Imperial Helium (TSX-V: IHC)(OTC: IMPHF) CEO David Johnson on New Zone, Test Wells & Ongoing Offtake Discussions

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Imperial Helium, Mr. David Johnson. David, it's great to have you back on. How are you today?

David Johnson: Gerardo, it's great to be back, and doing very well. Thank you so much.

Gerardo Del Real: Look, it's great to catch up. You had some news last week that I know you must be extremely busy behind the scenes because it was obviously very positive news. You confirmed a new prospective zone, and you commenced the first of two production tests, which of course, will lead into a resource estimate that's expected later on in the year. A lot of irons in the fire, including negotiations for maybe an off-take agreement that you're hoping to finalize terms in the first half of this year. Wanted to catch up, wanted to get the context from you. I'll let you take it away and provide that for us.

David Johnson: Yeah, thank you so much. So, the Steveville structure, our plan had been to find helium, to look at helium where it was already located. So we located a blow-out well, and then we went and tested it in something called the Blow-Out Zone and that zone, on the first well we tested, did 5 to 8 million cubic feet a day for three years before decline. And it was 0.43% helium, so very excited about that. So we went to drill the second well, which will be the second producing well, so two wells combined, producing 10 million a day. We went down through the Blow-Out Zone. We haven't perforated or production tested that yet because we identified a zone deeper down, that looked extremely prospective. And when we perforated that zone and let it flow, it really came at us. So the well came at us strong. We're very excited about that.

And then we tested gas concentration, and the gas concentration was about 19% higher. It's 0.51% helium. So we have a second zone and it's coming at us strong, the same way the first zone did, the Blow-Out Zone, and it's got a higher helium concentration. So that, is all great news. Where we're at in the process, so people understand, is that we'll finish testing the lower zone first. And that's a 10 day flow period, which we've just completed. And now there'll be a 20 day shut-in period. That's where we measure the pressure differences as it comes up. And that will finish that production test. And then we'll come up to the Blow-Out Zone, which is the same zone we tested in our first well. And we'll do the same production test on that. That'll be about another 30 days. And after that, then we'll have all the numbers we need to come back to the market with a resource estimate, and talk about what we really have in this asset in terms of volumes. We clearly have good flow rates, so we're very excited.

Gerardo Del Real: Obviously, multiple catalysts. You mentioned the gas analysis and I see mention of it being positive from an environmental impact perspective, because you didn't see any presence of CO2, of the SSZ, right? Can you speak to that a bit and just how important that is as you move forward?

David Johnson: Yeah, so that SSZ is the Sub-Salt Zone. The lower zone has a different gas composition and it has no CO2 in it, which is great, because overall, the mix of gases lowers our CO2 coming out of the ground. And the CO2, to be clear, is going to be sequestered. It doesn't go into the atmosphere. It goes straight back into the ground, so it's not going to affect the atmosphere at all. But the other thing it tells us is that we have two separate reservoirs stacked upon each other. And that's very good in terms of the overall volumes of the reservoir that we expect to see.

Gerardo Del Real: Excellent. I know there was an update on the prototype plant as well. We all know, whether it's vehicles, planes, trains, you name it, there's delays everywhere, right? Assay labs. Can you give us an update there?

David Johnson: Sure. So, ON2 Solutions produces oxygen separators for the atmosphere to separate oxygen out of the air for hospitals globally. And they're a really global organization. Part of what they've had to wrestle with is separating inert gasses or noble gasses from their gas stream, things like helium. So they know how to separate helium out. So we went to them and said, let's build this prototype plant. Well, two things happened so that they weren't able to deliver the prototype plant to us on time. One, they had a COVID outbreak in their own shop, and two, countries around the world are crying for oxygen separators. And so, ON2 Solutions had to make the very difficult choice of, "Okay, are we late on this project, or do we go over and help these people because it helps save lives?" And they chose correctly. They went out and they helped save the lives.

A lot of the crisis is beginning to pass now, so they've come back and they're working on the separator, and we're expecting to see that prototype plant ready here in the next six weeks. So the crisis has passed. We're moving on. We should have the prototype plant out, and it will demonstrate that we can produce 5-9 helium. And just so people remember, the prototype plant is not the plant that goes on the field. This is a small scale plant that we build to make sure we understand how to separate the helium correctly before we build a full scale model and put the whole field onto production.

It also has two utilities in that regard. One, it demonstrates to our gas off-takers that we can produce pure helium, 99.999% pure, because that's what 70% of the uses are. And two, it helps us de-risk the plant and the building of the large scale facility. And three, it means that we can use this facility on other opportunities, which we see coming down the pike to demonstrate how to build a plant for them and generate 5-9 helium.

Gerardo Del Real: A lot of catalysts, David. You, your team and your partners obviously should be commended for doing things the right way and doing the right things. I'm excited for those catalysts to start materializing here, and I suspect we're going to hear a lot of good news in the coming weeks and months.

David Johnson: Yeah, I think the last thing I would comment on, is just that we're down the track with negotiating our off-take agreement with our strategic alliance partner, Uniper. But I have to say, there's a huge demand for helium out there in the market. We've been approached by car manufacturers, the chip manufacturers. We've had inquiries from Asia and from China and from Europe and from major people inside of North America. So there's just a huge demand out there, and we're really excited about that. So we're looking forward to getting a good price on our contracts.

Gerardo Del Real: I'm looking forward to having you back on once that happens. Thanks again for that update, sir.

David Johnson: It's been great talking to you, Gerardo. Thanks a lot.

Gerardo Del Real: Chat soon. Bye now.