Emerging helium and natural gas company Renergen planned to list on Nasdaq this year, but this has not happened yet, meaning it cannot access the $750m (R14bn) in funding it previously announced.
Renergen owns Tetra4, the owner of a field in Virgina with natural gas and high concentrations of helium and SA’s first and only onshore petroleum production right.
The delayed $750m funding is for phase 2 of its project and earmarked to turn the gas producer into a profitable company and increase how much natural gas and helium it can extract from its Free State gas field by 2027.
The company’s $500m loan from the US International Development Finance Corporation (DFC) and $250m from Standard Bank, however, are contingent on the successful raising of $200m cash, most of which was to come from the US listing.
In terms of listing rules of the stock exchange in Australia, where Renergen has a primary listing, it had to list on Nasdaq within three months of a vote by Australian shareholders on the plans. The vote, on April 11, will need to be redone when it wants to list.
Renergen CEO Stef Marani said at the time it needed to raise capital in the US as investors there understand the natural gas and helium market better.
Marani told Business Day the listing will happen when the time is right and the “firm is comfortable” where it is as a business.
“We are fully committed to the listing, but subject to regulatory approvals and favourable market conditions. Guidance on timing will be provided when we are in a position to do so, but at this stage the listing is not on the critical path of the project — giving us flexibility to optimise the timing,” he said.
Renergen probably needs to list abroad at a better share price to raise enough capital. The share is trading at R14.40 on the JSE now, down more than 40% this year.
The company can also raise equity in private deals that would give it access to the $750m in guaranteed funding. Talks about another deal are continuing.
Marani said the loans from the DFC and Standard Bank remain in place, subject to conditions.
The mining small cap has been in the news since shareholder activist Albie Cilliers revealed extensive selling of shares by the company founders that had not been declared as they were not directors.
When those in the know sell most of their shares, it can signal problems in a company, and Renergen has certainly missed many targets.
It is still waiting for a promised R1bn investment in Tetra4 from the Central Energy Fund, with the due diligence on the investment completed in 2022.
The delay is probably not Renergen’s fault. The state-owned entity’s latest annual report from September 2022 shows it made a profit of only R62m that year. This suggests the fund may not have the resources to invest in the Virginia gas field.
Renergen is not short of cancelled plans. It signed an agreement in 2016 with Afrox, which is owned by the multinational gas and chemical company Linde, to operate its gas and helium field that did not come to fruition. Afrox said at the time: “The helium plant will be designed and delivered by Linde Engineering and is expected to commence operations in 2018/19.”
In 2020, it had plans to power buses with natural gas instead of petrol in a deal with the Industrial Development Corporation.
You have misinterpreted past events and relationships.
— Stef Marani, Renergen CEO
Canadian miner Ivanhoe was interested in buying a majority stake in the firm, but that deal was put on hold in July 2022.
Marani said Business Day’s interpretation of mounting failed plans is “not accurate”.
“You have misinterpreted past events and relationships.”
Renergen and Ivanhoe mutually agreed to walk away from the deal, he said.
Renergen supplies liquid natural gas to bathroom and ceramics retailer Italtile and to glass manufacturer Ardagh Group (formerly Consol).
Sproule, a global energy consulting and advisory firm, has verified large concentrations of helium and liquid natural gas at the Virginia site and Standard Bank and DFC would have done due diligence on the site.
Renergen was supposed to be producing 300kg of helium a day by this month, but various leaks have put this development back by months, with hitches such as this not unheard of in large mining-style projects.
On Monday, website Daily Investor raised questions about why Renergen estimated it would sell helium for $600 per thousand cubic feet when it published its 2027 revenue targets for its phase 2 project.
Daily Investor notes that global helium prices have mostly stayed between $200 and $210 since 2016.
Marani said there needs to be a belief in the ability of small companies to grow economies.
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