Natural gas and helium producer Renergen has made the long-awaited first commercial sales of liquid helium from its Virginia Gas Project, sending the shares soaring.
The company had planned to start helium production in 2016, with commercial sales to follow by 2018. However, these and several other deadlines were missed as a result of technical issues and operational setbacks, including a leak in a helium cold box discovered in mid-2023, which halted production.
In a statement on Friday the company said it is now using smaller Dewar containers for liquid helium storage, enabling it to commence commercial sales.
The shares leapt just over 37% to R7 after the announcement. They lost more than 55% of their value during 2024 as the production delays weighed on performance.
The share price reached a record high of R43.90 in late March 2022.
Renergen bought the Virginia Gas Project, located in the Free State, in 2015. The project is SA’s first onshore natural gas exploration and production project, focusing on liquefied natural gas (LNG) and liquid helium production. The project started producing LNG in November 2022 and achieved initial helium liquefaction in January 2023.
In addition to operational challenges, the company has been grappling with environmental and legal challenges, a cash shortfall, and is scrambling to stay afloat and regain investor confidence.
The company’s latest financial results, for the six months to end-August 2024, show revenue increasing 7.7% but costs surging 90%, leading to a steep drop in gross profit to R882,000. The company’s operating loss increased to R65m.
Renergen said the losses were primarily due to reduced production time for helium and LNG after annual maintenance at Virginia.
The company said it will now focus on increasing production and developing the project further. Phase 1 targets producing 350kg of liquid helium and 2,700 gigajoules of LNG a day. Phase 2 is expected to increase daily output to production to 5,000kg of helium and 24,000 gigajoules of LNG.
Renergen CEO Stefano Marani told the Financial Mail the company is implementing a multistep funding strategy, including an initial public offering on Nasdaq, underwritten by Standard Bank.
“We have got to go through some regulatory processes with the SEC [Securities & Exchange Commission], but we have other irons in the fire that we are looking at. It is premature to divulge too much,” he said.
Helium has became a sought-after commodity, with a 2024 report by market research firm IDTechEx indicating global demand is expected to almost double in 10 years.
LNG, though criticised by enviroinmental activists, is an important energy source in the global transition away from coal.
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