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 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

Di - YOU'RE surprised I'm still in SEO - how do you think I feel!!

I see from other boards that Winnie as put out a rallying call on this stock saying its undervalued. His target price 70p or more.