ECR Minerals mulls expansion into US helium market

30th Aug 2024 12:45

(Sharecast News) - ECR Minerals, an exploration and development company traditionally focused on gold in Australia, announced on Friday that its board was exploring potential investments in producing helium assets in the United States.

The AIM-traded firm said the strategic consideration would be a significant expansion of its focus, driven by the recent surge in helium prices and the critical applications of the gas in various industries.

It noted that helium had seen a sustained price increase, attributed to its irreplaceable role in sectors such as electronics, defence, space exploration, and medical devices.

The board said it believed that the robust market dynamics would likely support continued high prices for helium.

ECR's interest in the helium sector was bolstered by the expertise of its chairman and managing director, who also holds positions at Voyager Life, with a strong understanding of the helium industry and the economic models that best suit it.

The in-house knowledge was expected to reduce the need for external consultancy and overheads, the board explained, as the company evaluated potential investments.

ECR's strategic focus in the helium sector would be on assets in the US that either had recognised or historic helium production, as well as access to existing infrastructure such as gathering systems and processing facilities.

The company said it was particularly interested in assets that were currently in production, capable of near-term production, or had the capacity to process helium.

It said the US, being one of the world's largest helium producers with well-developed infrastructure, was considered the most likely target for the new opportunities.

Over the last year, ECR had maintained a low-cost operating structure, a principle it intended to uphold if it diversified into the helium market.

The company said it planned to rely on outsourcing and partnerships with trusted operators to ensure that funds were directed towards operational activities, rather than overheads.

Its board also emphasised that any necessary issue of new shares to fund the ventures would not be done at a discount to the current market price.

"We have spent many months streamlining ECR's business and improving its efficiency," said chairman Nick Tulloch.

"The robust model that we have established now allows us to consider other opportunities.

"As stakeholders in ECR, we naturally have an acute focus on our share price and I can reassure shareholders that any investment would be based on attractive terms to our company in addition to having a probability of material upside."

Tulloch said that while it was "often tempting" to think that the important part of developing a natural resources play was to find the resource, ECR considered that it was production and sales that "really define" a company.

"There are many substantial resource deposits globally that are simply not economic - or possible - to extract and sell.

"This is particularly the case with helium - despite its high value, it is not a straightforward element to process or transport.

"Therefore, as we examine this possible expansion of ECR, it is critical that we source assets that are capable of near term production, and therefore sales, of helium and access to nearby infrastructure, both gathering lines and a processing plant, is a must."

At 1139 BST, shares in ECR Minerals were up 0.75% at 0.27p.

Reporting by Josh White for Sharecast.com.