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

BUY recommendation for KMR in today`s IC. A fair and realistic assessment of the company`s prospects I think. Good for the long term, and also a strong price for ilmenite, currently $80-100 per tonne. Recent shipments to China have garnered around $130. A major Australian producer is facing production difficulties, this will hit the supply side. The KMR MD, Carvill is a shrewd cookie and should keep things on track regarding solving their current production difficulties.

No trading update since January, full year results due soon. When can we expect some good news?

I think that by now most of the initial production problems should have been ironed out...I hope !

Without it meaning to sound too daft a question, what sort of sp are people thinking this share could rise to in the long term, albeit things go to plans ? Also, what timescale would people classify as long term ?

Apologies for the ignorant question, but would welcome personal views

At a guess (big guess)...expect this stock to be around 60p by 1/1/09...could be more...if production problems are sorted quickly...long term 2 or 3 years ...I would expect the sp to be way above 1....the only thing is that this company has debt to pay off...don't expect a dividend too soon, but it's a company with good prospects !

Many thanks, appreciate it.

The sp of this co. has been most disapointing since the production difficulties expressed in the rns 25/1 08. If the expectations of the co. are positive after the prelims. on 30 /4/ 08, and production,delivery, and payment are on schedule then sp of 70p to 1 will not be far off. Even more, if news of uranium licences and field work.

The lack of a trading update usually does not bode well.

The lack of a trading update usually does not bode well.

Also general market sentiment, enforced sellers from smaller stocks, misguided views that commodity prices are softening (Ti still rising) all help keep the price down.

I'd like to see back to 65p+ by year end and then see what full production projections and interest rates make the future look like as to whether to hold further.

results just publised apr on line apr 1hr ago link through to their website up apr 0.75
@13.03 would be nice to see them up to apr0.60 or higher by year end

Results show continuing production delays for one reason or another.Difficult to assess performance without any sales figures, presumably a clearer picture of profitability will emerge when the interim results come out,but a long time to wait.

halifax - you forgot to mention that clear solutions were being/had been implemented, largely not at KMR's costs .

Good report seemed to me. As you say, I look forward to interims to see some revenues posted.

Staircase climbing here !, +2p today so far...!

Wonder who sold 2.46m shares this morning?

halifax...you are going to ruin my day !

rf not the intention have been monitoring KMR for a long time and wish the project every success.

I reckon if this had no debt....it would be up to over 2....but it has !

Thats a little bit better.

Never seen so many posts in a day !. The warrants are looking good value now.