WHERE HELIUM IS HEADING IN 2022
Looking in the Rear-view Mirror
In this series of regular posts, we look back at some earlier interviews with companies we worked with and how they have faired. These are companies that we worked with and really were excited about. With DME I have the luxury of being in the stock around $0.30 and have not sold any shares. Not only do I hold it, but I also actively buy more. If you watch my video’s, you know that I am converted. I am a believer, and we are told to not fall in love with stocks, but I disagree. I want to find the key public companies that will serve the future well and profitably. Having an alignment of goals, values, beliefs, and trust in management is absolutely required when looking for businesses. We rarely look just to trade, or just to make money – we want to find companies that can grow for years to come. DME fits this model so perfectly, that it had to be the first company highlighted in this series.
Something to keep in mind when we look at DME today is this post from Gasworld: https://www.gasworld.com/helium-markets-now-experiencing-helium-shortage-40/2022650.article
2022 is going to look even more optimistic for helium producers!
“…in September 2021, the Amur helium plant in Russia was taken down to complete construction punch-list items. While Amur was shut down, the natural gas processing plants that produce feed gas for the first of three helium plants experienced a fire on 8th October and a second explosion/fire on 5th January that will delay Amur’s helium production until at least Q3 of 2022. How long it will take to restart helium production from Amur remains to be seen, with speculation ranging from the most optimistic late Q3 to more pessimistic predictions that Amur will produce little, if any, helium before 2023.”
–Phil Kornbluth, President of Kornbluth Helium Consulting
We must wait a little longer for DME to complete their plant – but it will be ESG friendly which is critical to the strategy. They are drilling and have results in weeks to come. There is plenty reason to be optimistic about continued success as they will be vertically integrated looking to capture the entire chain of growth.
Now DME is also working on user agreements….who knows when we all know with whom but we do know the US Government is one!
Enjoy the transcript and video below of a chat we had with Robert Rohlfing (CEO & Executive Chairman), back in October 2020. The company is drilling right now, and they will have results in a few weeks. There is attention on them again to see if they can expand their great position. The plant will be clean, completely adhering to the best environmental standards within reason.
Desert Mountain Energy:
Good morning, everyone. It’s Andrew O’Donnell with supercharged stocks. Happy to see you all together today. And one of my favorite companies and one of my favorite people to talk to. Robert Rolfing, CEO Chairman, Everything President as well of Desert Mountain Energy.
Really excited to catch up with you. This is a fantastic story, a fantastic opportunity. It’s been a little quiet lately. I know there’s a reason for it, but we’re excited to catch up on some of the financing news as well as the drilling news that are coming up. How’s everything going?
Well, thank you. It’s good to see you again this morning. As I say, we just finished getting in the $9 million and a $4 million private placement, which is kind of tough at a time that a lot of people can’t even come up with it. And we’re really blessed to have it, well oversubscribed many times over. And then you get into that and it takes a little while to get these things through and therefore you go into a quiet period and you can’t say anything. Even though we have been busy, I’ve been just sitting on my laurels. I’ve been working hard. But having both those financing out of the way really sets us up for long term. Now for going into with the engineering, the final engineering on both the processing facilities and the power generation, the solar power generation plan. That’s one of the things that I think there’s a lot of people that have kind of missed that little nuance there. And the reason having solar power generation is because it controls our fixed costs for years and years and years. As long as we want to run this stuff. We have an electrical supply that is not subject to the normal power grid demands and the pricing thereof so that we can maintain very good costs.
Plus the power generation facility we are going to be building on 1 MW plan because our actual design criteria are considerably under that. So we are actually going to be an energy company and generate electricity. And again, it helps us and helps all the shareholders because we lock in so much of our operating costs, which is electricity on this because we’re not using methane and it’s a lot cleaner the emissions. And that’s one of the things our goal is with the company is to make us I can’t be totally green, but I can do a lot within my purview to do things in the most cost effective and take the extra step and design it in a green manner. It’s possible to be done. And I know over time there will be a lot more things that come out that will be green and new things. And we’re happy to be part of that because the helium is required for a lot of the new EV vehicles that help run the computers makes them run faster and on less electricity so that they can I don’t know if I want to run out and pop into a vehicle that I’m not driving, I get into an airplane.
But somebody I know there’s an autopilot on most of the time, but in a car there are just too many opportunities for someone to come flying in at you. And I still like to have a little control over where I’m going. So that aspect is fun. So where do we progress from here? We’re looking at wrapping up the permitting on the third well, which is not going to be anywhere near the first two Wells. And the reason for that there’s another really large target that I’ve wanted to drill for quite a while and we’re going to go drill that and there’s multiple zones within that well that we’re looking at for helium. We know that there’s a well drilled back in 1999 about 5 miles away from that that was what you’d it could consider to be off structure or low and they had gas in it and.
It was at the gas water contact point. So it was not really viable for them to try to produce. And we’re not just slightly uphill from we’re over 500ft higher, so we shouldn’t to be moving away from what’s going on down hole as far as the water that could be coming in. We’re getting away from that. We feel and we don’t be up on top of an anacline again. Another Ana client should be the highest spot, won’t be getting into frack jobs, won’t be getting into huge asset jobs or anything like that. That is our goal is to stay in and not have to try to do that. And everything we have designed thus far is to do exactly that. Andrew?
Yes, that’s why I was really intrigued about the entire integration and each kind of stage and step with this company too was trying to find optimal solutions as we’re moving forward towards this kind of greener future that everyone wants to see and put on the thinking caps and going, listen, there’s a way we could do this. Let’s think outside the box and it makes everyone happy and it does the right thing for the environment. Now, there’s a way you’re giving back to the community as well with this electric power as well, is there not?
Oh, there is. What we have planned is at the point that we reach approximately 50% of our money recovered on the hard cost of the electric hour generation plan. We’re actually going to be donating up to 5% of that to the schools in Snowflake, Taylor and Winslow, Arizona. Our company really feels education is the key to so many things. Schools have been really hurt and especially with them trying to deal with the covet and how they teach and the extra stress on all that. I know we’re going to get past that point. Schools will be back in a different fashion and we just look at this and say this is a great way to give back to the community, to really help teach, educate, and that’s so important to do that. And a lot of our loyalties, because we are on majority of our properties are on state land. Our loyalties basically go to the Arizona Land Department. Now those royalties get split depending on where they’re at. It goes to the fun state school, all of the schools across the state Department of Corrections. It goes to state hospitals and then some obviously goes to the state land Department.
But the majority of it is for funding schools and across the state. This is a way by you saying the power generation we can give back to the local community where we’re doing all of our work. And that’s what to me it’s important to be involved in the community like where I live right now in Muscogee, Oklahoma. I’ve been part of Muscogee Medical Foundation for a year. We do free flu shots every year. And it’s just a drive up and it’s so fun. You just set that type of stuff up and I’m looking forward to bringing some of these other things I have been doing elsewhere and you incorporate them and do other things and it’s fun because you can actually have an impact, positive impact in kids life, in people’s lives. And it’s like that is one of the most fun things that I get to do. It really is Well.
I love that, too, because it’s that whole notion and this is kind of the mantra that I always kind of preaches that you can have values and value investing and not only that, you can have a value company that has exceptional growth. And this truly is a scenario where this Trinity is met where we’ve got a critical, essentially rare gas that is absolutely necessary for coolant and high tech coolants in the future and we’re able to now incorporate a lot of new technology. And with the solar panels that are getting stronger and better to positively affect not only the environment as a whole, but the regional community as well, it just shows where that kind of capital markets has a real good way, positively impacting people’s lives.
And that’s one of those things. Again, I’ve been working on a lot of this for almost three years to even get it to this point due.
Do the pre engineering work on solar panels and the legislative end that you have to work through. There’s just a myriad of things. You can’t wait until you just go out and drill a well, you could, but that’s just not me. I like to know that I have things working, moving in step, moving the ball down the field, as it were, and towards the goal. And that goal is this. And we’ve already hit a number of goals. Now there’s a whole new series of goals and what we’re going to do and that’s what is unique with this.
I also like this was a little bit of a tangent, but I touched on an article at the point it’d be posting soon, but TSMC, Taiwanese semiconductors is going to be granted, it’s a big state, but they’re going to be a neighbor.
So it just shows, too. And I think I read that they are basically presold to Apple for the next year. They’re like, we’re making all of your semiconductors and we’re going to be doing it out of Arizona. How does this tie in with you guys? What does that look like for you guys?
Well, obviously, the other thing that they do is a lot of high end Department of Defense chips, and those are made in a pure helium environment. Obviously, they’re going to be looking for a place, another source they could possibly still buy some from out of what’s left in the National Reserve in Texas. But as soon as you liquefied, you send it down the road, you’re losing it. It’s vaporizing. And it may be only twelve hour drive in the middle of summer. In middle winter, it could be a 16 hours drive, and they could lose anywhere from five to as much as 17% of the helium that’s in there is going to vaporize.
Basically in the general area that they are looking at and the other semiconductor manufacturers, and there’s 17 different companies in the Phoenix Metro area, shall we say that puts us within four and a half to 5 hours, depending on which end of the spectrum you want to be. We can be there. So they, in effect, would be losing only basically less than 1%. And that at the end of dollars and cents. It’s a lot of money. They will use a lot of this. So they’re just having them in there along with the other people. It just adds more to the market demand for our product. The price could go up or it can go down. Obviously, prices have dropped a little bit on the crude level side. They haven’t dropped on the refined side, no. Okay. Well, in one case, it dropped from like $2,800 to I think I was told by the one University, they’re now paying $2,702 and they’re buying it by the leader. And it’s just super expensive. And a lot of these universities and for like super colliders and that type of works celebrity. They’ve added a helium recovery system to it.
It’s not really cost effective. They just have to have it so they can keep operating and they still have to replace the helium because it’s not a total recovery. What I’ve been told thus far by one University is that the money that they spent thus far on just the helium recovery is actually four and a half times what the cost of the helium is. But they’re looking at it long term as to, well, if it does it keep going up or just the supply, can they just cut down as to how many leaders they have to buy? And it was amazing how much helium loss they have in some of these scientific studies they do every time they spin up the super glider, it requires about two and a half million dollars worth of helium. Wow. And if they don’t recover it, it’s another two and a half. Now they can recover about 90% of that well, which is good. But it’s still every time they fire it up.
That’S a big loss.
Yeah. That’s one thing I really didn’t understand or fully appreciate how they and some of these other companies and they tried using liquid nitrogen. But liquid nitrogen has its own problems that they haven’t overcome yet. Someday, I’m sure somebody will overcome that. But in manufacturing processes, you can still use dry nitrogen. But if you have any copper, if there’s any moisture, it reacts with the copper and the trace sulfur in it forms nitric acid.
And it’s very minute. And those are some of the things that again, I say I did not fully appreciate until I was told by some of these professors, well, here’s the actual problem. Why we can’t use this yet. And you don’t get the same cooling. You don’t get things. You can’t run them as fast because they don’t become super conductive. Helium becomes super conductive, which is the totally unique property nothing else does.
Well, this is fascinating because you’re set up now, you’ve got the financing done. And although not to get in trouble, the bureaucratic aspect of closing it took a bit of time, but you raised the money so fast. People when they saw that release those kind of in the know, and that could read it, most retail investors would be thought, what does this mean? They jumped on it very quickly. So you’re past that now. And we’re really looking forward to seeing what this next call is going to do. There’s going to be lots of news flow and there’s going to be lots coming out. So we’re pretty excited to see all the news coming in the next near future. Is there anything that we’re missing that we need to pay attention over the next couple of weeks or even a couple of months?
Basically, there will be a whole lot of small news releases. And when we’re drilling the well that will have set facing, and then we’ll wait for the cement to cure and then we’ll perforate it. So it will be just a flow of events in between there now that we’ve got the finance and kindness and we can talk again because you can’t discuss anything. You’re on a news blackout. So we’ll be able to really discuss this real shortly here about the companies that we’ve engaged and gas engineering for the electrical engineering where exactly we’re going with this. And that’s exciting because it becomes, I think, to the smaller investors, and they wonder because why can’t they say anything? It’s frustrating to me. I would love to. I’ve seen enough responses. These people don’t know what they’re doing and they can’t say that. And it’s like it just is what it is. I’m locked in by rules and regulations and you literally can’t say anything. And that’s frustrating because I am one of these people. I’d love to communicate and take time with people and try to communicate well, this is what we’re doing. This is why you have to do the engineering on this and some of the other technologies that we’re using to strip off the nitrogen.
We’ve actually started working almost seven years ago with one University and how they created a different type of membrane. And we are going to be able to strip the nitrogen for 47% less electricity. Wow, it’s huge. That’s just the stripes that have come forward in just a few years. And that’s why I’m really excited, because all these things, all these balls that you throw up in the air, you try to keep them all up and juggling them all. Now they’re starting to come together. And I think people will really like to see that as it gels and it’s like one thing after another after another, and then there’ll be a few quiet periods, and then it’ll be more and more and we’ll be drilling again. I’m not going to try drilling in the middle of December and January at the elevation we’re at. It requires work high and it won’t get above freezing. And you have to just bring in so many additional things. And it’s like to wait 60 days. It’s not going to make a bit of difference. To save $150,000, I’m going to wait 60 days to save $150 because all the ongoing engineering work and everything else and how we’re bringing we had originally looked just to give people additional background.
We had actually looked at trying to use electric vehicles to move the natural gas electric tractors. Because we have so many high mountain grades, it’s not cost effective. We can’t do it. There’s a couple of other contracts that we have put into place. Initially, we will be using just contract trucking companies just to move the actual tank cylinders around. But later on, when we are going to be doing it ourselves, we’ll be using natural gas trucks. In some ways, it costs a little more to operate you have to have people trained, especially when it gets cold. There are certain constraints. But why not? I can do this if this is neat. I want to make the smallest carbon footprint that I can and still be productive. I think we can do it and I want to yeah.
I want you to as well.
But it is a lot of people just think, well, just because you’re in the drilling industry, you’re one of these bad guys and you’re trying to do it. Now, there’s a lot of big companies and that have picked up on things and by the members like on our board that we’ve added. Some great minds have been in there on some real early development of newer drilling techniques. I’m still old in school and there’s a lot of things I have to learn as a teaching old dog, new trick. But these are fun because we can actually make a positive impact in reducing the emissions, our emissions. What we can do for education, help schools, give back to the local community. That’s fun. That to me is we’re being blessed with some really unique times and a lot of folks can look at it and say, well, the sky is falling and it’s easy to get into a negative right to me, I look at this, I have so many wonderful positive things going on and it’s like, and I can help, I can do this. I can’t fix everything. But desert, mountain energy can come in. We can do this.
We can do this. We can do this. It’s just right down the road. And that’s fun. And I think a lot of people, they probably won’t see it from that angle. But maybe I hope that I can convey a little bit of where we’re trying to go with this long term into a fully vertically integrated helium production and energy because we will be producing electricity. Yes.
That’s what’s so exciting too. It’s not just a theoretical we can do this. We can help the climate by doing this and do a study. This is practical application of science and techniques of pulling it all together. Real time to go. Hey, listen, I think that if we do this, we can meet this. And that whenever I look at other stories out there that don’t get picked up by the mainstream news or anyone else is that if you just put your head over there and look at all the negative all day long, yes, it gets miserable. But there’s so many companies and this is one particular that is showing how people are out there solving these problems. This is where investors, if you are passionate about this, you should be spending your money for your time. That’s the best two ways. If you’re passionate about something and testing theories and thesis in real time to get the results that we all want to see. And this is a perfect example of that kind of Union of all of those kind of beliefs coming together once.
Thank you for inviting me in today. I appreciate that.
Thank you, Robert. It’s always a pleasure to talk to you and we look forward to hearing more news coming out soon. And all the best of luck.