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

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.

Guys....have a quick look at Van Dieman...VDM (Aim)....the other side of the Indian Ocean in a stable country....stock slipping back because of various delays....but nothing to worry about !, first of 4 mines being commissioned very soon...I'm in and waiting....!, check out the price of tin !.

The new photographs on the KMR site gives further credibility to a well run operation. The company`s material contribution to the welfare of the local community will also benefit them for the future in terms of labour relations and government attitude.

and still ticking up nicely. Looks good to go into profitability next year or the year after. An excellent medium to long term opportunity.

What on earth is happening here.....aggghhh ! stuck in this....thought this was going to rebound....not one of my best choices....can't believe the drop here !.

29p. cannot believe this. possibly because of no news for a while and market conditions,interims expected 19 \8\08.

Loads of good stocks dropping....check out GFM and FDI !.

Can't help but think its more than market sentiments here. Just weeks away from supposed full production, a mile stone IMO. and we are 40% down on very recent highs, at one point today down 25%. Spoke to MCcuskey twice recently, he is guarded but says he knows of no production related problems, that was 2 weeks ago at 42p. I now think he was very sparing with the truth. SP just 3p above what i bought in for over 3 years ago at one point today, bloody insane IMO.

excellent news

Cannaccord's price target of 35p seem's very low.

unless I am mistaken that was their target price 2004 when they were ~17p

todays news should upgrade all estimates

32p PLACING - represents 7% dilution

Cash needed for further working, I guess.

Seems a while ago this stock was being trumpeted as a route to loot....so why hasn't this translated into cash to run the operation?

How frustrating this project has become. The management seem to stumble from one blunder to the next! sounds like our government. Failing to hit targets and deadlines now results in this dilution, most were waiting on good news regarding ramp up and we got this!. I am of the impression that the stunt regarding the warrant conversion recently was to fund reaching our goal of 800kt, seems not, changed the goal posts again. A takeout is the solution they might give this underperfoming management team a kick up the arse. How many dead lines need to be missed and cash calls made before the receiver comes knocking.

borrowings seem to be holding this company down.this is probably why they need to raise more money,and dilution is not good.where is news of production,sales,and shipments.some clarification from management is needed.

Thing is i don't know if 32p now represents good value as its impossible to do any sums as the water is so cloudy from delays, problems, lack of production and sales info. feel we're always the last to know. This management team have gone from hero to zero IMO. cannot meet a deadline lets blame it on the credit crunch!! the climate change! no the invasion of Georgia even better Alistair Darling will do. Its about time we were kep't in the loop.