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

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."