Is the Helium One over 600% share price surge sustainable?
Helium One’s share price, which has risen by over 600% in a matter of days, is likely to at least short-term slip back before any sustainable bullish reversal is perhaps seen.
Helium One soars after drilling news
Helium miner Helium One’s latest news has provided a major boost for the share price, which has rallied sharply after significant losses in November and December.
Helium One Global has made significant progress in its drilling operation in Tanzania. The Itumbula West-1 well has completed all logging and testing operations, revealing a high concentration of helium and hydrogen. The helium concentration reached up to 4.7%, almost 9,000 times above background levels, indicating great potential for the helium reservoir. The well also encountered hot basement fluids, suggesting the presence of a low enthalpy geothermal system. The company has reported increased efficiency and productivity in its drilling rig.
The surge in Helium One's share price can be attributed to several factors. Firstly, there is a clear market opportunity due to a recent helium supply shortage, which has driven up the demand and price for the element. Helium is a non-renewable resource that is essential for various industries, including MRI machines, chip manufacturing, and space exploration.
Furthermore, Helium One's CEO, Lorna Blaisse, has made bold statements about the company's potential in the helium market. The recent drill campaign in Tanzania yielded promising results, confirming the presence of a working helium system. This has led to speculation that Helium One could become a strategic player in the industry, potentially increasing its value significantly.
However, it's important to note that finding a viable helium system and successfully extracting the resource are two different challenges. Investing in small-cap, high-risk companies like Helium One carries inherent risks. The share price has experienced significant volatility, with previous peaks and troughs. Investors should approach such investments with caution and be prepared for large potential losses.
Additionally, AIM-listed miners often need to dilute existing shareholders to raise funds for drilling and exploration. This can lead to further risks and uncertainties for investors. It's crucial to thoroughly research and understand the risks associated with investing in mining companies before making any investment decisions.
Analyst ratings for Helium One
Refinitiv data shows a consensus analyst rating of ‘strong buy’ for Helium One, by only one analyst though, with an upside target at 20.00 pence, a 967% rise from current levels (as of 7 February 2024).
Technical outlook on the Helium One share price
Helium One’s share price, which has risen by 619% year-to-date, is extremely volatile to say the least and this morning is trading down by over 20%.
Helium One Monthly Candlestick Chart
The Helium One share price has come off its July 2021 lofty heights at 29.00 pence and has fallen all the way to its January 0.1850 pence low before surging to Monday’s 3.70 pence high.
Helium One Daily Candlestick Chart
From a technical perspective it looks probable that the price gap with Friday’s high at 1.450 pence may well get fully filled, meaning that over the course of this week the Helium One share price is more likely to slide than rise again.
For renewed upside to be on the cards, a rise above last week’s high at 2.40 pence would need to be seen. In this scenario Monday’s high at 3.70 pence would be back in focus and probably the minor psychological 5.00 pence mark as well.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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