Good Morning,
Very busy - although amusingly, there were suggestions we had visited the dark side and started
working for a long-only fund! Chance for a recap later this week on the
pertinent issues from the 22 November to present, although nothing much has
changed, save for news driven events.
Iluka Resources sensibly announced the long-awaited
termination of discussions with Kenmare Resources (KMR) -
it’s wise for parties to read the RNS. Those followers will be unsurprised by
this "news.”
Over to KMR (bold, italics and underlining are additions):-
SGRF, a sovereign wealth fund
of the Sultanate of Oman, has approved in principle an investment of US$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 US$75 million capital, necessary Kenmare shareholder
approvals, and finalisation of a prospectus.
Wait….continue reading:
Moma is a world-class asset
that encompasses a large, long life ore body. Total invested capital
exceeds US$1.2 billion, with the mine producing more than 7% of global TiO2
feedstock supply - being the largest merchant producer of ilmenite globally.
Having invested capital that exceeds $1.2B, and producing 7%
of global TiO2 feedstock, it would appear the management are going to hang
around to run the next stage of the "KMR turnaround story/saga." This is despite being in charge whilst a transformation of a once multi-million pound company
into a small cap with a £12M valuation took place. One has to wonder what the board’s
remuneration and bonuses have been over the years in comparison to the returns
for shareholders.
The question that those supporting shareholders should ask
is, “are the management right for the future?” If the past is an
indicator of the future, prudence would be to have a fresh start with a clean
sweep. Those whom played the KMR pub quiz last year on FTML, will no doubt be
aware of the dire performance for shareholders.
What’s another $175M in the grand scheme of things? Will the
prudential be putting up any ‘wonga’ into the fundraiser? More to the point, is
$175M enough?
There remain a number
of material matters that need to be agreed to enable Kenmare to deliver the
planned capital raising and there can be no certainty at this time that they
will be achieved. Kenmare welcomes the indicated
support from SGRF and appreciates the support of key shareholders.
We’ll watch from a distance, although if one was short,
prudence would suggest closing on the news today. KMR Net Debt must be around
$315-332M by EMC estimates.
Continuing with a theme of shareholder value and with some amusement for those following the debacle at LGO
Energy. Judging by the latest announcement they’re off to find and/or recognise
shareholder value with
a strategic review.
The decision to cancel the SPA
has been considered as part of management's overall assessment of means to
better realise the value and future potential of the Tabaquite Block.
We have Glencore (GLEN) updating the
market this Thursday. NH and David Sheppard at the FT
ran with something a bit more positive,
“Glencoreexpects to cut debt ahead of schedule.” - Sensible and common-sense
discussion about GLEN's earnings forecasts in the current environment. Pay
attention to the terminology used on Thursday, one suspects there may be a few statements coming from the back foot.
Sadly for GLEN's workers
Collinsville coal mine in north Queensland, 180 workers are to lose their jobs. Is this an admission of the dire state of the coal industry? It certainly explains why Mick Davis is taking his time with X2 Resources, perhaps to Rio's annoyance.
In the weekend press we had Anglo American allegedly
slashing their dividend (again and again), talk about echoes – news must be
thin on the ground! Anglo’s investors’ day
tomorrow (08th Dec). We can no doubt look forward to
all the positives of a diversified miner and what this offers investors, whilst
struggling with depressed pricing.
With Anglo’s subsidiaries either under water in terms of
operational costs (Kumba Iron Ore/De Beers), lacking flexibility in CAPEX
(Minas Rio) or needing to deleverage the balance sheet. The future doesn't look
rosy. Anglo is now realising the hard choices it has to make and the limited
flexibility. Quite why they have not pressed the equity raise/capital injection
button is anyone’s guess. Surely they'll want to get in there before all the others?
For those that have followed a company
Rurelec that we consider jam tomorrow, its not often one gets validated in their views so quickly. Over the
weekend attention was drawn to the following announcement on
Independent Power Corporation PLC. See the
previous commentary here (EMC) when the IPC was "spun out" or Rurelec to allegedly save costs.
Questions:
a) When did the
Independent Power Corporation PLC, Peter Earl and Anglo Kazakh TransAsian
Pipeline Corporation Limited commence discussions? We may be able to update on this shortly...
b) Was this before or
after the spin off?
c) Was the NOMAD
consulted on the “spin-off?”
Atb Fraser.
