NHE upgrades helium resource at Mbelele Prospect in Tanzania

Our helium Investment Noble Helium (ASX: NHE) announced on Tuesday that the company’s internal resource estimate for its first well had almost doubled.

NHE’s first well Mbelele-1 is now targeting an unrisked 15.7 billion cubic feet prospective helium resource - previously the number sat at ~8.7 bcf.

NHE’s first drill is planned for September.

NHE also confirmed that a discovery at Mbelele-1 would immediately be followed up by an appraisal well on the same target (Mbelele-2):

Why the updated resource matters:

Previously NHE was planning two wells Mbelele-1 and Pegere-1 which COMBINED was targeting ~16.5 bcf of helium.

Now NHE gets to target a 15.7 Bcf target with just one well which IF successful could deliver a similar size discovery for a much lower cost (relative to drilling two wells).

After completing a capital raise and securing a rig through respected drilling company Marriott in July, NHE is now approaching a pivotal moment in its 7 year history.

The raise to facilitate this drilling was for $13.5M at 18c, with NHE directors investing over $1M of their own cash.

NHE is now trading well above the raise price, currently at 26.5 cents.

We see this price action as a reflection of not only the diligent work done by NHE to de-risk the project pre-drill, but also of the sheer scale of the prospective resource.

NHE plans to provide an independently certified resource estimate after the drill program is completed.

This weeks announcement also flagged that a low CAPEX commercialisation pathway is on the cards - with potential production within 12 to 18 months of drilling.

Of course, a key risk that remains is exploration risk - things can go wrong during drilling operations, whether that be delays, malfunctions of equipment or a failure to find an economic resource:

What’s next for NHE?

Rig mobilisation 🔄

The rig needs to make its way to the site in Tanzania from the UK and will make its way over shortly.

We’ll be watching timelines here closely.

⚠️The Big One: Drilling ⚠️ 🔄

Drilling is expected to start this quarter, with a planned September spud date.

The two targets here represent <10% of NHE’s overall resource which sits at an independently certified Mean Unrisked Prospective helium resource of 175.5Bcf.

Closer to the drilling event, we intend to outline our bull/bear/base cases for NHE’s drilling.