Renergen said yesterday the US Development Finance Corporation’s (DFC) notification process for a $500 million (R9.4 billion) debt finance loan was now complete, a major milestone in getting Phase 2 of the group’s Virginia-based helium and natural gas project underway.
Only standard project finance conditions remain outstanding, similar to those of Phase 1.
‘’Right now, it is all about delivery. The team is fully committed, and the number of hurdles to cross are reducing every day,’’ CEO Stefano Marani said in a statement yesterday.
The share price increased 3.54% to R21.66 yesterday afternoon, but the price is well off the R36.30 it traded at a year ago on the same day.
The group said in a quarterly update that Standard Bank’s credit committee had also approved a $250m loan for Phase 2.
During the quarter, a LNG (liquid natural gas) off-take agreement had been secured with Timelink Cargo for Phase 1 off-take, with supply anticipated to start in the fourth quarter of the 2024 financial year.
LNG production at Renergen had increased 12.8% relative to the previous quarter, amounting to 823 tons.
The helium cold box commissioning was completed - a leak in the vacuum circuit, which was now under repair.
In addition, a new well, Morpheus, was drilled, producing 3.2% helium and flow of 70 000 standard cubic feet per day.
The Phase 2 funding had following several months of due diligence on site studying the Phase 1 construction, geological and market conditions for helium and LNG with the respective credit and board committees, which resulted in positive approvals to proceed with the cumulative loans of $750m.
“The final step in this process was for the US DFC to present the transaction to the US Congress, and following the stipulated notification period with no objections, the loans are now approved and subject to typical project finance conditions precedent which are not substantially different to the Phase 1 US DFC loan’s conditions precedent,” said Marani.
This represented a major step forward in de-risking Phase 2, he said. Phase 2 involves substantially increasing capacity for greater volumes of helium and LNG off-take.
The additional contract for the supply of LNG to a logistics operator, Timelink Cargo, had aligned with the vision to de-carbonise the logistics sector. Timelink intended to convert a significant portion of their trucking fleet to run on LNG.
Marani said that following the successful performance testing of the LNG train, the team was now much more familiar with the operations of the LNG system and had improved production by a further 12.8% relative to the previous quarter, producing 823 tons.
“We expect this trend to continue over time until the plant reaches full capacity early next calendar year,” he said.
Given the nature of the repair of the helium cold box, the recommencement of performance testing of the helium system was expected in October 2023.
BUSINESS REPORT