TSXV: DME
DMEHF:US

Desert Mountain: +85k Acres of the World’s Best Helium

Uniquely positioned early-mover in the helium space

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After doing some digging, I’ve learned that helium’s uses aren’t limited to just inflating balloons and making your voice sound funny.

In fact, it turns out helium is one of the world’s most critical elements and is attached at the hip to the technology that is powering economies into the future.

It’s also facing a looming supply shortage that threatens the progress of these same technologies and economies.

Fortunately, there are early movers in the space that are positioning themselves to capitalize on this generational squeeze.

Today we’re diving into one that I believe represents the biggest opportunity for investors: Desert Mountain Energy (TSXV: DME).

Summary

  • Helium: Irreplaceable
  • Severe Supply Squeeze
  • “The Saudi Arabia of Helium” (aka Holbrook Basin)
  • Timing

Helium: Irreplaceable

Helium is a bit of a paradox.

It’s the second most abundant element in the universe, yet it’s one of the most scarce and valuable gases in the world. That’s because it’s generated naturally very slowly.

It’s also one of the most unique: it’s got the lowest boiling point of any element which means there’s no known substitute for it in things like superconductors and high-tech coolant applications. 

This makes helium critical. 

This importance is multiplying as global economies depend more and more on high-tech to fuel growth and progress.

Seriously, if you look under the hood of just about anything that powers today’s world you’re bound to find helium: semiconductors, fiber optic cables, nuclear reactors, computer chips, space vehicles, particle accelerators, hard drives, LCD panels, barcode readers, cryogenic shielding, leak detection, MRI machines…I could go on forever.

Even the Internet that you’re reading this on right now is powered, in part, by helium: the biggest companies in tech like Amazon, Google, Facebook, etc are among the heaviest users as their massive data centers wouldn’t be possible without this critical element.

Severe Supply Squeeze

As I mentioned, helium is indispensable for countless goods and services. 

It’s also non-renewable which means it can’t be synthesized through any practical methods.

This means that helium is finite.

The world’s known supply is concentrated in just a few countries with the US being the top producer.

In 1996, the Helium Privatization Act mandated that the US National Helium Reserve sell off the bulk of its reserves to the private markets.

Since then, the US has been flooding the market with cheap helium which has discouraged exploration and production–because if it’s so cheap, why bother?

Now we are facing a serious future shortage and possibly one of the biggest supply squeezes of our times as severe shortages have sent prices skyrocketing.

And this was before the Russia/Ukraine war, which has only added fuel to the fire.

You see, Russia was expected to eventually begin producing ~33% of the world’s helium production. Now, there are serious concerns that gas will never reach the global market.

And yet, the world needs its helium…

“The Saudia Arabia of Helium” (aka Holbrook Basin)

This brings us to the main event, Desert Mountain Energy, whose flagship project is located in what’s known as “the Saudia Arabia of Helium”.

The Holbrook Basin Helium Project–in eastern Arizona–stretches +85,000 rich acres of the world’s best address for helium, with historic grades ranging from 8-10%.

The project is also located just 35 miles from the historic Pinta Dome Project which produced 6.5 BCF of helium at grades averaging between 6-12%. 

The company has successfully drilled 4 wildcat helium wells and 3 offsets, all of which are financed with NO DEBT. This might also be a good time to mention it’s cashed up with CAD$18 Million in the treasury.

It announced commercial-grade helium percentages in a discovery well in McCauley Helium Field, which has completed all site prep and has plans to drill 3 offset wells. 

This brings us to the main event, Desert Mountain Energy, whose flagship project is located in what’s known as “the Saudia Arabia of Helium”.

The Holbrook Basin Helium Project–in eastern Arizona–stretches +85,000 rich acres of the world’s best address for helium, with historic grades ranging from 8-10%.

The project is also located just 35 miles from the historic Pinta Dome Project which produced 6.5 BCF of helium at grades averaging between 6-12%. 

The company has successfully drilled 4 wildcat helium wells and 3 offsets, all of which are financed with NO DEBT. This might also be a good time to mention it’s cashed up with CAD$18 Million in the treasury.

It announced commercial-grade helium percentages in a discovery well in McCauley Helium Field, which has completed all site prep and has plans to drill 3 offset wells. 

The project requires no pipelines as all transportation will be via trucking.

Timing

I noted above that Desert Mountain has CAD$20M in the bank, but it’s also got excellent access to capital markets.

The company just signed final contracts for the construction of the top-tier McCauley Helium Field finishing facility—which will be the world’s first to be powered by solar-hydrogen—at an all-in cost of ~$7M. The startup is set for Q2. 

The project—which I should note is led by a world-class technical team with decades of experience in the expiration & development of helium, hydrocarbons, and other minerals—will advance to initiate optimized production in Q3 of this year.

That means that Desert Mountain Energy is 6-12 months away from providing the market with the high-grade helium it so desperately needs!

Immediate plans call for 7 offset and wildcat wells in 2022. Over a 5-year period, the company expects to bring on 60 to 70 new helium wells.

And remember how I mentioned that no pipelines would be needed? That’s because Desert Mountain has already identified 36 end-users (plus the US Government) within a 300-mile radius of the project, which means all transportation will be via trucking.

Bottom Line

To summarize: The price of a scarce, non-renewable resource is rising as its supply dwindles and demand multiplies.

Desert Mountain Energy is an early mover in the helium space that is uniquely positioned (in literally the best place in the world for helium) to provide much-needed relief to a desperate market. 

At a time like this—with markets facing a serious future shortage—one would imagine that the phones at exploration & development firms like Desert Mountain are ringing off the hook with questions over whether or not they’ll be able to produce enough helium.

All signs at Holdbrook Basin point to a resounding yes.

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