Helium One (LON: HE1) shares are up 2% or so today. This is on the report that they’ve reached target depth at the Tai-3 drilling operations. We’ve long been interested in Helium One as it seems, to us, to be following a sensible chain of logic. As we’ve said before about HE1: “Helium One (LON: HE1) starts out with a rather good idea. The world's looking short of helium so why not go drill for some? Well, OK, that's a bit simple but there's good method there as well. We should know - and geologists do - that helium is the one non-radioactive element that is continually created newly here on Earth. The amount we had in the beginning boiled off into space billions of years ago. Everything that we have now has been much more recently created.
“The creation process is that when uranium and thorium (well, complicated, but often this is true) decay they throw off an alpha particle. The other name for which is the nucleus of a helium atom. The other thing we know about helium is that it often turns up associated with natural gas deposits. So, think a little laterally and go looking for natural gas in areas where the rocks have a lot of uranium and thorium in them. We might well then find that the gas is high in helium. So far so good and that's just what Helium One has been doing. They've found exactly that in areas of Tanzania.”
We buy into all of that logic as we also do at Noble Helium who are doing the same thing just over the hill. However, the proof is going to be in finding a reservoir of helium and that we’re now more unsure of than we were before.
We’ve followed Helium One, or HE1, a number of times. Through varied problems of drilling rigs not turning up, buying one - which then broke - and so on. We’ve also kept insisting upon two things. The logic works but the proof will be in finding a helium rich reservoir.
Which makes us worry about today’s announcement: “Elevated helium shows, up to six times above background, have been identified in the Lower Karoo Group and Basement targets. Helium shows increased in frequency and quality with depth, as anticipated”
Well, yes, that could be good. Could also be bad. Background helium levels are in the 3 to 5ppm range. 6x that is 30 ppm - which is decidedly non-economic. A waste, a disaster in fact. So, what is it that they’ve found, or nearly found? Is it a reservoir of helium that is slowly leaking to give that higher than background level? Or a source of helium generation - that U and Th - which has been leaking all along and therefore there’s no reservoir?
The current information release doesn’t tell us but that’s the thing to worry about.
