Pulsar Helium Inc. (TSX-V: PLSR): Pulsar in the context of peers - Topaz shines
• Comparing helium projects presents significant challenges due to variations in risk profiles, resource sizes, stages of maturity, operating environments, and potential for commercial viability. For example, it may be more advantageous to invest in a smaller resource base situated near established infrastructure and customers within a favorable operational setting, rather than a much larger exploration asset that carries a minimal chance of successful economic development, even if exploration yields positive results.• The purpose of this note is to compare the potential commerciality of the projects held by various publicly listed helium juniors.
• Many firms rely on historical data from previous operators or cite results from adjacent licenses, raising concerns about the quality and relevance of that information. To address this, we have chosen to focus exclusively on measurements taken directly by each company on its own licenses.
• While helium concentration is often emphasized, we argue that it does not provide a complete picture. High helium concentration may be inconsequential if the overall flow rate is very low. Therefore, we have also assessed net helium flow rates (calculating flow rate multiplied by helium concentration). We believe this metric offers a more accurate and critical assessment of a project's potential commerciality.
• We have also evaluated and ranked the projects based on three key criteria: (1) operating environment, characterized by favorable regulations, immediate access to field services and helium-related technologies; (2) proximity to helium markets; and (3) an independently estimated chance of development. For instance, a project situated in a region that necessitates significant investment in export infrastructure would carry considerably weaker economics compared to a similar project located closer to the market.
• On this basis, Pulsar's Topaz project screens very favourably. It boasts the second highest helium net flow rates coupled with the highest helium concentration. Additionally, its location in the USA, which offers the most favorable operating environment for helium extraction, enhances its overall appeal.
• With the deepening and testing of Jetstream #1 by the end of 2024 , Pulsar could derisk some of its prospective resources.
• Our unrisked NAV for the contingent plus prospective helium is £1.88 per share plus £0.80 for the CO2 resources (Pmean in both cases).
• We re-iterate our target price of £0.90 per share in line with our ReNAV.
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