Kenmare Resources to target €200m mine injection

KENMARE RESOURCES intends to raise almost €200 million to boost production at its African titanium mine in anticipation of growing demand for the mineral in emerging economies.

Kenmare operates a titanium mine in Moma, Mozambique, which reached full production this year.

The company yesterday said that it lost $30.4 million (€22.3 million) last year. The loss was in line with expectations, as the Moma mine was still under development for most of 2009, although production and sales began to gain momentum in the third quarter.

Kenmare, which is listed on the London and Dublin stock markets, announced that it intends to raise £179.6 million sterling (€196 million) by placing new shares in the business, and through an offer of 19 shares for 23 to existing shareholders.

It will issue a total of 1.5 million new shares.

“The issue price of 12 pence per new ordinary share represents a 41.8 per cent discount to the closing mid-market price of 20.625 pence per ordinary share on the London Stock Exchange on March 4th and a 45.7 per cent discount to the closing mid-market price of 24.3 cents per ordinary share on the Irish Stock Exchange on March 4th,” the company said yesterday.

The company’s shareholders will vote on the proposal at an extraordinary general meeting in Dublin on Monday, March 29th.

Kenmare intends using most of the cash to expand production at Moma, as industry trends indicate that demand for titanium is set to outstrip existing supply by 2012.

Its managing director, Michael Carvill, told The Irish Times yesterday that the prediction is based on trends identified by multi-national Dupont, which is the world’s biggest producer of the mineral. Mr Carvill explained that much of the demand will be driven by emerging economies such as China and India.

One of titanium’s chief uses is as a pigment in paints. Mr Carvill explained that demand for titanium lags behind demand for steel and other basic construction products, but pointed out that emerging economies are reaching the point where their needs for the mineral are set to increase rapidly.

“Countries like China and India are just at the start of that steep demand curve now,” he said.

Kenmare’s Moma facilities will be focused on downstream operations such as the process used to separate the mineral feedstocks – components – from the sand from which it is mined.

He added that the work would result in no disruption apart from a three-week shutdown of its operations during the course of the two-year period.

Work on the expansion is scheduled to be completed at the end of 2012.

It will increase overall production 800,000 tonnes of feedstock a year to 1.2 million tonnes, which will account for 10 per cent of world production.