Mendell Helium plc Extends Warrant Expiry to December 2026 with New Mandatory Exercise Clause and Director Stake Safeguards

Warrant Extension Details and Affected Categories

Mendell Helium has restructured its warrant portfolio by extending exercise periods for three warrant tranches issued during separate fundraising rounds. The 4p 2025 Warrants, initially exercisable for one year from an unspecified admission date and set to expire on 26 June 2026, have been extended by six months to 26 December 2026. The 6p 2024 Warrants and Broker Warrants, originally exercisable for two years from June 2024 issuance and due to expire on 19 July 2026, have been extended by approximately five months to align with the common expiry date.

Overall, 25,955,553 warrants across these categories will now expire simultaneously on 26 December 2026 unless exercised earlier. The 4p 2025 Warrants comprise 10,647,750 instruments (3.1% of issued share capital), while the 6p 2024 Warrants and Broker Warrants total 14,407,803 and 900,000 instruments respectively (4.5% of issued capital). This extension offers warrant holders additional time to convert their positions if market conditions are favourable. Mendell Helium currently has 108,533,799 warrants outstanding across all categories, indicating considerable potential dilution within its capital structure.

Introduction of Mandatory Exercise Trigger for 4p 2025 Warrants at 7 Pence

A key condition of the extension is a new automatic exercise mechanism for the 4p 2025 Warrants. Should the ordinary share price close at or above 7 pence on a mid-market basis for ten consecutive trading days, warrant holders will be required to exercise their warrants into ordinary shares. This converts the warrants from optional to mandatory conversion instruments upon sustained share price appreciation, ensuring dilution at that price level.

The 7 pence trigger price represents a 75% premium over the 4 pence exercise price, activating only if the company’s valuation rises significantly. This provision aligns warrant holders’ interests with ordinary shareholders during periods of strong performance, preventing indefinite holding of valuable warrants. The 6p 2025 Warrants remain unchanged in terms of exercise conditions and expiry.

Director Holdings and Related Party Transaction Disclosure

CEO Nick Tulloch and Chairman Eric Boyle disclosed holdings of 1,735,283 and 416,666 respectively in the 6p 2024 Warrants. Both directors recused themselves from decisions on the extension of these warrants to avoid conflicts of interest. They hold no disclosed stakes in the 4p 2025 or Broker Warrants.

The transaction involving Tulloch and Boyle is classified as a "related party transaction" under AIM Rule 13. Independent directors Paul Mendell and John Brown reviewed the terms with Cairn Financial Advisers LLP and concluded the extension is "fair and reasonable" to shareholders, ensuring compliance with AIM governance standards.

Fundraising Background and Warrant Origins

The 4p 2025 and 6p 2025 Warrants stem from a A3515,000 gross fundraising announced on 23 June 2025, where investors received one 4p 2025 and one 6p 2025 Warrant for every two ordinary shares purchased at 1 pence each. The 4p Warrants originally had a one-year exercise window, expiring 26 June 2026, while the 6p Warrants had a three-year window.

The 6p 2024 Warrants and Broker Warrants originated from a A3864,468 gross fundraising on 27 June 2024, issued on the same ratio but with a two-year exercise period. Broker Warrants (900,000 units) were issued at a 3 pence exercise price to brokers facilitating the 2024 subscription, providing incentive compensation. A subsequent fundraising placed restrictions on warrant exercise, necessitating the extension to preserve economic value. The announcement does not detail these restrictions.

Helium Production and Rost 1-26 Well Performance

Mendell Helium operates helium assets in Kansas via M3 Helium, with the flagship Rost 1-26 well near Dodge City. The well contains 5.1% helium, confirmed by a drill stem test showing a maximum flow rate of approximately 2,900 Mcf per day.

Commercial production began in November 2025, with December 2025 flow rates at 250 Mcf per day. Using a helium price of $300 per Mcf, this equates to roughly $1.4 million in annual revenue. Supporting infrastructure includes disposal arrangements with the Brobee disposal well and gas treatment equipment for helium concentration. Two leased tube trailers facilitate deliveries to off-take customers.

Rost 2-26 Well Completion and Expansion Plans

M3 Helium is completing a second well, Rost 2-26, with no disclosed completion date or production forecast. The company holds leases allowing up to eight additional wells in Fort Dodge, offering significant expansion potential pending capital and market conditions.

A joint venture with Ritchie Exploration, Inc. targets recompletion of Schneweis Ventures 13A, a well with historical drill stem test flow exceeding 10,000 Mcf per day and a historic flow rate of 300 Mcf per day. This asset could materially increase production capacity, with costs and revenues shared between partners.

Hugoton Field Assets and Infrastructure Integration

M3 Helium also holds interests in five producing wells within the Hugoton gas field: Peyton, Smith, Nilson, Bearman, and Dimmitt. These wells benefit from proximity to gathering infrastructure and the Jayhawk gas processing plant, reducing capital costs for production scaling.

The Hugoton assets diversify the company’s geographic footprint and mitigate concentration risk. However, current production rates and revenue contributions from these wells are undisclosed.

Potential Dilution and Warrant Exercise Implications

The total 108,533,799 outstanding warrants represent a significant dilution potential. Exercising the 25,955,553 extended warrants would increase share count, diluting existing shareholders unless offset by capital actions.

The new mandatory exercise clause for 4p 2025 Warrants at 7 pence guarantees conversion if the share price sustains that level for ten days, affecting 10,647,750 warrants. Warrants below this threshold remain exercisable at holders’ discretion. The 6p 2024 and Broker Warrants lack automatic exercise provisions, with exercises expected only if market prices exceed strike prices near expiry. The extension allows time to assess operational progress, helium prices, and share price trends before exercise decisions.

Helium Market Dynamics and Revenue Assumptions

Mendell Helium’s valuation and cash flow depend heavily on helium market prices and industrial demand. The company references a helium price of $300 per Mcf for revenue calculations from Rost 1-26’s production. Helium is essential in sectors like semiconductors, MRI, aerospace, and welding, with prices influenced by global supply-demand and storage.

The announcement does not clarify if the $300 figure reflects spot, forward, or contract pricing, leaving revenue durability uncertain. Price declines would reduce asset value and revenue, while price increases could enhance returns. Helium market volatility introduces uncertainty to future financial outcomes and warrant exercise decisions through December 2026.

Regulatory Compliance and AIM Listing Considerations

Mendell Helium is listed on the London Stock Exchange’s AIM, which imposes specific governance standards, especially for related party transactions and inside information disclosure. The warrant extension announcement is designated as inside information under UK Market Abuse Regulation, underscoring its materiality.

Independent directors Paul Mendell and John Brown, with Cairn Financial Advisers LLP, provided a fairness opinion on the related party transaction involving Tulloch and Boyle, complying with AIM Rule 13. The announcement does not specify whether shareholder approval was sought or if the extension proceeded under delegated authority, a relevant point for shareholder engagement transparency.