Natural gas producer Renergen’s after-tax loss will narrow from R33.8m to R26.7m for the year to end-February, according to preliminary results issued as per Australian stock exchange requirements.
The group reported a gross profit of R4m for the year under review compared with a gross loss of R800,000 the year before. This was because of improved margins from its liquefied natural gas (LNG) operations, which began in September 2022.
Before that the company only sold compressed natural gas, which has significantly lower margins. There were no helium sales during the year under review as the helium module has yet to be fully commissioned.
Renergen subsidiary Tetra4 wholly owns the Virginia Gas Project in the Free State, which contains helium concentrations that are among the world’s highest. The company’s loss is attributed to it being in a development and exploration phase on some projects.
Renergen has plans to raise $750m so that it can achieve commercial operation of its Phase 2 project by 2026, which will expand gas and helium production. In order for it to get an attractive debt financing package for this phase it has a number of 10-15 year take-or-pay offtake agreements with several top-tier global industrial gas companies for just more than half of the expected liquid helium production.
The company’s share price has fallen about 28% so far in 2023 as the company embarks on its fundraising drives and awaits investment.
According to cash flow statements, released also according to Australian stock exchange rules, at the end of February it had R55m left for business expenses for the next quarter. Renergen holds a primary listing in Australia and a secondary one on the JSE.
The update revealed that Renergen made no profit from its Cryo-Vacc storage containers developed for the safe transport of Covid-19 vaccines, which needed to be kept at extremely cold temperatures. It has spent R15.6m on its cold storage project.
Renergen received much media attention in 2021, when it revealed it had developed the cold storage solution to store MRNA vaccines for up to 30 days without electricity. The unprofitable firm transported 1-million Pfizer Covid-19 vaccines as part of its corporate social investment.
The statement reads that it continues to work on the cold storage project as potential transportation for biologicals, gene therapy and other medicines that require very low temperatures.
“The cryovation business model is undergoing refinement and further development with insights from experts from various fields with the intention of exploring several modifications that will improve the overall concept to enhance its appeal for the more niche biologics and gene-therapy market internationally,” it reads.
The company attributed its higher gross profit and smaller loss to the sale of its first LNG.
Renergen’s share price fell the most in five weeks on Tuesday, down 3.25% to R17.55.
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