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

LDettori... KMR has been a great stock for buying at 15-16p and selling at 20p but that was before the financing was sorted out. Now everything is in place this share will rocket, maybe not this week, maybe not until next year even, but rocket it will. Question is will you be able to catch it?

KMR new COO appointment RNS includes: "his appointment strengthens the Kenmare team in developing new opportunities for the company". Interesting... Maybe it won't be a one trick pony after all. I'd hope that any further projects took less long in gestation, though (Moma will have been over a decade?). There are other TiO2 plays in Africa, but none with as good economics as Moma, I believe. But that's not to say they are not actually economic. And I suppose there'a also Aricom (TIO) (spun out of POG), which seems to be in play, and which would save KMR some of the groundwork. Still, I hope nothing drastic will happen in terms of "developing new opportunities" until some revenues are coming in, in late 2006.

Point taken Dynamite, but, as I see it there were hundreds of millions of shares issued in the last few months and the holders of these shares will be very keen to lessen their KMR exposure so it will take a lot of buying to absorb all the selling - because of that I cannot see the 20p mark being breached in the next 6 months.

That's the downside of having an open issue alongside a placing - the retail investors looking to take early profits (the placees may have lock-ins). Still, overall, I guess I'm grateful for being given the chance to buy at 16p and get some free warrants -- at least, I'm a little more grateful now the price has finally clawed above 16p :)

But, the volume and number of trades has picked up nicely - highest for over a year, and OBV chart stepped up nicely on the last few day's move up in price - good support for the move. Much more of the higher number of trades and the average spread might actually start to narrow, which would only help trading as well.

From Business Day:



New titanium project excites

--------------------------------------------------------------------------------

The finalisation of a US$400 million debt and equity arrangement for the Moma titanium minerals project in the Nampula Province on the north eastern coast of Mozambique will provide a major boost to the South African government's commitment to the sustainable development of the African region.

According to Ian Benning, head of the project finance resources division of Absa Corporate and Merchant Bank (ACMB)(ASA), the lead arranger for the South African component of the deal, the titanium mine is expected to be fully operational by 2006 with revenues of some US$85 million a year being generated over the project's 20-year life.

As part of the debt package, ACMB have signed a US $80 million export credit financing agreement with Irish and London-stock exchange listed company Kenmare Resources to develop the Moma titanium minerals deposit.

Total debt comprises of a combination of senior and subordinated debt amounting to US$269 million and represents one of the largest ever debt raising in London for a non-FTSE 100 mining company.

This represents a turning point in the mining industry, whereby traditionally large resource projects were only financed through the support of major mining partners and mostly excluded traditional mid-tier mining
companies.
The lender group also comprises the European Investment Bank (EIB), the African Development Bank (AfDB), FMO (a Dutch-based development institution) and KfW Bankengrpe. Absa's lending is insured by the ECIC, South Africa's Export Credit Insurance Agency.

Using globally proven technology, Kenmare aims to develop a world-class titanium minerals deposit at Moma.

The mine is expected to be fully operational by 2006 and will in steady state produce 620,000 tons of ilmenite, 15,000 tons of rutile and up to 60,000 tons of zircon per annum.

Operating at an estimated cost of US$23 million a year, Moma will yield huge benefits for Mozambique. The proximity of the mine near major shipping routes will assist in opening the northern parts of Mozambique to the rest of the world.

The completed project will consist of dredges, a dredge pond and concentrator plant, a minerals separation plant, tailings dam, access road, export jetty with product storage and loading facility, electrical transmission and generation facilities, accommodation, airstrip and other related infrastructure

The project is expected to employ approximately 425 permanent staff at the mine and associated processing operations. When in steady state production, only 40 of these will be expatriate staff, while the rest of the complement will comprise Mozambican citizens.

Approximately 94% of titanium minerals are used in the manufacture of titanium dioxide (TiO2) pigment, providing whiteness and opacity to products such as paints and coatings but also plastics, paper, inks, food and cosmetics, including most toothpastes.

The balance of titanium is largely consumed in titanium alloys which are characterized by their strength, light weight, extraordinary corrosion resistance, and ability to withstand extreme temperatures, and are principally used in aircraft, although applications in consumer products such as golf clubs, bicycles, wedding bands and laptop computers are becoming more common.

I-Net Bridge

http://66.102.9.104/search?q=cache:Hf61SXPwRKsJ:www.bday.co.za/bday/content/direct/1,3523,1654420-6078-0,00.html+%22kenmare+resources%22+november+2004&hl=en

Nice to see the price holding up after a large bout of selling. There were also a few nice buys this afternoon which may be an indication of some press comment coming up. If so, we may see another rise before the next round of big sells. It would be nice to test the 20p mark again. If I could ask one question to Michael Carvill it would be - Are you currently in talks with another company regarding a takeover? I believe that the election will result in an easy win for the ruling party - Frelimo, everything seems to be going well, the only thing that causes me any slight concern is the weather - this year we have had so many hurricanes I hope one doesn't arrive in the Mozambique channel even though there should be plenty of shelter from Madagascar which would limit any damage, and there's not much to damage at this stage.

Stirrings from darkest Mozambique

capa

Artemis Fund Managers took a 6.35% stake in KMR just before Xmas.

10 million shares traded today. KMR is rapidly coming to peoples notice - this year will see it move from promises to reality. It is after all sitting on massive deposits of a substance which is forecast to be in short supply in the years ahead. Barring any political upheaval, and after years of civil war the area looks pretty quiet, KMR is going to make a lot of money

KMR is definitely one of the potential ten baggers in my portfolio, 2005 will see a huge rise.

Hi i am new to trading shares and was wondering why the kmr 9,859,192 trade is showing a sell but the price has gone up

grease monkey
the market does not report whether trades are buys or sells; the software that shows the trades makes a guess based on whether the trade price is closer to the bid or the offer price at the time the trade is reported. However, large trades are not reported unti 1-2 hours after they happen, and sometimes not till the end of the day. So .. large buy...price moves up...trade is reported hours later, and it now closer to the bid than the offer price and is reported as a sell.

What is officially deemed as a "large trade"?
Is there an EXACT figure or is it just RELATIVE to the rest of the trade volumes?

xargon
thank you for the info

Well, it must be over the NMS (normal market size) but always seeems to be several multiples of the NMS. To be honest I don't know whether there are exact rules or if it is purely at the discretion of the Market Makers.

Haven't seen 20p for a time :-)

capa

I'm finding it painful to watch at the moment! Will we finally smash through the 20p barrier?

Well Lostcause it has to happen some time. Lets face it in a years time Kenmare will be in production with customers for what they produce already lined up. This share can only go up.
Diana

Hopefully it will stay above the 20p mark tomorrow. Another small rise and a lot of chartists will start buying pushing the price up further, possibly to 25p - then, if we get good news of any sort further rises will be seen.

This was my share pick for 2005 and IMHO there is much more life yet in KMR and it is still a steal at this price, even after the steady increases in these past 2-3 weeks. Good volume again today and if it can secure positive support at the 21p level then I expect a further surge over the next few weeks. We may see some short term profit taking but I am holding these long term and in 2-3 years when they start industrial scale production in Moma the financials look truly astounding - see earlier posts. This is not a speculative PET style stock but a company with a significant established revenue stream in a highly attractive sector that is still well undervalued in the SP.