Our opinion on the current state of RENERGEN(REN)Renergen (REN) describes itself as an "...integrated alternative energy business..." which invests in renewable energy projects in Africa. The company listed on the JSE in June 2015 and has been losing money every year since. This is reflected in its falling share price.
Renergen is investing in liquified natural gas (LNG) and helium. The R125m rights issue was fully underwritten and enabled it to access a R218m loan facility. Its initial public offer (IPO) on the Australian Stock Exchange (ASX) was more than two times over-subscribed. It claims to have proven helium reserves of over 6bn cubic feet. On 18th May 2018, the US government identified helium as critical to national security, causing the price to rise by 135%.
On 7th June 2023, the company announced that it had received $750m in further funding from Standard Bank and the International Development Finance Corporation for its Virginia Gas project.
In its results for the six months to 31st August 2024, the company reported revenue of R25,6m, up from R23,8m, and a headline loss of 45,73c compared to a loss of 29,87c in the previous period. The company said the loss was "...broadly as a result of the reduction in gross profit contribution, higher operating costs1 (employee costs, depreciation and amortization, professional fees, insurance cost and repairs and maintenance expenses), higher interest expenses1, lower deferred tax credit, which were offset by a higher other operating income mainly consisting of foreign exchange gains and lower share-based payment expenses."
The share may be a speculative opportunity, but it is making losses and is very risky and volatile. We advised at least waiting for the share price to break up through its long-term downward trendline before investigating further, which happened on 14-3-25 when the company announced its first commercial sales of helium. The announcement caused the share price to jump.
We advise caution, at least in the short term.
