Mozambique mineral sands miner Kenmare will pursue a capital raising and debt restructuring to materially deleverage its balance sheet with US$100 million already secured.
Subject to agreement with lenders, the plan is expected to result in gross outstanding debt being substantially reduced.
The capital raising is expected to be conducted by means of a firm placing and open offer. It is intended that there will be an opportunity for existing shareholders to subscribe in the open offer on the same terms as under the firm placing, failing which shares not subscribed for will, it is anticipated, be issued to lenders as a partial equitisation of the outstanding debt.
SGRF, a sovereign wealth fund of the Sultanate of Oman, has approved in principle an investment of $100 million in the firm placing via one of its subsidiaries, subject to and conditional upon, inter alia, agreement of:
- a subscription agreement,
- agreement of arrangements with the Group’s project lenders on the Group’s capital structure,
- procurement of commitments from other shareholders in respect of an additional minimum $75 million capital,
- necessary Kenmare shareholder approvals, and
- finalisation of a prospectus.
The process of concluding these negotiations and finalising related documentation is expected to take a number of weeks.
Moma is a world-class asset that encompasses a large, long life ore body in Mozambique. Total invested capital exceeds $1.2 billion, with the mine producing more than 7% of global TiO2 feedstock supply – being the largest merchant producer of ilmenite globally.
During 2015, Kenmare has made material reductions to the sustainable costs of production in response to the decline in market prices, while heavy mineral concentrate and ilmenite achieved production records in Q3, 2015.
Subject to agreeing a sustainable capital structure with lenders, the board believes Kenmare’s business will be well supported during the current low mineral sands pricing environment and will be well positioned for all stakeholders to benefit from the expected recovery.
Iluka Resources withdraws acquisition intention
Iluka has publically announced it no longer intends to make an offer for Kenmare.
Iluka first proposed a combination of Iluka and Kenmare in June, 2014 and since then Kenmare has provided certain updates in relation to the proposed combination and its terms.
As announced by Iluka, despite significant progress having been made in securing satisfaction of many of the pre-conditions required to proceed and express a firm intention to make an offer, it has not proved possible for Iluka to satisfy certain of its pre-conditions.