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Royal Helium liquefaction deal opens up potential new markets


Helium remains in short supply globally, and with this shortage comes increased focus on companies that can deliver helium to the market. Canadian-listed Royal Helium [TSXV:RHC] has been busy already in January, with latest news out from the company announcing a tolling services agreement with Tumbleweed LLC that will see almost all of Royal Helium's output refined in Colorado.

As part of the deal, the Ladder Creek liquefaction facility will be refining the company's liquid helium at an extremely high level of purity to comply with US Compressed Gas Association requirements. It is a big step for the Canadian helium producer, as liquefaction means the helium can travel further to market. The deal is for three years, and then renewable on a year by year basis thereafter.

Helium is one of the rarest elements on earth. It is hard to mine and it is also hard to store. Helium that escapes cannot be recaptured: it vents into the atmosphere and is gone for good. There is a rising demand for liquefied helium and various disruptions have created an extreme shortage. Hence, a liquefaction deal in place represents an important stepping stone for this company.

Why get excited about Royal Helium though?

Royal Helium controls over 1,000,000 acres of prospective helium land across southern Saskatchewan and parts of Alberta. All of its lands are close to highways, roads and cities, as well as to existing Canadian oil and gas infrastructure. The company is well-positioned to become a leading supplier of helium into the North American market.

Royal Helium's reservoirs are carried primarily with nitrogen, which is not considered to be a greenhouse gas. It has a very low GHG footprint, when you compare it with other helium producers, which are reliant on natural gas extraction as part of the helium production process.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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