Wrap Text
Implied threat to mineral rights in South Africa
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")
IMPLIED THREAT TO MINERAL RIGHTS IN SOUTH AFRICA
The Company is issuing the following statement to update shareholders about the ongoing
actions involving its majority-owned subsidiary, Tetra4 and Springbok Solar Power Plant (RF)
Proprietary Limited ("SSPP").
Highlights:
• Helium is currently included in Tetra4's Production Right;
• Helium recognised as part of petroleum in the new Upstream Petroleum Resources
and Development Act;
• Tetra4 holds a valid and undisputed petroleum production right (regardless of the
challenge on helium);
• Construction without valid and complete Section 53 consent undermines mining
law for all minerals in South Africa, creating a dangerous precedent and leading to
investors losing confidence in SA mining law; and
• SSPP submitted an environmental authorisation request without identifying Tetra4 and
prior to any consultation with Tetra4, all consultation occurred after the submission
was already made, and all consultation was limited to environmental. No Section
53 consultation or technical discussions ever took place.
Recognition of Legislative Changes
The Company congratulates the President of South Africa for signing the Upstream Petroleum
and Resources Development Act into law on the 25th of October 2024, with the date of
commencement thereof to be proclaimed. This Act notably expands the definition of petroleum
to include "associated liquid or gas, any liquid or solid hydrocarbon or combustible gas,"
which effectively categorizes helium as an associated gas of petroleum rather than a mineral.
Additionally, helium does not qualify as a "mineral" under the current definition contained
in the Mineral and Petroleum Resources Development Act ("MPRDA") rendering the appeal
by SSPP to Tetra4's right to helium without merit, as the helium cannot be separated from
petroleum underground prior to its extraction. More importantly, helium is not produced by a
geological process but rather through a result of radioactive decay, which is a physical process
or nuclear process.
Regardless of the outcome of the appeal against the explicit inclusion of helium into Tetra4's
Production Right, SSPP commenced construction without obtaining a valid Section 53 consent
in an area where Tetra4 has held an undisputed onshore Petroleum Production Right
since 2012.
Broader Implications for Mineral Right Holders
The ongoing dispute between SSPP and Tetra4 has ramifications that extend beyond this
specific dispute. There is an alarming trend where new developers initiate projects without
securing the necessary permissions or Section 53 consent letters of support from all the
existing mineral and petroleum right holders. This practice threatens to set a dangerous
precedent whereby the construction of such projects proceeds without proper and meaningful
consultation or consent/support from all right holders, potentially invalidating the pre-existing
rights and protections conferred upon such right holders under the MPRDA.
Investor Confidence at Risk
Such actions could significantly erode investor confidence across all mineral and petroleum
extraction sectors, as construction without a valid and complete Section 53 consent results in
sterilisation and permanent stripping away of valuable mining reserves that can no longer be
accessed by the rightful holders of mineral and production rights. Uncertainty in legal tenure
erodes investment value indiscriminately, and this is true for all resources, including both
minerals and petroleum. A decision allowing the construction of SSPP without a valid and
complete Section 53 consent within Tetra4's production right area will set a dangerous
precedent with very far-reaching consequences for the entire sector. This, in turn, could have
severe economic consequences for South Africa, where mining contributes to a significant
portion of the national economy.
Consultation
In 2022, Tetra4 was approached by Subsolar Energy Proprietary Limited ("Subsolar")
regarding the environmental authorisations for two of its solar projects. During these
discussions, Subsolar disclosed the existence of a third project (namely SSPP). For the initial
two projects, Subsolar initiated a separate series of engagements with Tetra4 to obtain the
required letters of support for the Section 53 consent. However, no such engagement was
ever undertaken for SSPP. Tetra4 simply assumed the same process would follow in due
course as precedent was established.
In May 2023, Subsolar, through electronic communication between directors of Tetra4
and Subsolar on the topic of Tetra4's production right and more specifically the
requirement for the Section 53 consent, Subsolar requested a letter from Tetra4 granting
them support/permission to build, allowing them to obtain a Section 53 consent for their
various projects which we believed would have included SSPP. Tetra4 indicated that it would
issue such letters without requiring compensation on the basis that Subsolar consulted with
Tetra4 and to provide for future access to the gas-bearing structures. This condition was
acknowledged by Subsolar's directors, but no further correspondence in respect of SSPP was
pursued thereafter while the engagements continued on the other two developments.
Important to note is that at the time of Subsolar's request for written support in lieu of their
Section 53 consent application, SSPP had already been sold by Subsolar one month prior,
unbeknown to Tetra4. This was never brought to the attention of Tetra4 until it was disclosed
in recent court filings.
During the same time period in May 2023, a meeting was held between Subsolar and Tetra4
to discuss an overview of the various projects in Subsolar's portfolio and to obtain a holistic
overview of the Virginia Gas Project, including an overview of the extent of Tetra4's production
right and proven reserves. Coincidentally, an employee of Sola Group (one of the new
shareholders of SSPP), who is now a current director at SSPP, was introduced into the
meeting by Subsolar as part of a development team responsible for project implementation.
During all of these engagements, no disclosure was ever made that Subsolar had been sold
to SSPP, and that this employee was part of the new owner's management. As a matter of
course in business, it is normal practise for the seller to warrant to the purchaser the need for
additional authorisations, consents, licenses and or permits still required or outstanding, or if
they are aware of anything material that should be disclosed. It would seem unusual that this
acknowledged deficiency in approvals was never disclosed in the sale and purchase of SSPP.
Since the May 2023 interaction, SSPP has not engaged meaningfully or more importantly, in
a practical, technical manner in respect of any detrimental impact that the SSPP could have
on Tetra4's production right, knowing that Tetra4 is a petroleum right holder and not a mineral
right holder, and had made specific requests to be consulted to obtain Tetra4's support for a
Section 53 consent. They chose to proceed with construction knowingly. We struggle to
understand why the current SSPP director never engaged with Tetra4 on any Section 53
discussion despite being aware of the extent of Tetra4's production right from May 2023.
Despite SSPP publicly asserting that they "engaged" Tetra4 on several occasions, they omit
to mention that their purported consultation only took place after an EIA had already been
finalised and submitted to the competent authorities for approval, without prior identification
or consultation with Tetra4, and the EIA was subsequently granted several weeks later. Tetra4
was only consulted on the respective environmental authorisation application after the
submission had already been made, despite the repeated public statements of ongoing
consultation by SSPP. This was also limited to e-mail engagement (not considered formal
engagement) prior to receiving their final environmental authorisation process, which makes
the engagements with Tetra4 appear to be little more than window dressing. Despite that,
Tetra4 made it clear that it was the holder of a production right over the area, and this should
have prompted formal consultation and engagement under Section 53 of the MPRDA.
What remains unclear is whether SSPP's investors and funders were made aware that
Tetra4's support was still required for obtaining a valid Section 53 consent before SSPP
decided to commence construction on Tetra4's production right area, and as a result, sterilised
Tetra4's access to gas on the land in question.
It also raises significant concerns about how SSPP failed to identify Tetra4, a primary impacted
stakeholder and elected not to engage with Tetra4 during the scoping or EIA phase of the
consultation, especially when it is a materially affected stakeholder, one that has commenced
construction in 2019, and which are currently operating within a 30 km radius and is also a
well-known and very visible stakeholder entity in the media and broader public domain. By
their own submission to the relevant competent authority, their EAP stated they "identify
impacted parties within a 30 km radius". Yet, the Tetra4 facility, located a mere 10 km from
the SSPP site as the crow flies, was overlooked during this critical consultation process.
Tetra4 has filed an appeal in terms of Section 96(1) of the MPRDA to the Department of
Mineral Resources ("DMRE") to consider the entire application as well as the resultant
arbitrary decision by the Regional Manager, to grant the Section 53 consent, and hopefully
receives an appeal decision that sets aside, what seems to be an entirely irrelevant,
unreasonable and unjustifiable decision. Tetra4 further filed an application in terms of Section
96(2) for the suspension of their current Section 53 consent, subject to the appeal decision,
which would effectively require SSPP to halt construction on the basis that further construction
would lead to sterilisation of Tetra4's production right on that land. Unfortunately, by the time
the application was heard, the construction on the area in question was already advanced,
rendering a Section 96(2) application as being ineffectual.
Upholding Mineral Rights
The situation underscores a crucial issue: if the DMRE condones construction without
obtaining consent from existing mineral and petroleum right holders, it could lead to a
scenario where all mineral and petroleum rights in South Africa are subordinated to
developments on the mining right area or production area, regardless of the fact that these
rights are lawful limited real rights that were first in time. This may effectively amount to the
dispossession of mineral and petroleum rights and result in a precedent that is entirely contrary
to the objectives of the MPRDA. This shift would severely undermine investor confidence in
the mining industry as a whole, not just petroleum.
Tetra4 remains firm in that it is only seeking to protect access to the known gas-bearing fault
lines and structures in order to continue with its core business under the rights conferred to it
by the DMRE in terms of the production right. On this basis, co-existence is certainly possible
and requires no compensation by SSPP to Tetra4. However, to date, this consideration to co-
exist has been refused by SSPP.
The Company remains hopeful that the rule of law will prevail and that measures will be taken
to prevent such detrimental precedents from being established for the sake of the entire mining
sector.
Johannesburg
10 December 2024
Authorised by: Stefano Marani
Chief Executive Officer
Designated Advisor
PSG Capital
For all media relations, please contact:
investorrelations@renergen.co.za
For all US investors and media relations, please contact:
Georg Venturatos / Patrick Hall – Gateway Group, (949) 574-3860
Ren@gateway-grp.com
Date: 10-12-2024 03:30:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
