Renergen CEO provided misleading information about helium

Renergen CEO Stefano Marani claimed the company was filling customers’ tanks with liquid helium and generating revenue from it. However, its latest results show that this is not true.

On 12 August 2024, Marani told Zunaid Suleman from Benzinga All Access that the company reached a significant milestone in helium production.

He said Renergen was around a year behind schedule for turning on the helium. However, they had now done so.

“We have now finally managed to get the helium module on. We are producing liquid helium and putting it into our customers’ tanks,” he said.

Marani added that he was “really proud to say that we are deriving revenue from the helium as well”.

“That is the proof of concept essentially closed. That brings us in as the catalyst into the second phase,” he said.

The Renergen CEO said this was a special milestone, making them only one of a handful of liquid helium plants globally.

“South Africa is one of eight countries in the world that can produce liquid helium,” Marani said.

This sounds fantastic for South Africa and like something that should be celebrated. However, there is a problem.

Renergen’s latest reviewed interim consolidated financial statements for the six months ended 31 August 2024 contradict Marani’s claims.

The company said one of its key priorities is “delivering the first container of liquid helium to our customer”. This shows that it has not delivered any helium to customers.

It also stated that it incurred higher operating costs arising from the commissioning of the helium system “while not generating associated revenue”.

Renergen added that the group’s revenue is “solely derived from the sale of LNG (liquefied natural gas)”.

This shows that Renergen did not derive any revenue from liquid helium (LHe), as Marani claimed in the Benzinga All Access interview.

Daily Investor asked Renergen and Marani about the misleading statements regarding helium production, but the company did not respond by the deadline.

Why this is important to investors

Although the false claims may be dismissed as a technicality or the Renergen CEO mistakenly overstating their progress, it is important.

Considering its history, some analysts have questioned Renergen’s ability to profitably produce LHe at its Virginia plant.

Renergen’s primary asset is its Virginia Gas Project (VGP) in the Free State. The assets previously belonged to Molopo Energy, an Australian-based energy company.

Molopo Energy sold 100% of the VGP to Windfall Energy, owned by Renergen CEO Stefano Marani, for $1.

Molopo Energy determined that the VGP was uneconomic for development. Simply put, it thought it could not make money from it.

However, Marani said that a new geological exploration was conducted following the transaction, which proved Molopo Energy wrong.

He said the exploration revealed that the VGP had 80 BCF of methane reserves – much higher than the initial 17 BCF estimate.

They also discovered that the gas contained helium. The helium concentration was apparently so high that “many experts put the phone down on Marani in disbelief”.

Molopo Energy has reportedly completely missed this valuable resource. This is now Renergen’s biggest play.

With this new information, Marani’s Windfall Energy sold 90% of the VGP to Renergen for R655 million.

Some analysts raised concerns about the situation, questioning whether the project holds the promise Marani and Renergen claim it does.

Renergen can prove the sceptics wrong by showing it can profitably produce commercial LNG and LHe. However, to date, this has not happened.

Although the company produces commercial LNG, it is incurring huge losses in the process. To date, it has failed to prove the plant is commercially viable.

It has also failed to show that it can profitably produce and sell LHe, a cornerstone of the business.

Marani’s claims about producing LHe and generating revenue from it are, therefore, important, as this is what many investors are looking for.