Business Irish

Thursday 23 November 2017

Kenmare's loan extension 'gives flexibility'

Sarah McCabe

Sarah McCabe

ANALYSTS have welcomed Kenmare Resources' decision to extend a loan repayment date.

The Irish-listed mining company reached an agreement with a subsidiary of Barclays, Absa Bank, to extend the repayment date on $20m (€14.5m) of a $40m loan facility.

The FTSE 250 company paid back half of the loan in November, from the proceeds of a share placement. The remainder's due date has now been extended to March 2015, from March 2014.

"The Absa loan extension to March 2015 provides a useful degree of working capital flexibility" said Davy stockbrokers yesterday.

"The benefit of this is that it allows an added degree of financing flexibility during a period (2014) when product pricing is expected to recover but with detailed timing still uncertain."

However, others said the extension was unlikely to positively affect Kenmare's share price, despite it rising 3.5pc to 24c yesterday.

"While the agreed extension is positive in that it removes a degree of uncertainty, it was largely anticipated and thus we expect limited impact on the share price," said Goodbody's.

The shares slumped recently, due in part to concerns about demand for its output. It is valued on the Irish stock exchange at around €662m. A year ago it was more than €1bn.

Kenmare's operations are focused in Mozambique, where it operates a large ilmenite mine. Ilmenite is processed to make titanium dioxide, used in making paint and plastic.

Irish Independent

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