Renergen share price tanks as investors lose trust in helium promises

Renergen’s share price halved over the last year as investors have lost trust in the company’s ability to deliver on its promises.

Renergen was listed on the Johannesburg Stock Exchange in June 2015. It promoted itself as a company that will focus on alternative energy solutions.

Its pre-listing statement said it would invest in renewable energy projects and outdated infrastructure projects that could be modernised.

Renergen bought 90% of the Virginia gas project from Windfall Energy in August 2015 for R650 million. Windfall bought the Virginia gas project from Molopo Energy for $1.

The transaction was settled by offering Windfall Energy, owned by Renergen CEO Stefano Marani, 70 million Renergen shares and R5 million cash.

The company’s share price remained flat for years. However, interest rapidly increased when Renergen announced that it had found high helium concentrations in its gas.

Renergen reported that they discovered helium concentrations of 11% in some cases, which makes it one of the largest discoveries globally.

In 2016, Renergen announced that it signed a deal with Afrox to supply it with helium. Commercial sales were set to commence in 2018.

In 2021, Renergen’s share price spiked after it announced many wells with helium concentrations over 1%.

The Share price peaked in 2022 after Renergen announced that phase 1 of the plant had been commissioned.

However, things started going backwards after Renergen failed to deliver on its lofty helium and LNG promises.

A defining moment was when a deal to sell up to 55% of Renergen to Ivanhoe Mines fell flat in July of 2022.

The deal between Renergen and Ivanhoe Mines did not proceed because the conditions of the strategic agreement could not be met.

The deal would potentially bring in $250,000,000 of equity funding to Virginia Gas Project. When it failed, it raised questions about the Virginia gas project.

Daily Investor asked Ivanhoe Mines why it decided not to proceed with the deal, but the company preferred not to answer.

Another problem for investors was that Renergen did not deliver on its promises regarding liquid natural gas (LNG) and helium production.

After commissioning phase 1 of the project, investors were eager to see Renergen commercially produce LNG and liquid helium (LHe).

Renergen told investors it would generate 52 tons of LNG and 400kg of helium per day from phase 1.

Renergen has not met its LNG targets. Its latest results reported between 8 and 9 tons of LNG production per day and an operating loss of R135 million.

More importantly, Renergen has failed to commercially produce and sell helium. Instead, it has provided investors with one excuse after the other.

Shareholders grew tired of the company’s excuses, and Renergen’s share price plummeted by over 75% since its peak.

The share is now trading at far lower levels than when Renergen listed on the JSE nine years ago.

Renergen’s broken promises and failed projects

Linde tanker at Renergen’s Virginia site. Source: Renergen

Five years after Renergen’s first deadline to commercially produce helium, it still has not sold any helium.

It has missed one deadline after the other, with excuses ranging from cooling equipment problems to the Chinese New Year delaying production.

The lack of commercial production and selling of helium is not the only project which has not produced the desired results.

Since Renergen was listed on the JSE, the company has been involved in numerous projects that have not produced value to shareholders.

  • Investment in Ivory Coast Hydro—Renergen and two other parties entered into an investment in a hydroelectric scheme in Ivory Coast, which was impaired in 2018 as there were no economic benefits.
  • Cryo-Vacc—In December 2020, Renergen developed a device that could safely transport vaccines. The device was constructed from aluminium and had a reservoir to fill with liquid helium to keep vaccines cold at -70 degrees Celsius. It is unclear what liquid helium Renergen used for the device, as it reported its first liquid helium production in January 2023.
  • Satellite AI gas exploration system—In an interview with Matador Investments, CEO Stefano Marani revealed that Renergen had developed a gas exploration system that uses satellite images and AI to predict where to drill for gas. Marani stated that since the system was implemented, Renergen drilling has hit gas reserves 100% of the time. However, Marani said this will never be an accepted geological tool for mainstream companies.
  • CNG – Stefano Marani said Renergen partnered with Total Energies to disrupt the diesel industry by offering liquid natural gas to trucks. He said they were in the process of rolling out this service at filling stations across the N3 between Johannesburg and Durban. There has been little updates on this project and it was officially ended in September 2022.
  • Argonon Helium Token – Renergen listed a helium token representing 1/1000th of a mcf of its phase 2 helium and can be physically redeemed once phase 2 starts production. Since it was listed the helium token has lost 65% of its value.

The delayed production and sale of helium and the long list of failed projects have caused many investors to lose trust in the company.

The share price reflects the trust deficit, which Renergen will need to rectify if it wants to win back investor confidence.