The rising Helium One share price

Helium One is an early-stage helium exploration company operating within Tanzania. While most of us associate helium with balloons and high-pitched voices, the element has many modern practical uses that have driven up demand.

It’s become an essential component for MRI machines in hospitals, optical fibre manufacturing, and even rocket technology. As a result, the global helium market has been growing considerably. According to The Business Research Company, the total market size stood at $10.6bn in 2019 and could reach $16bn by 2023. Seeing an entire industry grow by around 60% in the space of four years is quite exciting. And indicates to me a potentially significant investment opportunity.

But what makes Helium One special versus its competitors? Despite the abundance of the element on this planet, helium is rarely found in concentrated reservoirs that are economically viable to extract. This is one of the primary reasons why there is currently a limited supply of the gas. However, thanks to its first-mover advantage, the firm has secured multiple prospecting licenses covering an area of just over 4,500 square kilometres. So far, its Rukwa Project appears to be the most promising and could contain up to 138 billion cubic feet of high-quality helium gas.

Needless to say, this could be a major opportunity for the business. And so I’m not surprised that the Helium One share price has exploded, especially since the company recently announced that drilling equipment is on its way to the Rukwa extraction site.

Risks to consider

As exciting as its strong competitive position is, the share price looks like it’s being inflated by significant investor expectations. As it stands, the business has no ongoing helium extraction operations. And thus, it does not currently have a source of revenue.  Yet the market capitalisation of the company today is around £120m.

If future tests at the Rukwa site confirm the preliminary estimates of the size of the helium deposit, then perhaps this valuation could be justified in my eyes. However, suppose the test results don’t meet expectations, or the firm runs into delays. In that case, I believe the Helium One share price could take a big tumble.

The bottom line

Resource exploration companies are fraught with risks. Pantheon Resources serves as an excellent example of what can happen when expectations aren’t met. As a reminder, the company delivered poor test results, and its stock price crashed by nearly 50% very quickly.

Personally, I do believe Helium One has the potential to become a leading supplier in its industry. But it’s far too soon to tell. So the stock is staying on my watch list for now.

The post Can the Helium One share price continue to surge? appeared first on The Twelfth Magpie.

More reading

• 2 UK shares tipped to more than double my money in 2026!
• Could Helium One Global, one of the UK’s most popular penny stocks, be about to take off?

Zaven Boyrazian does not own shares in Helium One Global. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Helium One share price rises

Helium is perhaps best known for its use in balloons. Fittingly, the Helium One share price has risen to lofty heights recently. It climbed more than 80% in the past month, and over 220% since its shares listed in December 2020.

Despite the sharp rise in share price, I think it still has vast potential as an investment. Some of the greatest investment potential can come from small-cap stocks. With a market capitalisation of around £80m, Helium One certainly fits this category.  

What so great about Helium?

Helium is commonly found as a by-product of liquified natural gas. The global helium gas market is expected to grow from $2.7bn in 2018 to $4.5bn in 2025. In addition, global helium supply is limited and demand is greater than supply. This is leading to higher prices.

The US Federal Helium reserve is a strategic stockpile started in 1925. But it ceased sales to industrial customers in 2019, further constricting supply.

Why is demand so high? Helium’s use in balloons is just 8% of the market. More importantly, 20% of helium is used in MRI scanners, which is a globally growing market. Other uses include high-growth areas such as in hard drives, data centres and rockets. Up-and-coming space exploration companies like Space X would be buyers of this non-toxic gas.

In the long term, in a world moving away from fossil fuels, alternate sources of helium will need to be found.

Why I like Helium One

This is where Helium One comes in. I’m bullish on it for a number of reasons. It has a pipeline of advanced and early-stage targets. Having been active in Tanzania for five years, it has a first-mover advantage in the area. It has also managed to secure some of the best locations.

At 138 billion cubic feet, it has the biggest resource of any listed primary helium explorer. It’s “drill-ready”, and well-financed.

Encouragingly, the management team also has a track record of delivering natural resource projects in Africa.

What about competition? Competitors have projects that are smaller, earlier stage and lower grade. The Helium One resource is 50 times larger than any other listed competitor.

The risks

Bear in mind though, the Helium One share price has risen significantly since it listed. Could its future prospects be priced in to the share price already? Possibly. There are certainly risks with investing in a small exploration company. There are no guarantees, in my opinion.

Encouragingly, Helium One has a good relationship with the authorities in Tanzania and licences were recently renewed. That said, there is a risk with authorities reviewing licences, particularly if the find is successful. However, it’s worth pointing out that there are several multinational and junior miners successfully operating in Tanzania. 

All things considered, the surging Helium One share price could signal further interest in this small explorer. I already own a small the shares in the higher-risk portion of my portfolio, but I might consider buying some more on further positive updates.

The post The Helium One share price is surging. Should I buy now? appeared first on The Twelfth Magpie.

More reading

• 2 UK shares tipped to more than double my money in 2026!
• Could Helium One Global, one of the UK’s most popular penny stocks, be about to take off?

Harshil Patel owns shares in Helium One Global. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.