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

ipwil

Yes I agree, but it could be the Chinese who will bid and then a counter bid from Rio

I bought in yesterday with a larger lump than the small holding I had to begin with, so 90, 110, 240, I guess you would take whatever comes your way.....

I used to have a stake in this years ago & it slowly drifted down. Fell off my radar, but now flagged as a possible target by RIO, so worth a small punt imo, even though sp approaching the 60p high.

I still hold a large amount even after banking profit's @50 ,50 and today @55

Kenmare in demand

StockMarketWire.com

Irish mining firm Kenmare Resources (LON:KMR) was up more than 7% as risk appetite increased and speculation continued over a possible bid for the company.

Rumours of a 110p-a-share cash bid from mining giant Rio Tinto are being circulated.

At 3:10pm: (LON:KMR) Kenmare Resources share price was +4.15p at 57.25p

Still climbing gently, but no further info on a possible approach.

Surely the company would hold out for a lot more than £1.10 per share, or is this simply the starting point of negotiations. I for one hope so.
That's on the assumption that any kind of approach has in fact been made at all.....

61p. Lookin' good!

"Bid unlikely" - Fox-Davies

Kenmare Resources* (LON:KMR)– Rumours of potential bid for Kenmare

http://www.kenmareresources.com/

• Kenmare Resources shares are reported to be rising on the back of bid rumours.

• The company produces ilmenite for titanium product production and is a key player in a market where production levels have been falling

due to longer term underinvestment and the exhaustion of better quality ilmenite mining operations in Australia.

• We feel that the rumour reported in the FT is unlikely and that analysts suggestions of Rio Tinto or Iluka as bidders are unlikely.

• Kenmare shares should be going better on longer term higher prices for ilmenite, the principal product from Kenmare’s Moma mineral sands operation in Mozambique.

• Legacy contracts remain in place for Kenmare at lower price levels with around another three to four years to run. However, markedly higher prices for new ilmenite contracts and an effective charge for gaining access to new ilmenite production is of significant benefit to Kenmare and its shareholders.

• We don’t think that another ilmenite producer is going to bid for Kenmare but we may well see one of the key ilmenite consumers come into the market in a stake building exercise to secure a foothold in the company and also share in the impact of higher price levels. Where the FSA might stand on this sort of share trading activity in a market where pricing is contractually confidential and where price moves are known by a few key negotiators.

• Kenmare’s production profile is rising again following difficulties feeding the gravity and magnetic separation plants. .

• The Phase 2, 1.2mtpa expansion is due for completion later this year and is robustly built. Management appear to be building the new plant to avoid many of the problems suffered with the operation of the first plant and we expect Phase 2 to run better than the Phase 1 operation.

• Dry mining production at Phase 1 is also supplementing for production shortfalls on the Phase 1 dredges to make up production. This is at relatively little additional cost and gives Phase 1 a degree of operational flexibility which is needed to make this work.

• Ilmenite prices rose strongly last year to record levels although few producers were able to take advantage of the higher spot prices as most material is sold under longer term price contracts. We are advised to use an average ilmenite price of around $350/t for our calculations for now but going forward producers should see more benefit from pricing contracts which better relate to spot market conditions.

Conclusion: Kenmare may not be a takeover target for other miners just yet but the shares should do well as result of significant expansion, operational improvement and price and margin increase. Kenmare’s management should be congratulated for their work and good effort in seeing the project through tough times in the ilmenite market and in financing and constructing Phase 2 for a very substantial increase in production and for their work in developing local employment in this very remote region of Mozambique.

* The author of this note recently visited Kenmare’s Moma site in Mozambique

http://www.proactiveinvestors.co.uk/columns/fox-davies-capital/8424/fairfax-market-report-including-stellar-diamonds-shanta-gold-ampella-mining-and-others--8424.html

Article in the Telegraph by Questor on 21st Feb said that :- Kenmare is going through a series of legacy contract expires which it can use to push the price of its products higher, in line with its compeditors.
Ref post 1121 above Fox Davies refer to legacy contracts at Kenmare remain in place at lower price levels for 3/4 more years" Looks like purposeful shoddy journalism by Fox Davies to me..

StockMarketWire.com
Kenmare Resources - which operates the Moma titanium minerals mine in Mozambique - bounced into the black in the year to the end of December.

The group posts after-tax profits of $23.7m against a loss of $16.3m last time with earnings before interest, tax, depreciation and amortisation jumping to $71.7m from $17.4m.

Revenues rose to $167.5m from $91.6m with robust demand increasing market prices.

Chairman Justin Loasby said: "I hope that, under my stewardship, the board will continue to develop and grow Kenmare's value in a sustainable and socially responsible manner, whilst retaining the entrepreneurial spirit that has served the company so well thus far.

"With this in mind, increasing and stabilising production is a key success factor.

"The board continues to identify and implement actions to reduce risks and to enhance the robustness and resilience of the production system."

Questor: Rising production and demand means Kenmare is a buy

Speculative demand fuelled by revived bid hopes helped Kenmare Resources rise 1.95p to 51.1p.

Read more: http://www.thisismoney.co.uk/money/markets/article-2131749/MARKET-REPORT-Oil-explorer-Borders--Southern-hits-Falklands-Islands-jackpot.html#ixzz1sSzlBzkg

katie priceless 22 Jun'12 - 19:35 - 21546 of 21547 edit

eedie4
Chinese domination of the World's rare minerals makes KMR a bid target , once it start's the share price will be bid upward's to unbelievable heights.

Been battered, bit of a speculative punt here on the spreads Mar contract. Initial target 45p.

I'm expecting news tomorrow - good news. Hopefully get up to 50p within the month and then over the 100p on T/O before July.

I notice the unbelievable heights of Kenmare's share price have reached less than 22p today!

Merrill Lynch comment:
"Iluka (ILU) confirms that it has made an approach to Kenmare (KMR) in relation to a potential combination, with ILU potentially bidding for KMR. ILU (Buy, C-1-7, A$8.30) is an Australian listed mineral sands miner. ILU states there is no certainty that any transaction will be progressed or that an offer will be made. Further announcements will be made when appropriate. We rate KMR as BUY, PO GBp26 set at 0.8x NPV. Current share price: GBp12. While we can’t be certain that any deal will be made between ILU and KMR, on a standalone basis we are positive on KMR for 1) its exposure to ilmenite and zircon where we expect a tightening supply/demand balance to be positive for product prices, and 2) its world-class, lowcost, scalable asset (mine life 20 years based on reserves, greater than 100 years based on resources).
We see 2 reasons why ILU may want to own KMR: 1) diversify the customerbase (ILU more China focussed the KMR) and 2) ILU has underutilised synthetic rutile capacity in Australia that is could potentially feed with ilmenite produced by KMR."

StockMarketWire.com
Kenmare Resources has rejected an approach from Iluka Resources regarding a possible offer by it for the company's entire issued and to be issued share capital.

The proposal received was based on a share for share exchange, with no cash component, with Kenmare shareholders receiving 0.036 new Iluka shares for each Kenmare share they own.

The Board of Kenmare believes the proposal does not recognise the value inherent in Moma as a long-life, low-cost asset.

M&G Investment Management, which manages funds owning in aggregate 19.05% of Kenmare, has confirmed that it supports this decision.

The approach from Iluka was preliminary in nature and was subject to various pre-conditions, including due diligence, and there can be no certainty that an offer will ultimately be forthcoming or on the terms on which any offer might be made.

Kenmare has said shareholders will be kept informed of relevant developments and in the meantime are advised to take no action.