“Goldman Sachs Says It Will Create the World’s First Trillionaire

“And a tiny sub-$1 stock is racing to build a first plant this year!”

That’s the headline hype of the new pitch from Nick Hodge for his Family Office Advantage newsletter, in which he’s pitching a penny stock in the helium market (Ooops, I gave it away, “star gas” is helium… it’s OK, there are yet more secrets to unveil below).

And he goes on…

“3,000% Gains Might Be the Minimum…

“All Starting on September 30th”

Exciting, right? We do love a crazy super-hyped story teaser for a penny stock, and you can usually count on Nick Hodge to pitch a few of those a year. The “hook” for this one, given current events, is that the billionaire space race is partly a race to reach the trillions of dollars of natural resources in space, including massive helium reserves on the moon, and that’s decades off in the future if it happens at all… but it is a fun story. Here’s some more of it…

“These Billionaires Have Already Lost the “Star Gas” Race

“While they all had their heads in the clouds…

“A team of geological experts were busy looking underground.

“And now they’ve done it.

“They’ve made a shocking discovery of Star Gas here on Earth.

“Right here in North America, actually.

“And one tiny company holds the claim, clinching a $36 trillion victory that has gone completely overlooked.

“It beat the billionaires. And now you can too.”

And then he heaps on the hype, here’s just a small sample…

“At $640,000 per pound, Popular Mechanics estimates the moon’s helium to be worth $25 quadrillion if it could all be mined.

“It’s enough to power the Earth for 80,000 years. All with 100% clean energy.

“That’s almost impossible to fathom.

“It’s enough to create 25 million billionaires. It’s enough to turn every single U.S. citizen into a millionaire.

“This is the secret behind the ‘galactic gold rush.’

“It’s why billionaires — the SAME ones investing in fusion — are racing for one thing:

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“To own and mine the moon’s helium wealth.

“It’s why Goldman Sachs predicts it will ‘create the world’s first trillionaire.’

“But here’s the thing…

“We do NOT need to go to the moon to become rich.

“We don’t even need to leave the Earth’s atmosphere. Or even North America.

“Because a hidden source of high-grade helium has just been discovered.”

And, to be fair, Jeff Bezos did have some science fiction-sounding thoughts following his brief trip out of the atmosphere on Tuesday, talking about the eventual need to move dirty and polluting industries into orbit to protect our planet… but he’s always a long-term thinker, ready to build on ideas that will take decades to get anywhere (Blue Origin, his space company, is now more than 20 years old, and he’s been pouring billions of dollars of his Amazon riches into it for most of that time, with very few signs of encouraging progress until the past few years).

What else do we learn about this secret stock, which is presumably extracting helium somewhere on our continent?

That’s pretty much it… it trades for less than a buck, it is in the process of actually beginning some sort of project, maybe a pilot project, within the next few months (September 30 is thrown around as the deadline), and it’s fairly new… these are the specific clues on that:

“This company has figured out how to extract viable helium from old natural gas wells.

“And it has been busy identifying the best wells in North America in a race to create the world’s first new helium reserve in years.

“It just started trading in mid-2021 with a very overlooked initial offering.

“Early estimates for just its first project are for over 1.1 BILLION CUBIC FEET of helium.

“Production testing will be underway THIS YEAR along with the construction and evaluation of a pilot plant.

“And new wellfields are already being added….

“The go-public financing was done at 25 cents.”

So who is it? There are a dozen or so “junior helium” companies out there trying to take advantage of price spikes we’ve seen in recent years, and that general story of “helium is in short supply and rising demand” has certainly attracted the investors, including Nick Hodge, who are always looking for the next story that might go “viral” among penny stock speculators.

We’ve seen plenty of waves of this in the past, from junior gold and silver stocks and oil wildcatters to the more esoteric rare earth metals juniors, lithium explorers and cobalt hopefuls, to say nothing of past mini-manias in geothermal energy, nickel, uranium and whatever other natural resource you can come up with. They’re not exactly easy to predict or time, particularly because onrushing investor attention in a tiny sector of the market can rush right back out again without warning (and, of course, because such mini-manias attract scammers — so we’ll probably see quite a few failing natural gas companies change their name to incorporate “helium” if this keeps rolling).

So what’s this one from Hodge? Thinkolator sez he’s teasing Imperial Helium (IHC.V), which went public on the Venture exchange in Canada two months ago.

This is essentially a startup, aiming to find commercial reserves of helium in the natural gas fields of Western Canada (and, of course, find a way to extract and sell it), with the first project being the Steveville Asset (which, yes, they do believe, “based on internal analysis and completed flow testing”, has 1.1 billion cubic feet of “helium potential”).

Handily, Imperial Helium does gather a chart with some of the pertinent data about several of the other junior helium names, North American Helium, Royal Helium (RHC.V), Blue Star Helium (BNL.AX), Avanti Energy (AVN.V) and Desert Mountain Energy (DME.V), which makes for an interesting comparison — I haven’t checked any of their numbers, but this is taken from their Investor page:

Imperial Helium did indeed raise about C$14 million at 25 cents a share in a private placement back in February, and they began trading on the TSX Venture about three months later. They spent some of that money boosting their lease area in Alberta, buying seismic data for the project, and starting field operations, with the first well spud on July 5. So this is likely to be a fairly news-heavy period for them as they announce results of that well and, they hope, begin to confirm that it’s a viable helium extraction project. There is no unique technology that I’m aware of, they haven’t created some new way to extract helium in a way that other companies can’t, they’re just trying to take advantage of high helium prices to maybe develop a long-ago discovery that might have enough helium to be commercially viable today.

This is one of those natural resource stories that’s a followup on a very old discovery — this is from one of their press releases:

“The initial well, otherwise known as well number 102/03-01-020-12W4M, is anticipated to be drilled to a depth of 2047m on the crest of the Steveville structure. The objective of the first well is to confirm helium concentrations and flow rates established during the historic blow-out that occurred in 1940.”

Which is at least a little bit interesting, because the Imperial folks can tell a little historic story of blowouts and past discovery — they sum it up here in an abstract for a geology convention where they’ll be presenting in September, Steveville was the site of a BP well that failed to find hydrocarbons, but did experience a historic blowout that led to finding a big gas field which was uneconomical (mostly nitrogen, not natural gas), but did have enough helium to briefly get their attention — it was below a 1% concentration, so didn’t end up becoming a ‘war effort’ helium project in the 1940s, but might, Imperial believes, be worth producing today. And the company’s ambitious story is essentially that there are 1,900 existing wells in Western Canada that have been tested over the decades and shown “potentially commercial” volumes of helium, and they’d like to start with Steveville but move on to some other prospective properties that other people might be ignoring, and begin trying to produce some of that valuable helium.

And, yes, the rationale behind Hodge’s September 30 date is that the company believes it is going to be able to complete testing of that first well in the next month or two, and announce a resource assessment during the fourth quarter — which, of course, begins on October 1. I have no idea when they’ll announce anything, but the drilling is underway.

Hodge lays it on pretty thick about this one property…

“It could be the world’s most valuable piece of land. And virtually nobody knows about it.

“It’s being called the ‘Saudi Arabia of Helium.’

“And best of all, the company that owns FULL land rights just went IPO. It trades for under $1 per share.”

And that’s highly speculative. They have leased the rights to one small property in Alberta, which, yes, might have a good helium resource. And maybe that larger Western Canada Sedimentary Basin area, which includes about 500,000 square miles of oil and gas production that Imperial has no rights to whatsoever (their lease area is about 90 square miles), could eventually become a major helium producing area to rival the Southwestern US or Qatar, but there would have to be a lot of investment to build a helium business in Canada, and we have no idea whether it’s a uniquely huge helium-rich area that would compare to the massive share of global oil resources represented by Saudi Arabia.

Alberta has been trying to open things up to make a major helium business feasible in the province, setting helium royalty rates last year to give investors some clarity to move forward, and the Weil Group opened a small production plant in Western Canada recently and has a few wells going, and there are other juniors getting involved and probably some existing natural gas companies in the area toying with the idea, but it’s it seems to still be pretty early days in building a meaningful helium export business up North.

But at this point, I need to make a disclosure… I usually own a few investments that are not listed in the Real Money Portfolio, mostly private investments or companies that are too small or speculative to really talk about, and among that group I do happen to have a small recent investment in an extremely speculative little prospect generator company out of the UK called Cloudbreak Discovery (CDL in London), which itself owns a small stake in Imperial Helium — so there’s a little conflict of interest there, and since I have to mention it here I’ll now share the details of that position with the Irregulars going forward. As a result of this note, I’ll extend my normal trading moratorium and not trade in my shares of Cloudbreak Discovery for at least a month — that’s probably being over-cautious, and I had socked that away as a “hold it for a few years and see if they get lucky” speculation anyway, mostly just because I have a soft spot for tiny prospect generators who don’t spend a lot of money, but these are true microcaps and I don’t want to be profiting from any impact Stock Gumshoe might have on the share price.

But anyway, how does Imperial Helium look? It’s trading a little above where their last financing took place, at about 30 cents (the shares popped to 45 cents or so post-IPO in May, but came down quickly after that), and it has a market cap of about C$25 million. They still have that cash from the February financing on the books, roughly C$14 million, but presumably a chunk of that is reserved for the commitments they made for the lease options and the cost of drilling (there will also be potential dilution from that if the shares get much higher from here, since there were warrants given in the financing).

Trying to develop a project is very expensive, so, like pretty much all junior resource companies, they’ll be incentivized to try to drum up investor interest and get the price up, perhaps with drilling results (assuming they’re good), because they’ll want to raise more money to take the next steps if they do have good results (“raise money whenever you can” is essentially the golden rule for junior resource stocks). It’s an interesting project, from what I can tell, but it is 100% speculative — we have no idea whether the testing results (confirming 1940 data, remember) will be exciting, whether they’ll have any skill in identifying future projects to expand on that hypothetical success, or what it would take to actually build a production plant if all goes well. You check out Imperial Helium’s July Investor Presentation for the story as they’d like you to see it.

So, as you might imagine, the price probably depends on a combination of “helium story” and drilling/testing results.

The helium story has certainly been becoming a bigger deal in recent years — that’s not brand new, past production concerns from major suppliers like Qatar have worried buyers, and the government’s decision a few years ago to stop selling down the strategic helium reserve, combined with falling natural gas prices (most helium is produced as a by-product of natural gas wells, and when gas prices drop fewer wells are drilled), has created somewhat of a rolling crisis for helium buyers. The most public view of that we’ve had recently was Party City shutting down their balloon business for a bit when helium was unavailable a couple years ago — helium for balloons (and blimps) is only about a fifth of the market (a lot more gets used by semiconductor fabs and other high-tech manufacturing), but it’s the part that most of us see. There was a good story from the NY Times about that helium shortage back in 2019, I remember listening to a NPR story back then about the history of the government helium reserve and what was then a shortage, and it’s been covered by lots of other big outlets, so this is not “new news.”

And every big headline about a natural resource shortage brings in juniors and speculators, which really kicked in last year. We all had other things on our minds last year, but stories about faltering natural gas companies “pivoting” to helium started to pop up, then later Frank Holmes, best known as a gold guy, was talking up the helium market last Fall, back when Desert Mountain Energy (DME.V, DMEHF), one of those comparison companies Imperial cites, was jumping 500% or so to reach a dollar (it has since tripled again), though COVID shutdowns did have an impact and there were also stories about a helium glut hitting the market last year as a result, perhaps temporarily as demand returns post-pandemic, and then Oilprice.com folks have been talking up helium again recently as well, particularly highlighting Avanti Energy (AVN.V, ARGYF), which, like Imperial Helium, is essentially a new startup this year, working to develop helium projects in Canada (and Montana).

Whether that means we’ll have a helium stock “bubble” like we’ve seen for graphite, potash, lithium, rare earths and so many other relatively minor commodities is still an open question, I guess, made more complicated by the fact that helium is a secondary commodity, mostly produced by natural gas fields and mostly not their top priority. Some of those new helium-focused stocks have already had very big runs in the past year… and if there is a real junior investment bubble in helium, we also don’t get to know in advance whether that “bubble” has already crested or is just beginning to form — when these things heat up it’s rarely about fundamentals or risk-weighted probabilities or resource statements, it’s mostly just about speculative excitement and news flow. If a bubble does form this year, with folks looking for the next big thing, well, I wouldn’t put “3,000% gains coming today” on your calendar (Hodge’s prediction of 3,000% gains seems to be based solely on, “that’s what a couple other helium juniors saw over the past year or two”), but perhaps Imperial Helium will be well-placed to do well — that probably depends more on the press releases that come out of their initial drilling and testing in Alberta than on any specific price for helium.

And on that point, there’s also no real central quote for helium prices that we can rely on, most of the information we see is just anecdotes about shortages or price hikes by suppliers. This market is made a little more complex by the fact that the helium business is really an oligopsony in some ways, there are really only three or four customers for helium producers, and they’re the industrial collectors and distributors of helium (mostly Air Products, Praxair and Air Liquide), who have long-term contracts with producers, set end-user pricing and essentially control the entire US market (and much of the international market). There are only a dozen or so major helium production plants around the world, and there’s no real “spot price” like there is for natural gas or oil (or even potash or cobalt), so even when we might sometimes see “bubble” prices quoted, they probably don’t really reflect 90% of the selling that’s happening under long-term contracts.

So… another junior resource “story” stock to fire up the imagination — did it work for you, are you revved up for helium speculation? Prefer to avoid the bubble hunt? Think it’s all, well, hot air? Let us know with a comment below.

Disclosure: As noted above, I own shares of Cloudbreak Discovery. I will not trade those shares for at least a month after publication, and will not trade in Amazon, which I also own, or any other company mentioned above, for at least three days, per Stock Gumshoe’s trading rules.