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

44p bid now, these shouldn't be this low even in this market.

This is starting to look : more than good value, because 6 months, end of summer is not that far away...

I posted that before i read todays update RNS.

Is the problem with KMR the weight of debt which they have to service, somewhat like IFL?

SA gold mines shut by power cuts

Mining plays a key role in South Africa's economy
South Africa's biggest gold and platinum mining companies have suspended production because of a spate of recent power cuts.
They took the drastic measure after state power company Eskom said it could not guarantee supplies, raising fears of miners being trapped underground.

South Africa is one of the world's biggest producers of platinum and gold.

The power cuts are a "national emergency", according to Public Enterprises Minister Alec Erwin.

"We are viewing the next two years as being critical," he said but denied reports that the power cuts could hit South Africa's hosting of the football World Cup in 2010.

He said that the government must share the blame for the power cuts.

Power is like oxygen, it's essential for any half-modern economy

Goolam Ballim
Standard Bank Group


Hospitals hit by blackouts
South Africa's power chaos
South Africa's power shortages reached their highest level on Thursday, an Eskom spokesperson said.

South Africa's three biggest gold producers AngloGold Ashanti, Gold Fields and Harmony have suspended production, along with the world's biggest platinum miner, Anglo Platinum.

"We are only running power for emergency supplies, such as pumping water out, and have stopped producing at all mines," AngloGold spokesman Steve Lenahan told Reuters news agency.

The announcement has led to a big jump in the price of both precious metals on world markets, while shares in the four companies have slumped.

Minerals and Energy Minister Buyelwa Sonjica said electricity rationing would be introduced as a "quick-hit" solution.

Goolam Ballim, chief economist of Standard Bank Group, warned that the power cuts would reduce South Africa's economic growth.

"Power is like oxygen, it's essential for any half-modern economy,'' he said, according to Bloomberg news agency.

South Africa has already reduced electricity supplies to its neighbours.

This has affected countries such as Zimbabwe, Zambia, Botswana, Mozambique and Namibia.

no, thats not the problem, well debt always is a problem but thats not the reason for the fall.

For those that are patient this could be the last wonderful buying opportunity in this stock, don't forget that this is an ISA stock for one, and the mine in all accounts has a life span of 100 years !, yes 100 years, (mind boggling I know), so at a guess let's travel in a time machne to the end of this year and look at the sp, it won't be 45p it will be 65 to 80p without any problem !

Do they have power now that South Africa has stopped electricity supplies to Mocambique?

halifax, you are starting to depress me, where are all the positive vibes ? I,ll end up selling if you carry on lke this, this mine is still in it's infancy, and a little patience is required on start ups !

One thing for sure, the blackouts will send precious metals through the roof, that's what SA live off !

And so will the crime rate go up in the blackouts, all this will hit the tourist industry

fourth shipment out,and the share price goes down. whats up doc?

Sometime in the future, soon, this will be rising and everybody will be thinking : " I wish I bought in then", in the meantime this drop like this is a pain in the neck, I'm going to sit through this, and hope that in a few weeks time all the problems will have been resolved, which I think will have been (42p crazy..., unthinkable a few months ago..).

I've traded this a couple of times on the way up, and with the current depressed share price was looking to buy back in, However, I am concerned that forecast revenues for 2009 are still only approx 90M against a market cap of 322M. In my mind this limits the upside without significant upgrades to production ouput. I'll wait and watch for the moment...............

Well canary9, it depends whether you look on the short term or the next decade or so, from what I gather this mine should last 100 years, (that is a long time, enormous earnings). If I were a major mining company, this would be the time to pounce on little KMR, the RIO's or Xtratas's could snap this up just like that, there will be a rebound there's no doubt, just a matter of when ?, the sooner the better for the likes of me !

I can certainly relate to the last 2 posts, canary additional revenues are expected to come from a ramp up to 2mt. Whilst feasible i share your concerns i also think 42p crazy. After saying that if kmr. were and still are such a great potential with enormous earning potential, I'd have thought any predator would show their hand now with a subdued SP. and pi's running for the exit signs!. A hefty 50% premium on top of 42p only values the company at may 2007 prices. A great deal has been achieved since then, i for one thought we'd be 70p+ now what a bummer.

Basically it has to do with the price and demand for the products. Currently firm in both counts and likely to remain so.
They have experienced problems not of their own making and the management is sound and on track.
Looking at the chart it looks like a buying opportunity.

looks like chart is in feefall to me. anyone know why kenmare is planning to draw down from standby credit facility when it raised over 9 million from take up of warrants last month ? . patience is starting to wear thin.

Whats Tom W have to say about these, it was one of his top tips ?

Tom W is a joke, acc & fmj were 2 of his top tips 3 years ago. He's like Andy Cole; have 10 shots at goal, you'll get one in eventually!!