Africa-Press – South-Africa. Shares of Renergen, a natural gas and helium producer, jumped almost 8% on Wednesday after it said it secured $750 million (~R14.3 billion) in debt funding for the construction of phase 2 of its Virginia Gas Project in the Free State.
The group said it had secured approval for $500 million senior debt funding from the United States International Development Finance Corporation (DFC) and a further $250 million debt facility from Standard Bank.
The DFC, an agency of the US government which funds developmental projects in other countries, previously provided Renergen with $40 million in funding for the construction of phase 1 of the project.
Liquefied natural gas (LNG) is viewed as a critical component of energy supply, while helium is also one of 35 mineral commodities identified by Washington as critical to its economic and national security.
Phase one of the Virginia project sees the production of about 350kg of helium and 50 tonnes of LNG per day. In phase two, this will ramp up to five tonnes of helium and 700 tonnes of LNG per day.
The loans are subject to a US Congressional notification – which is required in certain circumstances where the US department of defence awards a contract.
They are also subject to the raising of sufficient equity funding by way of a planned initial public offering (IPO) on the Nasdaq – as was announced by Renergen earlier this year – or other initiatives.
The lenders also want to approve a preferred engineering, procurement and construction contractor and preferred operations and maintenance contractor that demonstrates proven technical and financial capability for such a project.
“Having achieved this major milestone bears testament to the quality of the Virginia Gas Project and the impact it can have both locally and globally,’ said Stefano Marani, CEO of Renergen. “The many months of hard work are starting to lay the foundations for the Phase 2 plant, and we are excited to be working with our partners in the US, and to be welcoming our new South African partners, Standard Bank, on this exciting journey.”
Shares in Renergen closed almost 8% higher on Wednesday, valuing it at almost R3 billion on the JSE, but the shares have almost halved over the past one year. Click here for details about Renergen.
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