Kenmare Resources Share Discussion Threads

[donkey40] 31/12/2019 18:03

HNY greetings and all that. I am still poor thanks to KMR, so really I ain’t much in the mood to big it up.

I have long held the view that KMR share price is stage managed to suit others particular outcome. The share price jumped from the 210 range to 230 range last week, on thin volume. That got me thinking. That got me thinking either Oman or M&G wanted it higher at year end - why?

Why is easy - gaited funds and all that so pressure elsewhere within M&G to show good year end liquidity and valuations (within reason). Take the ‘look after the pennies’ approach - and year end valuations etc look better than they otherwise might.

Then I decided to test the market yday and today. Sold a few shares yday at 235p but there was no appetite for buyers to drive it higher. So today I stuck shares to sell at 234p, 235p, 236, 237p, 237.5p and 238p.

234 went immediately. 235 went after about 40 mins. 1 share of mine (on to sell at 236) went last trade of the day.

Year end close 236. That is the level they wanted (235-236). Now I expect it to trade backward quite quickly in first 2-3 weeks January - between 210-220 range. I personally don’t think the exact year end numbers matter - everyone reasonably knows these are within the guidance range. Shipments will dictate the final Revenue figure for 2019 and if this is less than expected, we can expect great attention piled onto outlook for ilmenite in 2020 (started with a bang).

Reality here - one mine and a set suit of products to produce and sell. Dominant position in the market. Tough place to do business but they should, by now, know how to co-exist there reasonably successfully. The problems are what management are paid to manage through...

It’s all quite boring really !!!

HNY

[kemismelt] 26/12/2019 23:47

murraybasin 17Dec19-982:

The global 87%TiO2 slag market is picking up with constraints at RioTinto smelters throttling the supply lines. LON:KMR can easily reach the 1m target by FY2021.

[donkey40] 23/12/2019 16:46

Still not showing much of a return over the Open Offer restructuring price that Oman and M&G bailed the company out at. M&G may be keen to show performance in other funds given their problems with the property fund (now gaited).

[spectoacc] 23/12/2019 15:45

They should warn more often. Were sellers at 206 on the day.

[donkey40] 23/12/2019 12:26

Has anyone been able to establish if the debt refinancing meant that the cash held in the liquidity reserve accounts (a requirement of the banks) has been substantially reduced (maybe even eliminated) ?

That in itself was a good enough reason to refinance. Everyone always focussed on the Net debt position - however that was a disguise of sorts. There was no right of set-off between the o/S gross debt balance and the cash reserve accounts. Because of that, the company had to bring the gross debt figure well down before (I imagine) banks would have consented to major dividend payout.

So it really isn’t surprising they refinanced around now - doubt they could have done it any sooner either.

Leaves 2020 to concentrate on the Pilivi relocation and work other production assets and power supply to ensure they hit guidance targets. Sales doesn’t seem to absorb huge amounts of management time.

[spectoacc] 20/12/2019 15:13

Now higher than pre "warning". :))

[murraybasin] 17/12/2019 18:19

It clearly is being covered by stock on hand per the RNS. They are still planning to ship over one million tonnes.

[donkey40] 17/12/2019 16:06

Agree - why report a production guidance miss one week before end of the year? Seems like an oversight almost, and just picked up. 3% below bottom end of guidance - surely that can be covered by Stock on hand.

[spectoacc] 17/12/2019 12:13

"Whilst total cash operating cost guidance remains
unchanged (US$151-167 million), cash operating cost per tonne guidance
is revised to US$160-165 per tonne from US$150-160 per tonne, due to
reduced production volumes."

So yes, from a pedantic point of view, costs are the same - but same costs to produce less = rise in costs!

[murraybasin] 17/12/2019 09:55

Negative on production, not costs. Costs are largely fixed so while the unit cost over lower production is higher, the costs are the costs. Then you have the sale of finished product stock over and above production. Q4 shipments are likely to be a new record if guidance is that FY shipping will be over 1m tonnes.

[petomi] 17/12/2019 09:53

I agree it's not too bad if pricing environment remains positive and they can ship from inventory. Hence modest share price reaction. But it's pretty poor to report a production miss so late in the year.
Good luck to all LTHs.

[spectoacc] 17/12/2019 09:03

Negative on both production and costs, but then again - sufficiently cheap to probably not be well down for long. Titanium pricing also a positive.

[donkey40] 12/12/2019 23:11

Pretty much the same thing. Tbh, I need to study the RNS and numbers in much greater detail and get a proper understanding of meaning and impact.

But it did seem to me that one replaces the other, and they have capital repayment holiday for 2 years. 1 year to complete expansion plans and pay with debt drawdown; 1 year to generate FCF to bring drawdown back in line - ending up back in current position where debt level is not excessive (in my mind anyways).

[murraybasin] 12/12/2019 18:58

Donks, when you mention rehabilitation costs, are you talking about the mine closure provision, or rolling rehabilitation which should already be part of the costs they account for?

I believe there has always been a mine closure provision of some sort. What may be different here is that it needs to be guaranteed as a security on the debt refinancing.

Coming from someone who knows FA about accounting as you know.

[donkey40] 12/12/2019 07:40

Mind you, once Base are fully in the game with Toliara project, there will be stiff competition. They are claiming:

Capes $520m;
814k tonnes ilmenite for first 26 years;
Annual FCF $140m same period;
NPV $652m over 33 year Mine life;
Average revenue to cost ratio 3.15 times.

Heady numbers !

[donkey40] 11/12/2019 19:17

Agree. Gives them band width on access to cash as and when. What might be interesting is the introduction of rehabilitation costs for the first time by the company. Iluka have/ had a pot purri of such legacy costs arising from their US operations; they have been strangely silent on same re their Aussie closures

[albo] 11/12/2019 17:37

Surprised these went down today on, what I thought, was reasonably good refinancing news!!!

[murraybasin] 30/11/2019 17:03

I think anyone who follows the company can visit the web site. Have you anything to say regarding the content?

[donkey40] 30/11/2019 13:55

Oh ok then - so they been in country for near 20 years; spent $1.2 billion and here we are, today, for the probably first time ever, we get told about an EIA or EIS for a road (yes a road/ not a mine) and a few of the lads are getting twitchy about an Environmental Approval.

FFS - how stupid are you donkeys !!

The bigger issue or concern here is that the company feels that an Environmental Approval is sufficiently newsworthy - that suggests to me that there isn’t much in the tank to report for the next reasonable while ....

KMR mgmt never ever ever previously discussed much about EIA or EIS - until now. Think it through please lads ....... (and when you do, it isn’t a great outcome - sadly).

[murraybasin] 30/11/2019 13:33

They wouldn't have been refused. There's a symbiotic relationship between the company and gov.mz (1400+ MZ employees). Worst case would have been some conditions to have been met.

Absolute worst case, plant could have been moved by sea.

[spectoacc] 30/11/2019 12:21

@murraybasin - how would they have been set had it been refused?

[murraybasin] 30/11/2019 12:15

I don't think they were in a panic to start the road yet. Getting WCP-C up and running is the current priority and next major milestone outside of regular reporting.