Renergen shares surge on first helium sales agreement from Virginia project
DURBAN - RENERGEN'S share price rose by more than 8 percent on the JSE yesterday morning after the domestic producer of natural gas and helium announced its first helium sales agreement with a global acting, tier-one automotive supplier to diversify its customer base beyond wholesalers.
The share closed 3.7 percent higher at R28.
The group said the sales agreement was its first direct-to-customer helium deal, and for reasons of confidentiality it was unable to disclose its customer or the details of the agreement, but confirmed that the customer operated in the automotive sector.
Renergen chief executive Stefano Marani said the company was proud to announce its first helium sales agreement from the Virginia Gas Project.
“Importantly, this contract shows the viability of accessing helium directly from the refinery by customers and Renergen diversifying its customer base beyond wholesalers,” Marani said.
The landmark transaction would see a substantial volume of helium from Phase 2 placed directly to the customer and was one of the key contracts underpinning the development of Phase 2 of the Virginia Gas Project.
The share price climbed to a dayhigh of R29.38 a share in the morning, up from Friday's closing price of R27 after the deal was announced.
The stock has been bullish for the past 12 months, up by more than 133 percent compared with the same time last year when the share was trading at about R12.
Marani said what excited the team about this sales agreement was that, from 2024, if a customer purchased a German premium brand vehicle, the overwhelming probability was that Renergen's helium would be powering the airbags keeping the customer safe.
“It has been an excellent start to 2021, and Renergen will continue to focus on developing Virginia into a tier-one, globally significant liquefied natural gas and helium project,” he said.
Renergen also announced the completion of the fifth major milestone at the Virginia Gas Project on time at the beginning of the month, as the company worked towards commencement of production this year despite the challenging working environment as a result of the Covid-19 outbreak and its impact on global supply chains.
The group said it expected to report losses for the year to the end of February despite positive developments at its Virginia Gas Project.
In the trading update released at the end of last month, Renergen expected to report a headline loss of between 27.89 cents and 37.47c a share, although this was much lower than the loss of 47.92c a year earlier.
The group said last year's losses increased as a result of once-off costs incurred on the raising of debt funding with the US International Development Finance Corporation and equity funding at initial public offering on the Australian Stock Exchange.
Renergen's subsidiary, Tetra4, received a $40 million (R583m) loan facility for its Virginia Gas Project from the US International Development Finance Corporation in 2019.