Mendell Helium PLC (AQSE:MDH) Half-year Report

Unaudited Interim Results for the six months ended 30 September 2024

The unaudited interim results of Mendell Helium plc for the six months ended 30 September 2024 are presented below. As announced on 14 October 2024, the trading operations to which these results relate, namely the Voyager and Amphora-branded plant based health & wellness business, have since been sold to Orsus Therapeutics plc (“Orsus”), a private label turnkey solutions provider specialising in developing, formulating, marketing & sales of health and wellness products for global brands.

Highlights:

·    Mendell Helium owns approximately 28% of Orsus with further upside potential based on the achievement of revenue targets

·    Mendell Helium has no further obligation to contribute to the running costs of the plant based health & wellness business with effect from 1 October 2024

·    Fundraising completed in June 2024 to begin the Company’s development as a helium producer in Kansas, USA

Post period operational highlights

As announced on 27 June 2024, the Company has an option to acquire M3 Helium (“M3 Helium Corp.”), a producer of helium which is based in Kansas and holds an interest in nine wells.  There is no certainty that the Company’s option to acquire M3 Helium will be exercised, nor that the enlarged group will successfully complete its re-admission to trading on the AQSE Growth Market.

Since the option was granted, M3 Helium’s business has undergone some significant but positive developments:

·    It has signed a farm in agreement with Scout Energy Partners (“Scout Energy”) over 161,280 acres of the Hugoton gas field, one of the largest natural gas fields in North America

·    The Nilson well, which at a production of 127 Mcf/day and being within the top 1% of Hugoton wells, has proved a new strategy for production in that gas field

·    The Rost well at Fort Dodge, with a 5.1% helium content, has shown potential to be a far higher producer than originally envisaged, capable of covering all of the Company’s overheads

·    M3 Helium has acquired two further producing wells (Bearman, Demmit) on the western side of the Hugoton gas field in Stanton County, Kansas

·    Preliminary indications of funding interest received from local oil & gas companies and deferred payment terms have been offered by fracking contractor

·    Admission document to finalise the acquisition of M3 Helium expected to be published in Q1 2025

This announcement contains inside information for the purposes of UK Market Abuse Regulation and has been arranged for release by Eric Boyle, Chairman.  The Directors of the Company accept responsibility for the content of this announcement.

Enquiries:

Chairman’s Statement

I am pleased to present Mendell Helium’s interim results for the six-month period to 30 September 2024. 

Post period end, on 14 October 2024 we entered into a share purchase agreement to dispose of our plant based health and wellness business to Orsus (the “Disposal”).  The Disposal was subsequently approved by shareholders in a general meeting on 11 November 2024 and completed on the same day.

Pursuant to the Disposal, Orsus acquired our three wholly owned subsidiaries, being VoyagerCann Limited, Amphora Health Limited and Voyager Life Limited, which, combined, own all of the Company’s plant based health and wellness business.  It was a term of the Disposal that Orsus took responsibility for all running costs of this business with effect from 1 October 2024.  Consequently, the results we are presenting today are not indicative of Mendell Helium’s likely future trading.

We do however remain keenly interested in the ongoing success of the Voyager-named operations as the consideration that we received for the Disposal was new ordinary shares in Orsus, representing approximately 28% of the enlarged Orsus group, and warrants in Orsus, exercisable on the achievement of certain revenue hurdles by the businesses we sold.  If exercised, those warrants represent a further 16% of the enlarged Orsus group’s share capital on a fully diluted basis.

Turning now to the future, on 27 June 2024 we announced a fundraising of £864,468 through the issue of new ordinary shares at an issue price of 3 pence per share.  At the same time, we entered into an option agreement (the “Option”) to acquire M3 Helium and have since concentrated our time and effort on developing its operations.

Since the Option was granted, M3 Helium’s business has undergone some significant but positive developments:

·    It has signed a farm in agreement with Scout Energy over 161,280 acres of the Hugoton gas field, one of the largest natural gas fields in North America

·    The Nilson well, which at a production of 127 Mcf/day and being within the top 1% of Hugoton wells, has proved a new strategy for production in that gas field

·    The Rost well at Fort Dodge, with a 5.1% helium content, has shown potential to be a far higher producer than originally envisaged, capable of covering all of the Company’s overheads

·    M3 Helium has acquired two further producing wells (Bearman, Demmit) on the western side of the Hugoton gas field in Stanton County, Kansas

·    Preliminary indications of funding interest received from local oil & gas companies and deferred payment terms have been offered by fracking contractor

To further these initiatives, the Company has extended a loan of US$510,000 to M3 Helium and Nick Tulloch, our CEO, has been appointed as chairman of M3 Helium, bringing the two companies even closer together ahead of the proposed merger.

Outlook

As we head into 2025, we have plenty to look forward to.  We expect to publish our admission document in connection with the exercise of the Option in Q1 2025.  We are aiming to bring Rost into production at around the same time and then turn our attention to developing the acreage in the Hugoton in line with M3 Helium’s agreement with Scout Energy.

Key to M3 Helium’s farm in agreement with Scout Energy is the Nilson well where production continues to steadily rise.  M3 Helium is now delivering 127 Mcf/day of gas into Scout Energy’s gathering system for processing at the Jayhawk plant.  At these levels, Nilson is within the top 1% producing wells in the Hugoton.  At the current rate of 127 Mcf/day, Nilson is producing over 20 Mcf of helium each month (based on a helium composition of 0.6%).  This equates to a monthly revenue of approximately $10,000 (revenue including helium and natural gas liquids).

M3 Helium’s ability to repeat further Nilson-type wells within the acreage it has farmed into is what the M3 Helium management team believe, can make the agreement with Scout Energy a significant success.

In the nearer term, production at Rost is expected to cover a large part of the Company’s overheads, meaning that all new funding would be fully directed towards its plans in the Hugoton.  The cost of bringing Rost into production is estimated at US$400,000.  This comprises the disposal well, a bigger pump, a compressor for injecting gas into tube trailers for transport and integrating the Pressure-Swing Adsorption modular processing unit to enable purification of helium onsite.  These works are estimated to take up to two months from commencement.

However, very encouragingly, M3 Helium’s team have identified potential cost and time savings by examining a nearby unused well and believe that there is a zone at around 4,000 feet depth that could take water. If that solution works, then M3 Helium would not need to drill out the bottom plugs, buy casing or cement. Net savings from proceeding along this route, if successful, would amount to over US$100,000.  We will know whether this plan is viable once works commence in the new year.

M3 Helium is one of very few companies that is able to claim helium production.  This very valuable gas, with no known substitute, has understandably driven plenty of commercial and investor attention in recent years.  Finding it may be the first step but bringing it to surface and getting it to market is ultimately what counts.  M3 Helium has a guaranteed offtake from Scout Energy, access to nearby infrastructure and a development opportunity over one of the prime sources of helium in the world.  M3 Helium’s successes in the US, particularly with the Nilson well, are generating considerable attention and we are confident that UK investors will shortly be able to see the opportunity that we have created.

Our latest investor presentation is available to download at https://mendellhelium.com/reports/.

Eric Boyle

Chairman

24 December 2024