Helium company plans strategic review while hoping for court protection

By Collin Gallant on January 31, 2025.

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The Royal Helium processing plant near Patricia was opened with great fanfare in late 2023, but the costly commissioning process continued for another 10 months and was eventually halted last fall before the company asked for court protection from creditors, court documents show.

But, the company’s non-liquid assets nearly double its debts.

A hearing in Ontario heard Wednesday that Royal executives are undertaking a strategic review of the company and have secured $1.5 million in financing while it intends to maintain the company as a going concern.

That follows major board changes in September as costs to bring the processing plant online mounted.

“Although the Steveville Facility (in southeast Alberta) is projected to be largely profitable, since the facility was acquired and subsequently delivered to the current site, its operations have experienced significant and sustained negative cash flows,” reads a statement by Royal chief executive officer David Young.

“This has been driven largely by the myriad of direct and indirect contractor costs associated with the commissioning initiative. This dynamic resulted in the need for subsequent capital raises and, having failed to bring the facility to its designed and initially contemplated efficiency level, the applicants suffered continued net negative operating cash flows.”

The facility was also robbed in late December with RCMP stating that a number of pieces of highly specialized equipment were taken by thieves.

The court appointed monitor, Roan Grant Thornton, stated in an initial report that Royal is in discussions to use new lender, Texas-based Energy & Specialty Gases, as a “stalking horse” bidder for the companies assets.

Royal controls the right to exploration on more than 800,000 acres of land in Saskatchewan and Alberta, including areas south of Dinosaur Provincial Park, where the Steveville facility is located, and the Maleb area in the County of Forty Mile.

Other blocks are located Wilhem, north of Swift Current, Cadillac, Climax and Val Marie, as well as extensive tracts southeast of Regina.

Those leases and rights are valued at more than $46 million in court documents, among total non liquid assets of $91.8 million.

Total liabilities at the end of 2024 totalled $40.1 million, including about $25.6 million in borrowing and term debt.

The company attempted to raise $4.5 million with a debenture offering in December, but that was cancelled in January as the firm applied for court-creditors protection.

The company has since been delisted by the Toronto Stock venture stock exchange.

A list of creditors provided in court documents state that Royal Helium and its related subsidiary Imperial Helium, owe about $8.7 million to the Business Development Bank of Canada and a similar amount to Canadian Western Bank. Those two lenders initiated the receivership action.

Among other unsecured creditors, lists include a number of service and supply companies located in Brooks region and southern Saskatchewan for amounts mostly below $20,000.

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