Helium: The High Level Overview

The very hot market for helium stocks welcomes a newly listed company for investors to become aware of; Imperial Helium Corp (TSXV: IHC).As an inert, non-reactive, non-toxic and environmentally safe element, Helium has many important qualities for today’s high-tech global economy. Helium is the earth’s smallest molecule, which makes it ideal for leak detection, and is considered the earth’s coldest substance in liquid form.

Therefore, helium is ideal for use in maintaining controlled environments, power generation, cooling sophisticated medical equipment and other technologies that require cooling, such as semiconductor and fibre-optics manufacturing. Helium is used in lighter-than-air transportation and it can be safely mixed with other gases. 

The accelerated use of helium in a broad cross-section of economic activity has resulted in demand far outstripping supply, which has led to a rush to find more helium to meet the demand. The shutdown of the U.S. Strategic Reserve, and the realization of the risks that dependence on supplies from high political risk jurisdictions during the global Covid-19 pandemic has exposed, has added to the interest in exploring for and developing helium reserves in North America. Like other gases, once found in economic quantities, it can quickly be brought into production, providing producers a relatively quick return on investment.

The purchase of raw helium is controlled by four main global gas competitors who represent 85% of the market and who contract to buy raw helium from helium extraction companies. 

Canada has the fifth-largest helium reserves in the world and Saskatchewan is the only province that can support drilling of dedicated helium wells. Typically, helium is most often captured as a by-product of traditional natural gas production. Recently a private Calgary-based company North American Helium Inc. opened its new $32-million plant in Battle Creek, Saskatchewan, that is expected to commercially produce more than 160,000 cubic feet per day of purified helium. 

Saskatoon-based Royal Helium Ltd. (TSXV:RHC) is working with the Saskatchewan Research Council to develop an integrated production and refining facility. On May 12, 2021, RHC announced a significant helium discovery at its Climax helium project in southwest Saskatchewan within a previously unknown helium bearing zone. The company now believes its Climax project could contain a low-case estimate of 2.5 billion cubic feet (Bcf) and a high case estimate 6.0 Bcf. RHC is expecting to commence production planning shortly for commercializing its Climax -1 zone, 

Desert Mountain Energy Corp. (TSXV: DME) of Vancouver, British Columbia is actively drilling for helium in Arizona and it has also purchased a 40 acre land package in the central portion of the Holbrook Basin to build out its initial processing facility and solar plant for green power. The Company’s 5-year development plan of 60-70 wells would eventually utilize three mobile processing facilities.

Imperial Helium Corp. (TSXV: IHC) is actively exploring for helium on its 24,500 hectare property near Steveville in southern Alberta. The property has a historical resource estimate of 1.1 Bcf of recoverable helium, with recovery factor of 85% of 0.635 helium. Management believes the property could potentially enter production by mid-2022. The Company’s big-picture strategy is to identify and acquire high potential helium assets in British Columbia and Alberta. It is looking at shut-in wells, exploration properties, and producing assets and is working with strategic partners on a number of initiatives. 

At the commencement of trading, Imperial Helium Corp. will have 85,191,743 shares outstanding and a modest market capitalization of $42 million. Imperial Helium has a top-notch management and professional team with extensive hydrocarbon industry exploration and production experience.

As a new name for investors to consider, IHC represents a ground floor opportunity in a very hot sector. The Company will be aggressively seeking acquisitions to compliment its core strategy, and we like the potential that the company could be in production sometime in 2022, which would greatly reduce shareholder risk and the cash flow could be used to help fund its acquisition strategy, which could reduce reliance of dilutive market-based financings. 

Comparables 

Shares OutstandingMarket Capitalization
Desert Mountain Energy68.5 million$283.8 million
Avanti Energy40.9 million$102.2 million
Royal Helium Corp102.0 million$65.3 million
Imperial Helium85.2 million$28.6 million

The helium market as of late has seen significant investor interest. With just a small handful of public companies operating in the field, there are few options for investors to place their dollars. Those entering production in the near term – i.e. within 12-24 months, are even more likely to draw investor dollars relative to exploration-only options in the space. With rising demand for helium in a tech-intensive world, demand is set to only increase from here.


FULL DISCLOSURE: Imperial Helium is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover Imperial Helium on The Deep Dive, with The Deep Dive having full editorial control. Additionally, the author personally holds shares of the company. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.

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