Pulsar Helium Inc. (TSX-V: PLSR): Raising new equity at a premium. Imminent high impact drilling newsflow
• Pulsar is raising up to US$7.5 mm of new equity at a price of U$0.38 (£0.30 equivalent) per share which is higher than the closing price of £0.26 per share the day prior to the announcement.• University Bank from Michigan will also provide a line of credit of up to US$4.0 mm to Pulsar’s major shareholder ABCrescent enabling ABC to exercise its 15.5 mm share purchase warrants at an exercise price of C$0.36 per share. Overall, Pulsar could receive a total of up to US$11.5 mm in new equity.
• This funding is anticipated to provide Pulsar with enough capital to fund all activities required to reach FID at Topaz, including (i) the deepening of Jetstream #1 well, (ii) a step out well, (iii) further appraisal wells, (iv) 2D and 3D seismic, (iv) further lease acquisition and (v) reserves and resources certification.
• With funding now in place, there is no risk of further dilution immediately following the drilling result of the deepening (approx. 500 m) of Jetstream #1. This is a high-impact well that could de-risk some of Pulsar's prospective resources.
• Our unrisked NAV for the contingent plus prospective helium is £1.64 per share plus £0.74 for the CO2 resources (Pmean in both cases).
• We have changed our target price to £0.80 per share in line with our ReNAV that incorporates the impact of the placing and warrant exercise.
University Bank
University Bank is arranging the placement. This is a local bank that could also provide debt funding for the construction of the helium and CO2 processing plant. It provides access to local high net worth investors that could support the progress of the project.
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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