Noble Helium secures multi-million-dollar funding—what does it mean for investors?

Noble Helium Limited (ASX) has entered into an At-The-Market (ATM) subscription agreement with Dolphin Corporate Investments (DCI), enabling the company to access up to A$2 million in standby equity capital over the next two years. This agreement, announced on 18 October 2024, provides a flexible and cost-effective funding option for Noble Helium as it looks to advance its strategic objectives while maintaining control over capital issuances.

The ATM facility allows Noble Helium to issue shares at its discretion, giving it full authority over the timing, amount, and minimum price of each subscription. Importantly, Noble Helium can terminate the ATM agreement at any time without incurring penalties. This flexibility ensures that the company remains in control of its financial strategy, avoiding dilution and maintaining shareholder value.

Control Over Capital Issuance and Minimum Dilution

Unlike traditional equity placements, the ATM agreement offers Noble Helium minimal dilution, with the company setting a floor price for share issues. The final price will be determined by either this floor price or a 4.4% discount to the Volume Weighted Average Price (VWAP), ensuring a strategic approach to capital management. This structure aligns with the company’s aim to secure funds efficiently while minimising potential market disruption.

The deal includes security provisions where Noble Helium will place 25 million fully paid ordinary shares as collateral. These shares may be bought back and cancelled at no cost, subject to shareholder approval, upon the maturity or early termination of the ATM. This arrangement provides additional assurance for stakeholders and demonstrates Noble Helium’s confidence in its financial management capabilities.

Expert Insight on the Agreement

Shaun Scott, Noble Helium’s Managing Director & CEO, highlighted that the ATM facility was recommended by significant shareholders and represents an additional funding flexibility option beyond traditional methods. He noted that the 4.4% discount is significantly lower than the fees typically associated with equity placements, offering a cost-efficient way to raise capital when required.

Scott emphasised that the company’s control over setting the floor price and determining the volume of shares issued puts Noble Helium in a strong position to maximise shareholder value while securing funds for future operations.

Noble Helium’s Strategic Flexibility

Dolphin Corporate Investments, a Melbourne-based firm, specialises in providing ATM capital facilities for small and mid-cap ASX-listed companies. The agreement with Noble Helium aligns with DCI’s mission to offer secure and transparent funding solutions. The partnership showcases Noble Helium’s approach to leveraging innovative funding structures that align with its growth strategy and operational flexibility.

The market’s reaction to this development will likely focus on how Noble Helium uses the facility to capitalise on strategic opportunities. Investors will closely watch how the company navigates capital raises while managing dilution, aiming to maximise long-term shareholder value.

Market Reaction to Noble Helium’s ATM Agreement

Noble Helium Limited’s stock has seen modest movement following the announcement of its At-The-Market (ATM) subscription agreement with Dolphin Corporate Investments (DCI). As of October 18, 2024, the stock price stands at AUD 0.050, representing a slight increase of 2.04% since the last trading session. This price improvement aligns with the company’s recent efforts to secure flexible funding options and indicates some positive sentiment among investors.

Despite this increase, the share price remains significantly lower compared to its 52-week high of AUD 0.265. Over the past year, the stock has experienced a substantial decline of approximately 73.68%, highlighting challenges faced by the company and the broader helium market. Analysts are closely monitoring Noble Helium’s next steps, particularly how the ATM facility might influence its liquidity and exploration activities in Tanzania.

Investors appear cautiously optimistic, noting that the ATM agreement provides Noble Helium with the ability to control the timing and terms of its capital issuance, potentially minimizing dilution risks. The company’s strategic flexibility, including the option to terminate the agreement without penalty, may offer a pathway to stabilize and potentially recover its stock performance in the upcoming months.