Renergen starts helium production as share price soars in tandem

Renergen starts helium production as share price soars in tandem

Renergen, operator of South Africa’s only onshore producer of LNG and helium at a site in Virginia in the Free State, said yesterday liquid helium had successfully been produced, an announcement that also significantly boosted their share price.

The project has been questioned by some in the retail investor community, who claim that the delays and other problems belie a project that is at its heart not likely to be commercially viable. Nonetheless, the group said yesterday that the successful production of the helium represented a “significant milestone” for the project.

In response, the share price – the share has been a favourite among retail investors – shot up 7.83% to R12.40 on the JSE by yesterday afternoon, although the price remains 31% below the R18 of a year ago, after investors hammered the price down due to project delays and other issues.

Smalltalkdaily Research analyst Anthony Clark said there had been a year’s delay in helium production due to equipment failure and other issues such as having to import new equipment, and considering that the project represents ground-breaking technology new to South Africa, that engineering-related delays were bound to have occurred, and that Renergen’s management had been too optimistic in earlier representations to shareholders.

Clark said, however, the production announcement was a big step in moving production from a manual to a fully automated process, just as LNG production was at present.

He said the independent verification of the helium production that Renergen had provided in the announcement was also significant, as it put paid to some detractors who questioned whether there would be helium production.

Albie Cilliers, a well-known shareholder activist wrote on “X” yesterday: “Unofficial Renergen spokesperson releasing current LNG production figures of only 19-20 ton/day, outside of a JSE SENS. Strange that he didn’t disclose too what verified % of their continuous gas stream is actually helium…”

S@MoonboyInvstr also commented on X: “Stock price won’t rise like a lot of people expect too, my guess 10-15% then stall… The market doesn’t trust Renergen anymore, they have to prove the results over a period of time. We’ve seen this before from them.”

@JasonduPreez13 commented: “I hope this is the beginning of a successful operational plant. Well done to the team and all the shareholders who stayed faithful with diamond hands. Those operating expenses can in a year or two be turned into money if the helium gets sold

Renergen’s CEO, Stefano Marani, said in a statement that “since April 2, 2024, the Original Equipment Manufacturer (OEM) has brought the helium cold box to the appropriate temperature in order to liquify helium in batches from its wells.

“Part of this process involved the purification of the helium to a level of 99.999% purity, which has been validated by an independent third party laboratory,” he said.

He said the OEM was now in the process of ensuring that operating conditions were satisfactory to commence the performance test, at which stage the helium train would be “put into continuous operation mode”.

To provide assurance that future shut downs and restarts would be smooth, the helium train would be taken off-line and the process would recommence from ambient conditions to ensure repeatability and that every process in the production cycle was documented and recorded with the OEM present.

“Importantly, LNG production has not ceased at any stage throughout the process and will continue to operate,” said Marani.

He said the OEM would complete any necessary checks and balances in the coming weeks before embarking on the performance test, however, “all liquid helium produced is recoverable and will be used to fill tanks for customers”.

Renergen is also pursuing a Nasdaq listing in the US.

BUSINESS REPORT