Helium: What You Need to Know About This Critical Element

Growth in the helium space

In 2021, helium was declared a critical mineral in Canada, along with copper, uranium, zinc and others.

As a critical mineral, helium is considered essential to Canada’s economic security, is required for Canada’s transition to a low-carbon economy and is a sustainable source for the country’s partners.

Global demand for helium is likely to nearly double by 2035, exceeding 322 million cubic meters, according to a report from IDTechEx. This growth in demand is attributed to the expanding usage of helium in various industries including medical technology and aerospace.

And since helium is a finite resource because it is non-renewable, its presence is rare on Earth, despite being the second most abundant element in the universe. The element is generally found deep underground in the same sedimentary basins that have historically produced oil and gas.

What is helium and why is it important?

Helium is a valuable and precious commodity used in a wide range of applications and its unique properties make it invaluable across various sectors:

• Medical industry: Used in MRI machines
• Technology sector: Essential for fiber optic cables and data centers
• Aerospace and military applications
• Semiconductor manufacturing and cooling
• Cryogenics

The element's non-substitutable nature in many applications drives continuous demand, with high-tech areas expected to see the most significant growth.Among all of helium’s applications, the most growth is expected to stem from demand in high-tech areas. Given helium’s unique atomic structure of being lighter than air, the element is also non-substitutable in many instances, which therefore requires significant helium production to meet endless industry demands.

Helium gas: A looming shortage

As of January 2024, the US government had completely sold off its helium stockpile to the private sector, a move that began following the passage of the Helium Privatization Act of 1996.

The decision was expected to have industry-wide ramifications because the US has been the largest supplier of helium to the world since the 1920s. The US accounts for 75 percent of the world’s helium production. Based on current consumption rates, the world’s known helium reserves are expected to run out between the years 2030 and 2040.

Canada is now being considered a top contender for helping close the helium supply gap. Canada has the fifth largest helium resource in the world and the US is the largest consumer of helium.

What does this mean? Canadian helium companies have a significant opportunity to leverage attractive prices as the US government exits the market and seeks new suppliers.

Key players in the helium industry today

There are multiple key players in the helium industry, including:

• First Helium (TSXV:HELI)
• Avanti Energy (TSX:AVN,OTC Pink:ARGYF)
• Desert Mountain Energy (TSX:DME,OTCQX:DMEHF)
• Global Helium (CSE:HECO,OTC Pink:GBHCF)
• Imperial Helium (TSXV:IHC)
• North American Helium
• Royal Helium (TSXV:RHC,OTCQB:RHCCF)
• Helium One Global (LSE:HE1,OTCQB:HLOGF)
• Blue Star Helium (ASX:BNL,OTC Pink:AZZEF)
• Thor Resources

Among the group, North American Helium is the most active driller in Canada, with a focus on helium and nitrogen production. The company also holds the largest contiguous helium land position in the world, with rights to over 5 million acres of prospective land in Saskatchewan and Utah.

North American Helium has a third-party-assessed Risked Prospective Resource estimate of 20.8 billion cubic feet of helium on half of the Saskatchewan land area. The company’s assets in Utah sit in a helium-rich area with strong historical drilling outputs as high as 2.8 percent helium — although the company has yet to drill in Utah.

The most uniquely positioned company for success in the group is First Helium. The company expects to be one of the fastest to produce helium relative to the peer group due its project-driven nature, access to existing infrastructure and favorable timeline. The company’s flagship 53,000 acre Worsley project near Grande Prairie, Alberta, has a discovery well with helium content that was tested as high as 1.3 percent. According to an independent engineering contingent resources report by Sproule Associates, the Worsley discovery well is estimated to have a net present value of C$15.2 million at a 10 percent discount rate, or C$0.23 per basic share outstanding.

The company plans to embark on a three well drilling program on locations adjacent to the discovery well and identified via 3D seismic to further expand its asset base and increase shareholder value.

First Helium has an existing take-or-pay helium supply agreement with a major global industrial gas supplier for helium gas production at the Worsley property. The agreement is worth up to $100 million in potential revenue for the company over the first five years of production.

Regardless of what company fits your investment strategy, the potential helium shortage and the anticipated rise in the demand makes companies like First Helium and North American Helium compelling to consider.

Takeaway

The helium industry is set to experience accelerated growth over the next decade. New and significant production is needed, and Canada is quickly rising to the top as a major potential supplier of helium.

Canadian companies with low-risk helium projects present an exciting opportunity for investors seeking to capitalize on high helium prices and increasing demand.

This INNSpired article is sponsored by First Helium (TSXV:HELI). This INNSpired article provides information which was sourced by the Investing News Network (INN) and approved by First Heliumin order to help investors learn more about the company. First Heliumis a client of INN. The company’s campaign fees pay for INN to create and update this INNSpired article.

This INNSpired article was written according to INN editorial standards to educate investors.

INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.

The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with First Heliumand seek advice from a qualified investment advisor.