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

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.

joe

Could we expect some dividends in 2-3years if all goes according to plan?

IMHO I think KMR will be over 1 in 18 months time or earlier. They have the backing, the finance, the product and the customers. Just watch this one fly once it gets going!
Diana

Gull,

Depends on their strategy but not impossible to see dividends by 07. If Moma comes on line to plan then we should see the revenues starting in late 06 and 07 will be a very strong year. There is global undercapacity on titanium, with unprecedented demand, especially China and SE Asia...this is continuing to drive very high prices that will translate into high margins for KMR. Joe.

KMR has finally broken out from it's 20p resistance. IMHO 2005 will see this share steadily rise as it goes towards actual production. 2005 is going to be a good year and then it will rocket. DYOR

Hi just checking in fromt he traders side...
Hugely long this one...and been for a while

Yay!! Everyone has finally woken up to this superstar...had this share just waiting for the breakout for 18months now. Just look at it fly, a pound by Christmas and a huge share in 2006 onwards.

Daily Mail market comment today...

KMR climbed 2p as dealers noticed a large buyer accumulating and speculated that KMR could become the next Asia Energy which has soared from 60p to 6.85

so glad I trusted my instincts on this one...a star is born. Good luck to all KMR investors!

Anybody seen the nespaper report this morning stating that it thinks Kenmare Resources will be the new Asia Energy??????????????????????????????????.
Killik Brokers have just come out with this interesting article and ive been tempted into having a few bob on them............................

KENMARE RESOURCES Shares on the move



A newspaper article this morning suggesting Kenmare Resources may be the next Asia Energy may be a touch optimistic. Nevertheless, this mining group is of interest to holders as we recorded back in June prior to a 53 million fund raising. We copy below that article for back ground purposes and we believe the stock has further upside ahead.





From the 18th June 2004



Kenmare is an intriguing proposition in the mining sector. The company owns the potentially significant Moma Titanium Mineral Sand Project in Mozambique. The titanium product is used in by the chemical industry to put colour into everything (fabrics, paints etc) and represents a large but mature customer base which tracks global GDP. The major sources of titanium are RTZ and Anglo but this new site, when it comes on stream in 2006, will represent around 5% of the global supply. It is a cost efficient mining process which will make it competitive at a time when global production costs are going up.

Having brought the group to this point, it now needs to raise a lot of money to build the mine infrastructure and this has been agreed in an announcement today. A placing and open offer of new shares will raise 30 million and 23 million respectively at 16p per share. This afternoon, a loan agreement, which was subject to the successful announcement of this placing, will raise another US$269 million.

When a new mine comes on stream, it is normal to buy your way into the industry by pre-selling some initial capacity at competitive rates. The projected production rate, allied to known and expected prices for the raw material should render the business substantially profitable and cash generative in which one can build a discounted rate of return. This value back to the ordinary shareholder is viewed by Cannacord, the advising broker, to be worth around 35p per share. The downside is the long period ahead with no significant news flow with risk of delays in the meantime. Importantly, they have at least protected the downside to the capital expenditure program with a capped deal with the worlds most experienced construction group in this area. At 16p this share is a speculative buy. ENDS.

Worth noting various ources now have a target of 50p plus on the share price and that could be very conservative.

cheers GF.

Excelent looking chart.



cheers GF.

MMs playing games at the days end.

cheers GF.