Royal Helium Secures Second Offtake Deal, To Raise $7.0 Million Via Convertible Debt

Royal Helium (TSXV: RHC) has secured a second offtake agreement for its Steveville helium processing plant, which is expected to be commissioned in the near term.

The off take arrangement will see the company sell 50% of its helium production capacity from the Steveville plant at a rate of US$625 per mcf. The agreement is for a period of three years, which begins upon the first delivery of helium. Details on the buyer were not provided.

The arrangement follows an August 2022 deal, when the company entered its first offtake arrangement with a “major space launch company.” Details of that arrangement were scarce, with pricing and quantity not disclosed by the company, nor was a contract period. At the time, the company simply said deliveries would begin in 2023.

The Steveville plant is slated to have a processing capacity of 22,000 mcf a year as per the company.

READ: Royal Helium Secures Liquefaction Tolling Arrangement For Steveville Production

The downside for shareholders however, is that the company evidently needs further funds to complete the Steveville processing facility. The firm this morning revealed it will be raising $7.0 million via the sale of convertible debentures in a bought deal lead by Eight Capital.

The financing will see 7,000 debentures priced at $1,000 per each sold. Each debenture is to feature 12% interest, payable semi-annually in arrears, with 2,703 warrants issued with each debenture sold. Warrants are valid for a period of three years and contain an exercise price of $0.40 per each. The debentures themselves will have a conversion price of $0.37 per share, and a maturity of three years from the date of issue.

“We are pleased to have secured the funding required to both complete the final preparation of the Steveville plant, inclusive of all associated midstream and logistics costs, and to advance exploration activities in Saskatchewan and Alberta. We are excited to initiate our cash flow engine at Steveville which was recently enhanced by the signing of a 2nd¬†offtake contract at a price of US$625/MCF. With the full production from Steveville now allocated, we are beginning the process of defining the next round of volumes that we can bring to market,” commented CEO Andrew Davidson.

Proceeds from the financing are slated to be used for capital expenditures related to the Steveville facility, along with exploration activities and general corporate purposes.

Royal Helium last traded at $0.375 on the TSX Venture.


Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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