29th Apr 2016 09:42
LONDON (Alliance News) - Kenmare Resources PLC Friday said it saw a more than doubling of ore mined in its first quarter in 2016, as it outlined further details of its plan to reduce its outstanding debt of around GBP367.8 million.
The titanium minerals and zircon producer said its ore mined increased to 7.06 million tonnes in the quarter, more than doubling from 3.21 million in the same period previous year, which it attributed to improved power supply to its mine in northern Mozambique.
Heavy mineral concentrate production in the quarter rose 90% to 274,800 tonnes from 144,500 tonnes the previous year, whilst zircon production rose 12% to 11,600 tonnes from 10,400 tonnes.
Kenmare produced 185,000 tonnes of ilmenite in the quarter, up 39% from 132,900 tonnes the year before. For 2016, it is guiding for 950,000 tonnes of ilmenite production, up 24% from 2015.
Total shipments of finished products were down 37%, Kenmare said, due to the delayed arrival of a vessel and inclement weather at the end of March.
Separately Kenmare said it is making progress with its deleveraging plan, which includes a USD100 million placing with State General Reserve Fund, a sovereign wealth fund of Oman, and a USD100 million placing with King Ally Holdings Ltd, as well as an additional placing of not less than USD75 million at the same issue price as that with King Ally.
Kenmare plans to use USD200 million of the proceeds to repay USD250 million of debt, together with the discharge of an amount equal to interest accruing on project loans from November 25 until the date of receipt of lender approvals, with the balance of the net proceeds to be put toward working capital.
It also will launch an open offer for shareholders to subscribe under the same terms as the placings, with a maximum size "as to enable the discharge of all remaining outstanding indebtedness", Kenmare said.
Kenmare proposes a share capital reorganisation as part of this capital restructuring.
The net effect of this will be that the company has no more than USD100 million in outstanding debt following the capital reduction, if not less.
King Ally will take a 30% stake in the company as a result of its participation.
"A successful implementation of this [capital restructuring] plan will reduce outstanding debt to not more than USD100 million, provide a significant working capital buffer and a stable and sustainable platform for the group pending a recovery in mineral sands prices. In addition, costs have been substantially reduced and the electricity supply, which has materially impeded production for the last several years, has been dramatically improved," said Managing Director Michael Carvill in a statement.
Shares in Kenmare were down 7.4% at 0.750 pence Friday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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