Renergen inks deal with Argonon to potentially establish helium spot market
Renergen is collaborating with U.S. production group Argonon on the forward-sale of liquid helium worth $25 million. The helium will be used interchangeably as tokens on an exchange where investors can cash in on prices and supply. The South African energy and gas producer says its Virginia Gas project primes them for this new production deal. Stefano Marani, CEO of Renergen joins CNBC Africa for more.
Mon, 18 Oct 2021 15:44:17 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Renergen partners with Argonon in a $25 million deal to forward-sell liquid helium, using tokens on an exchange to create a visible spot market for the commodity.
- The collaboration aims to introduce transparency and democratize helium trading through blockchain technology, enabling investors to access a previously opaque commodity.
- CEO Stefano Marani emphasizes the benefits to shareholders of selling forward production, positioning Renergen for larger capital projects while avoiding equity dilution.
South African energy and gas producer Renergen recently announced a groundbreaking collaboration with U.S. production group Argonon in a deal worth $25 million. This strategic move entails the forward-sale of liquid helium, which will be used as tokens on an exchange, allowing investors to capitalize on prices and supply fluctuations. The partnership marks a significant step towards establishing a helium spot market, introducing transparency and visibility to a commodity previously lacking a standard price point. Stefano Marani, CEO of Renergen, shed light on the innovative transaction during a recent interview on CNBC Africa.
Marani explained that helium, being an opaque commodity with no transparent price, presented a unique opportunity for Renergen to leverage its position as a helium upstream producer. Through the sale of helium to Argonon, who will issue tokens using blockchain technology, Renergen aims to create a visible spot market where the true value of the commodity can be determined. These tokens can be traded on electronic or digital exchanges, democratizing access to helium trading and investment.
The CEO emphasized the transformative nature of the collaboration with Argonon, highlighting the innovative approach as a means to elevate Renergen as a thought leader in the industry. While Marani acknowledged the complexity of being a trailblazer in such transactions, he underscored the benefits to shareholders, noting that selling forward production would prevent equity dilution. This alternative funding mechanism positions Renergen to undertake larger capital projects like the phase two expansion without significantly impacting shareholders.
Addressing inquiries about the total funding required, Marani refrained from disclosing specific figures pending the finalization of reserve statements. However, he assured stakeholders that this information would be made public shortly, indicating that the company's financial plans were on track and nearing completion. The CEO's candor and strategic approach to fundraising underscore Renergen's commitment to sustainable growth and innovation in the helium market.
With Renergen's forward-looking strategy and pioneering collaboration with Argonon, the helium industry stands to witness a transformation in how the commodity is traded and valued. The establishment of a helium spot market opens doors for increased market visibility, liquidity, and investment opportunities. As Renergen continues to push the boundaries of traditional energy and gas production, stakeholders can anticipate further advancements and strategic partnerships that redefine the landscape of the helium market.