Quantum Helium (QHE ) has raised £5 million via a placing of just under 17 billion shares at 0.03p per share.
The Placing was arranged by OAK Securities and was undertaken with a number of institutional investors who approached the company, reflecting growing interest in Quantum’s asset base and the strategic importance of domestic US helium supply.
The funding supports the next phase of development at Sagebrush and Coyote Wash, ahead of multiple near-term catalysts, including results from the company’s extended production test at Sagebrush.
In particular, the new money will be earmarked towards development planning and engineering at the Sagebrush project, towards progressing permitting, planning and progressing to drill-ready status targets at Coyote Wash, to fund future well planning and infrastructure design at the Sagebrush and Coyote Wash projects, and to support ongoing technical work, including seismic interpretation and subsurface modelling.
The company’s extended production test at the Sagebrush-1 well, which remains the key near-term operational milestone, is being funded from existing cash resources.
As it stands, the extended production test at the Sagebrush-1 well is progressing well, with operations advancing in line with expectations.
The next phase of operations will focus on the perforation and testing of the first of two zones in the Leadville Formation.
The Lower Leadville will be tested first, followed by a test of the upper Leadville where the DST was previously run. Perforations are scheduled to start this coming week.
The testing programme is designed to evaluate flow characteristics and confirm historical helium concentrations, including the previously reported 2.76% helium, and represents a critical step towards converting resources into reserves and advancing towards commercial development.
The company expects a number of significant operational updates in the coming weeks as testing progresses through this key phase.
“This is a very strong outcome for the company and we are pleased to have secured the support of a number of high-quality institutional investors who recognised the strength of our asset base and the opportunity we are developing,” said Carl Dumbrell, chairman of Quantum Helium.
“The placing reflects increasing awareness of the strategic importance of helium, particularly in the United States, where there is a growing need for secure and domestic supply. Recent global events have further highlighted supply constraints, and we believe Quantum is well positioned to play a role in addressing this. Importantly, this funding places the company in the strongest financial position it has ever been in and allows us to accelerate our development plans while maintaining momentum across our operations.
View from Vox
It’s been well broadcast across multiple platforms over the past few weeks that a major source of the world’s helium supply in Qatar has been seriously disrupted by the recent hostilities surrounding Iran. Some estimates reckon it could take years for Qatari supplies into the world market to get back to the levels they were at before the war. Be that as it may, there remain in any case constraints to any shipments that do get underway and try to come out of the Straits of Hormuz. So, with roughly a third of the world’s helium supply off line, it’s hardly surprising that investors are scrambling for sources of supply closer to the major markets.
Quantum Helium fits this bill better than anyone. Not only is it located safely and securely right in the centre of the USA, in Colorado, but it also already has an established 2U helium resource of over 2 billion cubic feet. What’s more, in fairly short order the company could be converting that resource into a reserve.
That makes it an obvious home for institutional money looking for helium, and the company’s experienced team only adds to the appeal. Throw in a bit of existing cashflow from oil production, and some extra upside from the wider district around Sagebrush and Coyote Wash, and the story does indeed look compelling.