Renergen names helium-supply customer to satisfy ASX rules
Dual-listed resources explorer Renergen has named an Austriabased manufacturer as the customer in its first direct heliumsupply deal after pressure from the Australian Securities Exchange (ASX), which said the gas producer’s announcement on Monday did not give investors enough information.
The contract with iSi Automotive spans a decade. iSi Automotive, founded in 1995 focused on automotive industry requirements, says on its website that it is competent in the use of cooler gases in airbag systems.
Earlier on Tuesday, Renergen warned that trading would be halted on the ASX until it gave details on the agreement, after a request from regulators for additional information.
CEO Stefano Marani said Renergen was simply “caught in the crossfire” between two different regulatory regimes, and Renergen, which has a primary listing on the JSE, generally conformed with its rules regarding the release of price-sensitive information. Monday’s announcement conformed with JSE requirements, said Marani.
ASX rules state announcements should “contain sufficient detail for investors or their professional advisers to understand its ramifications and to assess its impact on the price or value of the entity’s securities.”
The ASX rules state the exchange would “generally expect” an announcement to contain information such as the name of the customer, the term of the contract and its significance.
Renergen holds SA’s only onshore petroleum right, the Virginia gas project in the Free State, which has extremely high concentrations of helium, which is used in a range of applications including medical devices, rockets, fibreoptic cables and cooling of nuclear power plants.
On Monday, the group described the deal as a “landmark transaction”, but did not name the counterparty citing confidentiality. It said that by 2024 if you buy a German premium brand car the chances are Renergen gas would be powering the airbags.
The deal would commence after completion of phase 2 of the project, estimated to be completed towards the end of 2023. The agreement is conditional on completion of a number of project development milestones, Renergen said, and either party may terminate due to a delay in the commencement date. Renergen also noted a media report in the Australian Financial Review saying that after clinching the deal Renergen was looking for a cash injection for construction purposes.
Renergen said it would require capital “in some form and at some stage” to commence construction of phase 2 of the project, “but is still in the process of considering options and completing feasibility studies.”
“The company has not formally engaged with investors, nor has it begun pricing guidance,” the statement reads.
Renergen is now developing phase 1 of its Virginia gas project, while phase 2 is expected to be a more substantial project.
Renergen said in January that it had appointed three contractors that would define the project’s financial parameters, expected to be concluded around the second quarter of 2021.
Renergen’s share price was down 4.61% at R26.71 on Tuesday.