Voyager Gas Processing Agreement Executed

Blue Star Helium Limited (ASX:BNL, OTCQB:BSNLF) (Blue Star or the Company) advises of the execution of a Master Services Agreement (MSA) for the provision of helium recovery services through the delivery and operation of a helium recovery plant at its maiden helium development, Voyager.

Highlights

• Agreement executed with experienced US midstream provider, IACX Energy LLC (IACX), to provide helium recovery services through delivery and operation of a pressure swing adsorption (PSA) helium (He) recovery plant at high-grade Voyager project.
• Includes delivery and operation of a helium recovery plant with nameplate raw gas throughput of 2 MMcf/day to produce 98+% purity helium product gas.
• IACX will supply and operate the helium plant in exchange for a monthly payment and Blue Star will not incur any capital costs associated with fabrication of the plant.
• Plant commissioning and first output expected during 4Q CY2023.
• Targeted helium production based on an average of 8% helium in the raw gas is expected to be approx. 38 MMcf net to Blue Star in first full capacity year.
• Forecast total field and plant operating cost is highly attractive at an approximate US$100- 120/Mcf of helium product gas (full capacity).
• Voyager production well drilling and testing planned to commence during August 2023.

Blue Star Managing Director and CEO, Trent Spry, commented:

“Our selection of a third party operated plant option for the high-grade Voyager discovery has now been cemented with the execution of this agreement with IACX. We are pleased to have partnered with such a well-credentialled and proven midstream helium operator.

“As well as delivering significant de-risking benefits in terms of upfront capital, time and operating profile, adopting this pathway has also eliminated any requirement for Blue Star to commit to price- concession offtake agreements. The result is that we can target the premium pricing available in short-term U.S. contract markets and spot sales, with current pricing estimates understood to be running at US$450 – $3,000/Mcf for 98 to 99.999% purity helium.

“The plant to be supplied at Voyager can be readily expanded via the addition of a modular membrane unit or addition of a second PSA plant to increase helium output in the future, as well as to accommodate additional high-He-concentration raw gas from surrounding discoveries.

“We are excited to be advancing along the development pathway toward targeted first production from Voyager during Q4 CY2023. In parallel, we continue to advance development planning for the Galactica/Pegasus discoveries and mature our extensive exploration portfolio utilising our proven exploration techniques.”

IACX Senior Vice President (Commercial), Jeremy Jordan, said:

“We are very pleased to be working with Blue Star given the technical and commercial capabilities and professional approach that they have demonstrated. Our industry-leading, proprietary, PSA-based helium recovery units can economically extract and purify helium from natural gas to high purity with minimal helium losses, and we look forward to delivering and commissioning Blue Star’s first facility later this year. We anticipate having a strong long-term partnership with Blue Star as they continue to develop their portfolio.”

Voyager gas processing agreement executed

In-line with its chosen commercialisation strategy at the high-grade Voyager development, Blue Star has executed an MSA with an experienced US midstream provider, IACX Energy LLC (IACX), for helium recovery services via the delivery and operation of an initial helium recovery plant (example pictured below) at Voyager.

IACX is a fully integrated helium production, processing and marketing company. Its gas gathering and processing assets are concentrated in central Kansas, eastern New Mexico and the Texas Panhandle; and the company operates a number of standalone facilities across the Midcontinent and Four Corners areas of the US. It currently operates fourteen discrete helium recovery plants in seven states in the US and one Canadian province. One of the existing helium facilities is located in Las Animas County, Colorado neighbouring Blue Star’s Galactica/Pegasus prospect.

The MSA shall continue in force until terminated by either party giving 90 days’ notice at any time after an initial period of three years.

Blue Star is responsible for providing a secure site, access to the facility and delivering the raw gas to the facility inlet. The MSA includes minimum service levels in relation to plant uptime and capacity subject to the raw gas meeting certain composition specifications.

The process to execute the MSA and associated documents has been thorough and included the appointment of a top tier reserves/resource auditor to evaluate the Voyager resource. The result of this process allowed Blue Star to mortgage the Voyager mineral leases as collateral to secure the payments required under the MSA. The ability to post non-cash collateral is another affirmation of the resource as the Company moves forward with development. The mortgage will be released on expiry of the initial period of the MSA or upon the Company posting an alternative form of security.

The PSA facility has the expected capabilities and outputs (based on the Company’s raw gas input assumptions) outlined in Table 1.

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