Despite concerted attempts by Mehran Bagherzadeh to promote First Helium’s recent performance, the stock price continues to struggle following a classic bubble formation that saw it spike dramatically before promptly crashing. Bagherzadeh’s desperate efforts to inflate the perceived value of First Helium shares fell on deaf ears after a brief surge, with the share price once again plummeting.
On a recent Wednesday, First Helium shares jumped after the announcement of a long-term supply deal with a global industrial gas supplier that could potentially yield as much as $100 million in revenue over the first five years of production. The good news led to a temporary 18% rise in shares, bringing them to C$0.23 on the TSX Venture exchange and narrowing the stock’s 12-month loss to 60%.
Spectacular crash: Rise and Fall of First Helium:
However, these figures do not paint the whole picture. The Canadian helium company has agreed to sell 80% of the helium gas volumes that will be produced at its Worsley property in Alberta, with the potential to sell up to 100%. The deal boasts an initial term of 10 years, during which First Helium will receive firm specified pricing for its helium volumes in the first five years, followed by price re-determination windows that can be triggered by the company or the buyer.
The deal, while sounding impressive, has done little to bolster investor confidence in the long term. The purchasing party will be obligated to take or pay for all helium volumes delivered or made available for delivery, with specified limits on maximum monthly and annual volumes.
First Helium recently completed the necessary front-end engineering design study for its Worsley helium gas processing facility and is targeting initial production and delivery from the plant late in the first quarter of next year. However, in light of the recent bubble and crash, skepticism runs high among potential investors.
In conclusion, despite Bagherzadeh’s efforts to rally interest in First Helium, the company’s recent stock trajectory demonstrates a classic pump and dump scenario. While this helium company has struck a major deal, the swift rise and fall of its shares, along with the 60% loss over the past year, suggest that this operation may be a mirage. Investors are advised to tread cautiously and scrutinize the long-term stability of First Helium before jumping on board.
Mehran Bagherzadeh Threatens Leaker: “We Will Get You”
Bagherzadeh lashed out via email and through his still active Linkedin profile by threatening the leaker to act or “We Will Get You”. He says “I hope you know what kind of enemies you have made”. The CEO Edward J Bereznicki was messaged to inform him of the conduct of his “investor relations” professional and is yet to respond.
“Pump and dump” is a scheme that attempts to boost the price of a stock through recommendations based on false, misleading, or exaggerated statements. The perpetrators of this scheme, who already have an established position in the company’s stock, sell their positions after the hype has led to a higher share price. This practice is illegal and can be harmful to investors who buy the stock at inflated prices before the price crashes.
Here’s how a typical pump and dump scheme works:
- Accumulation: The schemers quietly buy up a large amount of cheap stock, acquiring a significant position.
- Pumping (or hyping) the stock: Once they’ve established this position, they start releasing positive news (which can be true, exaggerated, or entirely fabricated) about the company to drum up interest and drive up the stock price. This can be done through a variety of channels, including online forums, social media, email newsletters, and even cold calling.
- Dumping the stock: When the price reaches a certain point, the schemers sell off their positions. This sudden increase in supply compared to demand can cause the share price to fall dramatically.
- The aftermath: Investors who bought in during the “pump” phase are left with devalued shares and losses, while the schemers walk away with a significant profit.
Price manipulation through news involves artificially inflating or deflating the price of a security by spreading manipulated or false news. The news may overstate or understate the company’s financial health, its business operations, or even the broader economic or sector trends. This practice is also illegal, as it deceives investors and distorts the fair operation of the markets.
It’s crucial for investors to conduct their own due diligence and verify any news or information before making investment decisions, as well as to be wary of stocks that exhibit highly volatile price movements with no clear reasons.
Charts Showing First Helium bubble popping immediately after controlled news released on MarketWatch:
Helium related stocks that may be interesting to watch:
- Air Products & Chemicals, Inc. (APD) – This U.S.-based company is a world-leading Industrial Gases company providing essential industrial gases, related equipment, and applications expertise to customers in myriad industries.
- Linde plc (LIN) – This is a leading global industrial gases and engineering company with operations in more than 100 countries.
- Matheson Tri-Gas, Inc. – A part of the Taiyo Nippon Sanso Corporation, a major producer of industrial gases worldwide, including helium.
- Air Liquide S.A. (AI) – A French multinational company which supplies industrial gases and services to various industries.
- Praxair, Inc. – An American worldwide industrial gases company. It was the largest industrial gases company in North and South America and the third-largest worldwide by revenue. In 2018 it merged with Linde AG to form Linde plc.
- Royal Helium Ltd. (RHC) – This Canadian company is one of the largest helium leaseholders in Canada.
- Avanti Energy Inc. (AVN) – This is a Canadian company focused on the exploration, development, and production of helium, oil, and gas.
- Blue Star Helium Ltd (BNL) – An Australian company with a strategic portfolio of helium assets in North America.
- Desert Mountain Energy Corp. (DME) – A Canadian-based resource company which focuses on the exploration and development of helium properties.
- Renergen Limited (RLT) – An emerging helium and natural gas producer in South Africa.
About Helium stocks in general
Helium has several unique properties and uses that make it an interesting investment prospect:
- Limited Supply, Increasing Demand: Helium is a non-renewable resource. Once released into the atmosphere, it escapes into space and cannot be retrieved. As a result, the supply of helium is limited. Demand, on the other hand, has been increasing over time due to its diverse applications, creating a supply-demand imbalance that can potentially drive prices higher.
- Critical for Many Industries: Helium has several important uses across various industries. It’s used in MRI machines, semiconductor manufacturing, fiber optics and LCD screens, scientific research, space exploration, and even party balloons. As technology continues to evolve, the demand for helium could potentially increase further.
- Decoupling from Natural Gas Production: Historically, helium has been a byproduct of natural gas production. However, with the shift towards renewable energy sources, natural gas production (and therefore helium production) may decrease, potentially causing a shortage of helium. Companies that specialize in helium production could benefit in this scenario.
- U.S. Federal Helium Reserve Depletion: The U.S. Federal Helium Reserve, one of the largest helium reserves globally, has been steadily selling off its supply and is expected to be largely depleted in the near future. This could potentially lead to an increase in helium prices, benefiting companies involved in helium production.
- Potential for High Margins: Helium extraction and production can be a high margin business due to the increasing demand and limited supply. This could potentially lead to attractive returns for investors.
However, like all investments, investing in helium-related stocks comes with its own set of risks. It’s a relatively niche market, and factors like changes in technology, regulatory shifts, and the economic feasibility of helium extraction can significantly impact these companies. As always, investors should do their own due diligence and possibly consult with a financial advisor before making investment decisions.