Curiously, the possible significance of the announcement from Global Oil and Gas (FKA Global Vanadium, FKA Baraka Energy) yesterday seems to have been overlooked here.
Earlier this year, the aforementioned company announced that they had sold their Southern Georgina helium project to a group called Westmarket Oil and Gas, who have plans to relist the asset on the LSE in the next few weeks as part of a company called Georgina Energy.
Yesterday, GLV announced that as a result of the high level of interest in the upcoming IPO, the previously agreed terms had been revised in their favour:
...In light of the improved market interest for quality Helium Projects since the execution of the tenement sale agreement 28 March 2019, the Company and Buyer have also agreed to increased consideration terms for the transaction...
Westmarket had agreed to pay $500,000 in cash and the equivalent of $1,000,000 is shares, however this has now been increased to $1,000,000 in cash and the equivalent of $3 million in shares, assuming that the LSE listing goes ahead.
The expectation is that upon listing, Georgina Energy would be worth around £10 million, (circa $19 million AUD- see link) which is interesting given that the Baraka/GLV market cap has frequently been as low as $3 million, and for a time even less than that, over recent years.
It does seem that there is a greater appreciation of the helium story abroad than locally.
This apparent high level of interest in the Georgina Energy IPO is positive for BNL from at least a couple of angles.
1.) Firstly, while there is no doubt that the Southern Georgina Basin of the Northern Territory has strong helium potential, when it comes to resource projects it is all about location, location, location, as most veteran investors in mining stocks will tell you.
Big Star's helium acreage in Colorado has a short to medium term viability, which is almost certainly not the case with the South Georgina project in the NT. The population density of Colorado for each square kilometre of territory is much greater than that of the Northern Territory, indeed, by a magnitude of almost 300. The lack of infrastructure and the small pool of skilled workers makes it difficult to get projects off the ground in the NT.
It really is the outback up there, and outside of Darwin the human population is almost outnumbered by the crocodilos and bouncing kangaroos. You have to wonder if all of those investors in the UK who seem to be so keen on Georgina Energy have a real appreciation of the sheer remoteness of the area.
So if these investors think that the Southern Georgina Project formerly controlled by GLV is worth nearly $20 million, you'd have to suspect that the BNL project in Colorado, a far more viable project in the short term, would have to be worth more than the current Big Star market cap of c. $ 4 million.
2. Secondly, while this doesn't appear to be widely appreciated, Trent Spry, who joined BNL back in April this year, seems to have had a hand in identifying the helium in the EP127 permit in the Northern Territory.
After leaving the US focused Oil and Gas company, Entek Energy, Spry spent some time working for a company called Blackridge Mining (now Surefire Resources). For a time, this company was touting an advanced Seismo-Electric (SE) technology, which had been recently introduced into Australia from the US. This technology seems to have been adopted in conjunction with the arrival Spry, who joined the company about the first time they mentioned this.
Blackridge later announced that Baraka were interested in employing this technology in their Georgina Basin asset:
...Black Ridge Mining NL (ASX: BRD) ("BRD" or the "Company") is pleased to announce that Baraka Energy and Resources Ltd (Baraka) is considering utilizing BRD’s advanced Seismo-Electric (SE) Resource Imaging Technology (RIT) in order to better define the hydrocarbon presence within prospects and leads in its EP 127 permit in the Northern Territory. ('SEISMO-ELECTRIC (SE) RESOURCE IMAGING TECHNOLOGY (RIT) UPDATE' , SRN announcement of 24/08/16)
Eventually, this technology identified the presence of helium in the EP 127 permit ('Baraka seeks Helium and Conventional Hydrocarbon Potential', GLV announcement of 21/05/18), which set into motion the Georgina Energy IPO.
The point of this is that Spry seems to have a proven track record in identifying viable helium assets, and if you also account for his extensive experience working in the Oil and Gas industry in the United States, there is no real reason to doubt that the recently acquired Colorado helium acreage offers strong potential.
Big Star is currently sitting on 38,000 net acres in Colorado, and it makes for an interesting comparison with Spry's former company, Entek, which for a long time sat on an oil and gas acreage position of some 50,000 acres, situated just north of the border in Wyoming.
In the years leading up to the collapse in the oil price in 2014, Entek's market cap fluctuated between the $20 and $50 million mark. With this in mind, not to mention the significant differential between the helium and hydrocarbon gas price (about 100 times in the US at current), the market cap of Big Star does seem a little askew at the moment.
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