Kenmare Resources said on Monday it has secured a $100 million (€92m) investment from the Sultanate of Oman as it announced plans for a further capital raising and balance sheet restructuring. The move follows an announcement from Australian miner Iluka that it has pulled out of its proposed acquistion of the Irish titanium and zircon miner.
The goal of Kenmare’s new capital plan is to “ materially deleverage” Kenmare’s balance sheet to provide a “sustainable platform for future operations, with an enhanced working capital position”. It’s expected that this will see gross outstanding debt substantially reduced.
The capital raising is expected to be conducted by means of a firm placing and open offer. Existing shareholders will be able to subscribe in the open offer on the same terms as under the firm placing.
The State General Reserve Fund (SGRF), a sovereign wealth fund of the Sultanate of Oman, is to invest $100 million in the firm placing via one of its subsidiaries. This is dependent on factors including agreements with Kenmare's lenders on its new capital structures and commitments from other shareholders of $75m in capital.
In a statement, Kenmare said that it “ remains confident of the medium and long term fundamentals of the mineral sands industry”.
Also on Monday, Perth-based miner Iluka Resources said it had pulled out of a proposed acquisition of Kenmare, after Kenmare indicated its largest shareholder wouldn’t support the deal. The company last month cut its offer for Kenmare because of a fall in prices and a deteriorating market.. The proposed deal had first been announced in June 2014.
Reacting to the statement, Kenmare said is is now focused on securing the independent future of the company in the interests of all of its stakeholders.
Iluka’s chief executive officer David Robb said in a phone interview on MOnday that the Perth-based miner has a balance sheet that provides the “opportunity to invest at a time when others are not, and it gives us the opportunity to secure options for our shareholders on very favorable terms”. As well as citing the possibility of acquisitions, Robb also flagged the company’s existing projects as candidates for growth and “the significant investments we are making in technology.” Iluka was aiming to add Kenmare’s Moma mine in Mozambique, which contains reserves of zircon and produces ilmenite and rutile.
The UK’s Prudential Plc, the biggest Kenmare holder with a stake of about 20 per cent, didn’t immediately respond to a request for comment.
(Additional reporting Bloomberg)