The Streetwise Live! Broadcast on July 13, 2021 focused on helium and Royal Helium Ltd. (RHC:TSX.V; RHCCF:OTCQB), one of North America's largest helium leaseholders. The guests, Royal Helium President and CEO Andrew Davidson and capital markets specialist and Royal Helium Director Campbell Becher, discussed the commodity's uses and what makes this particular helium company an attractive investment.
Host Cyndi Edwards began by asking Royal Helium Ltd. (RHC:TSX.V; RHCCF:OTCQB) President and CEO Andrew Davidson what helium is used for. Numerous industries depend on helium, he said, including healthcare, technology, manufacturing and operation of high-tech products, transportation, even rocketry and quantum computing.
"Life in general is dependent on helium. Everything people do on a day to day basis is reliant on helium in one way or another," he added. "Helium is a unique molecule that has any number of applications and is irreplaceable in all of them."
Edwards next asked Campbell Becher, a capital markets specialist and Royal Helium director and investor, what he likes most about the Canadian helium company. He said that not a lot of people know about helium, and that in itself is compelling. The company is rare in that it has an 80–85% probability of success. It has the potential to capture other gases, such as hydrogen, and perhaps even spin those out; on exploration, Royal Helium found 9% helium over 39 meters, "which just doesn't happen," Becher said, noting that the company is fully funded, having closed a financing about a month ago, and management is trustworthy, hardworking and delivers on what it says it will do.
"And it's so cheap, it's almost ridiculous," Becher added. (Royal Helium is trading today at about CA$0.49 per share.) "We get the hydrogen for free, and essentially we're getting the helium for free right now as well."
Edwards noted that, in fact, Royal Helium has been getting attention lately. For one, Cormark Securities has a Buy rating and a $1.70 per share price target on it. Similarly, Eight Capital rates it Buy and gives it a $1.85 per share target price.
Davidson cited numerous reasons why Royal Helium's stock is currently undervalued. One is that compared to its peers, the company has a potentially larger helium resource. Also, it has a potential resource across of multiple industrial and in demand gases. Hydrogen for instance, he said, could be a world-class resource on its own. Royal Helium has more than 1 million acres of land to develop in Saskatchewan, Davidson went on. The company already returned successful helium numbers in the first three wells it drilled, having discovered "one of the potentially largest helium plays in Climax-3 with 6 billion cubic feet of helium in place," he said. Further, the jurisdiction in which the company's property is located is friendly, technical support and services are nearby and the project has provincial government support.
"It's a clear transition [from] using existing traditional oil and gas technology into a new gas stream with [a] new economic venture for the province that's really more green tech, green focused than traditional oil and gas," the CEO noted.
Edwards pointed out that Royal Helium recently started trading on the OTCQB exchange in the U.S.
"We built a pretty big following in the U.S. and wanted to make sure there was liquidity there for those shareholders," Davidson explained.
What near-term catalysts can investors expect from Royal Helium, Edwards queried. The company will complete another zone on the first three wells, aiming to define an additional helium resource there, Davidson said. Plans also call for a second drill program, similar to the one conducted in January but larger scale, to start soon. It will entail drilling another seven wells across four different project areas in Saskatchewan.
"They're very prospective parts of the province and have been virtually untouched by helium explorers," Davidson pointed out. "There are a lot of value catalysts over the next six months based on a properly planned, properly funded exploration program."
Edwards asked both guests if they see Royal Helium as a future acquisition target. Becher said most definitely, the company will be taken out and when it does, it should be acquired for no less than $2 per share.
"If we have any success here in the next number of months, $2 is going to be in the rear-view mirror, in my opinion," Davidson added. "We have a history of delivering on what we say we're going to do, and we don't plan on changing that. Our team is very focused and very, very good at what they do."
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- Andrew Davidson - President, CEO, Chairman owns securities of the company.
- Campbell Becher - Director, Royal Helium, owns securities of the company.
- Disclosures for: Cyndi Edwards, Host. I, or members of my immediate household or family, own securities of the following companies discussed in the broadcast: None. I personally am, or members of my immediate household or family are, paid by the following companies discussed in the broadcast: None. My company has a financial relationship with the following companies discussed in the broadcast: None.
