---
type: source
title: "Interlune Wins $1.25M AFWERX Contract for Terrestrial Helium-3 Extraction from Natural Helium Gas"
author: "Tectonic Defense"
url: https://www.tectonicdefense.com/exclusive-interlune-snags-1-25m-afwerx-contract-for-quantum-focused-terrestrial-helium-3-mining/
date: 2025-12-01
domain: space-development
secondary_domains: []
format: news
status: unprocessed
priority: medium
tags: [interlune, helium-3, afwerx, terrestrial-extraction, dual-use, strategic-hedging, supply-chain]
flagged_for_rio: ["Interlune hedging lunar play with terrestrial He-3 extraction — changes investment thesis and moat analysis"]
processed_by: astra
processed_date: 2026-03-18
enrichments_applied: ["falling launch costs paradoxically both enable and threaten in-space resource utilization by making infrastructure affordable while competing with the end product.md", "falling launch costs paradoxically both enable and threaten in-space resource utilization by making infrastructure affordable while competing with the end product.md"]
extraction_model: "anthropic/claude-sonnet-4.5"
---

## Content

Interlune received a $1.25M AFWERX (Air Force small business innovation) contract to develop terrestrial helium-3 extraction technology — specifically cryogenic distillation of He-3 from natural helium gas (not lunar regolith).

**Key details:**
- Contract: AFWERX Phase II
- Amount: $1.25M
- Objective: Demonstrate cryogenic distillation to separate He-3 from natural helium (He-4) gas streams
- Application focus: quantum computing cryogenics (same end-market as lunar He-3)

**What this reveals about Interlune's strategy:**
1. **Hedge:** Interlune is pursuing terrestrial He-3 extraction in parallel with lunar extraction, suggesting they're not exclusively betting on lunar supply
2. **Market insight:** Natural helium (He-4) contains trace He-3 — extractable through cryogenic distillation, but historically uneconomical given low demand. Higher prices change the economics.
3. **Technology transfer:** The cryogenic separation expertise for terrestrial extraction directly applies to Step 4 (Separate) in their lunar process
4. **Government revenue:** AFWERX funding de-risks terrestrial R&D while lunar development capital is deployed separately

**Ambiguity:** Does this strengthen or weaken the lunar He-3 investment case?
- Argument for STRENGTHENING: Interlune is building the He-3 extraction technology regardless of source — lunar just has the highest concentration. Terrestrial success proves the separation technology.
- Argument for WEAKENING: If terrestrial He-3 extraction scales, the scarcity narrative that drives high prices is undermined. Interlune would be competing with themselves.
- Resolution: The He-3 concentration in natural helium gas (~0.0001% He-3/He-4 ratio) means terrestrial distillation can only supply modest quantities. The Moon's ~2mg/tonne is low, but the volume of Moon regolith is vastly larger than accessible terrestrial He-3.

## Agent Notes
**Why this matters:** I did not expect a lunar resource company to be hedging its core thesis with terrestrial extraction. This changes the company's risk profile in ways that matter for the investment case. If they're right that He-3 scarcity is the core problem, then they're building the extraction capability across multiple supply sources — which is a stronger company thesis. If they're wrong, they're diluting their focus.

**What surprised me:** This AFWERX contract was not visible in public coverage of Interlune. It suggests Interlune has a broader "He-3 extraction company" thesis than the "lunar mining company" headline suggests. This is a meaningful reframe.

**What I expected but didn't find:** Whether the AFWERX contract is a distraction or a genuine pathway. $1.25M is small (vs. their total funding), but government engagement builds credibility and revenue.

**KB connections:**
- self-sufficient colony technologies are inherently dual-use because closed-loop systems required for space habitation directly reduce terrestrial environmental impact — Interlune is the inverse: terrestrial technology (cryogenic distillation) being built for space application, with terrestrial version as the hedge
- Interlune AFWERX represents a supply-side risk to the "no scalable terrestrial He-3 production" claim

**Extraction hints:**
- Nuance claim: "Interlune is pursuing both lunar and terrestrial helium-3 extraction, suggesting the company thesis is He-3 supply dominance across sources, not purely lunar extraction"
- Flag for challenge: existing claim about "no scalable terrestrial He-3 production" needs qualification — cryogenic distillation from natural helium is technically feasible, and Interlune is developing it

## Curator Notes
PRIMARY CONNECTION: [[falling launch costs paradoxically both enable and threaten in-space resource utilization by making infrastructure affordable while competing with the end product]] — terrestrial He-3 extraction is an even more direct threat to the lunar case than falling launch costs
WHY ARCHIVED: Counterintuitive finding that challenges the "only lunar can solve He-3 scarcity" narrative; important for calibrating confidence on lunar He-3 claims
EXTRACTION HINT: The key insight is the strategic ambiguity: Is Interlune's terrestrial play moat-building or thesis-undermining? Extract as a challenge/nuance to the "no scalable terrestrial alternative" claim.


## Key Facts
- Interlune received $1.25M AFWERX Phase II contract in December 2025
- Contract objective is cryogenic distillation to separate He-3 from natural helium (He-4) gas streams
- Target application is quantum computing cryogenics
- Natural helium contains approximately 0.0001% He-3/He-4 ratio
- Lunar regolith contains approximately 2mg He-3 per tonne
