Share Code: REN – Market Cap: R3.9bn – PE: -108x – DY: 0.0%

Updates: Phase One now producing both LNG and helium

• Renergen’s Virginia Gas Project’s Phase One is now producing both LNG & helium, thus signifying the Group’s transition from a developer to a producer. While initial project delays &, later, some operational teething issues pushed this event out later than planned, the Group announced late last year the production of LNG &, mid-January 2023, announced the production of liquid helium. Importantly, this now means that:
  • Phase One will start generating cash flows,
  • This provides further evidence of the resource and management’s ability to execute on the resource, &
  • The combination of the above two further de-risk Phase Two.
• The Virginia Gas Project was awarded ‘Strategic Integrated Project’ status by the South African Government, & the Group completed a small capital raise, placing 4.4m shares at c.2464cps in early December 2023, bolstering its coffers.
• Finally, the Group announced plans to list on the Nasdaq as a build-up to the equity-leg of Phase Two’s capital raise.

Valuation: Either peers expensive or REN (very) cheap

• Working through global pure-play helium stocks we found that:
  • There are very few pure-play helium stocks and almost none of them are (or close to) producing anything,
  • Ignoring the two extremely speculative Tanzania-based resources, most helium reserves are lowly-proven & small, yet investors are willing to pay large multiples for them.
  • If Renergen’s reserve (which is proven and now producing) is valued on an equivalent basis, the stock would multiples of its current price. Hence, we believe, the Nasdaq listing…
• Ignoring peers & the huge relative value in the stock, we see Renergen’s fair value at c.6233cps (previously: 6700cps) and 12m TP c.7,347cps (previously: 8000cps).