First Crypto Currency backed by Helium Commences Trading

ArgononHelium (ArgHe) has been listed on the BitMart Cryto exchange and has now begun the CoinMarketCap listing process. Each 1,000 Argonon tokens are redeemable for 1Mcf Helium in 2024 delivered by Renergen. The listing price was equivalent to US$275/mcf of helium.

Renergen has sold forward 100mmcf of liquid helium over a period of 19 years to

Argonon Helium US Inc (“Argonon”) in a unique and innovative deal. The aim of

this was to provide up to US$25mm of pre-funding for Phase 2 of the plant and to

facilitate the creation of a spot market for the currently opaque helium market.

End users could use the tokens to hedge their exposure to helium pricing and

there has already been interest on that front. Also, electronic storage of the

commodity is significantly cheaper than actually extracting it out of the ground

and trying to keep it at minus 269 degrees Celsius; forward sales contracts with

storage in the crypto space makes more sense. The funds could be used to

accelerate Phase II drilling at Virginia Gas Project without need for equity issue.

Argonon was established specifically to procure helium from Renergen and to

create a tradeable market in the commodity. Currently it is very difficult to

observe any pricing data on the helium market: there is no spot market or other

visible prices. Argonon sees this transaction as a ground-breaking step in bringing

helium to the financial markets and will pave the way for its inclusion into more

mainstream commodities funds and indices. Argonon has developed an

innovative product which will provide an accessible platform and market for any

interested helium investor to gain direct exposure to the underlying commodity.

This path is not dissimilar to other commodities for example lithium was in a

similar position a decade ago.

The coin is called an “ArgHe”. These tokens are backed by a smart contract, which

enables the holder to either store the token in their wallet on an exchange (which

is in the process of being established) that the holder will then either be able to

trade that token: buy, sell or use as a store of wealth if they believe that the longer

term prospects for helium are strong. This allows bulls on the long-term outlook

for helium to gain exposure without necessarily having to incur the storage costs

of keeping helium.

A token holder will eventually decide that either they are going to sell it in the spot

market because the price is right, or that they want to take delivery of the

underlying helium. If they want the underlying helium they notify Argonon, who

inform Renergen one quarter before delivery takes place, which is in-line with the

way the entire helium market currently trades. Renergen will send back a delivery

schedule, mutually agree with the end user when the helium trailer needs to

arrive; the token will then be delivered to Renergen and “burned” (i.e. cancelled)

and Renergen will issue a delivery certificate. When the container comes in, the

delivery certificate will be handed over at the plant, the tank will be filled and the

helium taken away, and there are a few less helium tokens in the world.

This structure is a variant of the concept in the commodities world known as

streaming where big commodity houses offer cash up front to be able to take the

commodity in the future at a discounted price. This type of funding is positive for

Renergen as it can raise the capital now without having to dilute the equity

holders. Also setting up this mechanism now prior to announcing Phase 2 and

base use capital needs means that Renergen is showing it has the ability and is

setting up the mechanism to be able to raise a certain portion of the capital to

construct Phase 2 without necessarily having to dilute shareholders. Previously

this type of deal would have had to have been done with a large commodity house.

However, with blockchain technology the average person in the street now has the

ability to participate in these streaming transactions, democratising the

investment process.

We view the creation of ArgHe as a pioneering move to make helium an investible

financial asset akin to more mainstream commodities. As with many other

commodities (and novel financial products in general), the paper helium market

is likely to start small and to be traded by those who have researched and

understand the future potential of the gas to be used in emerging technologies

such as quantum computing.