Announcements - 19th April 2004
2003 Preliminary Results Chairman's Statement
Dear Shareholder,
The key objective we have been pursuing over the last 9 months has been the signing of a Fixed Price Contract to develop the Moma project. I was very pleased to announce on the 8th of April that we had entered into such a contract with a Joint Venture formed between Multiplex Ltd and Bateman BV. I cannot think of a more suitable combination of key skills to implement the project. Multiplex is a large contracting group with operations stretching around the globe and which specialises in large complex construction projects. Bateman is an international engineering group with specific mineral sands expertise and experience of working in Mozambique. These best in class companies are bringing their expertise together to deliver the project for Kenmare under the agreed terms of the contract.
The contract, which is denominated in a number of currencies, is established on a base price of US$220 million with provisions for cost overruns up to US$240 million at which point it becomes totally fixed. Between US$220 and US$240 million the JV shoulders a progressively greater proportion of the costs. Hence there is a great incentive for it to ensure overruns above US$220 million are minimal. From commencement of the work programme under the contract it will take two years to complete the construction of the Moma project.
The contract is subject to a number of conditions precedent before it becomes effective. The most significant of the conditions precedent is the making available of debt financing, which is itself conditional on the availability of an equity financing component. Hence the next step is to complete the funding process.
A debt funding package has been negotiated with a lender group comprising the European Investment Bank (EIB), The African Development Bank (ADB), FMO (a Dutch development finance institution), KfW (a German development finance institution) and ABSA (a South African Commercial Bank) lending under an ECIC (Export Credit Insurance Agency of South Africa) export guarantee. The EIB, and the ADB have received board approvals for their loans to the project. The remaining lenders required the signing of the construction contract before they could take it to their boards. They are expected to do so in the coming weeks. Political risk guarantees are being provided to the project by MIGA, an arm of the World Bank, and are expecting to be supplemented by Hermes, an arm of the German Government.
It is intended that a placing to institutional investors will be performed to cover the required equity component of the financing. All shareholders will also be given an opportunity to participate in the equity financing component by way of partial claw back of this placing.
Kenmare accounts for the year ended 31 December 2003 show a profit of US$120,551 arising mainly from deposit interest income net of an operating loss of US$42,877.
Charles Carvill
Chairman
19th April 2004
For further information:
Michael Carvill
Managing Director
+353-1-671 0411
+353-87-674 0110
Murray Consultants
Tom Byrne
+353-1-498 0339
Conduit PR Ltd
Leesa Peters
+44-207-6188708
Mob: +44 781 215 9885
