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

and the possibility of a buy-out of course!!!

Uranium update at AGM?
Is M Carvilles' wife also called Bronagh?

Expect a lot of buying in the next few weeks as institutions start to buy this in anticipation of entry to FTSE 350.

Did'nt see that coming, what a unexpected ending.

Is this what TAers call a break up on the chart?.

It's a 'Breakout', goldfinger, and very nice it is too. Onwards and upwards.

Very pleased i followed my instinct and rolled over into Dec. by which time all will have become clearer.

hell of a stockpile of mineral. see photo on website.

Lovely. yum yum.

Lifted off another free B/Board....

Winnie says....

Moma is now producing and this is a profitable cash generative business. Output is steadily being ramped up and on a DCF basis this stock is worth at least 90p per share. I am working on new numbers at the moment but anyone who sells is making a grave error.

First reports from AGM, very positive with 1st shipment of ore in September.
Proven Reserves well in excess of the currently quoted 163mtonnes.Will continue to ramp up production without to much trouble.
cyril

SP performing well again.

Excellent report on the AGM over on the other site. This looks set fair for a strong rise.

Spot on Ponders.

NICE......................................

28.06.2007 - Moma Mia !!

July 23rd 2009 will be just another day for most people but on that date 2 years hence holders of KENMARE RESOURCES WARRANTS will know whether they have done all their money or made 3, 4, 5 or even 10 times their investment.

We last looked at these just over a month ago ( News Archive 24th May 2007 ) when they were 36p. Already, at a time when most shares are suffering their normal Summer malaise, they are up to a new high of 46p. Although a 28% gain in 5 weeks is not to be sniffed at, this is measly compared to the 15 x profit so far enjoyed by lucky punters who had them at 3 p in 2004

Just to recap, KMRW entitle holders to subscribe for fully paid shares in Kenmare on a one for one basis at 19 p at any time up to the aforementioned date so , for people buying now, the warrants effectively represent a 2 year call option over Kenmare stock. As with all warrants and options, the gains can be spectacular but there is always the real possibility of losing the lot. However, we consider that the risk / reward ratio on this one stacks up particularly well in favour of holders.

Lets just look at Kenmare itself. Today the shares trade at around an all time high of 67 p following confirmation that initial production is now underway at its giant Moma ilmenite mine in Mozambique. Ilmenite is the ore from which titanium is derived and, right now, this element is in big demand as a lighter but stronger substitute for traditional metals such as aluminium. The problem for this Irish explorer is that it keeps finding more of the stuff at a faster rate than it can rack up production. In 2005, it reckoned reserves were 72 million tonnes. By 2006, further drilling boosted the figure to 101 m. tonnes and then, this April, we learnt that reserves were up another 60 % to 163 m. tonnes.

Kenmare currently plan annual output of 800,000 tonnes for this year rising to 1.2 m tonnes by the end of 2009 so, even if they dont find any more, it will still take 136 years to fully exploit the mine. It therefore seems inevitable that they will either have to invest in much higher production ( and profits ) or fall victim to a swoop by one of the big boys like BHP Billiton or Anglo whose titanium mines are much more mature and starting to tail off.

At current planned production rates, the company should earn about 5 p a share implying a price earnings ratio of some 13.5. Not cheap but not particularly expensive either. So, for the shares and warrants to be substantially higher by July 2009, one or both of the above scenarios needs to have occurred which seems to us to be almost inevitable.

However attractive Kenmares pile of titanium is, we should never lose sight of the fact that the company also has even more potential in its other major asset in Mozambique 1,400 sq.kms. of uranium prospects. The company has recently boosted its exploration team in this area and is actively drilling for commercial deposits in rock which is already known to contain uranium mineralisation. If the luck of the Irish stays with Kenmare and they discover commercially viable uranium deposits, then the skys the limit. At present, this possibility is pretty well in the price for nothing.

Whatever happens, things arent going to be the same at Kenmare by the time the warrants expire in July 2009. Assuming further production increases in titanium output are announced and / or a bid is forthcoming, the shareprice should have topped 150p implying a warrant value of 131 p. If commercial quantities of uranium are proved up, we should be looking at a minimum of 300 p for the shares and 281 p for the warrants.

So, all other things being equal, the warrants should still appreciate from here by nearly 200 % but could fly more than sixfold if the uranium licences come up trumps. As for the downside, it would take a bear market in the mining sector caused by much lower growth in the World economy to upset the applecart. If Kenmare shares fell by a half to 33 p by July 09, the warrants would plummet some 70 % to 14p. Fortunately there arent too many of these warrants in issue so it would be virtually impossible to bet the mortgage on them anyway. That being said, the risk / reward ratio looks darned enticing with the company already underpinned by rising titanium production but with the added real possibility of a major uranium find.

GF....v v v v nice :-)

Yep but markets not responding yet Di.

Patience...we needed it with GFM too in the beginning:-)

Yep your right Di.

Hi you two - let me say it too - very, very nice.