Virginia gas project, South Africa

8th November 2019

By: Sheila Barradas

Creamer Media Research Coordinator & Senior Deputy Editor

     

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Name of the Project
Virginia gas project.

Location
The project spans 187 000 ha of gasfields across Welkom, Virginia and Theunissen, in the Free State, South Africa.

Project Owner/s
Tetra4, a subsidiary of Renergen.

Project Description
The project entails the construction of a 52 km gas-gathering pipeline and cryogenic liquefaction processing facilities.

The aim is to produce all South Africa’s helium requirements and potentially export the balance of production, as well as produce the first liquefied natural gas (LNG) locally available for commercial consumption.

Based on Renergen’s five-year production mark, it is feasible that the company can produce between 1 000 kg/d and 1 500 kg/d of helium, which could increase to about 5 000 kg/d, should it have the option of tapping into the contingent reserves.

Additionally, Renergen will produce, concurrently, up to 10 000 GJ/d of LNG upon reaching full production. This amount of energy is equivalent to 277 000 ℓ/d of diesel.

Should production be maintained, the production right has a remaining life span of about 23 years.

Potential Job Creation
Despite the project’s size relative to traditional mining operations, it will create an estimated 360 temporary jobs during development and construction, and an estimated 82 permanent jobs once all the clusters have been developed.

Capital Expenditure
The total projected capital expenditure to roll out the first phase of production is estimated at R500-million, which includes the cryogenic liquefiers.

Planned Start /End Date
Construction is still expected to start in the second half of 2019. The project is expected to reach commercial production by 2021.

Latest Developments
Renergen’s largest shareholder, Tamryn Investment Holdings, has agreed to sell up to 20-million of the 34-million shares it holds in Renergen to private company Notable Pioneer.

The call option expires on February 5, 2020.

Notable Pioneer is controlled by Hui Ye, who is the chairperson and president of the Beijing Chunhui Yuan Group, a private company with real estate, hotel, natural resources, education and entertainment interests.

Notable already holds a 7.058% interest in Renergen.

If Notable Pioneer exercises the call option in full, its shareholding in Renergen will increase to 24.81%, while Tamryn’s shareholding will reduce from 30.23% to 12.47%, based on Renergen’s current issued share capital.

The call option comprises two tranches of ten-million Renergen shares, with the first tranch to be acquired at a strike price of A$0.86 a share.

The remaining ten-million shares may be acquired at a 20% discount to the 30-day volume weighted average price of shares trading on the ASX.

The price of the call option is capped at A$1.20 per call option share and may not be less than A$0.86 a call option share.

Key Contracts and Suppliers
MHA Petroleum (helium reserve independent expert report) and VGI (owner’s engineer with regard to the engineering and procurement phase of the project).

Gas gathering work: EPCM Bonisana, a subsidiary of EPCM Holdings (EPC contractor).

Western Shell Cryogenic Equipment (contract to supply the technology and equipment for the plant).

On Budget and on Time?
Too early to state.

Contact Details for Project Information
Renergen, tel +27 10 045 6000, email info@renergen.co.za or investorrelations@renergen.co.za.

Edited by Creamer Media Reporter

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