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

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.

Very large volume today again.

cheers GF.

Gonna go up again today - plenty of support still there at these levels.

Hi all. I jumped on board earlier. I dont no if anyone has seen this, it is on this is money today.



Irish titanium miner Kenmare Resources, which has interests in Mozambique, jumped 2p to 23p. Dealers heard that a large buyer was sniffing around and bulls reckon that it could be the next Asia Energy, which has soared from 57p in October to 685p.

http://www.thisismoney.co.uk/investing-and-markets/tips-and-tactics/article.html?in_article_id=397470&in_page_id=23


wilbs

And in the blue again with big volumes.

cheers GF.

Can't see them doing an AEN, they'll be taken out before they get to quid imo

capa

Capa what's a AEN?

Sorry Dynamite AEN is the epic for Asian Energy, now that is a chart !

capa

Dyna,

Asian Energy, whose price rose from 70p to 6 in a couple of months.

A quid will do me capa.

cheers GF.

MMs now playing silly devils with this ones price. Looks like they need stock.

cheers GF.

Well IMHO I reckon a quid by the year end and several pounds by 2007. Thanks Capa and Andy I should have realised you meant Asia Energy.

A friend who has made a huge amount of money on Penny shares recommended KMR to me in 2003 when I bought orginally, he the lucky devil, bought at 8p previous to this and has no doubt like me added to his holdings.
D

mm's and profit takers now weighing in but underlying strength is still clearly there - if not today then next week we'll continue to see the climb.

I agree Joe. Buys more than sells but price down slightly. Prices never move up in straight lines.

cheers GF. Will get that analyst report if I can find it.

Here it is.................

Lifted from advfn an analysts report..........

If, as I expect, Kenmare secures further offtake deals over the coming months it does have the cash to expand the capacity of the project so that it has a DCF value of 57p per share. An announcement along these lines could well happen by the half year. So on fundamentals the shares are not expensive.

cheers GF PS from t1ps.com I think.

Thanks GF. For me, this is one to tuck away in the bottom drawer through 2005.

If I wasn't in so heavily already I'd still be tempted to add and add at this price level. Why?: There are already offtake agreements in place for more than 60% of the first 5 years capacity at Moma and given global over demand they will easily get to a 100% order book in mid 06. At full capacity, Moma will provide 5% of global supply, with stable prices and guaranteed cashflow to pay it's debtors, including a flexible low interest deal with the African National Bank and other sources of "friendly" financing (only one commercial RSA bank is involved), the picture will start to change dramatically as they move from commissioning to production. Even at today's market cap it's an absolute steal, barely covering the net value to KMR of a year's production vs. multiple year reserves. Factor in that although the project is financed by many sources BUT owned 100% by KMR - they will easily cover the debt and redress the short term balance sheet weakness. IMHO This share is an absolute banker to deliver long term - the activity of the last few weeks is just the dawn of realization and expect the institutions to start buying in before too long. I stand to proved completely wrong and please DYOR but this is a company in a sector I've watched for a long time and I can honestly say I've never before felt more bullish about the prospects of a single stock.

hi guys,

good thread, plenty of decent and informed info, and i admit, this does look good, prima facie!!!

Does anyone know at what price they have forward sold the 60% production for the first 5 years???

i may be in monday, but would like to know how much they have contracted for in comparison to the curent world price.