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It’s honest to say UK traders are out of the blue fascinated with Helium One (LSE:HE1) and its share value.
Shares within the Tanzania helium explorer have rocketed greater than 1,000% in a month.
This sort of explosive progress has turn out to be the speak of share value bulletin boards in all places. So why is that this occurring? And will I pile in now within the hope of getting filthy wealthy?
To start with…
It appears there’s a transparent market alternative to benefit from a current helium provide scarcity to make severe cash.
This can be a non-renewable factor that’s laborious to seek out and costly to retailer. MRI machines want 1000’s of litres of liquid helium to perform.
Chip manufacturers additionally use helium. NASA is an enormous purchaser, alongside China’s house authority, the place helium is used to pump rocket gas.
And the world’s largest helium producer is the US. In late January 2024 the nation offered off its big nationwide stockpile together with its Federal Helium Reserve.
In the meantime China solely started producing helium at business scale in the previous couple of years.
So what’s behind the surging Helium One share value?
Huge enterprise
CEO Lorna Blaisse has come out with some extraordinarily daring language just lately. That is after Helium One accomplished its newest drill marketing campaign in Tanzania.
The Itumbula West-1 properly confirmed “hugely significant” outcomes that “clearly confirm” a working helium system, we’re advised.
The corporate says it has the “potential to become a strategic player” in helium markets.
This might make the £75m market cap agency dramatically extra invaluable. However discovering a viable system — and extracting what’s there — are two very various things.
Backstory
Helium One began buying and selling on London’s AIM market in December 2020 after merging with Attis Oil & Fuel. Attis shareholders bought 1 share of Helium One for each 236 Attis shares they owned.
As of 6 February 2024, the share value was round 2.2p.
And that value is up 1,000%+ as a result of the shares have been buying and selling at 0.2p as just lately as 23 January.
However anybody shopping for at IPO can be 50% down. Plus there was an enormous run as much as a peak of 28p in August 2021.
The truth is, anybody who purchased earlier than December 2023 continues to be be within the crimson.
If, if, if…
I received’t sneer at Helium One shareholders. I’ve chucked cash at small-cap high-risk/high-reward AIM-listed miners earlier than.
One was drilling for copper in Botswana, the opposite for nickel and lithium in Canada.
As a result of I’m not penning this from a seaside in Bali, readers can conclude that neither they — nor I — struck it wealthy. On the time I classed my stake as cash I might afford to lose.
However there’s a distinction between me saying I can afford to lose cash, and me feeling sick as I watch it disappear.
What comes subsequent
AIM-listed miners usually must dilute current shareholders to lift sufficient money to drill and exploit properly choices.
Mining and exploration is a speculative enterprise. The rewards may be excessive. However they require a whole lot of upfront money for unsure outcomes and irregular payouts.
If anybody investigates Helium One, they need to go into it with their eyes open. This market is plagued by defunct mining operations that promised large and delivered little. So whereas Helium One might ship, I received’t be investing because the dangers are too nice for me.
