Helium One Global Ltd (LON:HE1) Chief Executive Officer David Minchin caught up with DirectorsTalk to discuss their latest project update, mobilising in the wet season, signing the MoU with Exalo and the company’s funding position.
Q1: David, could you just take me through this morning’s announcement and what it all means?
A1: The last 12 months have been challenging from an operational sense. We’ve made great strides forward in our subsurface understanding including a much improved refinement of the Tai prospect where we’ve identified untested closure in the Lake Beds and got a much better understanding of the geometry of the robust structural closure at the Karoo level. It’s de-risking something we already knew to be a working helium system.
From an operational point of view, and on the back of the Russian invasion of Ukraine, securing rigging services, against this headwind of record high global oil prices and natural gas demand, it’s been challenging.
What this announcement says, and I’m very pleased to be able to say this, is that we’ve now overcome all of those challenges. We have the rig and the service package all in place and secured to mobilise drilling in Q1 of 2023.
Q2: Are you able to mobilise this rig in wet season?
A2: Yes. As you know, Helium One are veterans of several wet seasons operations, don’t forget that we did our phase I seismic which we ran between February and May 2021 in the middle of the wet season. Our phase II seismic was mobilised in January of this year which was as the rains were falling and we also ran the ERT survey throughout the wet season and in saturated ground as we needed that saturated ground for the coupling of the geometric equipment.
As such, we’re in a unique position to understand what kind of conditions to expect in the field and the kind of challenges which a wet season operation will bring.
Drilling is very different but we are confident in the abilities of this rig and this team. The rig is able to break down into 28 tonne loads for transportation so it’s capable of mobilising during the wet season.
The untarmacked Mobma Road, which connects the site at Rukwa to the tarmacked Tanzam Highway, is where the problems would be. However, this is also the main road to the town of KamSamba and we’ve run trucks along this road all year round so we’re aware of what conditions and what challenges to expect.
Eventually, it all comes down to operational planning so our trump card in this is our Chief Operating Officer Colin Ivory, he’s got over 35 years’ experience of running remote oil and gas operational programmes and has operated everywhere from Canada to Congo. So, we have the experience, we have the knowledge and we have the team so we can get this done.
Q3: You mentioned confidence, are you confident that this will become a definitive contract?
A3: Yes, so we’re well advanced in our contract negotiations, we’ve exchanged draft contracts, for commercial reasons I can’t tell you about them but signing the MoU is that important step in securing exclusivity whilst we complete our final contract negotiations.
Basically, Exalo want to come to Rukwa and we want Exalo in Rukwa so we’re confident we can rapidly progress to final terms.
Q4: What can you tell us about Helium One’s funding position and how do you manage to fund the drilling?
A4: Over the last 12 months, we’ve been maintaining a very prudent approach to capital management, we’ve been keeping the burn rate low and we’ve been conserving capital where we can. It’s little things, economy flights, how we manage contracts, how we manage consultants, it’s all set the company ethos for stringent capital controls.
Because of that, we still have some cash in the bank, we’ve not been back to the market for nearly 18 months. Drilling is an expensive business however, capital invested in exploration has the potential to generate exponential returns on dollars spent in the ground. With nearly 3,000 square kilometres of the best exploration fairway for high grade primary helium in Tanzania, which by extension is the best exploration province for primary helium in the world. By drilling at Tai, we’re turning the key to unlock the value of the entire province, the entire 3,00 square kilometre fairway.
We’re excited to be back on the ground, we’re excited to be drilling, we’re excited for the year ahead and delivering returns to all the investors and shareholders who’ve been supporting us over the long road towards a discovery.
