Renergen’s share price has seen a remarkable 10% surge to R15.50 following the release of its quarterly update for the period ending September 2023. The share’s recovery from a dip to R9 in October is notable, though it still lags behind its 12-month peak of over R31.

The setback in Renergen’s share value was primarily attributed to delays in the development and construction of its natural gas plant. This, coupled with a breakdown in the unit responsible for helium extraction, had investors on edge. However, the company has now reported that the problematic helium extraction unit has been successfully repaired and reinstated.

According to the update, the repaired helium extraction unit, specifically the helium cold box module, has undergone rigorous testing. The system, now leak-checked and purged of impurities, demonstrated efficient long-term production capabilities. The repair process involved injecting gaseous helium into the buffer tank, testing liquefaction capabilities, and ensuring stability.

“We are confident in the repair and are now looking to progress with final system integration so that commercial liquid helium production can commence,” stated Renergen’s management.

The company also strategically utilized the downtime in the helium production unit to advance routine annual maintenance of the natural gas process plant. While this led to a temporary drop in production for the quarter, Renergen anticipates stable production, including helium, in the coming year. The maintenance period was also used for system testing, process optimization, and implementing design improvements based on the first 12 months of LNG operations.

Renergen, in its transition from a developing and exploration company to an operational entity, has shared cash flow figures for the first nine months of 2023. However, interpreting these figures requires careful consideration due to the shift in accounting practices. The company is now treating all costs as operational expenses rather than capitalizing them as development costs.

Despite a reported increase in revenue from R1.2 million to R23.8 million in the six months to August, Renergen’s loss expanded to R43.5 million. This has raised speculation that the company may still post a significant loss in its annual results for the year ending February 2024.

Renergen’s key asset is its 100% shareholding in Tetra4, holding the first onshore petroleum production right in South Africa for natural gas. The company asserts that its natural gas reserves boast some of the world’s highest helium concentrations, and the gas itself is exceptionally pure, with over 90% methane content, simplifying the liquefaction process.

The quarterly update reveals the discovery of a new gas well during exploration, producing approximately 115,000 standard cubic feet of gas per day with a helium concentration of 3.3%. Renergen is actively continuing its exploration efforts, with seven additional boreholes underway, although none have reached the targeted depth at the time of the report.