-age and complex technologies.

According to Rupert Hargreaves, an investment analyst for The Motley Fool UK: “There’s been some speculation the company is sitting on one of the world’s most extensive helium resources.”

Although helium is the second most abundant element in the universe next to hydrogen, its accessible supplies around the world are diminishing at a rapid rate. Tech giants such as Amazon, Alphabet, Facebook and several others, in addition to those in the medical field, depend heavily upon this noble gas. Forbes has been quoted as saying: “Helium is soaring on red-hot-demand, shrinking supply” (source: Forbes).

Helium One was conceived to tap into this critical shortage in the market and is led by new CEO Lorna Blaisse after the departure of former chief executive David Minchin. Blaisse was previously the Principal Geologist at Helium One and has over 17 years of experience in the exploration and appraisal of oil and gas projects across Africa.

With minimal financing, HE1 has acquired exclusive licensing rights to develop nearly 5,000 square kilometres of supposedly helium-rich deposits at three separate locations in Tanzania. Helium One has focused on its primary property, Rukwa, while testing has proceeded on its second site, Eyasi, with minimum attention paid to its third location, Balangida. Sufficient infrastructure is near each of these sites, and each one is within 130 to 800 kilometres of a major city or port. 

Is Helium One worthy of your consideration at this time? Analysts are cautious, as you might expect after the stock’s rollercoaster ride, but for small drilling firms such as Helium One, any positive headlines in the press can drive the price through the roof in short order. More negative news will only harden resistance.

Where Will Helium One’s Stock Price Be at the End of 2023?

Hargreaves, the Motley Fool analyst following Helium One, summed up investors' recent sentiments: “Considering the speculative nature of the Helium One share price, I wouldn’t buy the stock today. I’d much rather wait and see how the company’s drilling results develop over the next few months and years. This will allow me to better understand how the business will evolve as we advance, although it may mean I miss out on some profits along the way” (source: The Motley Fool).

Due to the speculative nature of Helium One at this stage in its development, a projection of share prices at this moment would be a pure guess. Helium One is an early-stage company still developing its business. Yes, helium prices are expected to rise significantly over the coming years, but this company will not be producing products for sale anytime soon. There is no significant drilling history to fall back upon, just a few test drills to determine potential. The question remains as to whether these sites are commercially viable.

The concern is mainly the company’s cash burn rate. Helium One stated in March this year that it successfully raised £9.9 million in December 2022 to fund the company through the 2023 Drilling programme in the Rukwa Basin, anticipated in the third quarter of 2023.

According to MarketScreener, there is currently one analyst covering the stock. They have a Buy rating and 20p price target, suggesting potential upside.

Helium One Long-Term Forecast

What is the Helium One Global stock forecast for 2027? The current stock price could always be multiples higher, or shares of Helium One could crumble in the near and long run. The market is demanding solid evidence that the Tanzanian fields can yield high-grade helium as promised before leapfrogging this short-term value.

Even if major finds are confirmed, the firm will require a good amount of additional capital to deliver its product to the marketplace. The company has already noted that a processing plant will require $50m to get off the ground and produce 3.5m cubic feet of helium annually. 

The current estimate for the Rukwa project alone is for a potential of 138bn cf. With operating costs of $6m and revenues approaching $100m, a very profitable business plan could be a real possibility for this company.

If positive finds are confirmed, HE1 may never have to raise additional capital. In situations such as these, the preferred exit strategy is for a major mining concern to take an interest and propose a takeover price that will satisfy long-term investors. Investors may not achieve the highest potential for their holdings, but an early payoff frees up capital for other investments rather than tying up the funds for more speculation, additional capital raises, and more performance risk.

Is Helium One a Good Buy

Is Helium One a good stock to buy for the long term? HE1 is speculative investing at its best and worst if it fails. 

So the question is, is Helium One Global Ltd a buy or a sell? Caution is the byword here unless you are an investor who likes to take highly risky bets with very large payoff potential. Investors want more confirmation of profitable helium deposits before driving up this stock price any further, for the near or long term.

As for an analyst’s opinion, Hargreaves counsels caution: “Even if it finds commercially viable amounts of the resource, it will still face a long battle to get the project up and running and producing cash flow. As a result, it could be years before the company sees any return on its exploration investment” (source: The Motley Fool). 

Remember that this comment came before the stock plummeted from 28.0p, but the sentiments are still relevant today.

What could change? The company has yet to establish a record of any revenues. Cash reserves were nearly £10m at the end of 2021, thereby ensuring a bit of time before having to raise more capital for significant drilling operations, as long as the firm continues to burn cash at an acceptable rate. If the firm is able to extract helium in 2023 and generate any amount of revenue, then the stock could rise once again.