Declining stock markets, known as bear markets, are devastating to small mineral exploration companies.
The best way these companies have to access cash for high risk exploration comes from selling shares to public investors and venture fund investors.
When markets are falling that source of cash for mining explorers dries up faster than a mud puddle on a 40 degree day.
That’s what has happened to many of the helium explorers featured in a Bizworld column last spring.
Saskatchewan wants helium exploration. Helium gas prices were stable for years, running from $50 US a thousand cubic feet to $100 around 2013, soaring to $250 in 2018, and currently in the $600 range.
Increasing use of helium in MRI machines, data technology and industry spur the need for more reserves.
Without the cash from sale of shares the helium companies have been slow to develop production on the leases they picked up in Saskatchewan, Alberta and the U.S.
Five public helium companies listed in Canada provide speculation opportunities for investors.
Desert Mountain Energy, currently $2.11 and down 15 per cent from last summer, appears to have done much. Five wildcat wells and three offsets were drilled. A $12 million processing plant has opened. First production from one well should happen any day now.
With a higher share price Desert Mountain just raised $20 million without diluting shares terribly.
First Helium, 26 cents and half last summer’s price, hasn’t done much except evaluate sites, test one well and design a processing plant. Two oil wells bringing in $8 million a year have helped fund the program.
Royal Helium, 37.5 cents, has held value with merger of a Steveville, Alberta helium company and success.
Royal managed to raise over $30 million in loans and shares last year. The funds built a processing plant at Steveville, and drilled wells at Climax, Val Marie and Ogema. More will be drilled this year.
Helium Evolution, 26 cents, is a new player since last year’s column, and has amassed 5.5 million acres in the Mankota/McCord/Gravelbourg areas.
This company has taken a faster way to cash flow, farming out wells to neighbouring producer North American Helium and needing less cash. North American drilled three wildcats and will do four this year. None are producing yet.
Avanti Helium, 67 cents, rests well below last spring’s price. The company’s first production from one well will happen in the last part of 2023. A processing plant should be ready by then.
Money from shares sales funded work but that dragged share price by 60 per cent.
Global Helium, 37 cents, has lost just over half its value.
Global has acquired Montana property with helium wells ready to got, got acres in Manyberries, Alberta and is still doing seismic work on 1.8 million acres in Saskatchewan.
The company has a one million acre land position in the Moose Jaw region running from Riverhurst to Caron.
CAUTION: Remember when investing, consult your adviser and do your homework before buying any security. Bizworld does not recommend investments.
Ron Walter can be reached at email@example.com
The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.