Helium One shares tanked on Tuesday after the Tanzanian-focused helium explorer announced a placing and fresh update on its Itumbula West projects.
Shortly after Helium One shares touched their highest levels since March last week, the company conducted another placing raising at a 37% discount to the closing price of 1.74p per share on August 23, 2024.
A total of £6.43 million has been raised from a single institutional investor, Cynosure Capital PTY Ltd. Retail investors were not given the opportunity to participate in the round, which sent shares down by over 14%% in early trade on Tuesday.
The funds will be used to finance the acquisition of a 50% stake in the Galactica-Pegasus project located in Colorado.
The net proceeds from this subscription will be allocated to various aspects of the acquisition of Galactica-Pegasus. The largest portion, US$2.7 million, will be dedicated to funding six wells, with a cap of US$450,000 per well.
Additionally, $2.55 million will cover the company’s 50% participating interest share in tie-back, installation, and processing expenditures required for the Galactica Project’s development. The company will also allocate US$1.5 million to reimburse past costs incurred by Blue Star on the Galactica Project. The remaining $1.18 million will be used for associated fees, legal costs, working capital, and development contingencies.
Alongside the announcement of the dilutive share placing, Helium One provided an update on a well test at Itumbula West-1, which yielded interval flows of up to 7.6% helium.
“We are very pleased with these results from the EWT in the faulted Karoo interval. This is a globally unique helium play and it has taken a lot of hard work and collective effort across multiple disciplines to establish how this system works in the southern Rukwa Basin,” said CEO Lorna Blaisse, Chief Executive Officer.
We have gained a huge amount of information from this Karoo EWT and look forward to seeing what the fractured Basement EWT is going to yield. Once we have completed testing on this second interval, we plan to finalise our integrated subsurface modelling and resource estimates to complete our feasibility study.”