Helium One appoints Mitchell Drilling as contractor for its three well exploration programme in Tanzania
25-03-2021 07:36:43 | by: Pie Kamau | hits: 3017 | Tags:

Helium One has agreed contract terms with Mitchell Drilling for completion of a three hole exploration programme at its 100% owned Rukwa project in Tanzania. Mitchell Drilling is a global leader in drilling technologies with over 50 years' experience and 115 rigs globally.

As a demonstration of support for the programme, Mitchell Drilling has agreed to upgrade the drill-rig and supply a larger rig at no additional cost. The selected rig offers increased capacity, providing additional drilling power to the exploration campaign. Importantly the rig is capable of drilling a 6¾" diameter hole to 1,200 metres, making it suitable for appraisal drilling subsequent to a discovery.

By moving directly from exploration to appraisal drilling without having to demobilise and remobilise equipment, Helium One will be able to dramatically accelerate the development of the Rukwa Project whilst also reducing associated costs. This will allow the Company to advance rapidly from discovery to resource evaluation.

Under the terms of the agreement, Mitchell Drilling may give notice at any time after the results from the first hole are announced to take payment in equity for the drilling of the third hole in the programme. The Shares will be valued at a 10% discount to VWAP (volume weighted average price) calculated from commencement of hole one to the date that the equity notice is given. Additionally, the parties may agree to drill a fourth hole for equity, with shares valued at a 10% discount to VWAP calculated from commencement of hole one to the date that the second equity notice was given.

Helium One and Mitchell Drilling are targeting a date in mid-May for the commencement of drilling activity.

David Minchin, Chief Executive Officer, Helium One, commented: "We are delighted to work with Mitchell Drilling as contractor for our maiden exploration drilling campaign. Mitchell Drilling are highly experienced in gas exploration with all the technical knowledge and expertise required to deliver a safe and successful exploration campaign. Mitchell Drilling have indicated that they are willing to take 50% of the contract value in shares, with a commitment to drill the 3rd hole and optional 4th hole for equity. Not only does this demonstrate Mitchell's commitment to the project, but also offers Helium One the potential to expand our exploration programme to include additional targets that may be identified from the current infill seismic campaign. Drilling is expected to commence in mid-May, supported by accelerated mobilisation with a drill rig which is already in Tanzania. The rig that Mitchell Drilling are providing is larger than originally contracted and is suitable for drilling of 6¾" appraisal wells. This will allow the Company to move directly from exploration into the appraisal phase, saving considerable time and money in demobilisation and remobilisation costs and allowing Helium One to continue the fast-track development of our globally strategic Rukwa helium project."