Scepticism about Renergen ’ s helium production
Natural gas producer Renergen said on Thursday that its liquefied natural gas (LNG) deliveries had resumed after a planned maintenance outage, but it gave no indication when helium production would start.
Renergen sells LNG to Italtile and Ardagh (formerly Consol Glass). Some investors lost interest in Renergen after it missed its targets to start producing at least 300kg of helium a day in 2021, before missing another target in July 2022.
Renergen ’ s share price is much lower than its peak of R43, reached just less than two years ago and is down more than 31% so far in 2024. The share price was 2.48% higher at R10.76 at close of trade on the JSE on Thursday, after jumping nearly 7% in midmorning trade.
Renergen said that it had produced helium briefly in January 2023, which was halted due to technical glitches, although it is not entirely clear if it did in fact produce the gas.
Renergen, headed by CEO Stefano Marani, who lives in the US, said it was paying attention to the helium system after the successful repair and testing of the helium cold box, which went offline in 2023.
The small-cap player said it was waiting for the original equipment manufacturer from China to arrive in SA after the end of Chinese new year celebrations.
“Once in the country, they will finalise the integration of the helium system into the overall plant and then undertake a final performance test to ensure the entire plant performs according to its original design,” the company said in a statement.
The company is increasingly drawing scepticism on social media as it has not shown it can produce gas and helium at reliable and consistent levels.
Mining projects are high risk with many delays. Investors want to see the company deliver on its promises. But some say delays are normal for a new energy development company.
Canadian miner Ivanhoe sold 20% of its 4.35% stake in the company between November and January.
LNG is seen as a possible alternative to diesel. It has a relatively low carbon footprint, while helium has a wide variety of applications, including being a critical ingredient in magnetic resonance imaging (MRI) scans used to diagnose patients with serious medical conditions.
Marani is drumming up financial support to push through phase 2 of its Virginia gas project. This phase is aimed at catapulting Renergen into a significant supplier of helium and LNG.
But it has been a battle to attract institutional investment backing, prompting the company to seek a third listing on the Nasdaq, where it believes the global helium market is better appreciated. It also has a listing in Australia.
The proposed Nasdaq listing of Renergen has been delayed since it was initially scheduled for 2023.
Renergen needs to raise $200m (R3.786bn) from the US listing or private investors as part of the conditions to access $750m in promised cash for further development of its reserves.