It's a fair bet that most of us know little about helium, and have never invested in it. We may think of balloons, but there are a number of critical applications for this element. Helium is expensive, it's in short supply, and when it's used there are no easy substitutes. There's an interesting project in Minnesota that I'm introducing. Pulsar Helium has recently drilled an appraisal well at their Topaz project, and they've hit one of the highest concentrations of helium in North American history. There's a lot of excitement about the project, and the stock is in a mispriced position, making it an interesting and highly speculative position trade for investors with means and courage.
When most of us think of helium, we think of balloons. That's three percent of demand. Helium is used to cool the the superconducting magnets used in MRI machines. It's used a lot in the tech industry for manufacture of semiconductors, fiberoptic cables, and hard drives. . It's needed for spacecraft and in deep sea diving. It's in short supply, so short that supply has to be rationed. There are a limited number of helium only producers, most of the supply is a byproduct of hydrocarbon production. Demand is increasing, and existing supply is rationed, and falling in the U.S. Natural gas sells for U.S. $3 per thousand cubic feet, helium sells for U.S. $750 per thousand cubic feet. The biggest supplier in the world is Qatar, and other supplier countries include the U.S., Canada, South Africa, Algeria and Russia. With the onshoring of commodities a big focus of American policy, a new source of American helium will be very welcome.
Pulsar Helium was founded in 2019 by Thomas Abraham - Jones, a certified geoscientist with 18 years of mineral exploration experience and 10 years of helium experience. In the search for a helium project, they found that a nickel exploration company was drilling outside of Duluth Minnesota in 2011, and at 1800 feet they hit a concentration of gas that blew 9 feet of drill core out of the ground. Some of the gas was captured on site, and it was tested and found to have helium at a concentration of 10.5%, one the highest in North American history. Helium is economic to produce at concentrations as low as 0.03%. Pulsar did some research, found that there have been other gas occurrences in the area, including 2% helium within 100 miles and they have leased 2000 acres of private land, with options on 2000 more for their Topaz project.
Pulsar went public on August 15th, 2023 on the VSE. Nearly half the stock is management owned, and their shares are locked up or restricted in selling for a three year timeframe from that date. There are 97 million shares outstanding, with existing warrants already in the money. A U.S. pink sheets listing is in the works. With an existing target in place, they were able to to a seismic survey and geophysics in the surrounding area, and last month they drilled an appraisal hole called Jetstream #1 about 50 feet from the previous drill hole. They hit helium at a similar depth, and onsite testing showed a concentration of 12.4%
The lab results from Baker Hughes came in at up to 13.8 &nbsmparing this to our extensive database for helium occurrences around the world, we are pleased to say the results from the Jetstream #1 appraisal well are the highest helium concentrations that we have ever seen. This marks an important milestone for Pulsar and we are delighted with such a positive outcome for our client." The stock predictably has been on quite a run of late, from the low twenty cent range up to a recent high of $1.64. It's currently trading in the $1.30 range.
Unlike a metal exploration project, Pulsar Helium is not facing a multiyear expensive drilling program. What comes next is flow analysis and perhaps one or two more drill holes in order to complete the research process. Flow testing is delayed until May during the Minnesota spring thaw which makes the roads unsuitable for heavy equipment. The flow analysis and determination of the size of the reservoir constitute the remainder of the exploration process. There are helium projects in production from three drill holes, and this is a small land base. Assuming the resource proves to be economic, it's on towards building the helium processing plant.
Financing would be a combination of debt and offtake agreements, the company is already hearing from potential purchasers due to the extreme supply shortage of helium. A helium plant costs in the range of tens of millions of dollars, not the hundreds of millions or more of a conventional metals mine. In response to a question in the attached presentation, CEO Thomas Anderson Jones said that if everything goes exactly according to plan, they could be in production in 18 - 24 months. Compare that to the timelines to build a gold or silver mine in North America, where it can take a decade or more from initial discovery. No water or chemicals are used in production, just electricity as the wellhead gases are processed through a membrane osmosis process followed by super cooling to extract liquid helium. There's not a lot of environmental impact with helium processing.
Helium is an essential, difficult to substitute element that is expensive and in short supply. U.S. governments are interested in onshoring supply of critical commodities, and demand for helium is growing at about 8% per year. Helium production is relatively simple, and to be a world class producer you're looking at a single 40' container truck per day, carrying a million dollars worth of helium. There are losses in transport, so being able to reach all fifty states within two days via container trucks carrying non flammable gas is a huge advantage.
The road map for Pulsar following this initial drill result is amazingly fast for those of us used to mining project timelines. The flow and pressure testing in May will be followed by a resource estimate. Assuming enough helium is found, there will be a feasibility study and at that point they will look to finance a production project. Pulsar has sufficient cash on hand to fund the remainder of the process through the feasibility study, and they don't want to dilute the stock further. Helium is in such short supply potential buyers are already approaching them before they've even proved that they have an economic resource. Project financing is expected to be a combination of debt and offtake agreements. In a recent interview, CEO Thomas Abraham - Jones was asked how long until production, and his response was if everything went perfectly they're looking at 18 - 24 months, an amazingly short timeline. There's a comprehensive interview and Q & A in the link, well worth watching.
https://www.youtube.com/watch?app=desktop&v=ptzy3AHHRLc
In the first paragraph I said that the Pulsar Helium stock is in a mispriced situation. What I mean by that is that either there's an economic helium resource at Pulsar's Topaz project in Minnesota, or there isn't. If the helium is there in sufficient quantity, the stock will rerate much higher very quickly. If helium is there in a large quantity, the stock will go very high. If there isn't enough helium, Pulsar does have a much less exciting project in Greenland showing 0.8% helium which is at an earlier stage of development. The stock won't disappear, but the price will plummet right back to earth.
I've learned a bit about the helium market in researching Pulsar Helium, and this is clearly a very speculative proposition at the moment. For speculators with means and the appetite for risk, this stock could be a multi bagger within a matter of months. Helium is clearly a sector to keep an eye on, as the essential nature of the element and supply shortage make for an interesting micro sector opportunity.
PLSR.V
Disclosure: I have a beneficial long position in the shares of one or more of the companies discussed in this article, either through stock ownership, options, or other derivatives. I wrote this article without external assistance, and it expresses my personal opinions. I was not compensated for this article, and I have no business relationship with any company whose stock is mentioned in this article.
