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'Undervalued' Helium Company Presents 'Key Opportunity' for Investors

Source: Streetwise Reports

 

June 25, 2021 (Investorideas.com Newswire) The factors making Royal Helium stock attractive are outlined in an Eight Capital report.


In a June 8 research note, Eight Capital analyst Phil Skolnick purported that Royal Helium Ltd.'s (RHC:TSX.V) stock offers a "key opportunity" for investors for a number of reasons.

Despite significant recent news and other positive factors, the energy company's share price is down about 25% from its recent high, Skolnick highlighted. Eight Capital's target price on Royal Helium is CA$1.85 per share, and the stock is now trading at around CA$0.62. The target takes into account the company's recently closed CA$17 million gross bought-deal secondary offering and increased drilling, he noted.

Skolnick presented five reasons Royal Helium warrants a higher valuation.

One, the company, through its Climax-3 well, discovered a new 39 meter contiguous zone in the regolith that, upon testing, showed high levels of helium and nitrogen, 0.55–0.65% and 71.97–95.95%, respectively. Royal Helium estimated the regolith contains 2.5–6.0 billion cubic feet of helium and said its discovery could be one of the largest ever made in Saskatchewan.

The discovery represents "a potential material expansion to the company's opportunities," Skolnick wrote.

Two, testing of the newly discovered zone also showed the presence of hydrogen, 0.02–14.97% with an approximately 9% average, which could be another source of revenue for Royal Helium, particularly because hydrogen demand is growing thanks to the world's focus on clean energy.

Three, the helium present in the Deadwood, Souris River and Duperow formations offers additional upside, as it is not included in the estimated resource based on Climax-3. Results of Climax-2, in which the regolith is also present and which Royal Helium will test, could also further expand the resource.

Four, the company intends to commence production at Climax-1 in Q4/21 and is now planning that.

"This is also a key de-risking event for the stock, as it puts the company further down the path towards first cash flows," Skolnick wrote.

Five, Royal Helium's acreage is adjacent to that of North American Helium, which just made a helium discovery in the Cypress West area that is substantive enough that the company plans to build a third helium production facility. The implications of this discovery, Skolnick wrote, are positive for Royal Helium.

Eight Capital has a Buy rating on the energy company.

Disclosure:

1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Royal Helium. Click here for important disclosures about sponsor fees.

3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Royal Helium, a company mentioned in this article.

Disclosures from Eight Capital, Royal Helium Ltd., June 8, 2021

Conflicts of Interest: Eight Capital has written procedures designed to identify and manage potential conflicts of interest that arise in connection with its research and other businesses. The compensation of each Research Analyst/Associate involved in the preparation of this research report is based competitively upon several criteria, including performance assessment criteria, the quality of research and the value of the services they provide to clients of Eight Capital. The Research Analyst compensation pool includes revenues from several sources, including sales, trading and investment banking. Research analysts and associates do not receive compensation based upon revenues from specific investment banking transactions.

Eight Capital generally restricts any research analyst/associate and any member of his or her household from executing trades in the securities of a company that such research analyst covers, with limited exception.

Research Analyst Certification

Each Research Analyst and/or Associate who is involved in the preparation of this research report hereby certifies that:

The Research Analyst involved in the preparation of this research report does not have any authority whatsoever (actual, implied or apparent) to act on behalf of any issuer mentioned in this research report.

IIROC Rule 3400 Disclosures: A link (here) is provided in all research reports delivered by electronic means to disclosures required under IIROC Rule 3400, including disclosures for sector research reports covering six or more issuers.

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