Ann: Helium Offtake Agreement Secured for Jesse-2, page-8

PART 2

	Going into this round of drilling, GGE is not looking to make a new discovery but rather looking to produce a commercially viable flow rate.

	We think that IF GGE can prove a commercial flow rate, it will be able to move the Jesse prospect quickly into production. In a November 2022 investor presentation, GGE earmarked next quarter for production from the Jesse-2 - assuming all things go according to plan.

1		For some context on what GGE is chasing, the nearby Doe Canyon helium field (which produces up to 50% of North American helium) is producing at ~20mmcf per day with helium grades of 0.4% from ~ 20 different wells. GGE confirmed today that its project has the potential to host >20 different wells and we are hoping Jesse-2 is the first of many wells that GGE can put into commercial helium production. The Doe Canyon helium field is owned by US giant, the NYSE listed Air Products which has a market cap of USBN. Below is an image of the two fields side by side:

1		Of course it's no guarantee, and there's a lot of work to be done, but if GGE can prove up a helium field on the scale of Doe Canyon, with similar flow rates, we expect this would deliver an outsized return for GGE investors. Even without “Doe Canyon scale” - helium spot prices are up over 300% (from US0/mcf to US,000/mcf) in the last 12 months, which is a strong environment for any helium producer, no matter how small. With a lack of supply and the reshoring of semiconductor manufacturing inside the USA, we think GGE is looking to commercialise its helium project in the right time at the right place. We are hoping GGE is able to go from helium developer to producer and is able to drill out future helium wells from cash flow generated from the Jesse prospect. This brings us to our “Big Bet” for GGE: Our ‘Big Bet’ “GGE makes a commercial helium discovery, ties it into the existing local processing infrastructure, and becomes a USA helium producer - or gets taken over.” NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved - just some of which we list in our GGE Investment Memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true. To monitor the progress GGE has made since we first Invested and how the company is doing relative to our “Big Bet”, we maintain the following GGE “Progress Tracker”: See our GGE Progress Tracker here:

Grand Gulf Energy ASX: GGE More on GGE’s Jesse-2 well In our last note we did a deep dive on the Jesse-2 well design. At a high level, the ultimate aim for this round of drilling will be to get a commercially viable flow rate so that GGE can put its helium discovery at the Jesse prospect into production. Having already made a discovery with its drilling program last year, GGE is now looking to tackle the issues it faced then (gas/water contact zone) by drilling ~16m above that contact zone. Of course, there is no guarantee GGE’s well design will avoid the same issues faced with its discovery well. GGE’s new well design is based on all the data available to the company BUT as we have seen with drilling events in the past, what’s been designed doesn't always play out the same way underground. We are hoping the program is a success, especially considering all of the historical well data, 2D seismic and data from the 2022 discovery well GGE has on its hand. In summary, below are the key reasons why we think the Jesse-2 well could be successful: 1.GGE already has a discovery - GGE has already confirmed a discovery with helium grades of up to 1% and a productive/strongly pressured reservoir at 2,465 psi. 2.Improved well design - With the learnings from its first well (Jesse-1A), historical well data and the 2D seismic data in the area, GGE has designed the Jesse-2 well aiming to avoid the gas/water contact zone by drilling down to a depth ~16m above it. 3.Surrounded by existing infrastructure - GGE’s discovery sits less than 20 miles from two helium plants and has pipeline infrastructure running adjacent to it. This means that if GGE can successfully obtain a commercial flow rate, the company will be able to tie in the discovery and start producing helium. 4.Offtake and strategic agreement in place - GGE already has an offtake agreement signed as well as a strategic agreement with Paradox resources the owner of the nearby Lisbon helium plant. Below is GGE’s well design and the gas/water contact zone is marked with a green dashed line.

1		How will GGE fund its drilling program? GGE’s most recent quarterly report (30 September 2022) showed a relatively healthy cash balance of A.1M. A large part of this capital came from the AM capital raise the company did in early 2022 at 4.4c per share. At the time, GGE mentioned that the funds would be used to finance TWO exploration wells following the success at the Jesse-1 well. In GGE’s November 2022 Investor Presentation, the company confirmed that each well was expected to cost US.5M, and that the upcoming Jesse-2 well was fully funded.

This means GGE should have enough cash to at least complete drilling operations at the Jesse-2 well, and potentially another well - assuming no cost overruns. However as with all exploration drilling programs, it's worth keeping in mind that much like a house renovation, costs rarely ever come in under or at budget. Typically there are surprise challenges that come up during drilling or the company needs to do additional work relative to what was planned initially and costs can blow out. With this in mind, it’s also typically prudent financial management for companies to shore up a balance sheet going into a drilling event, in case of cost overruns or results not being as good as anticipated. As a result, and depending on how the company’s share price performs, we wouldn’t be surprised if GGE looked to raise funds at some stage over the coming months, considering a large portion of its cash balance will be allocated to finance the Jesse-2 well. In any case, a more up to date snapshot of GGE’s cash position will come later this month when GGE will announce its 31 December 2022 cash position. What’s next for GGE? Drilling of Jesse-2 well This is the next big catalyst we are watching out for. GGE expects the Jesse-2 well to be spudded THIS quarter which means we don't need to wait very long for GGE to start drilling.

	Permitting for a third helium well GGE also confirmed in its most recent announcement that permitting was underway for a third well in early 2023.

	In a previous GGE note, we covered the potential exploration upside at GGE’s project. Here are the two key takeaways from that note: 1.GGE has identified three NEW potential drill locations in addition to the Jesse Prospect. 2.GGE has identified four mature step out drilling locations at the Jesse Prospect.

See our deep dive on those prospects in a previous note here: GGE Hits Gas Column. Flow Rate and Helium Concentration to be Tested Next. Our GGE Investment Memo: The ultimate purpose of our Investment Memo is to record our current thinking as a benchmark to assess the company's performance against our expectations 12 months from now. In our GGE Investment Memo, you’ll find: ·Key objectives we want to see GGE achieve ·Why we Invested in GGE ·What the key risks to our Investment thesis are ·Our Investment plan