Acquisition of Helium Licences in Montana

RNS Number : 5151A

Highlands Natural Resources PLC

08 June 2016

 

8 June 2016

Highlands Natural Resources plc ('Highlands' or 'the Company')

Acquisition of Helium Licences in Montana at Low Cost

Highlands, the London listed natural resources company, is pleased to announce that, in line with its strategy of seeking out potential value adding acquisitions, it has acquired exploration licences covering 59,033.82 acres located in Custer, Carter and Fallon Counties, Montana.  These licences represent the potential natural gas and helium play that Highlands announced that it was evaluating on 25 April 2016.

As previously announced, numerous shows of gas have been encountered across this target region. Historic gas analysis reveals that the gas contains elevated concentrations of helium (0.36 per cent) similar to the US Hugoton helium field, which is the largest natural accumulation of helium in the United States.  Consequently, the Company believes that a significant volume of gas, containing helium, could exist in this region which, if correct, would represent a significant helium resource in North America.  Further investigations are required and Highlands has commissioned RPS Knowledge Reservoir to prepare a competent person's report in this regard.  Further updates will be provided to shareholders in due course.

The consideration of US$91,050.73 has been satisfied through a cash payment.

The Importance of Helium

The United States Bureau of Land Management (BLM) sold helium for US$104.00 per thousand cubic feet in 2015 compared to current natural gas prices of approximately US$2.40 per thousand cubic feet. Privately negotiated sales of Grade A helium priced for approximately $200.00 per thousand cubic feet in 2015 according to the United States Geological Survey (USGS). Due to worldwide demand, Highlands forecasts that helium prices could rise significantly.  The strong price environment is due to dwindling helium resources which could lead to potential shortages of helium feedstocks globally.  The Federal Helium Reserve at the Cliffside Gas Field near Amarillo, Texas was established in 1925 to conserve scarce helium resources and the helium refining capacity connected to it currently requires approximately 2.3 billion cubic feet per annum, representing around 30% of global supply.  However, the Federal Helium Reserve's extensive resources are expected to become significantly depleted if not exhausted by 2020, meaning that the requirement to develop new fields into production is strong.

Contrary to popular belief, helium's uses extend well beyond party balloons. Helium is an essential feedstock for numerous industrial, medical, scientific and commercial applications including nuclear power generation, magnetic resonance imaging ('MRI'), industrial fabrication and welding, fundamental sciences and research, fiber optics, space and defence applications, semiconductor manufacturing, and many other applications. Significantly, helium currently has no substitute in cryogenic applications requiring temperatures below -220 degrees Celsius.  Highlands believes that helium's role as a critical and irreplaceable component of numerous modern industries will underpin future global demand.

New Advisory Board Member

To support helium project development, Highlands is also proud to announce that Mr. Ben Reinoehl has joined the Highlands Advisory Board. Mr. Reinoehl brings 40 years of experience from Air Products & Chemicals, Inc., where he was responsible for the worldwide helium and hydrogen product lines and the development of new sources of these gasses. Specifically, Mr. Reinoehl negotiated all crude and refined helium supply contracts for Air Products and also developed the first liquid helium supply in Algeria from LNG tail gasses.

Highlands CEO Robert Price said, "This land was acquired at extremely low cost and fits well with our strategy to take advantage of the rising price of helium.  Helium is an essential component of the modern economy, and Highlands believes that there is potentially significant value in securing helium resources in advance of expected global shortages over the coming years. The addition of Ben Reinoehl to our growing team provides significant institutional knowledge relevant to the development and commercialisation of acquired helium assets, and will support our helium project going forward. We will provide further information including a resource report from RPS Knowledge Reservoir in due course regarding the land and its potential."

**ENDS**

For further information, please contact:

Highlands Natural Resources plc Robert Price [phone] Cenkos Securities plc Neil McDonald [phone] Nick Tulloch [phone] St Brides Partners Ltd Lottie Brocklehurst [phone] Elisabeth Cowell

 

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