Helium producer Renergen has assured shareholders it is not in business rescue talks, despite mounting financial pressures and a huge drop in its share price.
The group is grappling with operational inefficiencies, environmental and legal challenges, a cash shortfall and is scrambling to stay afloat and regain investor confidence.
Renergen’s financial woes were illustrated by a sustained drop in its share price throughout 2024, culminating in a record low of R4.55 per share at the close of trading on Friday. With its market capitalisation now at just R672m, Renergen’s shares have plummeted 65.79% over the past year and 86.59% over the past three years.
In a Sens announcement on Friday, Renergen clarified that its Phase 1 plant is operational, producing liquefied natural gas (LNG) and liquefying pure helium sourced from its wells. However, delays in helium production have been a key factor in the company’s financial struggles. Renergen acknowledged that while the plant is functioning below its nameplate capacity, efforts to ramp up production through the drilling of additional wells are under way.
Renergen’s helium production has faced significant setbacks. The cooling of the helium ISO-container, a critical component in the liquefaction process, is progressing slower than expected. The company attributes this delay to the facility’s operating capacity and the inherent inefficiencies of small-scale liquefaction. Renergen said it is working on improving efficiency, with hopes of reaching nameplate capacity in the near future.
“The reason for an extended cool-down of this container is that our facility is currently operating below nameplate capacity. The efficiency will be improved through the additional drilling of wells to feed the facility and reach nameplate capacity, at which point we overcome the physics constraints and inefficiencies of small-scale liquefaction,” it said.
“At present, we entrain approximately 75kg per day of helium into the system and will increase towards nameplate as additional wells are tied in and operating efficiency is gained.”
The group said it produces liquid helium with a purity of at least 99.999%, verified by independent laboratories, including the SA Nuclear Energy Corporation and Air Products. The helium expert overseeing operations, according to Renergen, has confirmed that the cooling process for the ambient container is normal, though they would prefer filling a cold container given the existing production capacity.
Efforts are under way to expand the number of wells feeding the plant to reach the Phase 1 production capacity, with discussions progressing well for further expansion into Phase 2, the group said.
“The company is engaging with various parties to increase the number of wells feeding the plant, to get the Phase 1 plant to nameplate. These discussions are progressing well, with suppliers looking to entrench themselves further into the business with Phase 2 in mind.”
Renergen’s operational setbacks extend beyond production. The company is embroiled in multiple legal and environmental disputes, including objections to its Tetra4 project’s water and waste management plan and a failed attempt to halt the construction of the Springbok Solar project. These challenges have raised questions about the company’s ability to deliver on its long-promised helium and LNG projects.
Despite these difficulties, Renergen has urged shareholders to base their investment decisions on formal company communications rather than speculation. While the company faces hurdles it remains committed to achieving its production targets and addressing its financial challenges, it said.
“As mentioned in the quarterly announcement released on December 31 2024, the company has the ability to draw down on funding to the extent required. Shareholders are advised that the company has not entered any business rescue discussions,” it said.
“Renergen cautions shareholders against making investment decisions based on speculation and should rather base their decisions on formal communication from the company.”
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