KENMARE Resources has raised £2.74 million sterling through a share placing to fund the development of its Niassa gold project in Mozambique.

Kenmare's managing director Mr Michael Carvill, said most of the 8.9 million new shares had been placed with institutional investors such as Standard Life, Fidelity and Morgan Stanley.

Mr Carvill, who was speaking after Kenmare's a.g.m. in Dublin, said his family's holding in the company had been slightly diluted, and was now about 10 per cent.

He told shareholders that the Niassa project was proceeding "quite well" for the company. He said the inferred resource at OD1, which is the first structure being drilled, had increased from 200,000 ounces of gold to 300,000 ounces, and was still open at depth and on both sides.

If it extends to 500,000 ounces it will be able to be mined commercially, while one million ounces would be a good sized mine, he said.

The company has also identified three mineral structures on its southern Niassa licence, which are "substantially better than OD1 was at that level of information".

The meeting heard that Kenmare's graphite mine in Mozambique would break even at a profit level by 1997.

Kenmare's Ancuabe mine supplies 3 per cent of the world's graphite market by volume, and the company hopes to expand sales into a new form of dry cell battery.

Tests with a "household name battery manufacturer, which is developing a new graphite battery, are "going well," according to Mr Carvill.

He said Kenmare had supplied the graphite for the test models, and was very hopeful of winning the contract to supply the finished product.

"All graphite is different and they are six months into testing.

To swap to a new source would require new tests " be said.