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.
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.
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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.
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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.
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