Date post: | 02-Jan-2016 |
Category: |
Documents |
Upload: | clare-parker |
View: | 221 times |
Download: | 0 times |
31 May 2007
Moma Titanium Minerals ProjectMoma Titanium Minerals Project
Gareth CliftonGareth CliftonMozambique ManagerMozambique Manager
Discovery to Delivery
1987 - Start exploration at Congolone
1988 - 4.2 Million Tonnes Ilmenite Reserve Proven
1993 - 1996 - Joint venture with BHP. During this period the
Moma deposit was discovered.
1999 – BHP strategic decision to withdraw from Titanium
Minerals Industry. Kenmare negotiated purchase of Concentrator
and Separator Plants from BHP’s Beenup plant.
1999 – Pre-feasibility study completed
2000 - Kenmare Completes Moma DFS
2001 – NM Rothchild appointed as Financial Advisor
Kenmare Moma Titanium Minerals MineKenmare Moma Titanium Minerals MineTHE EARLY DAYS
Kenmare Moma Titanium Minerals MineKenmare Moma Titanium Minerals MineConcentrator Plant in Australia
Kenmare Moma Titanium Minerals MineKenmare Moma Titanium Minerals MineSeparator Plant in Australia
Kenmare Moma Titanium Minerals MineKenmare Moma Titanium Minerals Mine
The Mining Process
• Location on Coast (No Overland Transport)Location on Coast (No Overland Transport)
• Surface Mineralisation (No Overburden)Surface Mineralisation (No Overburden)
• Low Cost Dredge MiningLow Cost Dredge Mining
• Limited Infrastructure Requirements Limited Infrastructure Requirements
• Low Cost Hydro PowerLow Cost Hydro Power
• Significant Co-product RevenueSignificant Co-product Revenue
• IlmeniteIlmenite Products Suitable for Sulphate & Chloride Products Suitable for Sulphate & Chloride Markets Without Further BeneficiationMarkets Without Further Beneficiation
• Substantial Additional Resources for ExpansionSubstantial Additional Resources for Expansion
Competitive AdvantagesCompetitive Advantages
• Identify potential lenders and present Project details
• Bring interested parties together to discuss possible financing packages
• Identify concerns of potential lenders
• Address those concerns
• Finalise debt financing package
Kenmare Moma Titanium Minerals MineKenmare Moma Titanium Minerals Mine
Next Steps to be Taken
• Mozambique economic and political
environment
• The small size of Kenmare relative to financing
required
• Marketing commitments
• Potential cost overruns
• Supply of Power
Kenmare Moma Titanium Minerals MineKenmare Moma Titanium Minerals Mine
Lender Concerns
• Mineral Licensing Contract and Implementation Agreement signed 21 January 2002 with the Government of Mozambique defining:
1. Fiscal and Legal stability for the duration of the Project
2. Rights and Obligations of the Project Companies
3. Clear dispute resolution mechanisms
4. Clear rights of assignment
Kenmare Moma Titanium Minerals MineKenmare Moma Titanium Minerals Mine
Solutions:Mozambique Economic and Political Situation
• Loan disbursements to be conditional upon:
1. Signing of an acceptable contract for construction
of the mine – key elements fixed price.
2. Signing of marketing contracts.
3. Kenmare raising $83m equity, including $30m
Contingency Reserve
Kenmare Moma Titanium Minerals MineKenmare Moma Titanium Minerals MineSolutions:
Kenmare’s Size
• Completion support provided by blue chip customers
• Long Term Contracts (5 years) as no terminal market
• Guaranteed offtake volumes
• Agree prices or pricing mechanisms
• Direct agreements with lenders
Kenmare Moma Titanium Minerals MineKenmare Moma Titanium Minerals MineSolutions:
Marketing Commitments
Kenmare Moma Titanium Minerals MineKenmare Moma Titanium Minerals MineSolutions:
Potential Cost Overruns
MULTIPLEX
Joint Venture BetweenJoint Venture Between
• Contract signed April 2004
• Base price $220m
• Provision for cost overrun up to $20m
• Contractor to share increasing portion of cost overrun
• Significant delay and performance damages
• Power Supply Agreement signed with Electricidade de
Moçambique December 2002: supply and price formula
guaranteed
• Power Line Concession Contract signed with Government
of Mozambique June 2004 authorizing the construction of
privately owned line
Kenmare Moma Titanium Minerals MineKenmare Moma Titanium Minerals MineSolutions:
Supply of Power
Kenmare Moma Titanium Minerals MineInitial Capital Structure
US$mUS$mEquityEquity
Previously ContributedPreviously Contributed 9090Project Equity Contribution 53
Subordinated DebtSubordinated Debt 6666Senior DebtSenior Debt 200200
446446
SourcesSources
Overrun Contingency 30
Subordinated Stand-by FacilitySubordinated Stand-by Facility 77
Kenmare Moma Titanium Minerals MineKenmare Moma Titanium Minerals MineLender & ECA GroupLender & ECA Group
$ 40$ 40
$195 + € 62$195 + € 62
$ 80$ 80
€ € 5555
$ 15$ 15
$ 26$ 26
TotalTotal
--
$10 + € 47$10 + € 47
--
€ € 4040
--
--
Sub-DebtSub-Debt
AfDBAfDB
ABSA : ECICABSA : ECIC
TotalTotal
KfW : HermesKfW : Hermes
US$m & € mUS$m & € m
$ 40$ 40
$185 + € 15$185 + € 15
$ 80$ 80
€ € 1515
$ 15$ 15
$ 26$ 26
Senior-DebtSenior-Debt
$ 19 + € 7$ 19 + € 7 € € 77FMOFMO $ 19$ 19
EIBEIB
KfW : MIGAKfW : MIGA
$ 15$ 15$ 10$ 10EAIFEAIF $ 5$ 5
US$m & € mUS$m & € m US$m & € mUS$m & € m
Subordinated Lender Stand-by Subordinated Lender Stand-by FacilityFacility
$4 + €2.7$4 + €2.7
Kenmare Project AdvisorsKenmare Project Advisors
Stockbrokers: Canaccord Capital & Davy Corporate Financial: N M Rothschild Legal: Sullivan & Cromwell Client Engineer: Aker Kvaerner Insurance: AON
Lender AdvisorsLender Advisors Legal: Milbank Tweed Hadley & McCloy
Independent Engineer: SRK Consulting
Industry Expert: IBMA Inc.
Insurance: Bankrisk / Marsh
Observations.…Observations.…
Financing Complexity, Time & Cost Greater
Than Expected
Loan Signing June 04, First Disbursement Nov 04,
First Production April 07.
Vulnerability Under Financing Structure
Common Denominator in Negotiations
Substantial Completion Support
Acceptable EPC Contract with most elements fixed
Marketing Contracts
DFIs & ECAs Important Role
Engage Directly As Early As Possible
Good Approach For Long Term Business, but
Not for Faint of Heart.
Observations, ctd.…Observations, ctd.…
Moma Annual Production
800k Tonnes - 800k Tonnes - IlmeniteIlmenite
56k Tonnes - 56k Tonnes - ZirconZircon
21k Tonnes - 21k Tonnes - RutileRutile
Moma
Bunbury
Kenmare Moma Titanium Minerals Mine
The Entire Plant was transported from AustraliaThe Entire Plant was transported from Australia
Kenmare Moma Titanium Minerals Mine
From Exploration…
Blood, Sweat and Tears and a lot of Money
31 May 2007
Moma Titanium Minerals ProjectMoma Titanium Minerals Project
Discovery to Delivery