Royal Helium CEO Andrew Davidson on NASA, SpaceX and the path to dynamic growth

Thank you for the opportunity to tell your readers our story. We identified helium a few years ago as an under-explored and under-tapped commodity. After deep research and analysis of data from hundreds of oil and gas wells and miles of seismic surveys, we acquired what we believe are some of Canada's best properties in the province of Saskatchewan. Royal Helium has one of the largest helium land packages in North America and is now one of the world's first publicly traded helium stocks.

In mid-2020, the Company completed an initial, small seed capital raise that allowed us to conduct initial exploration work and establish twelve drill targets on the first two sections of land. In late 2020, we engaged a reputable financing partner, Cormark Securities, and completed a larger capital raise to get the first three helium wells underway, as well as develop additional land blocks.

We have assembled a strong team and are very confident about the future given the operating environment. Drilling is underway and we expect the first three wells to be drilled, cased, completed and tested by the second week of March. If the current success of our neighbor is any indication, we should have an exciting few months ahead.

In the immediate vicinity of our project, North American Helium has completed 25 wells and recently started production. The company is currently building a gas processing plant, which shows that producing gas in this region is a viable long-term business model. We intend to build on the success of our neighbors as quickly as possible. The end of the year is our specific target.

Helium has actually been off the radar of explorers and investors for a long time. You're right - there aren't many producers and not many companies actively looking for helium, even though there is a global shortage of the gas. Fortunately, our team recognized this scarcity several years ago. Our position as a first mover in this space allowed Royal Helium to acquire what we believe are the best helium properties in the province of Saskatchewan and throughout North America. We are among the first companies to begin drilling for helium, and we hope to be one of the first to produce helium. We believe that puts us in a very advantageous position.

It is a big land package, and that is intentional. As one of the first movers in this space, we identified the land that our team was most confident in and basically acquired all the land that we wanted. This large land package allows the company to become a major player in this area, depending on its success. We are currently the second largest helium landowner in North America.

The contact here is not so much directly with NASA or SpaceX, but with gas supply companies. Many of the very large representatives of this industry have already contacted us. Of course, our location in North America is particularly interesting in this context. As soon as an agreement is reached with one of these parties, we will inform the market.

We want to drill, clearly. At Royal Helium, we place a lot of emphasis on a lean cost structure. If you want to make progress operationally, that's crucial. For this reason, we will use the majority of the capital raised to drill the first three wells and define the resources. We will put the rest into developing and building our target inventory on the other land blocks. Our goal is clear: we are aiming for production and associated cash flow as quickly as possible so that we can continue on the path of expansion and growth. This is what our shareholders expect from us.

We are looking forward to completing production testing of our first three wells. Completion and test work will take approximately three to four weeks after the wells are completed for each well. We intend to progressively update the market. We expect all three wells to be drilled, completed and production tested by mid-March 2021.

We'd love to! The Company has now completed drilling of our first two wells, Climax-1 and Climax-2. Initial results and interpretation of the drill logs have shown a number of zones that we will be testing. Completion and testing of the wells includes sequential perforation and production testing of approximately 70 meters of potentially helium-bearing zones at Climax-1 and approximately 68 meters of potentially helium-bearing zones at Climax-2, both spanning multiple structural zones. Both holes were drilled into the Precambrian basement at the base of the Deadwood Formation. The Deadwood Formation is a sand and shale sequence known to produce helium in Saskatchewan.

Royal Helium will be working with Sproule Associates Limited. They are recognized as leading helium experts and have been involved in many of the new helium exploration projects in North America. Their work includes NI 51-101 resource calculations (the gas and oil equivalent of NI43-101 in mining), in accordance with NI51-101 classification, definitions and guidelines, as well as reservoir engineering for helium in Saskatchewan. Sproule will also advise us on the final work and test programs and provide an independent assessment of the prospective helium resources from the first three holes at Climax. Sproule will be working closely with Artisan Consulting's completion and testing team on our case.

Saskatchewan offers Royal Helium several competitive advantages. First of all, the geology. Saskatchewan is the only place in the world where helium is extracted as a primary product, not as a byproduct of natural gas production. Consequently, helium production in Saskatchewan is environmentally friendly, with little to no hydrocarbons in production. Helium is produced by the natural decay of uranium and thorium. As you know, Saskatchewan is known for its large, high-grade uranium deposits and we are fortunate to have reservoir structures directly above the helium source rock that trap the helium along with other inert gases.

Second, Saskatchewan shines with comparatively low royalties of 4.25% versus 20% or more in other regions where the helium is produced along with natural gas. In addition, land costs also compare favorably with oil and gas properties. Elsewhere, these costs can be hundreds of dollars per acre. In Saskatchewan, we only pay about $2.50 CAD per acre - that's a tangible advantage even when starting a helium project.

In general, Saskatchewan has a well-developed and mature oil and gas industry, which means that there is excellent infrastructure and optimal conditions for Royal Helium's business. From service providers to skilled labor, the environment in Saskatchewan is excellent. Added to this is a government that is sympathetic to the mining industry.

Helium is a unique commodity in that a drilled hole can begin production almost immediately. In addition, buyers are willing to purchase the gas at the wellhead. This goes as far as buyers bringing their own equipment to the site, separating the helium on site and buying it on the spot. This unique situation allows us to produce cash flow early on. Therefore, it is our stated goal to start producing helium as soon as possible.

Because of this environment, the Company can use these immediate cash flows to pay for additional wells on production and ultimately grow cash flow even more dynamically.

Once we have several wells on production, we also plan to install our own gas separation facilities. This will allow us to market our helium even more effectively. In the more distant future, we can also envision liquefaction plants that would allow us to bypass the major distributors and market refined gas directly to end users around the world. Discussions and studies are already underway to develop polygeneration and liquefaction plants that would allow us to market not only helium but also other inert gases, such as nitrogen, which is needed in fertilizer production, or carbon dioxide.

To answer your question succinctly, Royal Helium aims to be on production with multiple wells by the end of 2021.