Helium One Global (LSE:HE1) is one of the country’s most popular penny stocks. How do I know this? Well, despite having a market cap of only £54m (at 13 June), the number of trades undertaken each month regularly puts it in the top third among UK stocks.
But despite the release of positive news, its share price is at the same level as it was in February. What’s going on? Let’s take a look.
A dual approach
The group has two primary interests. The first is a 50% stake in the Galactica-Pegasus helium project in Colorado. Significantly, the facility has recently started producing and, earlier this month, the company announced that it had signed a three-month contract with a “US industrial gases purchaser” to buy its output. Discussions on the sale of carbon dioxide are ongoing.
Fortuitously, this is a good time to be selling helium. As well as sending prices higher, events in the Middle East have led to rationing. This has resulted in many industrial customers looking for a reliable supply from elsewhere.
The second, potentially much larger project, is in Southern Rukwa, Tanzania. Here, in May, the group held a signing ceremony to mark “the formal completion and execution of the agreements that support the Mining Licence which was awarded to the Company in July 2025”. The government holds a 17% stake in the mine.
A firm of advisors to “progress discussions with potential industry partners and seek external investment to advance the project towards development” has also been appointed.
So why isn’t the share price soaring?
Up in the air
In my opinion, there’s still a great deal of uncertainty surrounding the African project. And even though its American mine is up and running, it’s relatively small. The group’s joint venture partner, Blue Star Helium, is an Australian-listed business with a market cap of £10m. On this basis, investors in Helium One Global have placed a value on Southern Rukwa of £44m, even though the group has yet to secure the necessary finance (or a partner) for the project.
That’s why I believe it’s important not to get carried away. There’s no guarantee that a partner will be found although, I suspect, one will be identified given the favourable long-term market conditions for helium. But the terms of any deal are unknown.
How much equity will the partner want? How much debt will be taken on by the group? Can all the geological, technological, operational, political, and financial challenges be successfully overcome? Will helium flow to the surface in the required quantities? Is it economically viable to transport the gas from the middle of Africa to customers thousands of miles away?
To be honest, I don’t know the answers to any of these questions, which, in my opinion, means an investment would be highly speculative at this stage.
And until they are answered, I suspect the stock will struggle to gain momentum once more.
What next?
However, if everything goes to plan, the group’s share price should take off.
Due to its unique cooling properties, helium is used in many specialist applications. It’s particularly important in the space, healthcare, and semiconductor sectors.
However, there are too many moving parts at Helium One Global for my liking. An investment now would be too risky for me.
Should you invest £5,000 in Helium One Global right now?
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James Beard does not hold any positions in the companies mentioned.
