In a April 7 research note, Cormark Securities research analyst Brent Watson reported that the firm is raising its price target on Saskatoon, Saskatchewan-based Royal Helium Ltd. (RHC:TSX.V).
The analyst indicated that Royal Helium recently reported initial drill results from three wells drilled at its Climax property located in Saskatchewan. Watson stated that the preliminary testing data offer proof of concept that "represents a key de-risking milestone for Royal as commercial helium production in Saskatchewan is currently being sourced from gas accumulations with helium yields ranging from 0.3% to 1.0%."
Watson noted that drilling activity returned elevated helium levels in samples from each of the three Climax wells, which was subsequently confirmed with additional follow-up testing. Economic concentrations of helium measuring 0.33% to 0.94% were found at the Deadwood, Duperow and Souris River formations.
The analyst stated that a previously unknown zone in the Climax 3 area tested at around 0.6% helium with no water and represents a strong potential area for future exploration.
Watson noted that over the next 30-40 days Royal will be focused on long-term production concentration testing at the most highly prospective zones in the three wells. These high-grade areas being investigated range in thickness from 5 meters to greater than 30 meters.
"While we still view an investment in Royal as having a speculative element until flow results are announced, we are very encouraged by these preliminary results," the analyst wrote.
Cormark Securities rates Royal Helium a "Buy" and has increased the target price for the firm's shares from CA$0.90 to CA$1.05. RHC shares are trading at around CA$0.73/share.
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Disclosures from Cormark Securities, Royal Helium Ltd., April 7, 2021
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