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There were two announcements released by Renergen yesterday. One was a formal financial report and the other was an excitement-filled update on progress at the Virginia Gas Project. Nobody can ever accuse Renergen of not injecting a little passion into SENS.

The financial report in question is a preliminary report on the year ended February 2022. As I often remind you, the company’s valuation is not based on anything you’ll find in the income statement. The key Virginia Gas Project is still being brought into operation, which is why Renergen gives such frequent and detailed updates on its progress.

Revenue was just R2.6 million and the loss attributable to shareholders was R33.8 million. See what I mean?

Operating costs decreased by R6.8 million thanks to lower consulting fees and employee costs, along with swings in net foreign exchange. The benefits were mitigated to some extent by listing costs and other legal and professional fees.

In September 2021, Renergen made a final drawdown of R112.1 million on the loan facility from the US International Development Finance Corporation. The local Industrial Development Corporation (IDC) gave Renergen a loan facility of R160.7 million in December 2021, of which Renergen has used R158.8 million. Developing a resource production facility isn’t a cheap exercise.

The real story behind the company is found beyond the financials. Renergen has been busy securing LNG and helium offtake agreements and has enjoyed 5 out of 6 drilling successes from the exploration campaign.

To give more context to the achievements, offtake agreements with Consol Glass and a subsidiary of Italtile have already covered 60% of planned phase 1 production of LNG. The remaining 40% is going to the logistics market in a dual fuel application for heavy trucks.

On the helium side, 65% of planned phase II production has already been contracted under take-or-pay contracts that are between 10 and 15 years in length. The group is hanging on to the rest, with an intention to place it in the spot market.
In and amongst all this, Renergen also developed a transportation solution for vaccines called Cryo-Vacc. Demand for vaccines has fallen off a cliff, but Renergen may be able to find a market for the technology in verticals like gene therapy and similar niches. Renergen spent R10.9 million developing this solution, so they need to generate a return somehow. It pales in comparison o the R260.7 million on the Virginia Gas Plant in this period but is still a meaningful number.

Renergen had R95 million in unrestricted cash reserves at the end of the period. Subsequently, Ivanhoe Mines subscriber for shares for over R200 million. A much larger deal is the planned sale of 10% of Renergen’s operating subsidiary to the Central Energy Fund for R1 billion. The proceeds will be used for the phase II development.

The share price is up 18% this year and over 60% in the past twelve months.

Impala Platinum has released a production report for the three months ended 31 March 2022, which represents the third quarter of the financial year. Mining companies have been disappointing the market in the past couple of weeks, with production numbers taking knocks from supply chain issues and Covid-related disruptions.

Gross group concentrate production fell 2% in this quarter and tonnes milled fell by 4%, so Implats wasn’t immune to issues. Refined 6E production fell by 8%, impacted by lower concentrate volumes, while 6E sales volumes declined by 3%.

There was a general reduction in stock levels in the comparable period (especially in iridium and ruthenium). This period also saw some destocking of inventory (evidenced by a lower impact on sales than on production volumes).

With a nine-month lens, Implats has seen a 6% decrease in gross refined 6E concentrate production. This is attributable to more maintenance needing to be done in this period than in the prior period. Sales volumes of 6E fell by 4% with the same destocking explanations applying.

Impala Rustenburg had a particularly rough quarter, with production down 10%. Numerous issues including safety stoppages, cable theft, electricity curtailment (I assume this means load shedding) and community disruptions were at play. Over nine months, refined 6E production fell 16% with the additional impact of maintenance.

Zimplats achieved marginal improvements in this quarter. 6E matte production in the nine-month period was 2% higher than the comparable period.

In smaller operations, Marula achieved a 5% increase in 6E concentrate production this quarter and is up 9% for the nine-month period. Mimosa saw a 6% decrease in production in this quarter and for the nine-month period. Despite numerous issues, Two Rivers increased concentrate production by 7% in the quarter and flat volumes for the nine-month period.

Looking abroad, Impala Canada experienced a 4% drop in concentrate production in this quarter. The nine-month result is a 3% drop in production.

The IRS operation achieved 5% growth in refined 6E production in this quarter, with higher deliveries from third parties helping to offset delays from Mimosa and Zimplats. Over nine months, mine-to-market receipts dropped by 3% and third-party and toll receipts were slightly higher. The announcement doesn’t indicate a percentage change in production over the longer period.

And in case you’ve been living under one of the rocks at the mines, Impala Platinum is in the process of acquiring Royal Bafokeng Platinum via an offer to shareholders. Impala holds around 37.79% in Royal Bafokeng thanks to shareholders who already accepted the offer. The offer is still open.

Importantly, guidance for the full year that was provided at the time of the interim results has been reiterated.

It’s been a rough week or so for mining production numbers, so a quarterly report from South32 may have been met with some nervousness from the market. This is a good time to remind you that the JSE attracts mining companies with operations all over the world, so pressures in South African production don’t translate into pressures on businesses with offshore operations.

With that out the way, it may make more sense to you that South32 released unchanged production guidance for FY22, with operations delivering according to plan. The group operates in Australia, Southern Africa and South America. It’s a bit like the old days of Super Rugby.

With a pre-feasibility study completed for the zinc-lead-silver Taylor Deposit in Arizona, the group also looks set to expand in the northern hemisphere.

South32 has reported strong quarterly production results in aluminium, copper, zinc, nickel and coal. Manganese production fell due to planned maintenance at the South African mines. This is the first time the group has reported copper production, now that the Sierra Gorda investment has been completed.

Supply chain issues are in play here, particularly in the aluminium value chain where movement of inventory at operations has slowed down. The company is obviously mitigating this to the greatest extent possible.

With freight pressures, higher raw material input prices and major currency movements, guidance for operating costs per unit has been revised higher.

Capital expenditure guidance has been reduced by USD36 million to USD702 million, attributable to a deferral of spend at Worsley Alumina into FY23 among other things.

At the end of March, South32 had cash of USD52 million after acquiring a 45% interest in the Sierra Gorda copper mine for USD1.4 billion during the quarter. This was funded by USD600 million cash and USD800 million from a short-term acquisition bridge facility. The bridge was repaid after the end of this period through the company’s inaugural USD bond issuance, in which USD700 million in senior unsecured notes (due 2032) were issued. These carry an interest cost of 4.35% per annum.

A group like this is always busy with deals. For example, the sale of the Metalloys manganese alloy smelter is not proceeding and will remain on care and maintenance for now. In better news, the group received approval from the Brazilian Competition Authority for the acquisition of an additional 18.2% interest in the Mineracao Rio do Norte bauxite mine, taking the ownership stake to 33%.

Finally, South32 is no longer selling commodities to Russian entities. Exposure to the country has historically been limited and no new business relationships are planned.