Kenmare Resources Share Discussion Threads

[caposoka] 17/4/2018 16:07

As KMR’s operations are fed off the national grid in Moz (electrically powered MSP and dredgers), dips in the power supply can cause major production issues so ‘dip doctors’ were installed a few years back to smooth out the supply (akin to a larger version of say a UPS in offices).
Major outages in the power supply also caused major issues such as power lines being washed away during rainy season (Q1) but repairs and upgrades in recent years have led to a more stable supply. Back up generators were also introduced to keep the critical equipment running but these are only a back-up as they have a much higher running cost (diesel vs hydroelectric power).

[trev1223] 17/4/2018 10:22

Forgive my ignorance, but what are dip-doctors?

[murraybasin] 16/4/2018 19:45

As an example, slimes were encountered in the mine path during 2017, but it was still a record year for production.

[wheniamfree] 16/4/2018 19:14

Witch doctor lol.

Murray I’m not sure I just read the “however”; clause as something worth noting since it was separately mentioned. More like a “BUT..”

“Additional supplementary dry mining capacity is being added at WCP A and WCP B, which will help to increase mined tonnes for the rest of the year. However, WCP A will remain in a higher slimes zone for Q2 2018.”

[murraybasin] 16/4/2018 18:53

To anyone who knows the company well (Capasoka is one), your arguments do not hold up well. Higher slimes are something the company has to deal with from time to time and do not typically have any significant impact on QoQ production, so won't be an issue in Q2. We don't have precise reasons for stoppages in Q1; it's easy to speculate in the vacuum. However, there has been of the order of SEVEN serious storms during the cyclone season, one of which I've already pointed out wreaked havoc in Nampula in January. The cyclone season is the most obvious reason in evidence for lower production in January. One should tend to look at what is there, not what isn't. Historically we've seen worse, where power has been completely out, but this has been mitigated with on-site diesel generators and dip-doctors.

Growth, growth, growth ... adding any significant volume to current production would be bad for the market. Other juniors lining up ought to be taking note. Investors and lenders are likely to be reluctant to support any large scale new projects for precisely that reason. So, be careful if running the rule over new projects ...

The strategy at the moment is to sweat the asset, improving recoveries, containing costs, maintaining production and shipping volumes, and capturing price increases. It's not invalid.

There's also a witch doctor doing a dance down at the front gate and we should all be concerned about that.

If you're going to keep talking about 'high slime zone' you might also inform us all what impact you think it has on production output.

[wheniamfree] 16/4/2018 17:15

Furthermore Q1 has a significant reduction in production figures.

Whilst that is a quiet quarter (sales related) that does not account for production.

Their year forecast is already in deficit entering Q2 whilst concentrator A is in a high slime zone. Expansion to B still to come therefore how much mined dry ore can be expected to supplement before results are released for this quarter?

[wheniamfree] 16/4/2018 17:05

That makes sense, the 500tph dredge to be left in place post the moves planned for 2021 I believe?

So they are indirectly governed by the Major SHs since their financing has been reigned in somewhat.

So by the above indications, whilst capex has been scaled back there is still a necessity for expenditure to generate the same figures YoY at least until 2021. With increased production will come also increased opex, again they are dependant on the commodity prices increasing.

It’s more of the same which is what I was trying to highlight, the general report should indicate Kenmare trading flat at best case (by factors which are in their control.)

That is unlikely to excite the market?

[wheniamfree] 16/4/2018 16:43

Cap, 50% was a high ball to show the scope of expansion.

Do I expect to see 50%+ increase? Of course not but what I would expect to see is ambition of growth.

The point I was trying to highlight was that capex of $19m to expand a plant just to produce similar results is not growth. Whilst grades may improve down the line on reocation treading water is not a growth story, it also does not give the potential to offset any negativite impact from within or external of the company and it’s control.

[donkey40] 16/4/2018 16:28

You are a waster and a loser. Nobody interested in what you say or think here. Keep digging for more history - thing is everyone that follows this company knows it already. So keep wasting your time - muppet brain.

As far as I am concerned, from here on, with this company you are on Ignore.

[caposoka] 16/4/2018 16:25

WhenIamfree – how much investment would be needed to double production? Certainly several hundred million. Would KMR be able to raise this? Even the most ardent of shareholders readily acknowledge there are past confidence issues to overcome first from years of promising and not delivering, even if KMR have now reached the point of having had a couple of years of bedded down production, steadily improvement and improving market dynamics and very positive EBITDA numbers expected for the next few years. Would the load-out quay and transhipment vessels capacity also need doubling? At what cost? Certainly a couple of hundred million. What would the financing cost of all this be? Would the world market want to have another 8% of world supply come on line? There are some decent posters on various KMR boards who readily share ideas from different viewpoints. I don’t agree with keyboard warriors behaving differently to how they would behave face to face but none of your posts are adding value to anyone including yourself. GL with your future investments.

[wheniamfree] 16/4/2018 14:38

Donkey, quick question. How was MC in his early days and what ventures did he attempt before each and everyone amounted to diddly squat?

Perhaps however he is a martyr too?

“Murray - ignore this pr*ck. If he is that stupid to think the correct strategy is to double production and half the 100year mine life, he isn’t worth any effort.”

Brilliant, just brilliant.

That is the best thing I’ve ever heard/read. Many companies aim for a 20-30 year LOM which is a-typical time frames for their mining/production license terms.

Perhaps if they had your drive and ambitions they should reduce their production by 66% and extend their LOM to 100 years.

That is what your telling everyone right? And I’m the stupid one lol.

[donkey40] 16/4/2018 13:44

Amusing - a company with punlished Reaerves, no offtakes, delayed tenders, minimal staff, major investment still ahead, construction of P&E all ahead, no prior experience of extracting and selling gas, only prior experience of selling 2 companies in their home country to gas majors, now operating in Africa and thinking repeating a hat trick will be somewhat straight forward.

This is the pursued strategy - and this genius dares to criticise a company with 25 years experience of exploring, investing, operating, employing and exporting from Africa.

Go back to where you came from please. You are simply here to be a disgusting pest. Go away, take your BS with you and spread it elsewhere !!!

[donkey40] 16/4/2018 13:32

Murray - ignore this pr*ck. If he is that stupid to think the correct strategy is to double production and half the 100year mine life, he isn’t worth any effort.

Anyway, he is just being a mischevious copycat, with his ambition quip. Let him focus on a bag of gas with rapidly depleting cash, no commercial contracts, a delayed RFP process which delays commercial plans ever further, BS chit chat about other potential Offtake contracts, more directors on the board than actual staff numbers, no in-country presence worth talking about, industry partners that have promised much and delivered nothing. Pretty much sums up his bag of gas.

His comparisons against Kenmare are, as you and Cap and the rest well know, just him trying to wind me up. Best ignored on this board.

[wheniamfree] 16/4/2018 13:10

Tlou is running a two pronged approach for value accretion, upstream reserves along with downstream gas to power commerciality.
The RNS on reserves was due on or around the time of the RFP delay, no coincidence since either were due at the same time.
There is no revised competition to the RFP as known as it has been shortlisted again for the same two parties - there is nobody else in Botswana or the S.A. region with any independently certified CBM reserves. Within Botswana there is nobody else with environmental impact assessment approval a process that takes some 18-24 months to complete and is needed before even exploration can commence let alone any form of development or production and additionally Tlou have a production license for one of their ten blocks already in place. All of which are 100% owned. Even the other party in the RFP has zero of these, putting them already around 5 years behind.
Tlou would be 100% owner of the upstream and 50% owner of the downstream with their partner IPC. The full value resides in the gas reserves the electricity generation and sale is revenue generative but its the gas reserves where the intrinsic value resides.
The market over reacts, the RFP was expected to be a success but bearacracy threw in a curve ball. As such the documents are likely to be amended at government level hence the resubmission. This is the first CBM in the entire country - there is nobody else hence first move advantage but with the caveat of paving their own path.
Tony Gilby is twice proven in the industry, take a look at sunshine gas and arrow energy if you are interested. Capped at sub $20m on creation as founder and sold to BG group for $1.1bn.
There is too much to list here but needless to say the delay is a mere speed bump on ONE of many potential customers including mines, businesses etc locally and also the opportunities to sell regionally via the Southern African power pool of which there lies a circa 8000mw deficit on demand.

Not the place to discuss here but plenty more to it than the above point you raised.

[murraybasin] 16/4/2018 09:16

I've no interest in CBM, but, what I do find curious is the timing of the last TLOU reserves update relative to the timing of the termination of the prior tender process. You could be forgiven for being circumspect about those sorts of coincidences. What's unclear now is who the revised competition will be when it comes to the 100MW CBM plant tender. If TLOU is going to supply the gas, but not generate the power, does it mean TLOU hasn't managed to capture the full value chain? Are there other CBM licensees in-country who are positioned to supply whatever company is finally awarded that 100MW tender? Despite the 944% reserve increase announced in February, the share price is less than half of what it was in January. Doesn't seem like anyone is convinced by Tony Gibly's other options should he not succeed in the power tender. Seems to me like the Government didn't want to award to either of the two parties who already submitted and hence the need for the rerun. Admittedly, based on a very cursory review of some TLOU releases.

[wheniamfree] 16/4/2018 05:48

Not quite Murray since all licences are already in place.

The delay is down to the offtake since certain ISOs weren’t in place so more administrative due to it being “first in class”. I state delay since the customer is asking to rerun however more customers than just one, infact plenty.

Still - this is planet Kenmare.

[murraybasin] 15/4/2018 22:43

Well, as you know this starts by getting licenses, building a business, investing capital, and then hoping the aliens you do business with don't want to take enough mineral and humans away in their spaceships to make the venture unprofitable.

And, I guess, if you are trying similar elsewhere, and the alien overlords reject the advances of the human underlings and seek solace elsewhere, then that's life as we know it. It seems you haven't sacrificed enough lambs.

At the moment, it seems our spaceships are better than your spaceships, and unless you can work up enough good will to add warp cannons then you're going to be sitting in the back seat because not only do you have inferior cannons, but you have inferior shield generators.

Our alien overlord chose to let us run an in-country business. It seems your alien overlord told you to go back to square one. Clearly you haven't sacrificed enough lambs yet.

[wheniamfree] 15/4/2018 21:56

Why can’t they keep increasing production and scale out, they have a 100 year mine life as you tout.

Why not run to a 30-50 year mine life and increase production and grow the company like most producers tend to do? It’s called ambition and growth. Maybe one day dividends will arrive, maybe.. one day..

Donkey - oh the irony.

[donkey40] 15/4/2018 20:39

“ This means growth is dependant on the market prices since as you say, production will be flat or marginally increased at best. Or, as with Q1 perhaps down. Whilst capex of $19m may seem justified the benefits won’t be noticed for years especially if spot prices were to decline?”

Production will be same as last year, sales prices have shown a marked increase over last 2 years, after a period of exceptionally weak consumption.

And still you complain !! They cannot keep adding 20% production capacity year on year, but once they do, you the new oracle pitch up, moan and whinge - what a false fool you are !!

You and I both know why you are posting on this board - please go back to where you came from. You have little or nothing of interest to say on this company.

[murraybasin] 15/4/2018 16:47

"only 2018 is already forecast to be mid range post Q1 stoppages and issues even prior to the upgrade work on concentrator B"

The planned upgrade work on WCP B is already under way. This is being led by Hatch Engineering, currently on site. The Q1 production report indicates there were planned and unplanned stoppages. Presumably some of the planned ones, separate to reversal of the mine-path (per mine-plan), may be related to the WCP B upgrade work.

"and the likely reduction in production from concentrator A due to the high slime zones."

That is why KMR has supplemental dry mining. The slimes impact the dredgers, not the WCP. The dry mining operation keeps the WCP throughput up.

The following may also give a hint as to how historically Q1 can be a lower production month:

Average Precipation:


Tropical Cyclones:
hxxps://www.wunderground.com/hurricane/si2018.asp

Nampula, January:
hxxp://floodlist.com/africa/mozambique-floods-north-nampula-january-2018

I have a vague recollection someone I talked to in January said that there was some preemptive safety measures taken, which may have included plant stoppages and personnel relocation (in relation to Ava).

[murraybasin] 15/4/2018 14:16

I don't think many will be perturbed by the production if the final year out turn is of the order of $90-$100m EBITDA.

Have you anything else you think might be a concern for us? Maybe something we don't already know.

[wheniamfree] 15/4/2018 13:00

Perhaps so Murray but much of which will be from stock, it will be production figures I’d imagine the market will want to see much like for 2017, only 2018 is already forecast to be mid range post Q1 stoppages and issues even prior to the upgrade work on concentrator B (and the likely reduction in production from concentrator A due to the high slime zones.)

It would be interesting to see what time/cost contingencies have been factored in for this work.

I see the feasability studies are to begin for future moves but this won’t be for 3 years? This means growth is dependant on the market prices since as you say, production will be flat or marginally increased at best. Or, as with Q1 perhaps down. Whilst capex of $19m may seem justified the benefits won’t be noticed for years especially if spot prices were to decline?

Which was the point I made about treading water. I just fail to see from the above how they can increase on production this year, if I were to forecast I’d project they’ll be below target and going into H2 will be the decider for that.