Three strange JSE-listed companies with big similarities

Renergen, Cilo Cybin, and Copper 360 have many things in common that South African investors should consider.

The first two, Renergen and Cilo Cybin, are in different industries – mining and cannabis – but they share many similarities.

Both were listed as special purpose acquisition companies (SPACs) on the JSE. A SPAC raises capital through an initial public offering with the aim of acquiring an existing operating company.

Renergen was listed as a SPAC on the AltX exchange, meaning it was a shell company seeking to acquire renewable energy assets.

Stefano Marani was appointed as the chief executive of Renergen and was also the founder and director of Windfall Energy.

Windfall Energy Acquired the Virginia Gas Project (VGP) from Molopo Energy for $1 and a 36% profit share agreement capped at R50 million.

Before Windfall Energy bought the VGP from Molopo, Molopo incurred a more than $20 million loss from exploration on the project.

Marani, through Windfall Energy, then sold the VGP to Renergen for R655 million. The compensation was paid using 70 million Renergen shares and R5 million cash. 

Similarly, Cilo Cybin Holdings (CCC) was listed on the JSE as a SPAC, with Gabriel Theron as its founder and CEO.

The goal of the SPAC is to identify and invest in Biotech, Biohacking or Pharmaceutical companies.

CCC first identified a company: Cilo Cybin Pharmaceuticals (CCP), founded and led by Theron.

CCP is the SPAC’s only real target company, and since the SPAC was listed, none of CCP’s financials were shared with the public.

Therefore, both Renergen and Cilo Cybin were listed as SPACs and then acquired the company owned by the SPAC’s founder.

Renergen and Copper 360

Copper 360 was listed on the JSE as the only South African primary producer of copper through environmental clean-up.

The company identified copper deposits in the Springbok area of the Northern Cape at mines abandoned by other large copper producers.

Copper 360 stated that most of the copper ore deposits on its fields had been pre-developed by previous mining companies before the copper price slump in 1994.

Copper 360 stated that the mines were abandoned after 2003 because copper prices were too low to extract profitably.

Therefore, the company said that most of its copper deposits are near or at the surface, and at least one-third of its copper deposits are on the surface and require no mining.

Copper 360 explained that it requires very low extraction costs as so much copper is lying on the surface, waiting to be refined.

This is similar to Renergen, which has created a lot of excitement about its helium and natural gas resources.

Renergen stated that the VGP’s previous owner, Molopo Energy, completely missed the presence of helium gas throughout its exploration of the Virginia gas field.

When Renergen started testing for helium, it found concentrations over 11%, which is unheard of globally.

However, despite these seemingly amazing resources, neither Renergen nor Copper 360 have shown they could profitably extract them.

The companies have not reported profits from their operations or resource production anywhere near what they promised investors.

Renergen said it would produce 52 tonnes of liquid natural gas (LNG) daily and 350 kg of helium daily by 2020.

Renergen is four years behind schedule, producing only around 13 tonnes of LNG per day and no helium at significant losses. It reported a R70 million net loss over the last six months.

Similarly, Copper 360 told investors in its pre-listing statement in April 2023 that it was already producing 400 tonnes of copper per year.

It told investors that by March 2023, its cathode plant would produce 100 tonnes of copper per month.

It also told investors its copper concentrate processing facility would produce 600 tonnes of copper metal by November 2023.

For its 2024 financial year, investors were expecting between 3,000 and 4,000 tonnes of copper to be produced.

However, Copper 360 only produced 313 tonnes of copper for the entire year. This fell far short of targets.

Copper 360’s pre-listing statement indicated that the company would generate R463 million in revenue for the February 2024 financial year.

However, its financial results showed that it only generated R32 million in revenue and made an operating loss of R98 million.

The same share price fate

The three companies’ share prices followed a similar pattern. They shot up after listing amidst the hype but then declined to all-time lows.

Renergen peaked at a share price of over R40 per share in 2022. However, due to its lack of performance, its share price plummeted to below R9 a share.

Cilo Cybin had momentary hype on the day it listed but immediately started losing value. It is currently at R3.20 per share, much lower than the R4.10 it was listed at.

Copper 360 share price rocketed to over R12 per share after listing but plummeted on the back of poor performance to just over R3 a share.