Renergen General Discussion, page-811

Understandably the market did not take kindly to the share placement which dipped considerably in both Australia and SA and questions were asked about the timing when we are so close to the Phase 1 Helium switch-on. Being in SA, I was able to get hold of SM and pose a few questions. Here is a summary of the answers I received.

The massive cost of getting a plant up and running while there is little revenue coming in from production poses many tough challenges. RLT had to stand idle for 13 months due to Covid which severely drained the company’s resources and set back milestone targets. Even without Covid, to get a plant (which relatively speaking is massive) up and running and producing, requires ongoing funding which is critical. Debt funding has its limits because of the high cost of borrowing and it would be irresponsible for any company to allow its debt to reach unmanageable levels. Therefore equity funding through share placements will continue to be a necessary reality from time to time. The consequent dilutionary effect on the shares will inevitably dampen investor sentiment and cause the SP to dip, sometimes badly as has just happened.

However, until healthy revenues start being generated, shareholders will have to get used to the reality of share placements which will always catch investors (who are not institutional investors) off guard, which usually leaves a bad taste in their mouths and a venting of wrath towards management with accusations of sneaky stealth ambush. It needs to be mentioned that these share placements were authorized in June 2022 at the company’s AGM which ie there has been full transparency.

Stef agrees that the timing of the SP was extremely unfortunate and undesirable but the problem was the delay in the Helium switch-on (meant to happen in October) caused by the faulty oil heating conductor. Has this not happened then the capital raise would definitely have occurred after the switch-on by which time the SP would have been considerably higher. The problem was that the share placement had to be done before the institutional investors close their books, which is roundabout now, and they only reopen around mid-January. Stef said he know he was going to get truck-loads of hate mail yesterday and today, which of course he did get, but I could clearly discern that this bad timing was never his choice; he just left with no choice, but to do what was necessary for the best interests of the company (and the shareholders) - and bear the hard body blows that go with this kind of territory.

I personally know Stef to be a very open and forthright man of integrity, as well as a brilliant plant manager, and when I look at the scale and complexity of the plant and the magnificence of what has been achieved (just look at Zaraah’s illustrated posts above) and realize the potential for what lies ahead, that gives me the context and the perspective with which to view this capital raise. At the moment Renergen is trading on such a low base and so far below its true asset value, that a 10% dip (or more) in the SP, in a few months from now will not even be a minor blip on the radar.

I am no Renergen spin doctor, just an objective engineer with plant experience who can recognize an engineering masterpiece when I see it. So when I see investors express searing negative sentiments (which is understandable and I don’t judge anyone for this), and rain down unfair and undeserved body blows upon company management (who I trust implicitly and am in genuine awe of what they are achieving), I feel compelled to step in with my contribution and set the record straight (at least from my perspective).

The burning question, the answer to which will blow all tensions away, is when will the Helium start flowing? Stef cannot give an answer because he will be crucified if he gets it wrong, but after my chat with him today, I have a very strong sense that before the stroke of midnight on 31 Dec 2022, there will be a very good reason to say happy New Year !