Pure play natural gas and helium explorer D3 Energy Ltd is set to be the latest debutante on the ASX, with the company’s initial public offering (IPO) slated for April 26 this month.
Under the IPO, the Africa-focused explorer aims to raise A$10 million for an offer of 50 million shares at an issue price of 20 cents apiece.
With the coffers full, the company aims to explore and develop its natural gas and helium assets, situated in the Free State Province in onshore South Africa as well as fund general working capital.
As a nation that is experiencing severe energy supply difficulties, South Africa is making the identification of natural gas reserves an important part of the present energy supply as well as the country’s energy transition.
Primary focus
Incorporated in April 2012, D3 Energy is an emerging natural gas and helium exploration company, aiming to acquire and explore interests in natural gas and helium projects in Africa.
The company’s primary focus is on the exploration of, and where possible, the commercial production of natural gas and helium at its D3 project in South Africa (Figure 1).
Importantly, gas samples taken at the company’s exploration right ER315 indicate the presence of helium within the natural gas.
Looking ahead, D3 intends to separate helium from methane for potential commercial sale.
Figure 1: Map of D3 Energy portfolio, Free State, South Africa (Source: D3 website)
What are the company’s interests in the D3 Project?
Upon listing, the company will hold 100% of Motuoane Energy (Pty) Ltd, a company incorporated in South Africa that holds the permits for the D3 Project (Figure 2).
Currently, the company holds an 86.77% interest in Motuoane, an interest that was acquired on October 28, 2022, under the Motuoane Acquisition Agreement.
Under the agreement, the company has agreed to acquire the remaining 13.23% interest in Motuoane upon the earlier of the first business day following July 2024 and the company receive conditional listing approval from ASX to be admitted to the official list.
The offers are conditional on the completion of the company’s acquisition of the remaining 13.23% interest in Motuoane under the Motuoane Acquisition Agreement.
Figure 2: Ownership of the exploration assets constituting the D3 Project once listed (Source: D3 Prospectus)
IPO highlights
The IPO is being facilitated by Peloton Capital Pty Ltd and Originate Capital Pty Ltd, serving as joint lead managers.
Notably, the offering is not underwritten, reflecting the confidence of both investors and management in D3 Energy’s prospects.
Applications under the public offer must be for a minimum of A$2,000 worth of shares (10,000 Shares) and thereafter, in multiples of $500 worth of shares (2,500 Shares).
Figure 3: Indicative timetable (Source: D3 Prospectus)
Samso's Thoughts
Energy is one of the most narrated investment items currently and there are many opinions, especially the ones coming from the renewable space. I think that the investment community has latched onto this massive money-making concept and has again moved so fast that the reality of their intentions is not aligned.
The investment sector has always been the initiator of great ideas that the world should partake in because they are correct. Just like the great notion of the "NINJA LOANS" that was the great learnings of the GFC. The repackaging of ABC loans was "ok", so we should not be concerned as they knew best.
In a place like South Africa, the local discovery of power sources would be a money spinner but history has shown that places where there is a lack of jurisdiction authority always makes investments vulnerable. If D3 Energy can make this work, I am a big fan. As an investment for the mum and dads, I think serious DYOR must be made as this is a very vulnerable business concept despite the slow realisation that renewable energy is not sustainable.
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