Irish group raises £197m to develop Mozambique mine

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Kenmare Resources, an Irish mineral exploration firm, yesterday pulled off a $354m (£197m) financing to launch one of the largest-ever titanium mines, in Mozambique.

Kenmare Resources, an Irish mineral exploration firm, yesterday pulled off a $354m (£197m) financing to launch one of the largest-ever titanium mines, in Mozambique.

The mining tiddler - which has a market capitalisation of just £81m - said it had signed up a string of banks around the world to put up money for the plan, which will involve building a massive mine in the country by 2006.

In what is thought to be the largest financing for a mining company outside the FTSE 100, Kenmare said it had agreed loans from the African Development Bank and the European Investment Bank. ABSA, a South African commercial bank, and a Dutch development institution, FMO, are also part of the consortium. Together, five banks have agreed to lend $269m to the project.

Kenmare, which has been working towards launching the Mozambique project for 15 years, will take an equity stake in it. It has raised $55m of funding from shareholders, it was announced yesterday, to cover the cost of the stake plus its costs in the Moma Titanium Mineral Sands Project.

The company, which is listed in London and Dublin, has also raised an extra $30m as a "contingency fund" which will be returned to shareholders as long as the project goes according to plan.

Titanium is a valuable resource for industrial producers as it is added to paints and pigments to make the colour more opaque. Currently, the titanium market is dominated by a small number of giant mining companies, such as Rio Tinto and Anglo American. Those two account for almost 70 per cent of the world's supply of the mineral.

Tony McCluskey, the finance director of Kenmare, said: "It is very unusual to have an independent company such as ourselves starting a mine like this."

Kenmare has been able to raise the money from banks and institutional investors because it has already carried out extensive research into the amount of titanium it expects to be able to generate from the Mozambique mine.

Kenmare had already signed a joint venture with Multiplex, an Australian contractor, to help build the mine. But construction hinged on Kenmare being able to raise the debt financing.

Analysts estimate that Moma should bring in annual revenues of $85m over a 20-year period with operating costs projected at $23m a year over the same interval. Sales contracts covering more than half the annual revenues for the first five years of operations are also in place. Kenmare's shares fell 2.25p to 17p.

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