JSE and ASX-listed emerging helium and natural gas producer Renergen has signed a retainer letter with the US International Development Finance Corporation (DFC) for a possible $500-million loan to finance the Phase 2 development of the company’s Virginia gas project, in the Free State province of South Africa.
DFC provided $40-million in financing for Phase 1 operations and is currently screening the proposal for Phase 2 financing.
Renergen says it is considering co-lenders alongside DFC, after receiving multiple letters of intent from additional lenders.
All lenders are in the process of reviewing Phase 2 information and will be conducting an on site inspection of the Phase 1 operations, as part of the necessary due diligence.
For Phase 2, Renergen plans to secure 65% debt funding, while equity funding will comprise the balance.
“We find ourselves in a strong position as we embark on turning on the Virginia gas project plant in coming weeks. The company has grown significantly in size and scale and, importantly, now has the ability to sculpt terms to suit our financing requirements,” comments CEO Stefano Marani.
The Virginia gas project spans 187 000 ha of gas fields across Welkom, Virginia and Theunissen, in the Free State. The full project entails the construction of a 52 km gas-gathering pipeline and cryogenic liquefication processing facilities.
Phase 1 is expected to produce 350 kg/d of helium and 50 t/d of liquefied natural gas, with Phase 2 earmarked to increase these numbers.
As of May 30, the Phase 1 plant was being commissioned.