North American Helium Inc. announced that in late 2022 and January of 2023 it successfully brought two additional helium purification facilities on production.
One facility is located approximately 20km southeast of Consul, Saskatchewan and the second is located approximately 15km southwest of Eastend, Saskatchewan.
Commenting on this operational achievement, Mr. Marlon McDougall, President and COO stated, “In early 2022 we indicated that we planned to double helium production during 2022. With the commissioning of these newest helium production facilities, we’ve done that. NAH now has five helium production facilities in operation and this sets the Company up to significantly grow production again in 2023. Including volumes from these latest helium production facilities, our current production is in excess of 110 MMcf/y.” Mr. McDougall continued:
“We have been very deliberate in our exploration and development planning, including pre-ordering long-lead equipment, so we can efficiently tie-in new wells and begin marketing new helium volumes to customers in this tight supply environment. As we continue to execute on our growth strategy, the Company plans to market approximately 60 MMcf/y of additional helium volumes throughout 2023.”
Non-hydrocarbon sourced helium contracted on long-term agreement with Linde
North American Helium successfully brings newest helium facilities into production
One of North American Helium's trailers arriving onsite for a purified helium refill in SW Saskatchewan. (Photo: Business Wire)
Commenting on the growing production volumes now on long-term contract, Mr. Nicholas Snyder, Chairman and CEO stated, “We are pleased to be working with Linde, the world’s largest industrial gas company, as the primary off-taker of the helium production from our newest facilities. Bringing two new production facilities online in consecutive months is a result of our increased levels of investment across our business over the last 18 months. We are now operating on a scale where there are multiple prospects getting ready to drill, new discoveries undergoing additional development drilling, and new production facilities coming online each year. It’s a continuous process to bring predictability and reliability to this business in a way that hasn’t previously been seen from the upstream helium sector.
As we continue to grow, we expect to become a larger part of the helium supply picture in North America, and ultimately a major global producer. We believe our non-hydrocarbon sustainable helium supply is more attractive to industrial gas distributors and also helium end-users not only because of their own emissions reduction goals but also because we have shown our operations to be more reliable than some hydrocarbon-linked helium projects. The location of our projects, both in terms of access to logistics and taking into account the current geopolitics, is a clear differentiator.”
Growing helium production provides opportunity for spot sales
NAH has historically contracted substantially all of its helium production on long-term contracts with gas distributors. In order to assist end-users of helium during this latest shortage, NAH now plans to keep a portion of its supply available for sale in the spot market. Beginning in early 2023, customers will have the option to purchase spot loads of high purity helium gas or liquid to meet their critical business needs.
NAH improving logistics capability with acquisition of liquid ISO containers
To continue to meet the logistics needs of its customers, NAH currently has a fleet of 15 high volume composite trailers in which the company can deliver gaseous helium. That fleet is expected to add up to 10 more composite trailers by year-end. Throughout 2023 NAH will also start taking delivery of six Gardner 175-40 ISO containers for the transport of liquid helium. Owning its own ISO containers further expands the Company’s service offering by enabling the delivery of liquid helium directly to customers who do not own or have access to ISO containers within the North American and international markets.
NAH enters into $75 million credit facility with leading Canadian institutions
North American Helium also announces that it has recently entered into a lending agreement for a syndicated revolving credit facility with National Bank of Canada (“NBC”) and Export Development Canada (“EDC”) for a total of $75 million. NBC is acting as Agent of the syndicate.
Key features of the facility include:
- Senior secured agreement with covenant based lending
- Three-year term extendable annually
- Accordion feature allowing for an increase in the facility to as much as $100 million
- Ability to borrow in USD or CAD currency
- Ability to hedge exposure to any movement in underlying interest rates
While the company currently sits in a favorable cash position, the new credit facility will provide additional financial flexibility to fund the corporation’s significant future growth initiatives, as well as for general corporate purposes.
Commenting on the addition of the new credit facility to the Company’s capital structure, Mr. Snyder stated, “As the business continues to mature, this was a natural step for North American Helium and one which provides even further financial flexibility to pursue our growth objectives. The Company currently has no outstanding debt and is in a strong cash position as we enter 2023. Having this credit facility in place provides the Company additional capacity to develop its large land base, as we continue on our journey to become the leading provider of secure, sustainable, and reliable helium in North America.”
Commentary on USGS process to review and updated list of critical minerals
In 2022, helium industry participants were surprised when the United States Geological Survey (USGS) removed helium from the US list of critical minerals, despite a global shortage of this vital element at the time.
Speaking to the recent announcement by the USGS that it is now seeking public comment on risks to helium supply, Mr. Snyder stated: “We applaud the USGS in seeking comment to better understand the ongoing risks and disruptions to the helium supply chain and we hope this action is a prelude to adding helium back to the US critical minerals list. Helium is absolutely vital to launching satellites, manufacturing semiconductors, and other applications vital to the core strategic interests of the United States of America.
The helium industry is currently undergoing the 4th global shortage of the last 20 years as a result of persistent delays and operational issues related to hydrocarbon-linked helium sources as well as geopolitical risks from oversees sources that have been magnified by the war in Ukraine. There is now a growing consensus that this helium shortage will persist until such time as Russia becomes a major exporter of helium. Faced with a choice between protracted shortages or reliance on Russia, we believe the US should join Canada in recognizing that this is a critical mineral for which new North American sources are needed.”
As North America continues to shift towards becoming a net importer of helium, NAH believes it is vital to encourage and recognize the value of new sources of non-hydrocarbon helium production in both the US and Canada and encourages entities that require helium to write to the USGS by March 16th.
