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

The Company is aware that on 21st June 2004, the following held in excess of 3% of the issued ordinary shares of the Company.

No. of Ordinary Shares
% of Issued Share Capital

Clydesdale Bank
28,750,000
9.98%

State Street Nominees Limited
22,800,000
7.90%

Morstan Nominees Limited
10,990,000
3.81%

HSBC Global Custody Nominee (UK) Limited
10,886,775
3.78%

BNY (OCS) Nominees Limited
10,521,625
3.65%

Add
Prudential 92,754,629 = 14.35% as of 11th November
Artemis 41,000,000 = 6.35% as of 17th December
Zurich Financial Services Group 580,000 shares + 3,443,750 warrants as of 4th February

Funny - can't find any notifable disposals of these holdings. If they have sold some millions of them into the general market after a rise from about 17p in June 2004 to 27.5p currently who can blame them, that's what they are meant to do - a gain is not a profit till it's banked and all that. As I tried to explain above, the MMs have been happy to absorb them at this price and the original holders continue to hold substantial volume of shares between them.

The company's Moma titanium project is about to start mining operations with real revenues flowing over a 20 year life of some 2bn tonnes of ore in total.

There are no adverse reports and various tipsheets continue to support them for what that's worth.

I would be interested to know why you have spent so much effort in dissing these shares - are you shorting them, or wanting to buy in at a lower price or just earnest guardians of other people's fortunes. My own effort is spent in debating your position because I hold and will continue to hold shares which I do not want to see devalued by what I consider to be erroneous arguments. Although, perversely, I should welcome a dip on the price to top up my holding.

SD

Good Post SD. I have held KMR shares for almost 2 years now (bought at 14p)But I am not selling, instead I bought some more a while ago. I hold these shares through my company; as an aim share if I hold them over two years I do not have to pay CGT so I am definitely holding. Even if this were not the case I cannot see any reason for selling as this share has massive potential as it even has the customers when the mine is built. KMR can only go up and even short term profit taking is only going to be extremely short term dips. KMR seems to settled at this new level; any newsof progress is going to shoot it up to another level again so buy whilst you can and climb on boardDYOR IMHO ;-)
Di

I see there's another hectic rush for the doors today! Everyone and his grannie is selling Kenmare lately and can't seem to get rid quick enough. So much rubbish is hyped on this share but the person who dumped that whopping 11 million shares last Thursday told the real story about Kenmare Resources!!!

Informer...I have one word to say to your post 'CRAP'

The day is young and Kenmare is falling like a stone!!!

Here's a genuine tip for you. Sell Kenmare and buy African Diamonds (AFD). 114 buys and only 9 sales today (kenmare has 3 buys and 15 sells). It's a share with a future and, best of all, it's going to fly over the next couple of days!!!

Informer...AFD has made me lots of money with it's up and downs but I've given up on it now. If you really want to make money on a diamond mine and you have the bottle to take the risk buy NML not AFD

Hi Dynamite

Have you been away, or just busy?

I detect some shorters' trades (several 6,250 AT sells going through) today. Let them create a buying opportunity for all of us, not just themselves, say I.

There is no point in shorting a dog (I should know!); you just follow it down to the bottom where it stays. Maximum leverage consists of expecting good news to hike the SP after you've shaken the tree - so any stock worthy of shorting perversely must have some fundamental and market values which will take it up again the other side.

Di's 50% gain over two years with still the best to come will in the end make more profits than the traders. It's on my top up list, funds willing.

SD

Sorry Dynamite -but it looks like you checked out of the (African Diamonds) hotel a little early. The move is really on now and there's lot's of money to be made here over the next few days. Check back in is my advice.

SD....KMR is not a dog and not going to the bottom. I have been busy spending money instead of making it so now I have to make some more :-)

AFD chart looks good and the Sunday Telegraph mention of De Beers' take over of the 49% they don't already own has clearly stimulated the price this morning.

However, in cases of take over excitement, it is often better to bank profits whilst you can, in case the rumour proves unfounded or gets caught up in regulatory approval mechanisms.

AFD and KMR both suffer the potential weakness of being single product companies, but KMR has the enormous strength of being in the much more limited Ti02 market with established demand growth (China etc) with a vast new site to mine all to itself, without big brother holding is hand (half way up its back, knowing De Beers).

If AFD is taken over the premium may be as high as 50% to today's price - very nice too. If KMR fulfils its potential it should at least double or more in price over the next several months. But no reason why AFD should not have its day in the sun too. Good luck with it.

SD

Informer....
....the day is young and the shares are falling like a stone....
alot of small shares are being pulled back on little volume including kmr. Infact it touched a 38% retracement which could herald another buying opportunity... yep, a whopping 11 million shares on thursday and the stock ended up!!!!!!!

Jules...KMR screen is all blue now...it was nothing more than a buying opportunity.
Di

"A fool and his money are easily parted" Especially this is the case where fools put their money on such a weak share as Kenmare.

informer... think you may be the fool

The amount of money I make on buying and selling says I am anything but the fool. If you want to throw good money away on a really terrible share like Kenmare then go ahead. One guy dumped 11 million Kenmare shares last Thursday. He's a fool too ??? Take a look at the market. Then, if you are unable to see what's happening there, go take a look in the mirror and ask yourself who the real fool is.

Jules I think you are right and if you don't have anything sensible to say just go away Informer cos' you are being a prat!

some of you guys do make me laugh. We are in a period of sluggish, even negative stock market sentiment. High oil prices, weak dollar, Iraq .... it just goes on and on, its a wonder anybody is buying anything if you listen to the doom and gloom merchants. KMR has had a good run from the 16p levels and its only natural with no news flow that some people will take profits - good luck to them. I am staying in - KMR is sitting on top of vast reserves of a mineral that is in short supply. Its a real company that will come into production next year, not some mining stock living from promise to promise of better times ahead. KMR is going to make lots of money.

Informer - apart from your obvious dislike of KMR, tell us what you see as the negative points of the company.

Jimwren...Here here

Hi Folks, re informer, pro1, etc, etc. He's posting the same rubish virtually word for word on several BB's and meeting the same response. I'm certainly not selling KMR.

As jimwren says - negative sentiment abounds (from those not well into oils - shouldn't it be the other way round?), not to mention boredom. So people like to trade a little and take profits and reinvest just to feel they are doing something.

Just the kind of day to top up, which is what I've done. I can relax now, knowing I'm up to the weight I want to be at a reaonable price. I will look again nearer start of production to see where we've got to by then.

SD