When I scour the penny stock landscape, Helium One Global (LSE:HE1) always catches my eye. For starters, it’s trading for less than 1p per share (0.62p, actually). So that immediately makes it pretty rare.
Another thing is that it’s an incredibly volatile penny stock. Depending on which September someone invested in, they could either be up 123% (from 2025) or down 93% (from September 2021).
In theory then, I could make a lot of money if Helium One ever reached its previous highs above 25p.
Finally, this gas exploration firm is hoping to start generating revenue from helium projects. And demand for helium is expected to remain high for years to come due to its use in semiconductor manufacturing, space technology, and quantum computing.
So, should I load up on this penny stock?
Exciting times
The explorer has two projects it’s hoping to extract helium from. In south-west Tanzania, its flagship southern Rukwa Helium Project received a mining licence last year. The site boasts strong sustained helium concentrations of 5.4%, peaking at 9.2% at surface.
Helium One also owns a 50% working interest in the Galactica development project in Colorado, USA. Operated by Australia’s Blue Star Helium, this project is much closer to production.
Indeed, in its interim results published on Thursday (26 March), Helium One said stage one of the Galactica development was completed. Six wells are now connected to the processing facility, and it’s moving swiftly toward 24/7 operations.
Even better, the project secured its first-ever helium sales agreement at spot pricing. This is a huge milestone because it moves Helium One closer from being a promising explorer to a revenue-generating producer.
Negotiations are progressing with multiple parties for long-term helium and CO₂ supply contracts…These early operational steps represent the beginning of a new chapter for Helium One, one in which we expect to generate our first revenues and establish a commercial presence in the global helium market.
Helium One.
Exciting times. So, why did the penny stock crash 14% on the news?
Extreme share dilution
Well, there’s the thorny issue of how to fund the extraction of the gas. And, alongside the report, Helium One announced it has raised £3.5m through an institutional placing, with an additional £1m retail offer currently open.
The problem was that the shares were priced at a discounted 0.6p, and the share price dropped to reflect that.
So, as well as the usual challenges associated with mining projects (cost overruns, delays, and political risks), there’s every chance significantly more cash will need to be raised in future. And this might result in an even lower share price.
To get a sense of the dilution here, the number of shares has increased by over 2,400% in just five years! Yikes.
Worth a punt?
As mentioned, helium is in high demand and likely to stay that way. To give just one example, huge amounts of the gas are needed to cool quantum computing systems to near-absolute zero temperatures.
Were Helium One to get the US project up and flowing, and find a larger partner to shoulder the cost burden in Tanzania, the stock could seriously take off. Therefore, extremely adventurous investors might want to consider taking a punt.
But speaking personally, this penny stock is too dicey for my own portfolio.
