Renergen, owner of South Africa’s only onshore liquid natural gas (LNG) and helium facility and which is working on a Nasdaq listing, said yesterday its interim loss had increased by 55.2% to R67.5 million from a loss of R43.5m previously.
The results for the owner the Virginia Gas Project (VGP) showed that its revenue increased 7.6% to R25.6m in the six months to end-August. The interim loss is more than double its six month revenue, but Renergen is at an early stage of its life, as helium production only started this year, while LNG production started last year.
Also, a planned $1.2 billion Phase 2 expansion aims to significantly lift helium and LNG production – progress was being made for environmental authorisation on Phase 2.
The interim loss per share increased by 52.89% to a loss of R0.4573 per share from a loss of R0.2991 per share in the prior period. No dividend was declared.
Net tangible asset value per share increased 52.1% to 830.88 cents reflecting advancement of the construction of Phase 1 and early stage development of Phase 2, an increase in deferred taxation and the transfer of exploration and development costs due to the commercial viability of extraction of LNG being demonstrable.
During the six month period, the company took ownership of the helium facility from the original equipment supplier that built it, and produced 2 388 tons of LNG.
Due to the extended annual maintenance from the prior year, the LNG plant only resumed operation in February 2023 and combined with the commissioning activities during June and July 2023, overall LNG production during first half was “relatively unchanged” relative to the prior comparative period at 2 388 tons.
The LNG plant was operating at about 35% nameplate capacity.
On the delays in ramping up helium production, Renergen’s management said: “We acknowledge it has taken longer than initially planned to reach this step, but ensuring safe operation of the plant remains a key priority. The company is now focused on ensuring reliable and stable operations while it continues to ramp up the facility towards name-plate production.”
On the development of Phase 2 of the helium project, the company has completed the feasibility studies and front-end engineering, appointed an engineer, and has obtained environmental usage registration for the Phase 2 expansion project.
Tetra4, a subsidiary and operator of the VGP, has begun the bidding procurement processes to appoint the primary contractors for drilling and exploration, gas gathering pipelines (both fixed and variable scope), the Liquid Natural Gas/Liquid Helium process plant including balance of plant, and the overhead line and substation connection.
Phase 2 total project costs were estimated at $1.2bn. Phase 2 was expected to produce 684 tons of LNG per day and 4.2 tons of helium per day.
Several take-or-pay agreements had been concluded with global industrial companies for just over 50% of the anticipated Phase 2 helium production. The balance was earmarked for sales in the international spot markets.
The subscription for the second tranche of Renergen debentures amounting to $4 million was concluded during the six months.
The R303m Standard Bank South Africa (SBSA) bridge loan facility was settled and a new R155m secured loan facility was acquired from SBSA.
Legacy 2D and 3D seismic data was reinterpreted, which provided information for the migration of gas at depth, as well as signals for “significant gas accumulations” at various time and depth slices, the company said in the results.
Looking ahead, key priorities were to deliver the first container of liquid helium to the customer, completing the Nasdaq IPO, and progressing construction of Phase 2 of the VGP.
Other priorities were the appointment of the Phase 2 plant contractor, and ramping up LNG and helium production and increasing efficiency and reliability of operations, Renergen’s directors said.
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