Plans to raise US$275 million

The Irish company Kenmare Resources that operates a dredge mine in Moma district, on the coast of the northern Mozambican province of Nampula, announced today that it hopes to raise 275 million US dollars.As part of this equity fundraising, it has entered into a conditional agreement with King Ally Holdings under which it will receive a hundred million dollars for ownership of not more than 29.9 per cent of the enlarged company.The company also hopes to receive a hundred million dollars from the Omani sovereign wealth fund and a further 75 million dollars from new and existing shareholders.The company still has a long way to go before the plan can be put into operation. Kenmare’s statement conceded that “a significant number of uncertainties remain and there can be no certainty that the capital restructuring, including the investment by King Ally, will be completed”.The Moma mine extracts ilmenite, rutile and zircon from titanium-bearing heavy mineral sands. However, falling prices and a nineteen per cent drop in output last year has put the company in deep financial difficulty. Raising funds to pay its creditors has been slower than hoped and the company defaulted on its loans at the end of January.Shares in the company fell almost twenty one per cent on the London Stock Exchange following today’s announcement of the latest capital restructuring plan.Ilmenite (iron titanium oxide) and rutile (titanium dioxide) are used to make white pigments for paints, paper and plastic. Titanium can be extracted from these ores and used to manufacture metallic parts where light weight and high strength are needed. Zircon (zirconium silicate) is used for abrasive and insulating purposes.