From the FT on the 19th June

http://search.ft.com/search/article.html?id=040619001094&query=kenmare&vsc_appId=totalSearch&state=Form

COMPANIES UK & IRELAND: Kenmare negotiates $269m loan
By John Murray Brown
Financial Times; Jun 19, 2004



One of the largest debt financings for an independent mining company was announced yesterday when Kenmare Resources agreed a $269m (146.5m) facility to develop the Moma titanium mine in Mozambique.

Drawdown of the debt is contingent on the Irish company raising equity of $79m, lifting the value of the project to $345m.

The company already has commitments of $55m from a number of large investment funds.

Documents will be posted to shareholders on Monday for an open offer to raise up to $42m.

A banker at NM Rothschild, lead advisers on the financing, said the debt package represented three times Kenmare's market capitalisation of $90m.

"I do not think there have been any listed mining companies who have done that," he said.

Among the lenders, the African Development Bank is lending $40m and the European Investment Bank $15m in senior debt and a $40m subordinated loan, reflecting the vital economic benefits to what is the poorest region of one of Africa's poorest countries.

Martin Curwen, of the EIB, said this was the first deal signed under the 2000 Cotonou agreement between the EU and African, Caribbean and Pacific countries.

He said EIB's presence would "provide comfort" to other lenders. "It is part of our mandate to support projects where the funding would not have been available from the financial markets," he said at yesterday's signing ceremony, attended by Castigo Langa, Mozambique's minister of mineral resources and energy.

KFW, the German development finance institution, is providing $50m, partly tied to the supply of electrical equipment by Siemens.

The Dutch development agency FMO is lending $15m. The only commercial bank involved is ABSA, the South African bank, which is lending $80m to support the purchase of South African goods and services by the mine.

The mine is expected to be in production in the second half of 2006, with annual output of 600,000 tonnes of ilmenite and other titanium minerals that supplies white pigment used in paint and toothpaste.

The company has already raised 4m to purchase a mineral separation plant in Western Australia, which is being dismantled and shipped to the site.

At full production, the mine will account for about 5 per cent of world supply. About two-thirds of world production is controlled by RTZ and Iluka, an Australian company spun out of the old Rennison Goldfields.

FT Comment

* There have been similar financings in the minerals sector but never where the borrowing is three times the borrower's market valuation. The Lihir gold project in Papua New Guinea raised $300m in 1995 but lenders had the comfort that Rio Tinto Zinc owned about 40 per cent of the company. Kenmare's project is 100 per cent-owned by Kenmare, a company that has no cash flow and would have reported a small loss of $40,000 last year but for interest on its bank deposits. This project clearly could transform its fortunes. There are offtake agreements in place for more than half the first five years' production with Dupont and Mitsui. Prices for mineral sands tend to be more stable than base metals, which behave more like a commodity dependent on capital goods demand. The current market cap is little more than the value of a year's production from the mine. An upgrade seems inevitable. Canaccord, the company's broker, has a current price target of 35p. This compares with a close of 17p, down 2p yesterday.


Copyright The Financial Times Ltd

todays news should upgrade all estimates

32p PLACING - represents 7% dilution

Cash needed for further working, I guess.

Seems a while ago this stock was being trumpeted as a route to loot....so why hasn't this translated into cash to run the operation?

How frustrating this project has become. The management seem to stumble from one blunder to the next! sounds like our government. Failing to hit targets and deadlines now results in this dilution, most were waiting on good news regarding ramp up and we got this!. I am of the impression that the stunt regarding the warrant conversion recently was to fund reaching our goal of 800kt, seems not, changed the goal posts again. A takeout is the solution they might give this underperfoming management team a kick up the arse. How many dead lines need to be missed and cash calls made before the receiver comes knocking.

borrowings seem to be holding this company down.this is probably why they need to raise more money,and dilution is not good.where is news of production,sales,and shipments.some clarification from management is needed.

Thing is i don't know if 32p now represents good value as its impossible to do any sums as the water is so cloudy from delays, problems, lack of production and sales info. feel we're always the last to know. This management team have gone from hero to zero IMO. cannot meet a deadline lets blame it on the credit crunch!! the climate change! no the invasion of Georgia even better Alistair Darling will do. Its about time we were kep't in the loop.

I'm wondering if the issue isn't elsewhere? - like the price they can get for this material ( that they are minimg)...is that market sufficiently robust to allow another supplier to fit in with a vast pipeline?
Is there a possibility that the market just isn't . . . as strong as . . . we were led to believe?

We have been led to believe it though hangon!. Its only in this latest statement we're told that the best month of production yielded some 31kt some 35kt less than needed. A large portion of our product is fixed price well below current prices.When i spoke to Mcclusky some weeks ago he said they could easily sell anything they could produce so i don't think that the issue. Missed deadlines time after time is to blame, and the buck stops with management.

If the project is viable a takeout may occur but at what price? Zero sales in a start up situation is a recipe for disaster to happen before long. What are the directors doing to resolve this cashflow problem before the lenders foreclose? Shareholders are always the ones to lose most in such situations.

RNS COO resigns, poor timing.

Excellent timing IMHO.someones got to carry the can for this fiasco!, conditions on buying in by the new boys a sacraficial lamb must be offered up. No doubt he'll walk away with a golden handshake a pot full of share options and a early pension. Its the muppet who headhunted him that wants stringing up IMO.

has prudential sold shares?

no bought them

why the drop ?

Simple, management incompentence.

Are we going under?.

anyone know if the placing of 51 million shares on 29/8/o8 at 32p was successful?

"THE MARKET FOR ALL OUR PRODUCTS CONTINUES TO STRENGTHEN"--------THE LIFE OF THE MINE IS OVER 100 YEARS-----interim report 29/08/08. after looking in depth at the interim report the whole financial success of the mine now depends on the production ramp up to the target level of 66,000 tons of product per month by june 09 ( otherwise covenants will be broken).this had been expected much earlier.Production has been,april---12,000 tonnes,may---20,000 tonnes,june---31,000 tonnes,july---28,000 tonnes with a 7 day shutdown for remedial works.

Share price continues to weaken now 25p.

humpback please advise me where you read we have until June 09 to hit the magical 66kt pm. as i've obviously missed it.

note 7. bank loans. interim report.