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The capital spend in this report for 2024 along with soft pricing has made me lower my buy price. I've been invested since 2018 and the impression is that of a well run company, but given the (increased) large investment needed for the move, I can see why the share price is well down today. Needs higher product pricing to restore my faith.
I am surprised that only the market is factoring in the Red Sea debacle.
Saga, from memory you were around when Iluka made an opportunistic Offer.
In my opinion, if a reasonable Offer were received the Board could be forced to sell.
I posted “Sitting Duck” thread, wondering if you feel this could become reality?
It is not my preferred option and would likely mean I’ve wasted a couple of years here but I can’t see the board being supported if an Offer can in close to £4.50-5.00 and KMR would be steal at that Market Cap for a large strategic Buyer.
I remember the opportunistic iluka offer. I am starting to wonder whether this is being worked for another one of those "opportunistic" bids. There were few large trades executed today. Would be interested to see what happens in the auction today and what is reported out of hours.
I very much doubt a 400-500p bid would do it since that is less than half the current book value per share. I think more around 700p or 680M
My typical stance is in agreement with you.
However, the last Tender Offer those willing to sell at £4.20 (ish) was significantly over subscribed and this is now coming through.
The recent sell off is simply due to a lack of awareness of KMR in the market and its lack of liquidity. As normal over sold and now it’s hard to buy in size.
For me, trying to remain patient and let the share price correct to it normal low position, is frustrating.
But, with significant willing sellers just above £4 and Share Price at £3.30 I feel like all logic could be thrown out the window, if an Offer were to appear.
I would be disappointed to Sell May holding at £5
However, the larger II’s would 💯 have a call to make if it were Offered. I could see some defensive commentary. The Offer materially undervalues the business etc etc but I could see an aggressive approach being successful between £4.50 and £7.00 very easily.
For me the Board is responsible for the Market weakness and needs to respond.
Lots of BS about Red Sea and Valuations will not cut it for me. The lack of liquidity and Institutional support is the boards fault/responsibility.
As of this morning the glass half full / empty position became…. If the board would even confirm there is a f’in glass it would be a marked improvement.
Sorry for rant….. very annoyed
"An intrinsically good business with a falling share price is likely to attract predators, and in June 2014 Kenmare received an all-share takeover offer from Australian miner Iluka Resources. Worth about 17p a share (a 40% premium to the prevailing price of 12p), the offer valued the company at about $800m. The board rejected the offer, saying it did not recognise Moma’s value as a long-life, low-cost asset. Its stance was supported by investment manager M&G, which held 19% of Kenmare’s shares."
$800M was approx £480M at the time
Con, I was indeed around during the Iluka Offer. I certainly held shares back in 2015, if not earlier. Ithink the company is a "Sitting Duck" for an approach and this time I shall sell. The Board are too interested in playing "Miners", or should that be "Minors", than they are at building the company for the benefit of the shareholders. Some of the BoD should take their overstuffed pensions and go now, I am sorry to say.
Thanks Saga, always value your comments.
You know I’ve been a big supporter but I feel like the board have fallen asleep at the wheel, much like they did before the Iluka Opportunistic Offer.
For me, with much regret, I’m in the same boat. Bring on the offer and time to move on.
All I would like to add is I would take the offer as well although I would probably plough it back in to who bought us. This is a great asset which with the right management and outlook would be an outstanding investment.
Getting a bit desperate chums. You're making out that if an offer did indeed eventuate you would accept any miserly sum!
Fair comment, I think £5 per share would be a miserly sum but indeed, right now (Friday evening, long week, need a 🥃) I would take the £5 per share and run.
Monday I may be a little brighter but let’s see….. obviously there is no Offer……. Yet!
Remember the board rejected the offer of $800M since it did not recognise Moma’s value as a long-life, low-cost asset. Lets not forget where KMR are. " WCP A will complete mining at Namalope in late 2025 and commence its transition to the Nataka ore zone. Nataka is the largest of Moma’s ore zones, representing 75% of Kenmare’s Mineral Resources. WCP A is expected to mine Nataka for the remainder of its economic life, which exceeds 20 years."
An offer $800M today would equate to approximately 700p/share. With all due respect what parameters have changed that would allow an offer to be acceptable below that figure? It my mind this still sounds like a great long term hold and continue to reinvest the dividend for now to take advantage of such a cheap share price. Or could I be missing something ?
Tep, that is exactly the question. Many people and funds have supported the Company, and its board, to deliver the value of the true value of the asset, which I firmly believe to be $1.2-1.4bn.
The question I am posing is, do you believe this board are capable of delivering in excess of $800m in 3 years time?
If not, and many people believe in the asst but not the board, then what would happen if an opportunistic Buyer made an Offer of $600m now?
Since the Tender Offer, we have seen consistent II selling. Therefore, if an Offer was received would the board get support to carry on (under delivering in many people’s eyes) and defend the true value of the asset. Or would, given the higher rates environment, the II’s accept the Offer, realise a reasonable return and deploy their capital into lower risk investments delivering a similar return.
In my view, the II investment world has been through a sea change, capital that is high risk and under delivering is at an acute risk of being sold off at a discount and redeployed into lower risk investments.
The II’s could realise a return on KMR and reinvest it into a senior secured Corporate loan at 15% so why leave it in KMR?
The reality is the board is paying a dividend (less IWT) and the capital appreciation is currently extremely poor.
If the II’s were given a chance to realise a good return (say $600-800m) would they really feel leaving the capital in KMR for 3 more years look attractive versus lower risk similar return investment opportunities.
In my view, the board may serious struggle to defend a reasonable Offer of 2x the current share price which for me and many others would be hugely disappointing.
The board appears to be asleep at the wheel again. They are not driving the investment story. II’s are not buying in to replace exiting II’s and that is why the share price is on its knees. The global macro story explains why the share price should only be around £5 not £3.20.
Top quartile miners are not trading at 1.2x EV/EBITDA and I feel the company is a SITTING DUCK
I would love to have some senior secured Corporate loan at 15%, can you give an example or two?
Based on a recent Oaktree Capital Insights podcast… further thoughts on Sea Change