Pulsar Helium Inc. (PLSR:TSX.V) gained research coverage by Auctus Advisors on the same day it completed its initial public offering (IPO), reported analyst Stephane Foucaud in an Aug. 15 initiation note. Auctus assigned Pulsar a CA$0.90 per share target price, which implies more than three times the upside.
"Pulsar is now about to start drilling," Foucaud wrote, "and is targeting early production."
200% Potential Return
This helium exploration and production company headquartered in British Columbia has two assets and a market cap of US$22 million (US$22M). Its price at IPO was CA$0.30 per share, one-third of Auctus' CA$0.90 target price on it.
Thus, the projected potential return for investors is significant, at 200%.
Asset Offers Near-Term Production
Pulsar's flagship asset is a natural gas project in Minnesota called Topaz, reported Foucaud, which in 2011 showed a helium concentration among the highest of North American projects owned by publicly listed peers: about 10.5%.
"Based on very limited data, the reserves auditor has already attributed up to about 300,000,000 cubic feet (300 MMcf) of helium contingent resource to this single well," Foucaud reported. "There could be much more."
Pulsar has the mineral rights and leases for up to 3,132 acres of land surrounding the discovery.
Topaz is in a less competitive area for helium, in a mining district and near access to infrastructure and the U.S. helium market. These features mean the helium asset could be rapidly monetized.
Auctus estimated that payback from Topaz would take only four months, assuming initial gross gas production of 5 Mmcf per day (5 Mmcf/d), a cost of US$15M to build a 10 MMcf/d facility, and a helium sales price of US$450 per thousand cubic feet. (Helium generally is produced as a byproduct of gas.)
To move forward, in Q4/23, Pulsar plans to drill and flow test a new well that twins the previous discovery to better understand the reservoir and to better define the Topaz project and resources. It also plans a passive seismic campaign for a clearer understanding of the area's geology.
"The upcoming drilling and flow test of the new Topaz well is a potential rerating event" that could "boost our valuation for the company to more than CA$3.45 per share," from CA$3.31, Foucaud wrote.
Project in Overlooked Region
Pulsar has a second, earlier-stage project in East Greenland called Tunu and holds the country's first awarded helium-hydrogen exploration license. It covers 2,772 square kilometers, relayed Foucaud.
Management believes Tunu contains all of the necessary geologic conditions for a possible helium development. This is bolstered by a positive result of sampling a hot spring in South Greenland, which emits gases of a similar composition to those discharged from springs in Tunu. The sample showed helium was present in concentrations as high as 2.3%.
Because most of the country's hot springs are in Central East Greenland, Pulsar is considering a joint development of geothermal/hydrogen and helium, Foucaud noted. Next, the company plans to acquire additional gas geochemistry and geophysics data on Tunu.
About the Commodity
Given its unique properties, helium is critical to high-growth sectors such as technology, space, and scientific research, yet the world's inventories of the element are quickly dwindling, Foucaud pointed out.
The European Commission has deemed helium a critical raw material. Today, most helium comes from a few fields in Qatar, Algeria, and the U.S., though production in the States is rapidly decreasing. All of this bodes well for Pulsar.
"The steep expected increase in demand, combined with riskier new sources of supply (Qatar and Russia), is expected to see helium prices remain very high," added the analyst.
Cashed Up for Current Plan
Pulsar has the funds for its upcoming drill and testing program at Topaz, Foucaud noted. As of June 30, 2023, the company had CA$100,000 in working capital and CA$2.5M in IPO proceeds.
A Look at Management
Thomas Abraham-James, the chief executive officer, president, and director, and Neil Herbert, executive chair, co-founded Pulsar in 2022.
Abraham-James is not only a seasoned CEO but also a geologist and has more than 17 years of experience in the mineral resource industry. Herbert's expertise is finance, a sector in which he has worked for 30 years.
Pulsar's chief financial officer (CFO) is Dan O'Brien, who has been the CFO for a number of private and publicly listed mineral exploration companies.
Pulsar's directors and officers have skin in the game, noted Foucaud, as together they hold about 49% of the helium company's total 74.9 million issued shares.
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- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
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Disclosures for Auctus Advisors Inc., Pulsar Helium Inc., August 15, 2023
Pulsar Helium inc (“Pulsar” or the “Company”) is a corporate client of Auctus Advisors LLP (“Auctus”). Auctus receives, and has received in the past 12 months, compensation for providing corporate broking and/or investment banking services to the Company, including the publication and dissemination of marketing material from time to time.
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