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

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.

Only watching from sidelines, but there is an RNS about Irish Takeover Rules -DYOR-
could this be a sell-out for L-T retail investors?
At 3p it's a lot cheaper that not so long ago - would be a pity if Execs have no backbone ( and maybe spent their cash too soon....)
-anyone - thoughts?
EDIT (16Jan2017 )- Wow...CONsolidation, or What?
30Jan2015 sp shows just under £8 ( ie not the 3p I quoted about that time). That's looking like 250:1 CONsolidation - unless anyone else can correct me.
-but don't think they are anywhere near that lofty price now! Nearer to £2, demonstrating that, whatever you do with share-density the Co. performance shines through. Pity those LT holders already broken by earlier Fundraisings...etc.

StockMarketWire.com
Kenmare Resources - which operates the Moma titanium minerals mine in northern Mozambique - said ore mined in 2015 decreased 19% to 27,532,000 tonnes (2014: 34,120,000 tonnes), mainly due to power interruptions and flooding damage in Q1 2015.

Heavy mineral concentrate production decreased 15% to 1,100,600 tonnes (2014: 1,287,300 tonnes). Ilmenite production decreased 11% to 763,500 tonnes (2014: 854,600 tonnes) but zircon production increased 2% to 51,800 tonnes (2014: 50,800 tonnes).

Other highlights:
- Increased primary zircon product quality and improved recovery of secondary zircon volumes

- Total shipments of finished products were flat at 800,400 tonnes (2014: 800,000 tonnes)

- Significant cost per tonne savings have been achieved, notwithstanding increased production from H1 2015 to H2 2015

-Improved power quality and consistency since the December 2015 installation of additional power transmission infrastructure by Electricidade de Mozambique ("EdM")

- A deleveraging plan has been submitted to lenders for approval, including a USD100m investment by State General Reserve Fund ("SGRF") and a further capital raising as part of a balance sheet restructuring

Managing director Michael Carvill said: "Power interruptions and instability have been the key bottleneck to production at the Moma Mine in recent years and acutely felt in Q1 2015, when flooding resulting in a prolonged outage. However, the investment by EdM to enhance the transmission infrastructure has resulted in a step change in the quality and consistency of our power supply since coming on line in late December.

Prices of ilmenite, our major product, have remained under pressure in Q4 2015. However, the recent closures of titanomagnetite mines in Russia and China and the reduction of feedstock inventories at Chinese ports are encouraging."

Anybody know whats happening here?

StockMarketWire.com
Kenmare Resources swung into the black in the six months to the end of June, posting a profit of $9.4m against a loss of $47.1m last time.

Revenues increased 82% to US$102.4 million, as a result of increased prices and sales volumes.

Ilmenite production increased 25% to 504,800 tonnes compared to H1 2016 while zircon production rose by 32% to 37,700 tonnes.

The group said ilmenite price recovery continued in H1 but with some recent softening in the Chinese market.

Managing director Michael Carvill said: "Kenmare has produced a record one million tonnes of ilmenite in the twelve months to June 2017, whilst improving safety standards, and remains on target for 2017 production guidance.

"We have also produced record levels of zircon and are capturing more of it in higher quality products. Increased shipments, higher average received prices, and lower unit costs have resulted in H1 EBITDA increasing to US$29.8 million. We look forward to building on these achievements.

"In relation to our medium-term objective of optimising mining capacity, several development options are under assessment some of which may significantly reduce or defer previously guided capex, whilst optimising production volumes.

"Capital investment decisions will be made in the context of market conditions and maintaining balance sheet strength."