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

I think we will see a quick 25% rise in the next 3 weeks .

Your theory based on what flipper?. 25%! more like 2.5% until any relevant breaking news is issued.IMO.

25% in 3 weeks time , based on a 40p share going to 50p .

Fliper, why do you think so? Thks.

there are alot of fund managers holding this, redmayne are recommending it, will go up but not as opptomistic as flipper.

I've held these now from 20p,always going to be until production.Try ADVFN. BB.Some very knowledgeable investors on there who've done their home work on this and don't mind sharing.
BD.

In july the MOMA mine was 88% complete.
Anyone know how far off completion we are now?
I realise that financing has been spread over the next 20 years, so a big rise in the sp is not on the cards, but full production should at least raise the profitability of KMR particularly as they don't have to share profits with other partners.

Yes but dont forget the interest rates & the US dollar strength & how these factors effect the bottom line, also half of what also half of what is produced will be sold at a heavy discount to current prices 40% less & the energy costs have that influence production have gone up by 80%.

All in all though there should be a modest rise in share price by Feb next year (6 months time).

Happy holding

Gull

I think that the value the Uranium will bring to KMR will at least equal the value of the mineral sands. Uranium is BIG BIG business and the results of the initial exploratory work may come with the interims. If initial exploration results are good it could add 10p to the SP immediately.

Thanks for the upbeat post Frankie. Am still holding KMR.
I suppose a little nudge in the right direction for the next Godolphin winner is out of the question???

Uranium catches on with niche-savvy investors
Fri Sep 15, 2006 12:45 PM BST
By Nick Trevethan
LONDON (Reuters) - Uranium could be the next big thing for investors searching for high returns in niche markets, with growing interest in nuclear power fueling the boom.
A number of funds have already moved into the physical uranium market including Canadian-listed Uranium Participation Corp and Nufcor International, a joint-venture between AngloGold Ashanti Limited and FirstRand Limited which manages Nufcor Uranium.
"I think we are seeing the tip of the iceberg of financial investors entering the physical uranium market," said Mitchell Dong, chief investment officer of Solios Asset Management Inc. It operates several funds and pools of private capital investing in energy assets, including uranium.
"We think we will see a move from a purely physical market to a blended physical and financial market, as we see in the power markets in the Nordic countries and the United States."
Spot uranium prices have nearly doubled over the last 12 months to $52 per pound, according to the website of Ux Consulting (UxC), a leading publisher of uranium prices and price forecasts.
Uranium demand from the world's 440 nuclear reactors runs at around 80,000 tonnes per year, while mine production is around 50,000 tonnes.
The shortfall made up from finite stocks of highly enriched weapons-grade material from nuclear warheads that is downblended for use in commercial reactors.
Analysts said increasingly sophisticated investors would want to cash in on rising prices.
We are seeing a requirement for more sophisticated, more active investment products. It is no longer simply a question of putting money into an index fund and coming back in five years," UBS analyst Robin Bhar said.
"This more active approach will require a myriad of new imvestment products such as structured notes and niche markets like uranium."
MORE ACTIVITY IN URANIUM
Recently, ETF Securities announced plans to launch a series of products that would allow investors to gain exposure to commodity price movements by tracking indices.
"We could see more speculative activity in uranium that doesn't rely on holding physical material through exchange traded-notes (ETNs) -- assets that are based on benchmark prices rather than a store of physical material," Bhar said.
In addition to the ETFs, around half a dozen private hedge funds hold physical uranium.
"Five years ago over 80 percent of spot market volume was purchased by utilities. So far this year under 20 percent has been purchased by end users," a European uranium analyst said.
Andrew Ferguson, manager of Geiger Counter Limited, a closed-end uranium mining and exploration fund with 13 million pounds under management, said the market was too new to cope with exchange traded notes.
"There are people out there looking at paper-based assets, but the market is a bit too new for those."
"Some clever person will come up with something along those lines. We are happy investing uranium miners and assets like Nufcor. Physical uranium is also an option, but we see the greatest upside with producers and explorers," he said.
Gary Stoker marketing manager Nufcor International Ltd said: "Certainly uranium markets have been very interesting for investors over the last three or four years and it does not appears as if that interest is abating."
"Uranium until recently saw no investor interest and even now 90 to 95 percent of the market is producer to end-user business, but investors are starting to get into the market"
He said the financial community was investing anticipating substantial growth.
"Various numbers are bandied around. The one thing that is certain is that the economics of a nuclear power station are fairly insensitive to the price of uranium.
"Even if prices double from here, it won't significantly affect the competitiveness of nuclear power."
That bullish view was shared by investors in Nufcor's fund, which holds over 1,000 tonnes of uranium and trades at around 30 percent above its net asset value.

Frankie no disrespect, but are you on the correct thread.All this talk of uranium is premature to say the least.Surely we should stick to what resorces kmr are to produce. Anthing else is a futuristic bonus at this time.Forgive my ignorance if i've missed any very,very recent announcements!

Just someone spamming, Boxer.

Boxerdog - the futuristic bonus will come sooner than you think. Anyone know who is overseeing the exploration work? Is it Alastair Brown?

Frankie expand please,when,why and who!

2. Resources: It was announced on 27th March 2006 that as a result of further exploration drilling which resumed in late 2005, the total ilmenite resource base at Moma increased from 72 million tonnes to 101 million tonnes. Moma will be one of the lowest cost producers in the world.

3. Uranium Exploration: In their AGM statement on 12th July 2006, Kenmare announced that it has been granted three uranium exploration licences covering approximately 750km2 in western Mozambique. The licences, which lie in the Zambezi Valley, cover an area underlain by Karoo sandstones and contain known occurrences of uranium. Further news of this exploration programme is imminent.

4. Titanium: The global demand is growing strongly due to a resurgence in demand from the aerospace industry and as a result of the recent shipbuilding boom. Demand for zircon is very robust with continued price increases expected. There is continued strong demand from the ceramics sector, most notably from China and as a result of limited new supply, prices are expected to remain high.

5.Possible Takeover: There is every chance on consolidation within the mining sector, with Kenmare being a possible target, especially due to its massive proven resources, forecasted low cost of production and as a result of the political stability of Mozambique. BHP and Rio Tinto could easily be drawn into a bidding war for Kenmare.

The Gull,

"the energy costs have that influence production have gone up by 80%."


Are you sure?

I believe the reason the minestart has been delayed is to connect to the cheap national electricity grid of Mozambique, rather then run off the more expensive on site diesel generators.

Hi Andy, where did the news come from start date had been delayed. I contacted the company asking for confirmation the mine would be completed for the end of the year. The response was all will be revealed in the interim results, ie no confirmation, which worried me a little.

I wouldn't worry that they have not given you any information over the phone.
If you look at other discussion boards where people have phoned the company to get info, everyone has got the same result : "Wait for official announcement".
Which makes sense, as they wouldn't want to give anyone information which was not already in the public domain.
Any idea when interims are due?

kivver,

I believe they have delayed the start of the handover due to a lack of electrical supply, and although they have the option of running on generators, this is far mjore expensive, and tehrefore they have decided it more prudent to wait until the cheaper elctrical supply is connected.

If I can find an article I will post it here.