Pulsar Helium Inc. (TSX-V: PLSR): Accessing project finance rather than equity
• Pulsar has signed a term sheet for a US$4 mm project finance facility set to mature in March 2026. The facility will bear interest at 12% per annum on any drawn amounts, with a 2% utilization fee on draws, which will be reimbursable at maturity.• We understand that Pulsar will be able to draw on this facility imminently.
• This highlights the quality of the Topaz asset. Accessing project finance at this stage underscores its value, as such funding is typically only available closer to FID.
• The company will require less equity than anticipated. With the completion of the second equity tranche of the private placement announced in December, Pulsar has raised ~US$2.4 mm of new equity, compared to earlier expectations of US$7.5 mm.
• Flow testing of the Jetstream #1 and #2 will start ~29 March with each well to be flowed for a period of approximately two weeks.
• Reflecting on the lower equity dilution, we have increased our target price from £0.80 per share to £0.85 per share. Our unrisked NAV for the contingent plus prospective helium is £1.73 per share plus £0.75 for the CO2 resources (Pmean in both cases).
Valuation
Assuming a flow rate of 0.75 mmcf/d and helium concentration of 12.5%, Jetstream #1 could generate revenue of ~US$22 mm (@US$650/mcf for helium) during the first year of production (with no decline). This indicates very strong project economics given that a development well should cost
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