This IM company review on Renergen may engender mixed views from readers. However, this will likely be the last IM comment on the alternative energy and helium counter given the offer made to acquire the business on May 20 by Nasdaq-listed ASP Isotopes.
Renergen has been a contentious stock, and to say it drew Marmite or Trump-like reactions would be an understatement. From its early days evaluating natural gas formations in the Free State, to discovering that the gas contained a meaningful percentage of helium, the exploration stock, listed on the JSE in 2015, took on a life of its own as commerciality of the prospect occurred in late 2020 into 2021.
The hope that an inland South African resource had significant quantities of natural gas that could be condensed into liquefied natural gas (LNG) alongside the extraction of the valuable helium gas element drove investor fervour. As the company invested in its feasibility production site, Virginia Phase 1 (VP1), and gave the market a slew of updates on its progress — now, in hindsight, overly optimistic given later technical challenges — investor zeal around the stock rose.
From R11 in January 2021, Renergen ran to a high of R43 by April 2022, though this was not without hype and volatility.
After a tumultuous ride, many investors will be glad to see an exit from the recent Renergen share price lows
But the helium balloon eventually popped in 2023. Persistent technical problems with the VP1 plant disrupted the production of LNG and helium, deflating investor and shareholder confidence. The share price reacted as production delays, corporate missives and the worsening financial performance of the company compounded the deteriorating confidence in VP1 and Renergen’s prospects.
Into 2024, as the delays intensified, there were growing concerns that Renergen would run out of money. Despite having validated commercial quantities of LNG and helium, both in high demand, Renergen was unable to exploit these resources. The talk was that the cart had been put before the horse with regard to building the processing plant, and that there were not enough wells to optimise gas extraction.
With a cash crunch, the stock crashed to a low of 300c by early March 2025. A respite came in mid-March when Renergen announced a much-delayed first commercial sale of liquid helium. The stock rallied nearly 300% but drifted back to 700c after its quarterly update, with the realisation that the company was running out of runway and something had to give.
Out of the blue, on May 20, ASP Isotopes made a firm offer to acquire Renergen with a scrip ratio of one new ASP for every 0.09196 Renergen. At the time of writing, with ASP trading at $10.27 a share and Renergen at R15.45, the paper offer is worth R16.59 a share but is dependent on the movement in the ASP share price and the rand.
What is ASP Isotopes? It’s an advanced materials company focused on developing and producing isotopes for a variety of industries. Its main operations in South Africa are derived from expertise spawned by the country’s nuclear and defence industry in the 1970s and 1980s. Rare periodic table isotopes are separated, with uses, for example, in cancer treatment, semiconductor manufacturing and nuclear fuels.
ASP believes combining its business with Renergen will provide a holistic global offering of rare elements and isotopes, hence its rationale for the transaction. Its current market value is $946m, or R16.6bn, vs R2.3bn for Renergen.
Year to date, the ASP share price has risen 108%, driven by commercialisation of some of its isotopes, especially within nuclear medicine and advanced semiconductor chips, and a nuclear power fuel partnership with Bill Gates on high-assay, low-enriched uranium, a crucial fuel for small-scale advanced nuclear reactors, alongside the Renergen bid.
After a tumultuous ride, many investors will be glad to see an exit from the recent Renergen share price lows. Many, conversely, will decry their losses given the rollercoaster share highs.
What was ultimately proven was that the gaseous reserve prospect and VP1 were viable, but not something Renergen was able to commercialise.
The writer owns shares in Renergen and will follow into ASP Isotopes
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