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

Titanium supply remains tight

By Tom Stundza

October 11, 2006

Titanium demand from all end markets, but especially commercial aerospace, remains healthy and robust, says Ronal Epstein, analyst at Merrill Lynch in New York, who recently attended the International Titanium Associations annual conference.

Although numerous capital expansion programs are in place, the suppliers continue to play catch-up with demand, he says, adding there was no consensus whether there would be enough supply to meet the significant demand in the coming years.

Reason: Demand may double by 2015. In a report to clients this week, Epstein says that Boeing expects to be the largest customer of titanium, at 30% of consumption by the end of the decade. He notes that Boeings internal forecasts, even with the planned capacity expansions, show there wont be enough supply to meet the onslaught of demand and encourages further capital expansions. Capacity of 95-100% is not feasible and ideal capacity is in the 80-85% in order for any unexpected demand to be met, writes Epstein. Hence, the company is aggressively addressing issues it sees with the supply chain. Reason: Between 15%-20% of the 787-model jetliner will be comprised of titanium as compared to less than 9% on the 777 model. Also, while commercial aerospace is expected to be the main driver of demand, Epstein says, the industrial and defense segments are also expected to be strong, mostly driven by global economic expansion in the Middle East and China and the oil and gas industries.

Titanium Corporation Announces On-Site Commissioning of Pilot Mineral Concentrator Plant

October 04, 2006

Titanium Corporation Inc. is pleased to announce that its pilot mineral concentrator plant has been successfully commissioned on-site in Fort McMurray, Alberta.

The operation of this heavy mineral concentrator on-site is an important step in Titanium Corporation's 2006 Pilot Program to finalize the Company's process flow sheet to optimize the recovery and separation of heavy minerals from mined oil sands tailings. As a result of technical work conducted in 2005, the Company's engineering team redesigned the process flow sheet. The Company's strategic plan was modified to focus the first phase of development on the production of zircon, followed by an expansion phase to produce titanium products. Zircon continues to remain in high demand world wide and has experienced significant price increases .

The pilot mineral concentrator was constructed in Australia in modules, a strategy which is proving highly efficient with project timing and costs tracking within the original budget of C$3 million. Following decommissioning of the pilot mineral concentrator in late October 2006, the mineral concentrate that is produced will be shipped to Titanium Corporation's Regina facility for separation processing and analysis during the fourth calendar quarter of 2006.

I wonder what the sp will be in a years time when everything is up and running ?

At least double me thinks thats if KMR is still going.

Kenmare plans to expand annual production from 650,000 tonnes to 1m tonnes in mid 2007. For an additional investment of $50m, the value of annual output could be raised from $90m to $145m.

The mining majors are desperate to replenish their reserves. And because they have a lower cost of financing, Moma would be worth even more in their hands.

BUT what PRICE would they have to pay to get it?.

where will the 50 mil come from, already very heavily in dept.

from initial cashflow from the 650,000 tonnes - duhh!

Doesnt matter where it comes from , please remember its year after year the extra production for a one off charge. And dont forget the operation could last for 90 years.

IC "tip" for KMR is available on their site:
BUY

It's taking Kenmare Resources longer than initially planned to build its' mineral sands processing plant at Moma in Mozambique, but the company still expects to be producing a concentrate stockpile by the end of this year. The next step is to get the mineral separation plant up and running to process the concentrate. That, says the building contractor, should be happening by early January, and first sales will follow shortly afterwards. So it's not a catastrophic delay.

Indeed chairman Charles Carvill says he's "delighted" with progress. However, an additional $20m in capital expenditure - taking the total on the project to $336m - combined with some slippage in forecast output for 2007 has led broker Davy to reduce its target price for Kenmare by 8p to 50p a share, based on a cash profit margin of 67 per cent and discounting future cashflows at 8 per cent a year. On the plus side though, the broker still argues that Kenmare is the best UK-listed company in the mineral sands space on the basis of margin and potential output. And there's plenty of balance sheet depth if further delays arise.

IC View: The delays are teething rather than systemic and Kenmare's strategy of building a strong long-term position in the mineral sands sector looks secure. We advised buying the shares at 36p (30 June 2006) and at 34.5p, they remain a buy.

Shares Mag had a good write up about KMR yesterday; a double page spread and definitely a buy.
I've held these the longest of any share I have over 3years from 14p upwards and as Shares said a bit more patience needed :-)
Di

Dynamite,

I certainly agree with that sentiment, frustrating that there is a delay, but KMR look on schedule for year-end.

Being hit at the moment by RHPS sellers.

33p to buy .

What are RHPS playing at? Buy one week and sell the next? What is the justification for thier sell recommendation? Any subscribers on here to tell us why? I am sure that all will come good with KMR, but the current malaise in the share price is somewhat disconcerting.

TB looking to clear some deadwood to make room for new recommendations as much as anything more concrete. He's bored rather than scared with KMR and can book a profit.

Edit: IMHO!

Hi Di, how are you?

sd

Pond life did you see the article in shares?

Good reading 60-70 is what they reckon they are worth

Good luck

Yup your right Pond life refering to RHPS Im not a subscriber but one of my buddies is and we exchange articles. I was called a liar over the road because of Bulfords quick U turn. In fact they accused me of fabricating the article from last saturdays RHPS.

You think you are doing them a favour and then they round up on you. You cant win sometimes.

Sorry guys, but I think you are expecting too much at the moment.
MOMA is not yet complete, KMR recently posted an operating loss & also reported slippage in their program, so I think it is too early for this one to take off.
Another month and interest should pick up, but I still think 30-35p is realistic at present.
I have also found that tipping companies in shares mags can often have a negative effect, so I would prefer that they didn't!

it gives good opportunity for profit taking. caught me out before

Hi SD,

I'm good .........sitting on shares with a lot of patience; I see you have some of them like CHP. Surprised you are still in SEO...that share made me alot of money but I learnt my lesson with YOO and got out with lots of profit and did not average down. KMR is just another one to hold onto and wait...it will go up I'm sure...don't be surprised if it goes down before the openGFM did that too.
Di