Mining

PIC dumps Renergen shares

Renergen CEO Stefano Marani

The Public Investment Corporation (PIC) significantly decreased its stake in Renergen, which now amounts to 4.84% of the company’s total issued ordinary share capital.

In a SENS announcement released on Thursday, 12 July 2024, Renergen announced that the PIC had decreased its stake in the company by 1,173,327 shares.

Previously, the PIC’s stake in Renergen amounted to 5.118% in voting power with 8.32 million shares. It has now been reduced to 4.841% with 7.15 million shares.

In 2021, the PIC held a large stake in Renergen but reduced its holding to 9.88% of the company’s total issued share capital.

It acquired more shares in March 2023, which made its stake in the company 5.118%.

As of 10 July 2024, the PIC’s stake in Renergen amounts to 4.841%.

This announcement comes almost exactly one month after Renergen revealed that it had resumed liquid helium production after taking the necessary steps to ensure its cold box could operate efficiently on 11 July 2024.

On Monday, 6 May 2024, Renergen announced the successful production of helium at its Virginia Gas Project.

“Since 2 April 2024, the Original Equipment Manufacturer (OEM) has been cooling the helium cold box to the necessary temperature to liquefy helium in batches from its wells,” the company stated.

“The OEM is now working to ensure that the operating conditions are satisfactory to begin the performance test, at which point the helium train will enter continuous operation mode.”

Renergen CEO Stefano Marani mentioned that the OEM would complete the required checks and balances in the upcoming weeks before starting the performance test.

He also noted that all liquid helium produced is recoverable and will be used to fill tanks for customers.

On Tuesday, 11 June 2024, Renergen reported that it had completed the necessary actions, restarted the facility, and resumed liquid helium production as of 4 June 2024.

The liquid helium produced cools the remaining components of the helium train, such as tanks and pipes, to approximately -269 degrees Celsius.

“The OEM contractor must now demonstrate that they are operating the entire plant at the desired temperature, pressure, and production flow parameters,” the company said.

This step is essential before the contractor can start the final contractual obligation of completing a performance test.

“We acknowledge it has taken longer than originally planned to reach this step, but ensuring the safe operation of the plant is our main priority right now,” Marani said.

“The progress achieved to date places us among only a few companies globally to achieve this status.”

He added that investors should recognize that there are fewer than 20 helium production facilities worldwide, and Renergen will soon own and operate one of them.

The latest development appeared promising. However, it is not the first time investors have heard similar promises.

The promises began in May 2016, when Renergen announced a major deal with Afrox to source and supply liquid helium locally by 2018/19.

This deadline passed unmet. In August 2019, Renergen promised to produce 350 kg of liquid helium per day by 2021. Again, this did not materialise.

On 5 January 2023, Renergen reported producing its first liquid helium at the Virginia Gas Project and that all components of Phase 1 were operational.

Two months later, Renergen released a guidance note reaffirming that helium production was ongoing.

On 2 May 2023, the company stated that production was being optimised and integrated, aiming to reach 300 kg of helium per day within the 2023 financial year.

This was encouraging news for shareholders, who anticipated that Renergen would start to sell helium and generate revenue as promised.

However, this enthusiasm was short-lived. On 26 June 2023, Renergen reported a leak in the liquid helium cold box, stating that the OEM would fix the leak off-site.

Renergen expected the helium system to be ready for performance tests by October 2023.

Since then, there have been numerous announcements regarding progress with the cold box and the helium production system.

To date, the company has not sold any helium, and it remains unclear when this might change.

Therefore, the latest announcements regarding helium production should be viewed in the context of previous events.

So far, Renergen has not demonstrated that it can profitably produce and sell liquid helium (LHe) at its Virginia Gas Project – the most crucial measure of Renergen’s progress.

Until its financial statements reflect this, investors will remain sceptical about Renergen’s prospects.

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