Voyager Life #VOY – Option to acquire M3 Helium Corp. and Issue of Equity

Voyager is pleased to announce that it has entered into an option agreement (the “Option”) to acquire the entire issued share capital of M3 Helium Corp., (“M3 Helium”), a producer of helium in Kansas, USA.  The Option gives Voyager the right to acquire M3 Helium through the issue of 57,611,552 new ordinary shares in Voyager (“New Ordinary Shares”) to M3 Helium’s shareholders, representing 57 per cent. of the enlarged issued share capital of Voyager.

Highlights

• M3 Helium is already producing helium and natural gas from its first well and has successfully tested four other wells as being economic to operate
• Through an arrangement with a local partner, M3 Helium has access to existing infrastructure to transport and process helium in large quantities (specifically a pipeline to a processing plant)
• With proven geology, it has the ability, subject to funding and availability of new leases, to rapidly scale up its projects to hundreds of new drilling sites based on expected resource capacity from an independent resource report (described further below)
• It owns an existing modular hybrid plant to process and enrich helium – utilised in Fort Dodge (described below) where there is no immediate access to infrastructure

The Company has conditionally raised approximately £864,000 (the “Fundraise”) through a subscription of 28,815,606 New Ordinary Shares at an issue price of 3 pence per New Ordinary Share. For every two New Ordinary Shares issued pursuant to the Fundraise, investors will receive one warrant allowing the holder to subscribe for an additional Ordinary Share in the Company at an exercise price of 6 pence per Ordinary Share, exercisable within two years up until the second anniversary of the date of Second Admission (as defined further below) (the “Warrants”).

The proceeds of the Fundraise will be utilised to:

• fund the development of M3 Helium’s operations in Kansas through a Loan Facility;
• specifically the Company expects to drill a further well at M3 Helium’s Hugoton North Play;
• costs for the preparation of an Admission Document (as defined below) in connection with the proposed re-admission to trading on AQSE Growth Market; and
• general working capital purposes for the Company.

Further details on the use of proceeds are set out further below.

The Fundraise will be undertaken in two tranches. The first tranche of 6,993,122 New Ordinary Shares will utilise existing share authorities and will be issued pursuant to the Fundraise immediately and the second tranche, including the Warrants, will be issued subject to approval by Voyager’s shareholders at a forthcoming general meeting to be convened shortly (the “General Meeting”).

The exercise of the Option will constitute a reverse takeover pursuant to AQSE Rule 3.6 of the Access Rulebook and is subject to, inter alia, publication of an admission document (the “Admission Document”) as further described below.

The Directors intend to dispose of Voyager’s existing plant-based health and wellness operations following re-admission of the enlarged group to trading on AQSE.

There is no certainty that the Option will be exercised, nor that the enlarged group will successfully complete its re-admission to trading on AQSE Growth Market.

Overview of M3 Helium

M3 Helium owns economic interests in five wells in Kansas as well as a helium production plant.  Significantly, M3 Helium is already producing helium and generating revenue from one of these wells with two of the other wells to be shortly tied into nearby infrastructure.  Its additional two wells have tested successfully as being economic to operate. With proven geology, the Directors believe that M3 Helium has the ability, subject to funding and availability of new leases, to rapidly scale up its projects to hundreds of new drilling sites based on expected resource capacity from an independent resource report (described further below).

M3 Helium operates in Kansas, USA from two locations:

Hugoton Field: North Play

The Hugoton gas field, located primarily in southwestern Kansas, western Oklahoma, and the Texas panhandle, is one of the largest natural gas fields in North America, deriving its name from the town of Hugoton, Kansas. Discovered in 1927, this field which covers around 31,080 square kilometres has significantly contributed to the natural gas supply in the United States. Over its long history, more than 12,000 wells have been drilled in the Hugoton field.

The field’s cumulative production is substantial, with over 30 trillion cubic feet of natural gas produced since being discovered. Additionally, it has yielded substantial quantities of natural gas liquids and helium.

M3 Helium’s North Play potentially extends to 250 sections with recoverable gas, with each section being approximately 640 acres (one square mile).  Production to date has indicated a helium content of 1.25 per cent., a concentration that compares very favourably to other parts of the Hugoton gas field.  Analogous wells drilled by other operators within the North Play have averaged over 0.44 bcfg per well, meaning that, with four wells per section, M3 Helium estimates a potential of up to 440+ bcfg of recoverable gas across the entire area.  At a constant 1.25 per cent. helium content, M3 Helium estimates potential recoverable helium of over 5.5 bcf across the entire area.

The north region of the field has been historically largely undeveloped because of the combination of high nitrogen content, which makes natural gas economically challenging, coupled with infrastructure costs.  These economic impediments changed on 1 April 2024 when Scout Energy acquired the only existing pipeline thereby providing M3 Helium with a direct path to commercial sale, utilising Scout Energy’s Jayhawk helium plant in Kansas. It is this access to nearby infrastructure that makes the North Play particularly significant.  Helium sale prices to date at the Jayhawk helium plant have been US$550 per MCF, less a 20 per cent. processing fee.  However, reflecting some recent price weakness in the global helium market, M3 Helium is assuming lower pricing going forward as modelled in its well analysis described below.

An independent resource report prepared by WSP for the benefit of M3 Helium on 25 January 2024 provided the following probabilistic resource estimates*:

*Investors should note that this resource report has not been prepared to the standards of a competent person’s report in line with the requirements for UK listed companies and, furthermore, as it is addressed solely to M3 Helium, investors in Voyager cannot rely on it.

Vertical wells in the North Play are forecast by M3 Helium to cost approximately US$300,000 to complete with a 29-month projected payback based on the following assumptions:

*M3 Helium models a flat helium price in determining financial returns from its wells although most market commentators predict a rising price over the 30 year well life.

M3 Helium estimates that the average life of vertical wells in the Hugoton North Play is circa 30 years.  Whilst, to date, it has solely drilled vertical wells, management’s longer-term strategy is to drill horizontal wells at this location.  Upfront costs would be higher at circa US$2 million for a horizontal well of 10,000 feet (approximately 2 miles) in length with staged fracks every 220 feet.  M3 Helium predicts an increased production rate from horizontal wells because of the greater wellbore length exposed to the pay zone and the Company expects to explore this option later in the year.

Fort Dodge

Fort Dodge Prospect is in Ford County, Kansas. M3 Helium owns the lease and existing well in the area (Rost 1-26). Helium concentrations at Fort Dodge have been higher to date at 4.6 per cent. but, unlike the North Play, there is no access to infrastructure meaning that M3 Helium will utilise its modular hybrid plant to process and enrich produced helium.  Purified helium is expected to be collected on site by its customer with terms being negotiated.

The Fort Dodge lease allows for two additional similar wells to be drilled in addition to Rost 1-26.

Vertical wells in Fort Dodge are more expensive, being estimated by M3 Helium at US$800,000 due to the need for on-site processing and an injection well (for the disposal of saltwater) but have a 6 month projected payback based on the following assumptions:

Restructuring of M3 Helium

Prior to entering into the Option, M3 Helium underwent a restructuring whereby title to certain of its assets was transferred into the company in return for issuing shares to the asset owners.  The purpose of the restructuring was to ensure that all assets were held by a single legal entity and so that Voyager was able to enter into the Option with M3 Helium. Prior to the restructuring, certain assets, including some of the wells referred to above, had different ownership and the parties wished to streamline the ownership structure and operations.

As explained above, Voyager’s acquisition of M3 Helium (the “Acquisition”) will be classified as a reverse takeover under Rule 3.6 of the AQSE Growth Market Access RuleBook and, consequently, exercising the Option will be subject to the publication of the Admission Document and re-admission to trading on the AQSE Growth Market.

Financial information on M3 Helium

M3 Helium was incorporated on 16 June 2023 and prepared its first unaudited accounts to the period ended 31 December 2023.  In that period, it recorded total operating expenses of US$24,724 and did not generate any income.  Cash outflows in that period, including both its investment activities and operating expenses, comprised US$1.14 million before financing activities of US$1.6 million.  The total assets, including cash resources of US$454,385, comprised US$1.57 million.  There were no liabilities at the period end.

M3 Helium has also provided Voyager with up to date unaudited financial information prepared on an interim basis to 31 May 2024.  This reflects the ongoing development of its Kansas wells and total assets at that date are shown as US$3.59 million with US$320,250 of outstanding liabilities.  Cash outflows in the period 1 January – 31 May 2024, reflecting these development activities, comprised US$2.19 million before financing activities of US$1.7 million.

M3 Helium presents its accounts in US GAAP but, following completion of the Acquisition and once it is a subsidiary of the Company, it will report in IFRS.  There are certain differences in the two standards for companies in the natural resources industry including:

• Expense recognition: Under IFRS, expense recognition is generally principles-based. Expenses are recognised when it is probable that a decrease in future economic benefits related to a decrease in an asset or an increase in a liability has occurred and can be measured reliably.Under US GAAP, expense recognition is more rules-based and follows a matching principle, meaning expenses should be matched with the revenues they help to generate.
• Leases: Under IFRS all leases are recognised on the balance sheet (with some exceptions for short-term and low-value leases), with a right-of-use asset and corresponding lease liability. US GAAP applies more distinctions between finance leases and operating leases, affecting the pattern of expense recognition in the income statement.
• Exploration and evaluation (E&E) costs: Companies have the flexibility to either expense or capitalise E&E costs. If capitalised, they are classified as intangible or tangible assets and assessed for impairment when facts and circumstances suggest that the carrying amount may exceed recoverable amount.Under US GAAP, E&E costs are generally expensed as incurred but allows capitalisation of costs associated with successful exploration efforts, while unsuccessful efforts are expensed.
• Capitalisation Criteria: IFRS also provides a broader criteria for the capitalisation of development costs; specifically costs can be capitalised if it is probable that they will generate future economic benefits and the costs can be measured reliably.
• Impairment Reversal: Impairment testing is required when there are indicators of impairment. Assets are impaired if their carrying amount exceeds the recoverable amount. IFRS allows for the reversal of impairment losses (excluding goodwill) if conditions change whereas US GAAP does not.Under US GAAP, it is necessary to assess if the carrying amount is recoverable based on undiscounted cash flows. If not recoverable, the impairment loss is measured as the excess of carrying amount over fair value.
• Joint Arrangements: Under IFRS, joint arrangements are classified as either joint operations or joint ventures. Joint operations involve rights to assets and obligations for liabilities, with proportional consolidation. Joint ventures involve rights to net assets and are accounted for using the equity method.US GAAP also accounts for joint ventures using the equity method but proportional consolidation is generally not permitted.

Overall IFRS provides more flexibility in accounting choices and consequently the Directors do expect there to be some amendment to M3 Helium’s historic financial track record when it is consolidated with Voyager but they do not consider these changes to be significant to investors’ understanding of the Acquisition or the prospects of the Company overall.

The projected overheads of the Company following the Acquisition are not expected to exceed £1 million (excluding the one-off costs of preparing the admission document and capital expenditure in Kansas).  Following completion of the Acquisition, the Directors expect to realise some cost synergies in areas such as finance, administration and marketing, but the primary benefit of the Acquisition is anticipated by the Directors to be through the development of M3 Helium’s assets in Kansas and, specifically, increasing production and therefore revenue.

The Fundraising, Director Participation and Issue of Warrants

The Company has conditionally raised approximately £864,000 through a subscription of 28,815,606 New Ordinary Shares at an issue price of 3 pence per New Ordinary Share. For every two New Ordinary Shares issued pursuant to the Fundraise, investors will receive one warrant allowing the holder to subscribe for an additional Ordinary Share in the Company at an exercise price of 6 pence per Ordinary Share, exercisable within two years.

The first tranche of 6,993,122 New Ordinary Shares will utilise existing share authorities and will be issued pursuant to the Fundraise immediately and the second tranche, including the Warrants, will be subject to approval by Voyager’s shareholders at the General Meeting.  The Company expects to publish and despatch to shareholders a circular and notice of General Meeting (the “Circular”) in the coming days.  A further announcement will be made at that time and the Circular will be available on Voyager’s website.

Eric Boyle, Non-executive Chairman, and Fetlar Capital Limited (a company controlled by Nick Tulloch, Chief Executive Officer and his spouse), each intend to invest £25,000 in the Fundraise and will therefore each receive New Ordinary Shares and Warrants. The following table sets out their respective aggregate holding in the Company – the intended investment will be in the second tranche of the New Ordinary Shares and at Second Admission (as defined below).

¹Also includes aggregated shareholding of Eric Boyle and his spouse and adult children

²Also includes aggregated shareholding of Nick Tulloch and his spouse

*Assuming approval of the issue of 36,230,287 New Ordinary Shares and Warrants by shareholders at the General Meeting and the proposed issue of 57,611,552 New Ordinary Shares to M3 Helium shareholders

The Fundraise, which is not being underwritten, is conditional, inter alia, upon admission to trading on AQSE. The New Ordinary Shares will rank pari passu in all respects with the Ordinary Shares including the right to receive all dividends and other distributions declared, paid or made after the date of issue.

Previously New Ordinary Shares issued by the Company have been eligible for Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) purposes providing tax benefits to certain investor groups. With its change in business activities, Voyager will apply to HMRC for clarification whether these tax efficient qualifications will remain in place following the Acquisition.

Use of Proceeds and Strategy

The Fundraise will raise gross proceeds of £864,000 for the Company which will be applied towards:

• the development of M3 Helium’s operations in Kansas;
• specifically the Company expects to drill a further well at M3 Helium’s Hugoton North Play;
• preparation of the Admission Document; and
• general working capital purposes.

The Company expects to exercise the Option on re-admission to trading on AQSE Growth Market of the enlarged group and, immediately following the Fundraise, will commence preparation of the Admission Document. The Company intends to make a loan facility (the “Loan Facility”) available to M3 Helium to advance its drilling programme with its Kansas’ assets.

The Loan Facility has been prepared on the basis of an arm’s length commercial agreement between Voyager and M3 Helium for a term of up to one year. The Loan Facility contains restrictions on M3 Helium taking on external finance and is structured to ensure it ranks in priority to M3 Helium’s other obligations.  Drawdowns under the Loan Facility must be for a specified purpose, namely the ongoing development of M3 Helium’s business.

Voyager’s existing health and wellness operations

Following the Acquisition, the Directors intend to dispose of Voyager’s existing plant-based health and wellness operations.  These comprise:

• Manufacturing facility in Perth, Scotland producing both products for Voyager and third party customers
• E-commerce and wholesale operations based in Perth, Scotland
• Three retail stores in Scotland (St Andrews, Dundee and Edinburgh)

Although the Directors have concluded that the scale of these operations is not likely to be large enough in the short term to justify being a public company, there have been considerable successes in recent months.  On 4 June 2024, Voyager announced that it had been successful in pitching for and winning a substantial new customer for its manufacturing division, VoyagerCann.  terms with this customer are for a preliminary order for six product lines with an initial order value of up to £30,000 and thereafter further orders to meet demand as well as potentially further product lines.  This customer is a leader in its field with retail stores across the UK, a strong online presence and supplies to equally well-known third-party stores and has already started discussions with Voyager on “phase 2” of its product roll out which will comprise further additions to the range. Voyager also supplies other high profile customers, such as Pets at Home, where it has had four products available on Pets at Home’s website since November 2023, as well as manufacturing for one of the leading CBD brands in the UK.

With these successes, and even taking account of the low valuations currently ascribed to CBD and cannabis companies at present, the Board believes that a disposal of these operations will be possible in the near term and, importantly, will not be a significant cash drain on the Company in the meantime.  The Company’s manufacturing, e-commerce and wholesale operations can be profitable without the burden of the expenses of being a public company and, despite challenges on the high street, market rents for at least two of Voyager’s shops are now materially higher than the rent paid by the Company so transferring these leases in the short term is a realistic possibility.

Appointment of new director

Following completion of the Acquisition, it is intended that Paul Mendell, co-founder of M3 Helium will join the board of directors of Voyager.

Paul is an oil and gas producer and co-founder of two UK listed companies – Iofina, an AIM listed iodine producer, and Highlands Natural Resources, later known as Zoetic International where he was chairman of that company, now known as Chill Brands Group. Paul has owned interests in over two-hundred producing oil and gas wells in the US which he has developed or from properties he acquired and were subsequently acquired by larger firms including Anadarko, EnCana, Noble, Oxy and others. He is a geologist and a well-respected developer of new concepts in exploration for oil, gas, iodine and other commodities. Paul also founded Mendell Energy; a Denver based independent oil and gas producer, acquired for US$12 million in 2012.

A further announcement will be made in due course.

Admission 

Application will be made for 6,993,122 new ordinary shares to be admitted to trading on the Aquis Stock Exchange Growth Market (“First Admission“). First Admission is expected to occur at 8:00 am on or around 4 July 2024. Application will also be made for 21,822,484 new ordinary shares to be admitted to trading on the Aquis Stock Exchange Growth Market (“Second Admission“). Second Admission is expected to occur at 8:00 am on or around 19 July 2024. The New Ordinary Shares will rank pari passu with the existing ordinary shares.

Upon completion of the Fundraise, the Company’s Enlarged Share Capital will comprise 43,218,494 Ordinary Shares carrying voting rights.  The figure of 43,218,494  Ordinary Shares may be used by Shareholders following Second Admission as the denominator for the calculations by which Shareholders may determine if they are required to notify their interests in, or a change in their interests in, the share capital of the Company under the FCA’s Disclosure and Transparency Rules.

Warrants will be issued over 14,407,803 new Ordinary Shares pursuant to the Fundraise, and, in aggregate, 19,338,759 Warrants will be in issue following Admission.

Nick Tulloch, Chief Executive Officer and Founder of Voyager, said: “Investors might understandably be surprised by our decision to restructure our business as a helium producer but, although the change may seem sudden, it is the product of a considered plan.  Eric Boyle and I have known Paul Mendell, founder of M3 Helium, for many years.  We worked together at Highlands Natural Resources and Paul was one of Voyager’s first directors.  Prior to founding Voyager, we looked at a different helium opportunity in Kansas together – it was not suitable for a number of reasons; Eric and I went on to lead Voyager and Paul continued to develop other opportunities. 

“In the past two years, it is apparent that investors have developed a degree of caution around cannabis and CBD companies. The sector has been beset by disappointments and share prices, including our own, have underperformed.  Conversely, helium opportunities have become highly popular as evidenced by the success of recent fundraisings, again including our own.  We may reflect that it is ironic that we are switching horses just as our CBD business reaches new levels of success but we have a responsibility to our shareholders to act in their best interests.  A health & wellness manufacturer and e-commerce business like Voyager may be better suited as a private company or being part of a larger entity whereas our public company can support a fast-growing natural resources opportunity.

“M3 Helium offers several significant benefits.  With proven geology in one of the US’s most recognised resources postcodes, the company is already producing helium and, even more importantly, has access to infrastructure to transport, process and bring it to market.  As a result, we have a modular investment plan.  M3 has established its production credentials and we know the likely cost of new wells.  We can apply funding raised to develop and extend M3’s asset base with the clear goal of accelerating and increasing helium production.  

“The option structure announced today gives the two companies the ability to work together on further investments in Kansas whilst we complete the admission document and conclude the acquisition.  As the coming months unfold, I can assure shareholders that, following on from this successful fundraising, they can look forward to further newsflow as we continue our production roll out in Kansas.”

This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

ENDS

Enquiries:

Notes to Editors:

About Voyager’s health and wellness division

Voyager was founded in 2020 and is based in Perth, Scotland.  The Company’s primary objective is the formulation, manufacture and supply of high quality CBD and hemp seed oil products although it also produces several other complementary products, the majority of which are manufactured from the hemp plant.  Its product categories include a pet range which has rapidly developed into one of the Company’s best sellers.   The Company sells online, through third party stores and in its own stores which are located in St Andrews, Edinburgh and Dundee.  The Company has three principal retail brands: Voyager, focused on health & wellness and petcare; Ascend Skincare, its beauty range; and Amphora, with 23 products validated on the FSA’s novel foods list and a range of vapes.  Voyager products are currently available from Cornwall to Shetland in online and brick-and-mortar outlets.

The Company’s philosophy of plant-based health and wellness is embodied in its mission statement and hashtag of “Choose you”. With an experienced team and a product line created in line with the UK’s regulatory regime, Voyager aims to become the trusted brand in this increasingly popular health and wellness space.

Through Voyager’s bespoke skincare product creation and development division, VoyagerCann, the Company also offers a full turnkey service to other CBD, skincare and cosmetics brands assisting them in developing and launching new products with a manufacturing and distribution facility in Scotland.

Website and social media links:

Voyager:

https://voyagercbd.com/

https://www.instagram.com/voyagercbd/

https://twitter.com/voyagercbd

https://www.linkedin.com/company/voyager-cbd/

https://www.facebook.com/voyagercbd/

voyagerCann:

https://voyagercann.com/

https://www.instagram.com/voyagercann/

https://twitter.com/voyagercann/

https://www.linkedin.com/company/voyagercann/

https://www.facebook.com/voyagercann/

Amphora: https://www.infusedamphora.com/

FORWARD LOOKING STATEMENTS

This announcement includes “forward-looking statements” which include all statements other than statements of historical facts, including, without limitation, those regarding the Company’s financial position, business strategy, plans and objectives of management for future operations, or any statements preceded by, followed by or that include the words “targets”, “believes”, “expects”, “aims”, “intends”, “will”, “may”, “anticipates”, “would”, “could” or “similar” expressions or negatives thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company’s control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this announcement. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based unless required to do so by applicable law.