Kenmare Resources Share Discussion Threads

[donkey40] 09/4/2018 01:54

Thanks Murraybasin - very comprehensive posts. I would not worry about Wheniamfree - he is just being mischevious with myself. Him and I have a running dingdong on another board, where I have been getting under his skin about a company he had high hopes for. He seems to think that the current share price weakness in KMR is his opportunity to poke me back.

Luckily for him, his loss elsewhere could turn out well now he is getting real and proper insight into a company with real business, assets and revenues. The cash generative side looks increasingly tasty imo as we progress into the year.

[murraybasin] 08/4/2018 18:51

P.S. The prices quoted earlier are obviously for ilmenite. The H&P report bases its assertion on zircon reference prices of $1200/tonne during 2018. Spot price for zircon (per Bloomberg) is already at $1600/tonne with Iluka's reference price currently over $1400/tonne. H&P put forward EBITDA of $129m in 2018 with net profit of $75m. They were spot on for 2017 with EBITDA of $75m and net profit of $28m. Given their $200 under-shoot on zircon prices, probably means their EBITDA and net profit values are also under-stated. Following, it looks like the current share price puts KMR on a forward P/E of something between 3 and 3.5.

[donkey40] 07/4/2018 18:22

If the guy at the helm is such a tool, how come a sovereign wealth fund was persuaded by him to invest $100m? And M&G to pay again for 20% in the refinanced entity (M&G global recovery fund) when they were the main shareholders of 20% in the company before the refinancing?
Had they zero confidence in him, would they have paid $100m and $67m respectively?
Director salaries and shareholding’s - easy target when there is negative sentiment flying around. As you well know from our other friend. But at least here there are revenues and production and customers and free cash flow generated to manage. The laugh in Kenmare case is the management are not highly paid, being held back due to the legacy of history. But armchair investors and Analysts think they know everything - coz they can just click and quote.
And having paid those amounts, who do you think calls the major decisions these days - management or large shareholders?
For hedging strategy - which exchange offers such service?
Sales contracts - it’s a nice problem have, isn’t it. One where you have something to sell, customers that want to buy and you currently and historically have accounted for 8% globally (and up to 35% as an independent) of sales of the product.
Your questions (excluding the stupid snapshot, event driven politics ones) on the company are starting to get more focused and relevant - understanding of their particular warts and wrinkles comes with following for a good few years. Try many.
And of course past success or knowledge is no guarantee of future success or profits. Maybe context is a good thing; maybe it blinds one to favourites or to prejudice - time will tell.

[wheniamfree] 07/4/2018 16:31

21bn 800million shares pre consolidation. Looks like the board did a good job royally shafting shareholders here.

Same man at the helm too and what it appears to be the same strategy that saw holders lose everything.

Nothing else to be built just that the gradings are so low the concentrator needs upgrade this year wiping out all recent profits. Treading water then yes?

They also need to look to move the dredges onto better ground to try and up grades, how much will that cost?

All depending on product price then yes? Very risky strategy and no hedging facility, furthermore opex is still high along with the capex required to keep production levels up to make do with the low grading.

Why are their cost of sales so low and how long are their sales agreement contracts in place for before re-negotiation to even benefit from any rise in product prices?

As for politics I have a great handle on things but thanks, perhaps Bloomberg are wrong as well I guess?

[donkey40] 07/4/2018 15:33

Well your last para is valid. The mine was built eventually for $1.2bn, then expanded to current nameplate in 2014 for a further 300m. So is built, fixed and working better now that ever before in its 15 year production history. So it is time to sweat and squeeze the asset. So I would venture this company is at the start of another cycle of value creation for shareholders.
During 2 previous cycles, it attained a market cap’n of £1.5bn plus and was a FTSE 250 Stock.
You and I both know it suits your argument to point out the current weakness in share price, EV and the like. They will be taken care of in due course - coz product pricing is strong, investment has been made, nothing much new needs to be built for 5+ years, and they are a dominant and established supplier in a global market.

I am not bothering about Moz comments. We will never agree on those. You already showed me for over a year you have no clue on Botswana politics so I doubt you are any better informed having studied Moz for a couple of weeks and read a couple of Google links ( which you no doubt now think are facts).

Just remember - do not buy this stock !!

[wheniamfree] 07/4/2018 11:41

Ah similar FDI comment to what was stipulated elsewhere, I see you stole the answer given to you when you claimed it an issue in Bots?

The difference is, Bots isn’t on the brink of credit default as a country is it? Infact far from it, Moody A2 rating correct?. As for FDI a nationalisation program for key projects would make little effect if the opposing option is that the country fails to function and it’s people suffer famine and extreme poverty. Very easy remedy to start with, even if just taken as 50% state or government ownership.

As for who would operate the mine? Now if government realised ownership they could employ a disciplined, in country and reduced board on a much lesser wage as opposed to a hareem of foreign members who spend little to no time in country but pocket millions from the coffers. The remaining in country operators (many who are locals) could be kept on at increased salary to operate the mines. Problem solved with that one, I wouldn’t be so naive to assume the above is not a stronger possibility. Mozambique is in a extreme state, for IMF and world bank to relinquish options of funding and support tells you all you need to know.

No disputing the chalk and cheese part but since you feel the need to comment elsewhere I see no issue with listing the dire states and issues Kenmare are facing.

Forget EBITDA for a moment, let’s focus on the real bottom line figures and true EV. Why not state those donkey as opposed to some BS calculation that companies use to paint a pretty picture?

Mine life means little if the opex and capex of feasibility aren’t worth the squeeze. What good is a mine operating for 100 years at break even or minimal profit? Of course it creates jobs but where is shareholder value, growth and appreciation?

[donkey40] 07/4/2018 11:23

The nice thing about Kenmare is you are busy critiquing a company with real assets, people, revenues, debt and cash balnces. Plus global factors impacting the products produced and sold. And politics.

Will be fun with our other friendly stock has similar problems and opportunities to actively manage. At the minute, cash at bank and politics is all that’s on the current menu.

Chalk and cheese these 2 really. I don’t know why you keep bothering really

[donkey40] 07/4/2018 11:08

Great insight - bang on the money. Let me see what I can add.

Nationalise - go for it. Then who runs the mine? Once they make such a move, what impact on future FDI flows into the country?! If the country is as big a basket case as you would try to have us believe then moving to influence or impact funding inflows makes sense / makes no sense - you decide for yourself.

Net profit levels - $19m net profit for a mine that cost $1.5bn sure seems oathetic result. Again you are right - obviously you are a bit of a historian buff. I prefer to look at last year EBITDA $60m and forecast $100+m for 2018 x 100 year mine life. Where the bulk of the Capex for next 5+ years, maybe longer has been incurred.

Share price at current lows - you decide for yourself if it is falling further, over or under valued. Like I said yday - please don’t buy any of the shares.

[wheniamfree] 07/4/2018 08:54

Production increased but grades are down. Doesn’t matter what the mine life is, if their opex costs outweigh the costs of sale.

So we still have an inflated board of 12 taking a figure amounting to 20% of total Company profits between them, does that sound right? Plenty of noses in the trough there!

As for the $19m profit that’s in its entirety has been earmarked hasn’t it for 2018 to upgrade the concentrator so all the profits earned have gone and the reason for upgrade? To increase production to offset the low grades. Sounds like treading water somewhat, certainly not progression. In the mean time the stock piles will be depleted whilst Work is carried out.

Now, on to the dire state of Mozambique I see you care to omit that from your timely answer? Unmanageable Debt, extreme corruption and now terrorism in the vicinity. Let’s see if the government reign in all the infrastructure and assets and nationalise leaving yourself with nothing.

Would be one way to start to tackle the spiralling debt problem, why take crumbs via royalty and tax when you can have the whole cake. Country and her people come first.

[donkey40] 06/4/2018 21:52

Ok, now I got some time for you numpties.

Lower grades - it is a 100+ year mine life, so sure they r gonna hit patches and periods of lower grades. No big deal - unless they cannot manage through that. Dredging of sand and separation of elements + stocks on hand = record production all through 2017 and more of same in 2018. I Guess you missed the bit about record Prod and Sales - and hit zircon market and stable ilmenite market.

Whatever happens - please please please, none of you muppets buy. I would cry if stupid dipsticks like you made money here !!

[donkey40] 06/4/2018 15:04

Don’t buy this stock !! And if you already have, sell quickly and get out !!!

It is a total train wreck waiting to happen.

[sleveen] 06/4/2018 14:31

Indeed.

The prospect of lower grades made me wait to see what the impact would be.

I'm still waiting.

[wheniamfree] 06/4/2018 14:27

“MOZAMBIQUE mineral sands producer, Kenmare Resources, would try to match last year’s record ilmenite production in 2018, but the general outlook was a slight fade in output.

As a result, the company – which is listed in London – would spend $19m examining growth projects and studies at its Moma mine during the year in an effort to offset the plateau to downward shift in production. The mine is set to run into lower grades.

Shares in Kenmare were up marginally by 1.45% in early UK trade. The stock has traded flat on a one-year basis, although that doesn’t tell the whole story of Kenmare’s last three years in which it nearly went bust.

There are some headwinds for the mineral. The Chinese are able to produce ilmenite as a by-product of their iron ore mining, although production from this source was mostly likely capped as they were at capacity. But increased environmental regulations and enforcement regarding domestic pigment and ilmenite production had disrupted the market.“

So despite turning a profit after the ridiculous number of board members sucking in 20% of that total as bonuses and salaries they now need to spend that entire profit on upgrading the concentrator due to low grades??

One word - OUCH!!!!

[wheniamfree] 06/4/2018 14:12

Fitch Ratings keeps Mozambique’s risk assessment unchanged on “restricted default”

[donkey40] 06/4/2018 12:53

Sure is. And you are bang smack on the money. Good job

[wheniamfree] 06/4/2018 07:53

Creating new lows here daily.

Current valuation is extortionately high. I think the market are beginning to realise this.

Did you check out my other comparable companies to show you the point?

[wheniamfree] 06/4/2018 07:36

Let’s see, debt for equity swaps and lenders hold a large portion of stock in a highly risked Company.

Not only did the original debt get written down they had to take an equity based payment (hence why shareholders got wiped out) or did you not realise since you keep saying how many shares are in issue. Let me point out the 109m shares are post consolidation so a multiple of 200 needs to be applied there for true count.

The CEO has apparently raised points of illiquidity. That is all a front imho, the stock is illiquid for a reason although he does air that concerns of future investors will be that debt lenders will dump stock hence why such an overhang exists.

Where are all the recent sells from? It was noted that MC was speaking to those lenders to try and release stock and create liquidity, I am sure they are more than willing to however where are the buyers?

If what we see in terms of consistent drip drip drip of stock and share price decline is the lenders then perhaps MC should be careful what he wishes for. Where is all the appetite for stock.

What I find fascinating is that with such a small realised profit (the first in many years let me add) why the salaries/pensions and bonuses of a board some 12 strong (yes 12!) totalled 20% of that figure?

Also are you able to advise me on how a company operating in Mozambique has its chief operating officer not even in country let alone onsite!?

[wheniamfree] 05/4/2018 21:05

Only last week;


“No escape for Mozambique as debt troubles mount.”

“When news of the secret loans broke, major donors - including the International Monetary Fund (IMF) and World Bank - suspended aid to the southern African nation, pitching it into further economic hardship.

Economic growth fell from 6.6 percent in 2015 to 3.7 percent in 2017, with government debt soaring to 112 percent of gross domestic product (GDP) by the end of last year.”



Nationalisation is a general path when countries are put to the wall. Those such as Kenmare paying a royalty base can either be bled dry by increases to offset country debts or a retake of assets and infrastructure.

Given the cut on world bank and IMF funding options and a spiralling debt pile with creditors looming what other possibilities do Mozambique have given their saviour of gas options aren’t even likely to appear until 2023 and that is then also a maybe.

Economically not a place to be doing business is my view.

[donkey40] 05/4/2018 20:05

Nosirendor - I am with you. Let’s get this going 100%. Time to shake the trees and put some pressure on Lazy Mikey (no longer Smooth Mikey). Yes 100% - let’s us get this started !!

Thinking about.....
Calling an EGM to oust the BOD, anyone interested in jumping aboard?

[wheniamfree] 05/4/2018 18:57

Oh dear, mr know-it-all clearly knows nothing.

I’ll keep pulling this one apart then. Plenty of skeletons in the closet the more I look.