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VANCOUVER, BC, March 20,
2023 /CNW/ - Total Helium Ltd. (TSXV: TOH),
(OTCQB: TTLHF) ("Total Helium" or the "Company")
announces that it has entered into a definitive purchase and sale
agreement (the "Purchase Agreement") for a joint venture in
the Pinta South Helium Project in Arizona. The Purchase
Agreement, dated effective January 17,
2023, entered into between Brooks Range Corporation, a
wholly-owned subsidiary of the Company, Pinta South Operating
Company, LLC, Butler Minerals I, LLC and Mid America Exploration
LLC (collectively, the "Vendors"), provides for the
acquisition (the "Transaction") of an interest in existing
helium production as well as a working interest in a large-scale
helium exploration and production program in the Holbrook Basin (the "Pinta South
Project").
"Total Helium is thrilled to announce this joint venture.
This JV is a great complement to Total Helium's strategy of
acquiring producing assets as we build upon our existing
relationship with our industrial gas partner. I have the
utmost respect for our joint venture partners, Butler Minerals and
Mid America Exploration, who are proven helium finders and
producers. It is my belief that this joint venture will create
significant value for our shareholders for many years to
come," commented Robert B.
Price, Chief Executive Officer of the Company.
Acquisition of Existing Production and Other
Highlights
The Pinta South Project encompasses 27,192 acres with over 150
potential drill sites in the Holbrook Basin in Arizona. As part of the joint venture,
Total Helium will acquire a 20% interest in 2 producing wells with
average daily gross gas production of 265 Mcfp/d and helium
concentrations greater than 8%. Total Helium will also
acquire a 50% interest in eight additional existing wells which are
being connected to a helium processing plant. Following completion
of the Transaction, Total Helium plans to begin drilling and
complete ten additional wells, bringing the total number of
producing wells to 20 by the end of Q2 2023.
The Pinta South Project is attractive to Total Helium as it will
allow the Company to continue to sell produced helium to its major
industrial gas partner seamlessly. Total Helium will be
producing helium at a higher volume and selling it at a
significantly higher price than it has done previously.
Ideal Field for Helium Production
The Pinta South Project is an ideal helium exploration and
development project for several reasons: concentration, expansion,
and cost effectiveness.
- The helium concentration in the field is exceptionally high at
5-8%. This very high concentration of helium in the gas stream
makes the project one of the most unique opportunities in the
industry. Additionally, the gas stream is predominately made up of
nitrogen, which makes for inexpensive processing of the helium and
does not contribute any greenhouse gases to the environment.
- With the project comprising 27,192 acres and with the potential
to drill 150+ wells on that acreage, there are significant
opportunities for expansion. With a gathering system and helium
processing facility already in place, the field is already
producing and is primed to scale up production significantly.
- The primary target formation in the field is shallow, which is
conducive to inexpensive drilling and completion costs. The
secondary, deeper formation in the area represents potential future
upside for the project.
Transaction Terms
Pursuant to the terms of the Transaction, the Company will
acquire a 20% interest in 2 producing wells and a 50% interest in
eight additional existing wells which are being connected to a
helium processing plant in consideration for a one-time cash
payment of US$12,000,000 (the
"Purchase Price") due and owing upon completion of the
Transaction. Total Helium will hold a 50% working interest in all
future wells drilled as part of the Pinta South project.
Completion of the Transaction remains subject to a number of
conditions, including receipt of any required regulatory approvals,
receipt of financing, the Company funding a capital development
program for the Pinta South Project in the amount of US$2,000,000 and the delivery of customary
closing documentation. The Transaction cannot be completed
until these conditions have been satisfied, and there can be no
assurance that the Transaction will be completed in a timely
fashion, or at all.
The Company is at arms-length from the Vendors, and no finders'
fee is payable in connection with completion of the
Transaction. The Transaction constitutes a "fundamental
acquisition" for the Company, under the policies of the TSX Venture
Exchange (the "TSXV"), on the basis that the Company intends
to devote the majority of its capital to the Transaction and the
Pinta South Project. As a result, trading in the Company's
common shares has been halted, at the request of the Company,
pending completion of filings with the TSXV in connection with the
Transaction. It is anticipated that trading will remain
halted until the Transaction has been completed.
As part of the due diligence process for the Transaction, Total
Helium has engaged Sproule Holdings Limited ("Sproule"), a
well respected consulting and engineering firm, which has been
involved in the evaluation of helium projects both domestically and
internationally. Sproule has prepared a competent person's
report to validate the existing helium reserves on the Pinta South
Project. A copy of the report will be made available by the
Company on its website (www.totalhelium.com) following completion
of the Transaction.
Brokered Private Placement
The Company also announces that it has engaged Haywood
Securities Inc. (the "Agent") to lead a brokered private
placement (the "Offering") of up to 40,000,000 special
warrants of the Company (each, a "Special Warrant").
The Special Warrants will be offered at a price of $0.50 per Special Warrant for gross proceeds of
up to $20,000,000. The net
proceeds from the Offering will be utilized by the Company for
satisfaction of the Purchase Price, to satisfy funding for the
capital development program required pursuant to the Purchase
Agreement and to address costs associated with completion of the
Transaction. Completion of the Offering is subject to certain
conditions, including approval of the TSXV, the satisfaction of all
outstanding conditions to completion of the Transaction and the
satisfaction of customary closing deliverables.
Each Special Warrant will be exercisable into one (1) unit of
the Company (a "Unit"), for no additional consideration, at
any time after the closing, and each Special Warrant not previously
exercised shall be deemed exercised on the later of (i) the third
business day after a receipt is issued for a final prospectus
qualifying the Units for distribution in all of the Canadian
provinces, except Quebec (the
"Qualifying Jurisdictions") and (ii) the date that is four
months and one day following the closing. Each Unit consists
of one (1) common share of the Company (a "Common Share")
and one (1) Common Share purchase warrant (a "Warrant").
Each Warrant shall entitle the holder thereof to purchase one
Common Share (a "Warrant Share") at an exercise price of
$1.00 at any time up to 24 months
following the closing. In the event that the volume-weighted
average trading price of the Common Shares on the TSXV is greater
than $2.00 for a period of ten (10)
consecutive trading dates, the Company may, within ten (10)
business days following such event, accelerate the expiry date of
the Warrants. The Company shall seek the necessary approvals
to list the Common Shares, Corporate Finance Shares (as defined
herein) and Warrant Shares on the TSXV, which listing shall be
conditionally approved prior to closing. The Company will also
undertake to list the Warrants, and any Warrant comprising,
underlying or issuable (as the case may be) pursuant to each of the
Compensation Special Warrants and the Compensation Options on the
TSXV.
The Company has granted the Agent an option to increase the size
of the Offering by up to 15% at any time up to the 48 hours prior
to closing.
The Offering will take place by way of a private placement
pursuant to applicable exemptions from the prospectus requirements
in the Qualifying Jurisdictions, and in those jurisdictions where
the Offering can lawfully be made including the United States under private placement
exemptions.
The Company will use commercially reasonable efforts to prepare
and file a preliminary short form prospectus in the Qualifying
Jurisdictions where the Special Warrants are sold, qualifying the
distribution of the Units, within forty-five (45) days after
closing. The Company has agreed to promptly resolve all comments
received or deficiencies raised by the securities regulatory
authorities and use its commercially reasonable efforts to file and
obtain receipts for the final short form prospectus as soon as
possible after such regulatory comments and deficiencies have been
resolved. In the event a receipt is not received for a final short
form prospectus on or before the date which is
four-months-and-one-day following closing of the Offering, each
Special Warrant shall be automatically exercised and will entitle
the holder to receive 1.1 Units.
In consideration for their services, the Agent will receive a
cash commission equal to 6% of the gross proceeds of the Offering,
such number of compensation special warrants ("Compensation
Special Warrants") equal to 6% of the number of Special
Warrants sold in the Offering and a corporate finance fee equal to
2% of the gross proceeds of the Offering payable in the form of
Common Shares (the "Corporate Finance Shares"). Each
Compensation Special Warrant will be exercisable into one (1)
compensation option (a "Compensation Option"), for no
additional consideration, at any time after the closing, and each
Compensation Special Warrant not previously exercised shall be
deemed exercised on the later of (i) the third business day after a
receipt is issued for a final prospectus qualifying the Units for
distribution in the Qualifying Jurisdictions and (ii) the date that
is four months and one day following the closing. Each Compensation
Option shall entitle the holder thereof to purchase one Unit at an
exercise price of $0.50 at any time
up to 24 months following the closing.
On behalf of the Board,
Robert B. Price, Director and
CEO
Total Helium Ltd. - www.totalhelium.com
The TSX Venture Exchange has in no way passed upon the merits
of the proposed Transaction and has neither approved nor
disapproved the contents of this press release. Neither the
TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this
release.
Statements included in this announcement, including
statements concerning our plans, intentions and expectations, which
are not historical in nature are intended to be, and are hereby
identified as, "forward-looking statements". Forward-looking
statements may be identified by words including "anticipates",
"believes", "intends", "estimates", "expects" and similar
expressions. The Company cautions readers that forward-looking
statements, including without limitation those relating to the
Company's future operations and business prospects, are subject to
certain risks and uncertainties that could cause actual results to
differ materially from those indicated in the forward-looking
statements.
SOURCE Total Helium Ltd