Helium One‘s (LSE:HE1) a penny inventory that seems to be caught in a little bit of a rut. Whereas the corporate patiently waits for approval of its mining licence software in Tanzania, its share price has been treading water.

Traders know that if the corporate is to totally exploit its Rukwa mine, it should first get authorities approval. Then it’ll be in a greater place to boost the required funds to assist absolutely commercialise manufacturing.

The wait’s irritating as a result of the corporate is aware of there’s gasoline deep underground.

One other potential alternative

In the meantime, consideration has moved to its 50% “working interest” within the Galactica-Pegasus helium improvement mission in Colorado, United States. It’s operated by Blue Star Helium, a tiny Australian-listed firm with a present (21 February) market-cap of £4.75m.

And there have been some developments just lately. Six of Helium One’s final eight inventory alternate bulletins have been concerning the American mine.

Firstly, in the midst of December, it was reported that dangerous climate had delayed the drilling of the deliberate improvement wells. Then, simply earlier than Christmas, it was confirmed that all the things was in place to start work. An additional weather-related delay was subsequently introduced in January, resulting in a choice to gravel the roads main up to the positioning.

Nevertheless, the latest launch is extra optimistic and says that drilling ought to begin shortly. Encouragingly, it seems that all the things stays on schedule to extract helium within the first half of 2025.

The corporate’s administrators and shareholders shall be relieved as a result of it’s more likely to take 12 months — from the granting of the licence — earlier than Rukwa’s absolutely operational.

Future prospects

It should make a pleasing change for shareholders to see information objects about operational issues somewhat than monetary ones. That’s as a result of the corporate’s repeatedly needed to ask buyers for extra money.

When it first listed, it had 497m shares in difficulty. At present, there are 5.92bn in circulation — practically 12 occasions extra. And with its mine in Tanzania requiring an estimated $75m-$100m to begin producing income, and the Galactica-Pegasus mission more likely to require some more money, I believe further shares must be issued quickly.

To try to keep away from this situation, the corporate’s administrators are speaking to potential trade companions — and banks — with a view to offering the required finance, however there aren’t any ensures these negotiations shall be profitable. And that’s a serious downside for me.

On the plus aspect, the demand for helium’s rising and it may well’t be manufactured. This has helped drive its price greater. Additionally, there’s no spot marketplace for the gasoline. As a substitute, costs are negotiated on a contract-by-contract foundation. Specialists reckon it’s now 100 occasions extra worthwhile than pure gasoline.

Nevertheless, mining’s notoriously tough, particularly in rural Africa. The Rukwa, South West Tanzania area is 80 miles away from the closest city.

And till Helium One’s initiatives are absolutely funded — and its mining licence in Africa has been granted — an funding could be too dangerous for me.