Blue Star tops up treasury for helium drilling
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Special Report: Blue Star is now funded for drilling its helium prospects in Colorado after completing a $2.3m share placement.
Completion of the first tranche of the placement to raise about $980,000 through the issue of shares priced at 1c each is expected on or around 23 June.
The second tranche will be completed following the receipt of shareholder approval at the 2020 annual general meeting, which Blue Star Helium (ASX:BNL) expects to hold in July.
“The company is now in a very strong position to pursue its 2020 plans including advancing its portfolio of prospects and leads and a high impact drilling program targeting its prospective helium resources in Las Animas County, Colorado,” managing director Joanne Kendrick said.
Blue Star recently presented an independent prospective resource estimate of 3 billion cubic feet (Bcf) (or 3,000,000 mcf) of helium for the Enterprise and Galileo prospects in Colorado.
The last published price from the Bureau of Land Management auction, which has historically served as a “defacto” crude price for plant-gate helium sales, averaged $US280 per thousand cubic feet (mcf).
This is just the tip of the iceberg given that the company has identified nine other prospects and numerous other leads on its landholding, which stretches over 120,000 gross acres (65,000 net acres).
It plans to drill one well at the Enterprise prospect at an estimated dry hole cost of $US300,000 ($432,219) though this could increase by a further $US100,000 if commercial amounts of helium is discovered and the decision is made to complete the well as a producer.
Helium is a critical component in modern technology applications, like MRI and nuclear medicine, both of which are becoming more widely used globally.
Despite this, helium is already in short supply and will become increasingly rare once the US Strategic Helium Reserve shuts in 2021.
The other major source of gas is as a by-product of natural gas production, which due to ongoing low fossil fuel prices is unlikely to alleviate the supply shortfall.