Grand Gulf Energy Ltd (ASX:GGE) has secured firm commitments for a $3.2 million placement, enhancing its financial position and propelling the advancement of the pivotal Jesse helium discovery for future growth.
Figure 1: Jesse-3 well location targets a structural high proximal to the historic Redd-1 well with proven gas confirmed by the Jesse-1A discovery well
Strong Investor Support
The Placement received substantial support from both new and existing professional and sophisticated investors, underlining the market’s confidence in the Project’s potential.
The funds secured from the Placement will provide Grand Gulf with a strong cash balance enabling the ongoing progression of the Jesse discovery within the Red Helium Project. This positions the Company to pursue several high-potential opportunities including executing the Jesse-3 drill targeting a structural high on seismic and proximal to the historic Redd-1 well, planning the completion and testing of the Jesse-1A well for efficient future production tie-ins, evaluating stimulation and flow-testing options for Jesse-2, and conducting a 3D seismic program to expedite the full-field development of the Jesse discovery inspired by the success of the analogous Doe Canyon helium field situated 15 miles to the east.
Figure 2: Jesse-1A and Jesse-3 locations in the Red Helium project AMI with local pipelines / gas transport route to the Lisbon Helium Plant.
The Placement involves two tranches targeted at professional and sophisticated investors, with a total of 400 million new shares are to be issued at an issue price of $0.008 per share, each with attaching options on a 1-for-4 basis. Tranche 1 includes 191,539,030 new shares, while Tranche 2, subject to shareholder approval, comprises 208,460,970 new shares.
Furthermore, the Placement will issue a total of 220 million unlisted options, each exercisable at $0.0025 within three years from the date of issue. This includes options granted to placement investors, lead managers, and brokers, with these provisions ensuring a multifaceted approach to fund influx, while also incentivising key stakeholders.
Grand Gulf’s Red Helium Project offers exposure to the helium industry within a proven helium-producing region, the Four Corners Area.
Notable features of the Project include a substantial area of mutual interest (AMI) with strategically leased acreage, geological similarity to the successful Doe Canyon Field, well-placed seismic data identifying multiple drill targets, and proximity to the operational Lisbon Helium Plant. The surging demand for helium, with premium helium spot prices exceeding US$2000/mcf, adds to the Project’s appeal with permitting and preparation activities on track to support Q4 2023 Jesse- 3 spud.
Grand Gulf’s Managing Director Dane Lance expressed optimism about the Company’s upcoming endeavours.
“Planning and preparations are on-track for Jesse-3, targeting a seismic high with proven gas in the proximal Redd-1 well, and the low-cost Jesse-1A completion, providing multiple near-term paths to first production,” he said.
“The inclusion of the independent McCracken sandstone secondary target, which produces helium both north and south of the Jesse discovery, provides exciting upside for a modest cost. With our first two exploration and appraisal wells both flowing helium to surface and proving helium is pervasive across the Jesse discovery at a commercial grade, we look forward to being back in the field in what could be a potentially transformative fourth quarter for the Company and our shareholders.”
“A binding offtake agreement and an existing pipeline connected to the Lisbon helium plant provide the potential to quickly bring helium from a commercial well to market with minimal time and capex positioning Grand Gulf well to capitalise on the ongoing global helium shortage when the world’s largest helium consumer needs it most.”
GGE’s Australian Stock Exchange-listed price is currently selling at 1c (1.45 pm UTC+ 8 hours).