Renergen, the JSE-listed helium and natural gas producer which has been at the centre of a social media storm, says its strategy remains unchanged despite challenges that have resulted in delays in its gas project in Virginia in the Free State.
The Renergen share price took a knock after shareholder activist Albie Cilliers took a swipe at the company on X earlier this month, saying major founders and insiders had sold shares in the company in the past two to three years while hyping up its prospects and using paid-for analysts to promote the stock.
CEO Stefano Marani told Business Times this week the company was on course to become a leader in helium and liquefied natural gas (LNG) production.
“The fact is, we have a project to build and we will continue to achieve the milestones we are working towards. That is essentially the single-minded focus we have at the moment, to complete the commissioning of phase 1 and then ensure phase 2 is in construction phase and commissioned on time.”
Renergen, through its subsidiary Tetra4, became South Africa’s first onshore petroleum production right holder when it acquired rights for the Virginia project from Molopo Energy in 2013, ahead of its 2015 listing.
The company planned to roll out between 12 and 18 LNG filling stations for trucks, aiming to switch to a cheaper alternative to diesel. Marani said the rollout of the filling stations was tied to the commissioning of phase 2, the original data of which was delayed due to the impact of Covid-19 on phase 1 construction.
“We still intend to roll out the filling stations in line with the phase 2 commissioning and our plan is to have the filling stations join up all the major highways between Johannesburg, Durban, Cape Town and Port Elizabeth (Gqeberha). The current timetable looks like we will have phase 2 in commissioning at the end of 2026 and in operation during 2027.
They have looked at the project and have realised its potential, and [that it] makes for a compelling case. They are willing to back and invest in it. That should lend more credibility than a few comments here and there on social media
— Stefano Marani, Renergen CEO
“Just as we started construction of phase 1, the Covid-19 lockdown kicked in. That cost us a considerable amount of time. After Covid there was a crisis in the shipping industry, which meant we had several months where a lot of our equipment was sitting on docks in Shanghai waiting to be shipped. We just could not get the equipment shipped out.
“The final delays related to the commissioning. The discovery of leaks in December 2022 and then the leak in the helium cold box was announced more recently. That resulted in further delays of phase 1 completion,” Marani said.
In its June 2023 report, Renergen announced it had identified a leak in the vacuum circuit, which is being repaired. In December 2022 there was a leak in the vacuum walls of pipes of the helium system. These have been fixed.
However, Cilliers said the market only has Renergen's word that it has produced liquid helium in the cold box.
Responding, Renergen said it would assess the statements and consider steps to protect shareholders.
The share price recovered from last week's fall after the company addressed Cilliers's concerns and said its fundamentals remained strong.
The price is up 6.87% over the last week, but is still 51% lower than a year ago.
Cilliers told Business Times he took exception to what appeared to be a staged PR show or misrepresentation of Renergen's liquid helium production.
Marani said the company's business case was solid as two major financial institutions, a US government agency and Standard Bank came to the table with thorough due diligences, which included independent technical experts. He said the company's plan for an IPO in the US would continue.
“They have looked at the project and have realised its potential, and [that it] makes for a compelling case. They are willing to back and invest in it. That should lend more credibility than a few comments here and there on social media.”
In February Renergen said it received approval for $500m (about R9.5bn) in senior debt funding from the US's International Development Finance Corporation and a further $250m debt facility from Standard Bank.
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