Executive Summary

In this report, we review Renergen’s FY25 results for the period ending 28 February 2025, released on 19 May 2025, as well as the offer by ASP Isotopes Inc to purchase all the outstanding shares of Renergen.

Financials:

·       Revenue improved by 80%, from R29 million in FY24 to R52.1 million in FY25. The increase was driven by improved production and higher LNG prices.

·        Cost of sales rose by R61.3 million to R80.2 million, mainly due the following:

o   Depreciation increased by R32.7 million.

o   Fuel and lubrication costs rose by R9.7 million, due to a larger asset base leading to increased machine hours.

o   Utility costs increased by R14.7 million, impacted by increased machine hours and the commissioning of the LHe production plant.

·     A gross loss of R28.1 million was recorded for FY25 compared to a gross profit of R10.1 million in FY24.

·  Other operating expenses also weighed on profitability, rising by 34% from R146.9 million to R196.8 million.

·    The interest expense and imputed interest surged to R81.1 million in the current year, from R22.7 million in FY24, due to a reduction in the capitalisation rate of borrowing costs relating to assets under construction. The capitalisation rate for borrowing costs declined from 79% to 19% during FY25.

·     A net loss for the year of R246.9 million was recorded, an increase of 125% from R109.8 million from the loss in FY24.

Production and prices received:

·        LNG sales volumes totalled 4 633 tonnes, a 74% increase when compared to 2 660 tonnes in FY24.

·        Average LNG sales prices rose by 3.7%, from R217/gigajoule to R225/gigajoule.

Analyst thesis

Renergen possesses valuable and unique assets, including a high helium concentration relative to its peers and ambitious growth plans. However, operational challenges have led to Renergen, at times, not being able to capitalise on higher gas prices. As a capital-intensive business, Renergen’s future growth depends on costly exploration, which must be financed through either additional debt, placing further pressure on the balance sheet, costs, and debt covenants, or equity issuance. The latter is particularly unattractive given the current low share price, which would lead to significant dilution to raise the required capital. Additionally, there is a going concern risk, though this may ease as the company ramps up to nameplate capacity and performance improves over time.