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

What about the power line connection ?

connected ...... bzzzzzz

Get switched on to KMR - the new ramp!

whhoooooooooooooooooooooooooooooooooooooooooooooooosssssshhhhhhhhh!!!!!

Growth Equities & Company Research nicked from the other side :-)

GE&CR October Review

19 November 2006

Kenmare Resources

In terms of its share price Kenmare Resources has had a strong September the shares now trade at 39p. This reflects a strong newsflow and the fact that the shares remain fundamentally undervalued. Having initiated our coverage at 15.75p, our enthusiasm is undiminished.

On 25th October Kenmare served up mixed news. The unwelcome news was that the contractor at the Moma site has warned that there will be a six week delay in completing the Minerals Separation Plant (MSP). This means that ilmenite will not actually be shipped until mid February. However sands can be extracted as planned from around Christmas and so there will be no effect on forecast sales for 2007. This is a minor delay, no more.

The good news was confirmation that as of the second half of 2007 Kenmare will expand output from 700,000 tonnes per annum to 800,000 tonnes. The cost of expanding capacity will be just $6.5 million and so Kenmare can meet this from reserves. This indicates to us that Kenmare has signed, or is close to signing, additional offtake deals for Moma. We still expect Kenmare to commit itself, at some stage over the next year, to expand output to 1 million tonnes per annum from 2008 onwards. It has sufficient cash to fund this additional increase in capacity. In the 21 months since we initiated our coverage of Kenmare, the market price of ilmenite, rutile and zircon have risen sharply, largely in response to increased demand for China and other rapidly industrialising nations. A number of the offtake agreements historically negotiated by Kenmare for Moma were on a fixed price, or part-fixed price, basis so not all of this increase will flow through to the bottom line. However offtake agreements being negotiated at present and concluded in recent months are at pricing levels some 25% higher than the earliest offtake agreements.

We value the base case Moma mine (output 703,000 tonnes per annum) at 59.1p per share using a cautious DCF model and a 1 million tonne mine would be worth 70.6p per share to Kenmare. We will be working on new forecasts and a new valuation over the coming weeks as we prepare a new detailed note but we see no reason why those forecasts and valuation will not be significantly higher than our current numbers.

Were the late trades of 1m and .5m buys or sells anyone?.

Both were buys at 39p. 500k normal trade, 1m at bargain condition. Offer price was actually 39.25p at the time.

New PICS !!! filling the pond
Pond looks as though its now filled.......bzzzz

Impressive, just hope the power being generated to drive the pumps and lighting is not generator driven, but instead from the national grid, If so it would signal the end of recent delays. Looking forward to handover when the action should commence.

boxerdog - there were no recent delays from the power supply, so grid power signifies nothing we don't already know. the delays were in delivering materials (steel?) for the processing plant by about 6 weeks - which does not delay stripping and first dredging, but delays first processing by a tiny 6 weeks over 3 years - immaterial in the mid/long term.

stockdog,

Are you sure grid power is connected?

I understood the delays were because of this, and the cost of generator running, so they delayed for three months rather then increase their costs by using generators.

The picture could have been taken using generators rather then the grid.

Those that kept faith over the last couple of months now starting to be rewarded.

Andy
It's all there in the RNS and web updates.
I've no idea whether power is connected yet. All we're told is the power line is there ready to be energised and the delay to mine completion was caused by late delivery of materials for the separation plant. The power issue has become an obsession with some people and I can't be bother to cut and paste the chairman's words anymore, but it's all there for you to read. None of us know the economics of converting from generator to grid power, so how can we possibly make a hudgement based upon its occurrence or lack thereof. My own guess (no more than that) is that grid power becomes economic versus gennie when 24 hour a day operations start.

Too right Goldy. With this and HMY, you certianly have the golden touch at the moment.

stockdog,

It's not an "obsession", it's very pertinent IMO.

I was told, and can't remember by whom, they are preferring to wait for the line to be energised rather than use generators as they cost so much to run. That may be true or it may be total b*****x.

I have emailed KMR, no reply yet.

Andy - read the RNS and trading announcements, please. It's all there. Also see the other board for lengthy exchanges on this subject.

If you can't remember who told you, with greatest respect, how can you attach much value to such "information"?

"Preferring to wait till line energised" - what are they keeping waiting? nothing I know of, except (and I'm repeating myself here) for the 6 week delay in delivery of materials for the separation plant.

Andy, you always contribute such careful research to the many threads I encounter you on. Why are you dealing in such unfounded gossip here?

By all means call Kenmare - I expect you'll get the same answer Kenmitch on the other side got.

Wish you well.

according the site ''the MSP, due to be completed in early January 2007, will now be complete around mid February. This delay has been caused by the late delivery of materials to the project site''. some words changed to avoid copyright.

stockdog,

I hold KMR shares and warrants, so I certainly want success here just as much as you do.

I regularly attend Minesite, amongst other London forums, and I heard it there, but cannot remember who mentioned it. It certainly wasn't malicious gossip, as very few PI's attend, and I remember that I thought it prudent to wait for the electric supply at the time.

I am relaxed with KMR, I am sure they are about to deliver, first rule of mining companies is there's always a delay!

here's one of the recent photos from the site, looks completed!



Wet Concentrator Plant Starting to Float (1) (Nov '06)