The government’s Central Energy Fund (CEF) will invest R1 billion for a 10% stake in Tetra4, the Renergen-owned gas producer developing a massive project near Virginia in the Free State, estimated to be worth over R1 trillion.
Renergen announced on Monday that the parties had concluded a term sheet for the purchase following negotiations.
The CEF is a state-owned diversified energy company that reports to the Department of Mineral Resources and Energy.
Its investment mandate is focused on contributing to the energy security of South Africa through exploration, acquisition, development, marketing, and strategic partnerships.
Renergen CEO Stefano Marani said the investment results from long-term discussions between CEF and Renergen.
“During this time, the CEF team have been amazing to deal with, and I am very pleased to be able to welcome them as a major investor in our future,” said Marani. “Renergen and the CEF’s relationship goes back many years.”
“Importantly, during this time, Renergen has successfully grown Virginia in size and scale, highlighted by the growth both of our helium and methane reserves, which have finally reached the critical mass to enjoy CEF’s involvement.”
CEF CEO Dr Ishmael Poolo said the company’s participation was in line with being a “strategic investor” in the energy value chain to support the region’s energy needs.
“I, along with the Renergen Board and management team, look forward to building on the strong strategic partnership with CEF as we embark on Phase 1 operations in April and establishing Virginia as a significant domestic and global gas producer,” said Marani.
Renergen added that should binding contracts between the parties not be executed after 141 days, the purchase price shall be renegotiated in good faith.
The agreement with CEF follows Renergen’s announcement of a strategic partnership with Canadian company Ivanhoe Mines, owned by billionaire financier Robert Friedland.
The company will get a 4.35% stake in Renergen through the placement of around 5.6 million shares worth approximately R200.6 million. That funding will be used for Phase 2 of the project.
“To sign CEF and Ivanhoe Mines in the space of two weeks as major investors and strategic partners highlights the significant growth of the company and the critical role Virginia will play in the future supply of clean energy as well as in-demand helium,” said Marani.
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