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

here we go, here we go, here we go,here we go.

From the other side :


From UK Analyst

Kenmare shares have trod water, at 46.5p, since our last update with the market waiting for the company to announce the beginning of ilmenite production and shipping from the Moma Titanium Minerals project, located on the coast of Mozambique. Feasibility studies on the project were completed in February 2001, confirming the technical and commercial viability of the project.
Moma is a new mine containing considerable reserves of the titanium minerals, ilmenite (approximately 101 million tonnes) and rutile (approximately 2.7 million tonnes), as well as large quantities of zircon (approximately 7.8 million tonnes). The market price for ilmenite, rutile and zircon has risen sharply over the past five years, largely in response to increased demand from China, India and other rapidly industrializing nations.
Kenmare was expected to bring Moma into production in the first quarter of 2007, with extraction and shipments expected to start in the first half of the year. We expect confirmation that this has happened shortly. Moma has an expected production capacity of 701,000 tonnes of ilmenite, 17,000 tonnes of rutile and 60,000 tonnes of zircon per annum for at least 20 years. The value per tone of the last two minerals is considerably more than the ilmenite's value per tonne. Project financing is based on a 20 year mine plan with reserves of 16.4 million tones of ilmenite, 0.5 million tonnes rutile and 1.3 million tonnes zircon. The company expects to accelerate production output by the second half of 2007, from 700,000 tonnes to 800,000 tonnes per annum, with an increased output commitment to 1 million tones of ilmenite per annum from 2008 onwards.
To date, Kenmare has signed a number of multi-year off-take contracts for a significant component of ilmenite, rutile and zircon production. Kenmare is in discussions with a number of other consumers regarding the remaining uncommitted production from Moma. The largest demand for titanium minerals ilmenite and rutile is in the manufacture of titanium dioxide pigment, which accounts for in excess of 94% of total demand for titaniferous feedstocks. The balance of the demand for titanium minerals comes from titanium metal producers and welding electrodes.
We value the base case Moma mine (output 703,000 tones per annum) at 59.1p per share using a cautious DCF model and a 1 million tone mine would be worth 70.6p per share to Kenmare. We are working on new forecasts and a new valuation over the next few weeks, as we prepare a more detailed note but we see no reason why those forecasts and valuation will not be significantly higher than our current numbers.

For anybody whose not read the above all very positve but months old. Their updated valuation is still to be released.

At last here we go, need to recoup my chaco losses, and iph, not been a good month, sold rdg early as well:-(.

Still learning, but not letting go of these.. Happy days ahead, new increase in resources very welcome should value company well over 100p in time.

yay that is my shares in KMR doubled at 50p...bought them from 14p to 34p... alot of activity today :-)

I got in just over 2 years ago 21p. I confess i've commited the cardinal sin of only having 1 egg im my basket, after countless topping up i'm holding circa 1/4 mill. Hope this stratagy doesn't come home to haunt me!. Blue skies at present but keeping my eyes peeled.

Looking good on the momentum front.

Very good Goldfinger but I'm not sure that I fancy being in Boxerdogs shoes! 100% KMR...hmmm I'm 30% KMR due to profits and 30% GFM for the same reason but the rest is well spread. In fact the 30% I have in KMR is more than the orginal pot I started off with so I'm not that bothered. Last year I ended up 75% in GFM due to profits and eventually sold the lot to buy back cheaper and a smaller stake size but it just keeps on going up ;-)

Dynamite understand where your coming from, not for the faint hearted and must be monitered in case of need to exit. Not my usual stratagy just very confident in the KMR. story.

Those of us who have held long term will now start to benefit on 2 fronts.1stly
the SP increase, which not dramtic at the moment will gather pace and could
double by year end(GFM took a while to take off, from 1st production).
2ndly the CGT will after 2 years reduce to just 10%.
So i very happy to remain and allow all the hot money to run its course,and wait for the steady rise in the SP.
O/T another miner worth checking out is HMB, just weeks away from producing
its its 1st gold.
cyril

cardinal sin from me too. 85% kmr

niceonecyril - KMR is not an AIM stock, is it. Anyway its listing on the Irish Stock Exchange almost certainly prevents it from enjoying AIM accelerated taper relief.
IMHO
DYOR

niceonecyril - KMR is not an AIM stock, is it. Anyway its listing on the Irish Stock Exchange almost certainly prevents it from enjoying AIM accelerated taper relief.
IMHO
DYOR

and me 75% kmr, strarted in small batches at about 18p.

clear chart breakout too with the stock currently at all time highs...also on really good volume, indicating further rise to come....

stockdog i stand corrected, mixed up with another share from my ISA which is
dual listed.
cyril

Momentum on its side.

Any TAer with the present state of play please???????????.

gf - I'd say we're now consolidating nicely after the break through of the much visited resistance at 48.50 which I would very much expect to see develop as the support of a new trading range up to mid 50's (the top of the November up-channel crosses today's date at about 54.5p, indicating the same sized range of 6p as recently) short term before moving on up to the 60's we all anticipate. We've also broken past last March's 50p EOD and 50.5p intraday spike, which I take to add strength to the break out and could even indicate a new base of 50.5p.

On balance Volume is looking strong and RSI shows below overbought territory allowingh the consolidation pattern I'm looking for to catch up.

However, as we move through May, I am watchful for signs of last year's sell off - or did that happen in February already?

Anyway, that's my analysis, albeit less technical than others.

I'd say you were spot on stockdog (spotty dog?). We've broken out of the old trading range, retested it on a pull back and now look set fair to move north. A classic chart pattern supported by good fundamentals - a strong mix.

Shares in Kenmare Resources* (KMR) added 1p to 51.25p in heavy volume. after GE&CR published a note increasing its base case target price from 50.25p to 51.25p