Renergen Limited (JSE:REN) News - Renergen Progresses Funding for Phase 2 Helium/LNG Development with Initial Placement and Complementary Strategic Pa

RENERGEN LIMITED
Incorporated in the Republic of South Africa
(Registration number: 2014/195093/06)
JSE Share code: REN
A2X Share code: REN
ISIN: ZAE000202610
LEI: 378900B1512179F35A69
Australian Business Number (ABN): 93 998 352 675
ASX Share code: RLT
(“Renergen” or “the Company”)

RENERGEN PROGRESSES FUNDING FOR PHASE 2 HELIUM/LNG DEVELOPMENT WITH
INITIAL PLACEMENT AND COMPLEMENTARY STRATEGIC PARTNERSHIP WITH
IVANHOE MINES

   •   Ivanhoe Mines Limited becomes 4.35% shareholder in Renergen through initial
       placement of 5,631,787 shares at R35.625 per share (equivalent to US$2.37,
       AUD3.24) equal to a 5% discount to 30-day VWAP

   •   Strategic investment agreement establishes a pathway for Ivanhoe to increase its
       shareholding in Renergen up to a 25% shareholding through a market-related (10%
       discount to 30-day VWAP) Second Subscription, following completion of 120-day
       due diligence period (commencing immediately)

   •   Following completion of the Second Subscription, Ivanhoe thereafter has the
       option to increase its shareholding in Renergen up to 55%, by electing to provide
       equity funding of up to US$250,000,000 at a market related price (10% discount to
       30-day VWAP) for further development and up-scaling of the Virginia Gas Project

   •   Strategic investment by Ivanhoe comes at a time where the current global LNG and
       helium markets are in shortfall

   •   Investment by Ivanhoe highlights the excellent growth of Renergen and significant
       and exciting opportunity for the Virginia Gas Project to become a globally
       significant LNG and helium producer

   •   Transaction paves the way for Renergen to access significant capital towards
       Phase 2 development, diversifies its investor base into North America, and
       minimizes potential dilution to existing shareholders as further investments from
       Ivanhoe linked to prevailing share price at the time of subsequent investments

Natural gas and helium producer, Renergen Limited, is pleased to announce a significant
investment in the Company by Ivanhoe Mines Limited (“Ivanhoe”) through a placement of
5,631,787 shares at R35.625 per share, a discount of 5% to the 30 day VWAP, raising an
equivalent of ZAR200.6 million (equivalent to US$13.3, AUD18.3 million). The placement is within
the Company’s existing pre-approved placement capacity, but importantly Ivanhoe will acquire
an initial strategic shareholding in the Company and, subject to its evaluation of the Company
and scalability of operations, may thereafter become a strategic partner and major shareholder
in Renergen. The conditional option provides for funding of up to US$250 million (or greater at
Ivanhoe’s election) towards up-scaling of the Virginia Gas Project (“Virginia Gas Project”)
following the imminent commissioning and commencement of Phase 1 commercial production.
Ivanhoe is a Canadian-listed, African-focused natural resources development company, led by
its founder, Executive Co-Chairman, Mr Robert Friedland. Mr Friedland has an unparalleled track
record in the discovery and development of major natural resource projects around the globe,
including the current major development in South Africa at Platreef.

The strategic investment in Renergen highlights the excellent growth of the Company over the
last two years and the potential of the Virginia Gas Project to become a globally significant LNG
and Helium operation.

Commenting on the major agreement between Renergen and Ivanhoe, Dr David King, Chairman
of Renergen, said “Ivanhoe is an ideal partner to stand alongside Renergen in the development
of its world class helium reserves at Virginia. The strategic partnership with Ivanhoe is testament
to the great progress that Renergen has made in its transition from explorer to developer of an
internationally significant resources project.”

CEO Stefano Marani added: “This major transaction is a landmark deal for Renergen and one
that recognizes strong synergies with our new partners, Ivanhoe. Robert Friedland is a leader in
terms of finding and developing disruptive, world-class resources across a broad range of
commodities and jurisdictions, and to secure his potential backing of the Virginia Gas Project is
testament not only to the work done to date, but also to the incredible opportunity to establish a
South African-based globally significant LNG and helium production operation. I am very proud
to welcome Ivanhoe as a shareholder in Renergen.

Aside from the teams collaborating really well, Ivanhoe already has extensive mining operations
in South Africa and as the transaction goes through the motions of implementation, new exciting
areas of collaboration are being uncovered every day. The future for Renergen is very exciting
and I look forward to progressing our Virginia Gas Project and working side-by-side with Robert
and Ivanhoe to deliver further value to all our stakeholders”.

Robert Friedland, Ivanhoe Mines’ Executive Co-Chair, commented: “In Ivanhoe Mines’ journey
toward net zero carbon emissions, liquefied natural gas is a compelling transition fuel to provide
base-load power for our Tier-One Platreef palladium, rhodium, nickel, platinum, copper and gold
mine. Renergen’s Virginia Gas Project has the potential to provide clean, reliable electricity to
augment our own solar-generated power for a 24-hour-a-day alternative to the coal-fired national
electrical grid.”

Transaction Details

1. Transaction Rationale

Ivanhoe is mining and developing in Africa the strategic minerals necessary for the electric
revolution, among them, copper, nickel and platinum group metals. Helium is another strategic
element, the importance of which remains largely unpublicized. It is therefore a synergistic fit for
Ivanhoe and Renergen to collaborate on the development of helium in South Africa given its
strategic significance and the complimentary nature of adding helium to Ivanhoe’s mix of strategic
commodities.

Furthermore, with regard to concerns on energy security in South Africa, Renergen’s
development of the country’s first commercial LNG facility and proposed gas-to-power operations
at the Virginia Gas Project through Phase 2 development will impact favourably on national
energy security, as well as Ivanhoe having the ability to source the power it will need for its
Platreef Project. Moreover, power production at the Virginia Gas Project will have significantly
lower greenhouse gas emissions than the country’s existing predominantly coal generated power
supplies.

While the primary driver for Renergen entering into this transaction is to secure funding for the
further development of the Virginia Gas Project, not all the cash available from Ivanhoe is required
immediately. The parties have therefore agreed that as part of the strategic co-operation between
them that, that Ivanhoe will have the option to settle the Second Subscription by issuing the INV
Shares, which further enhances the co-operation between the parties.

2. Initial Issue of Shares for Cash

   2.1. Renergen and Ivanhoe have concluded a written initial subscription agreement (“Initial
        Subscription Agreement”), in terms of which, Renergen shall issue 5,631,787
        Renergen ordinary shares (“Shares”) to Ivanhoe (or its nominee), at a price equal to 95%
        of Renergen’s 30-day VWAP on 10 March 2022, being a subscription price of R35.625
        (“Initial Subscription”). The Initial Subscription shall be implemented under the general
        authority to issue shares for cash granted to Renergen by its shareholders at the
        Company’s annual general meeting held on 30 July 2021.
   2.2. The Initial Subscription is anticipated to be implemented on Wednesday, 16 March 2022,
        and once completed, will result in Ivanhoe being a 4.35% shareholder of Renergen.

3. Strategic Investment and Co-operation Agreement

   3.1. Renergen and Ivanhoe have concluded, concurrently with the Initial Subscription
        Agreement, a strategic investment and co-operation agreement (“Strategic
        Agreement”) in terms of which, inter alia, Ivanhoe will be entitled to subscribe for such
        number of Shares as will, after their issue, result in Ivanhoe in aggregate holding 25% of
        the total issued share capital of Renergen on a fully diluted basis (“Second
        Subscription”). The Second Subscription is subject to the fulfilment of various
        conditions, including, inter alia, the successful completion of the Due Diligence and the
        issue by Ivanhoe of the DD Notice (as such terms are defined below) and the regulatory
        and shareholder approvals described below.
   3.2. The issue price of the Shares under the Second Subscription will be equal to 90% of the
        VWAP for the 30-day period immediately prior to Ivanhoe issuing the DD Notice, less an
        amount equal to 5% of the Initial Subscription Price multiplied by the Shares issued in
        terms of the Initial Subscription, divided by the number of Shares to be issued in terms
        of the Second Subscription (“Second Subscription Price”).
   3.3. The Second Subscription will be settled by Ivanhoe, at its election, in either or a
        combination of:
       3.3.1. cash and / or
       3.3.2. issuing such number of Class A Ivanhoe common shares, being the class of
              shares listed on the Toronto Stock Exchange (“IVN Shares”), as is equal to the
              Second Subscription Price (or the relevant portion thereof not settled in cash). The
              IVN Shares shall be issued at a price equal to the 5-day VWAP of the IVN Shares,
              measured over the 5 trading days prior to Ivanhoe issuing the DD Notice.

4. Scalability Due Diligence

   4.1. In terms of the Strategic Agreement, Ivanhoe will conduct a due diligence investigation
        in respect of Renergen for a period of 120 days commencing immediately upon the Initial
        Subscription (“DD Period”) to, inter alia, assess the financial condition, assets, liabilities
        and prospects of Renergen and its business, and (or such longer period as Renergen
        and Invanhoe may agree in writing) (“DD Period”) to determine the extent and the
        scalability of the Company’s helium natural gas projects, including the Virginia Gas
        Project (“Due Diligence”).
   4.2. On or before the termination of the DD Period, Ivanhoe will notify Renergen in writing that
        it is satisfied with the outcome of the Due Diligence (“DD Notice”), in the absence of
        which the Strategic Agreement will lapse and not be implemented.

5. Project Development Equity Funding

   5.1. Provided that Ivanhoe is the holder, directly or indirectly, of at least 25% of the Shares,
        Ivanhoe shall be entitled (but not obliged) on notice given to the Company, to increase
        its holding of Shares to not more than 55% of the Shares, on a fully diluted basis through
        an additional Share subscription, the purpose of which would be to provide equity funding
        for the further development of the Virginia Gas Project (“Project Equity Funding Right”).
   5.2. To the extent that Ivanhoe exercises the Project Equity Funding Right:
      5.2.1. Ivanhoe shall be entitled (but shall not be obliged) to purchase through a new Share
             subscription, such number of Shares as will, after their issue, result in Ivanhoe
             being the holder (directly or indirectly) of not more than 55% of the Shares on a
             fully diluted basis;
      5.2.2. Ivanhoe shall subscribe for the Shares at a price equal to 90% of the 30-day VWAP
             of the Shares immediately prior to date that Ivanhoe gives notice to the Company
             that it is exercising the Project Equity Funding Right;
 5.2.3. Ivanhoe shall not be required to spend more than US$250 million as a consequence of
        exercising the Project Equity Funding Right, but may do so in its sole and absolute
        discretion and Ivanhoe’s ultimate holding in Renergen will be determined by the price
        paid for the Shares as set out in 5.2.2 (“the Project Equity Funding”).

6. Conditions Precedent

   6.1. The Second Subscription and the Project Equity Funding are subject to the various
        regulatory and shareholder approvals, including:
       6.1.1. Renergen shareholder approval for the Second Subscription and the Project
              Equity Funding;
       6.1.2. all regulatory approvals including, inter alia, the approval of the Johannesburg
              Stock Exchange, Australian Securities Exchange, the South African competition
              authorities and/or the Financial Surveillance Department of the South African
              Reserve Bank, to the extent required;
       6.1.3. to the extent that any issue of Shares by Renergen to Ivanhoe would result in a
              requirement for Ivanhoe to make a mandatory offer in terms of section 123 of the
              Companies Act 71 of 2008, as amended (“Companies Act”), approval by the
              Company’s shareholders of a waiver to make such mandatory offer, as
              contemplated in terms of regulation 86(4) of the Companies Regulations 2011;
              and
        6.1.4. should Ivanhoe elect to settle the Second Subscription in IVN Shares in whole or
               in part, approval of the Toronto Stock Exchange to issue such IVN Shares.

7. Other Material Terms

   7.1. Anti-dilution Right
        7.1.1. For so long as Ivanhoe holds directly or indirectly at least the Initial Subscription
               Shares, Ivanhoe will have anti-dilution rights such that if Renergen issues further
               Shares or securities convertible into, or exchangeable for, Shares, Ivanhoe shall
               be entitled to maintain its then pro rata shareholding in the Company, or if its
               shareholding in the Company is below 55% at the relevant time, to increase its
               shareholding position to not more than 55% as a result of the exercise of this right
               (“Anti-Dilution Right”). The Shares to be issued in terms of the Anti-Dilution Right
               will be at a price equal to 90% of the 30-day VWAP prior the date that Ivanhoe
               was provided notice that its Anti-Dilution Right has been triggered.
        7.1.2. The additional Shares which may be issued to Ivanhoe in respect of the Anti-
               Dilution Right shall be subject to approval by Renergen shareholders at the next
               occurring annual general meeting of the Company.
   7.2. Exclusive Off-Take Negotiation Right
       With effect from the Initial Subscription, Renergen grants Ivanplats Proprietary Limited,
       a subsidiary of Ivanhoe and owner of the Platreef Project, the sole and exclusive right to
       negotiate to be the offtaker for power generated by the gas and solar hybrid power facility
       anticipated during Phase II of the Virginia Gas Project, the terms and conditions of which
       offtake agreement are required to be on market related terms.

8. Board of Directors (“the Board”)

   8.1. From the date of the Initial Subscription, Ivanhoe shall be entitled to nominate one
        member to the Renergen Board.
   8.2. From the time that Ivanhoe is the holder of more than 20% of the Shares, it shall be
        entitled to nominate such number of persons to the Renergen Board as is equal to one
        third of the total number of members of the Board, subject to compliance with the
        applicable non-executive and independence requirements as set out in the JSE Listings
        Requirements, Companies Act and King IV Code on Corporate Governance (“King IV
        Code”).
   8.3. From the time that Ivanhoe is the holder of more than 50% of the Shares, it shall be
        entitled to nominate such number of persons as is equal to the majority of the total
        number of members of the Board, subject to compliance with the applicable non-
        executive and independence requirements as set out in the JSE Listings Requirements,
        Companies Act and King IV Code.

9. Information on Ivanhoe

   9.1. Ivanhoe is a Canadian mining company, listed on the Toronto Stock Exchange, focused
        on advancing its three principal projects in Southern Africa: the development of major
        new, mechanized, underground mines at the Kamoa-Kakula copper discoveries in the
        Democratic Republic of Congo and at the Platreef palladium-rhodium-platinum-nickel-
        copper-gold discovery in South Africa; and the extensive redevelopment and upgrading
        of the historic Kipushi zinc-copper-germanium-silver mine, also in the Democratic
        Republic of Congo.

10. Effective Date

   10.1.       The effective date of the Initial Subscription will be Wednesday, 16 March 2022.
   10.2.       The effective date of the Second Subscription shall be the 5th Business Day after
               the date on which the Investment Approvals necessary to undertake the Second
               Subscription have been obtained or granted;
   10.3.      The effective date of the Project Equity Funding is still to be determined. If all the
       relevant Investment Approvals are not obtained within 1 year of notice of exercise by
       Ivanhoe of the Project Equity Funding Right (or such longer period as shall be agreed in
       writing between the Parties), the Project Equity Funding Right shall then terminate at
       such date.

11. Representations and Warranties

  11.1. The Initial Subscription Agreement and the Strategic Agreement each contains
        representations and warranties by Renergen in favour of Ivanhoe which are standard for
        a transaction of this nature.

12. Financial information

  12.1. The Ivanhoe market capitalisation as at 11 March 2022 was c. CAD13 billion. Ivanhoe
        reported a profit for the year ended 31 December 2021 of $48.2 million, with net assets
        of US$ 2.37 billion.

13. Categorisation

  13.1. The Second Subscription shall be classified as a specific issue of shares for cash, to the
        extent that it is settled in cash, requiring approval by Renergen shareholders at a general
        meeting.
  13.2. To the extent that Ivanhoe elects to settle the Second Subscription with IVN Shares, the
        Second Subscription will constitute an acquisition and may require categorisation in
        terms of section 9 of the JSE Listings Requirements. The Company is in discussions with
        the JSE on this matter and will advise shareholders in due course as to the outcome
        thereof.
  13.3. The Project Equity Funding shall be classified as a specific issue of shares for cash
        requiring approval by Renergen shareholders in general meeting.

14. Circular

  14.1. A circular containing the full details of the Second Subscription and the Project Equity
        Funding, incorporating a notice convening the required general meeting of the
        shareholders of Renergen, will be distributed to shareholders in due course, including
        the date of the general meeting, and will be announced on SENS

Johannesburg
14 March 2022

Authorised by: Stefano Marani
Chief Executive Officer

Designated Advisor and corporate advisor
PSG Capital

South African Legal Advisor to Ivanhoe
Falcon & Hume Inc Attorneys

Canadian Legal Advisor to Ivanhoe
Strikemans

South African Legal Advisor to Renergen
Norton Rose Fulbright South Africa Inc

Energy Advisor to Renergen
Gneiss Energy Limited

For Australian Investors & Media, contact Citadel-MAGNUS
Cameron Gilenko, 0466 984 953
www.renergen.co.za

Date: 14-03-2022 08:00:00
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