Member Info for Caposoka

Nosir, have a look at page 20 onwards of the preliminary results. A cash sweep mechanism exists, sweeping up 25% of cash available for restricted payments. This is done every 6 months over and above the committed payment schedule. After 6 months 25% is collected on the remaining 75% (plus of course any further cash generated), so this equates to a sweep of 43% p.a. Debt should fall much faster than programmed and as Greeno stated, it makes sense to invest in capex now because the cash is 'lost' in debt repayments. Hopefully the capex generates a return of more than the 5.5% interest rate on sub-ordinated debt.

Hi Nosir, I referred to the EGM earlier as this is something that came straight from the FD during the Conference Call. Clearing the path to dividends does not appear a simple one... shareholders to vote at an EGM (or AGM as you say), plus applications to court, all due to the accumulated losses to date, plus approvals from lenders. Hope expressed was to be in a position this time next year to decide on whether they have the free capital as well as the hurdles removed in order to pay out. Another year is not a happy message to convey. Cash sweep already exists so that should cater for keeping sufficient capital to invest/work and offsetting/paying down debt. Agree there is scope of inefficiency of capital but think there are various capex projects now on-going where cash is earmarked. Also agree that they missed a trick regarding announcing how much was paid off in excess of the first repayment that was referred to. It could have been an easy-win headline. When the Q1 figures come out in a month, hopefully they can be a bit more forthcoming then, but maybe not. They tend to stick to production and not financials in these updates.

Irish Independent https://www.independent.ie/business/irish/revenue-jumps-47pc-at-kenmare-resources-36703875.html III http://www.iii.co.uk/alliance-news/1521033385855777500-3/kenmare-resources-swings-to-profit-on-record-production-volumes Canaccord maintains 500p target https://www.whatsonthorold.com/2018/03/14/kenmare-resources-lonkmr-stock-rating-maintained-by-canaccord-genuity-the-gbx-500-00-target-indicates-104-08-potential-talga-resources-ltd-ordinary-shares-au-tlgrf-shorts-lowered-by-17-72/ Irish Times - Norwegian Sovereign Wealth Fund sold out of KMR during year https://www.irishtimes.com/business/economy/norway-s-1tn-sovereign-fund-almost-doubles-its-exposure-to-ireland-1.3425909

Skid, if you listened into the conf. call or to the recording when released, the SP was discussed - question why clear operational improvement not being reflected in the SP was put down to lack of liquidity. Interesting part is that efforts are clearly being made to persuade the lenders to sell, to increase liquidity but all attempts have been unsuccessful thus far. Sounds like a chicken or egg impasse needing further work.

Also to increase short term production through "Namalope Supplemental" - a small 500tph dredge - the capex involved is less than $15M, so can be funded from cash flow - offers access to previous inaccessible parts of the ore body as a bolt on to the existing WCP. Appears to be a low capex / high return investment in addition to WCP B upgrade.

A couple of titbits... Monazite production of approx. 6kt / year. Movement to Pilivili looks like a month for the move, followed by a re-commissioning / ramp up phase. Dividends - EGM / High Court processes due to accumulated losses, plus discussions with lenders - not a 'quick' process. Hopefully this time next year will be in position to decide.

My read is that IIs have requested KMR to make use of existing assets to reduce capex to free up future cash for dividends earlier. Spending 90-100M on WCP C has been but on back burner and dressed up as moving WCP B to Pivilli due to better grade prospects there. I had hoped WCP C would be built first to offset disruption of the move. On flip side, cheaper initiatives to increase production up to name plate is not a bad thing, at least until majority of debt is paid off. Also, within the results 28M was re-invested into property and equipment from cash generated. How much of this was dry docking costs dressed up as increasing the asset value rather than a direct cost is unknown but good nevertheless.

I don't see tomorrow as disappointing, more another step of steady progress along the road. The beanies will look at net profit and grumble the rate of return on the investment remains low - but it is improving. Lots of other positives will be within the details - eg investments being made from cash generated. I'm hoping that a post period comment is made on debt repayments. Start of Feb 1st 9M was due but including cash sweep, this may have been in 20-25M range which should provide a nice headline.

Thanks BF. You were spot on, missing the 9,300 of zircon (I put an aid memoir next to the number in the spreadsheet, so the number became a text not recognised by the formula...). Village on my part. Bumps the revenue and EBITDA up. I would be happy with EBITDA 40M+ in H2 but the doubt remains as the change in net debt did not reflect H2 being much better than H1. Still think there may have been some non-recurring costs partially offsetting any revenue increase - such as hefty dry docking bills, capex for WCP C upgrade and/or consultants. Looking forward to tomorrow.

Just to add. Net debt fell 6M in H1. Net debt fell 5M in H2. My best guess is H2 revenue / EBITDA was similar to H1. I'm not expected H2 fireworks due to the sales figures.

Supaman, think you have to take into account the effect of the Q3 dry docking of Bronagh on sales in H2. H1 EBITDA of 30M was based on revenue of 100M - I sales 495kt, Z/R sales 40.7kt. H2 sales dropped. I sales 466.8kt, Z/R sales 28.5kt, offset by what we expect were rising prices. If H2 revenue held up at 100M, that would not be a bad result. EBITDA would be circa 60M. Hopefully revenue was a little higher in 210-220M range.

envelopes in Moz probably useful in other ways, esp brown ones.

fancy spreadsheets out, back of the fag packet calculation in.... probably explains financial performance pre 2016 fund raise...

Hi Delano, good to see you here as well and hopefully it won't be the last of you. One thing I have learnt from my KMR experience is that the market is often right when all the indicators and general noise appear otherwise, so as per Power's post, why is the SP still depressed is a valid question that we shall all be asking. Agree with your post - general lack of confidence, frustration etc etc - but not that trading remains in the red. H1'17 EBITDA was 30M with a tail wind remaining in H2 and the most recent podcast from the FD talked about continuing cash generation and expansion, Maybe next week will reassure you and others. The net debt figure in the 11 Jan update was underwhelming to say the least - still improving but far less than hoped. This will be more clear next week and hopefully some positive news / surprises will emerge from the details - eg has cash been spent (or reserved) on capex in advance of 25% being eaten by the cash sweep at the start of Feb. Hope springs eternal for a positive update.

Maybe see if the questions still applies after next week. I am not a chartist but looking at the chart since Aug 2016, 250 ish has acted as a floor on several occasions and various spikes have coincided with release of financials. Also having new, better metrics pushes unfavourable historical ones off further off the page.

Hanan's Oct research may have been ahead on 2017 end debt position but appear behind on Zr pricing - page 6 - predicted ILU Zr reference price at USD 1,200/t for foreseeable future. Report does make some useful correlation between ILU ref prices and KMR achieved - a question on this BB from a couple of weeks back. LB-KMR future tie up. Seems to fit LB's strategy and with annualised EBITDA > 500M, revenue > 1.5B, net debt 300M sure they could afford it at some stage in the future.

In Oct, it predicted net debt at Y17 end of 19M. Reported net debt 34M. Not sure if difference due to lower than predicted revenue or higher capex. Shall find out next week....!

Supaman, you are correct the date should be published but in case you missed it, a podcast from the recent mining conference in Cape Town has announced the results will come out on 14 March.

I liked your lead on those too but had no funds available so neither lost or gained. Hope you succeeded. When I mention a success like LRD I should also mention the disasters but in those cases 'happy' to claim the credit for them alone !

18 months ago, followed your suggestion on LRD. After today, owe you a beer. Actually, two as prior to that your guide on BSE was equally good. Apologies to others for non KMR subject but have no other forum to pass on my appreciation !!