Picture supply: Getty Pictures
The typical penny inventory is extremely unstable and Helium One International (LSE: HE1) is definitely no exception. Because the begin of 2024, it’s surged 272%, but it’s additionally down 66% since February.
The exploration agency floated in late 2020, after which its shares took off like a helium-filled balloon. Nonetheless, since reaching 27p in mid-2021, they’ve steadily deflated and now commerce for lower than 1p every.
However the firm has been making notable operational progress. So, may this be the subsequent millionaire-maker penny inventory? And if it would, ought to I make investments? Let’s dig in.
Not simply scorching air
Helium One is a pre-revenue firm targeted on exploring and growing helium assets. It has initiatives in Tanzania and a 50% curiosity within the Galactica-Pegasus venture in Colorado, USA.
The corporate has already recognized helium-rich fuel in Tanzania, and it’s utilized for a mining license there.
In the meantime, Colorado regulators have accredited 5 new proposed helium wells on the US venture. Drilling was meant to be getting underneath method now however has been delayed (extra on that under).
What’s so particular about helium?
Helium is a colourless, odourless fuel that’s ample within the universe however uncommon on Earth. Most of it’s present in pure fuel fields, although in small portions, making it troublesome to extract.
It has a variety of purposes throughout varied industries and fields. For instance, it’s vital in MRI scanners, is utilized in semiconductor manufacturing, and is required in area exploration to chill rocket engines and pressurise tanks.
As world demand will increase for these applied sciences and the availability of this useful resource is restricted, costs are anticipated to rise. Due to this fact, it’s a precious commodity and never nearly filling balloons!
Rained off
At this time (13 December), the corporate introduced that because of wet climate the development of properly websites and entry roads at its Colorado venture has been postponed.
Its companion and venture operator, Blue Star Helium, has rescheduled drilling to mid-January 2025 to keep away from pointless prices through the Christmas interval.
Nonetheless, the general venture timeline stays on monitor, the agency mentioned, with manufacturing nonetheless anticipated to begin in H1 2025.
As I write, the market doesn’t appear fearful as a result of the share value is up very barely.
Attending to £1m
If Helium One can get this valuable fuel flowing and enters into provide contracts, the share value may rocket a lot greater.
We bought a glimpse of such potential in January 2024 when it exploded 1,300% greater within the area of two weeks. If it went up that a lot once more from right this moment, an investor would want to have roughly £71,500 within the inventory to succeed in £1m.
I wouldn’t put £71k right into a penny inventory, so it received’t be making me a millionaire, at the least underneath this state of affairs.
However ought to I take a punt?
For the monetary yr ended 30 June, the corporate reported a complete lack of $11m. It had $11.6m in money in June, highlighting its restricted monetary assets and the dangers right here.
This yr, it raised funds issuing shares in February, June and August. Then this month it issued a load of shares to a service supplier as an alternative of money. This stage of shareholder dilution turns me off.
Helium One is an fascinating penny inventory with potential, nevertheless it’s far too dangerous for my liking. I’ll be investing elsewhere.
