Member Info for JODO

Mamba
Not an expert but this doesn’t make sense to me:
“That is to be decided in an extraordinary general meeting. I can see little difference even if the said removal of directors take place as that would not affect in principle the re-structuring plan.”
Surely a majority on the board could withdraw the proposal and/or fire the CEO if they wish?
Ultimately, it may not help but it would affect the restructuring plan, no?

You really are a sour kraut

NGR
I'm sure we're all pleased to know that you don't know what's going to happen!

The group is currently outputting heavy mineral concentrate at the rate of 1.4 million tonnes pa, which is 87% up on last year’s total. With 37% higher grades, this will drive Kenmare’s operat- ing profits up to possibly $150m.
Last year’s capital expenditure programme pushed the group into net debt of $64m but with the cash flow now flowing freely, this debt should be eliminated in the current year, resulting in finance charges being almost eliminated. This could push earn- ings per share up to an all-time record of €1 year to put the shares at the current price at €5 on a prospective five times price-earn- ings multiple, which looks like a dramatic undervaluation.
PROSPECTS
On the back of this perfor- mance, Kenmare’s share price has almost doubled from the begin- ning of last year but the prospects are that the shares will gain in value over the next year as the market begins to realise just how profitable Kenmare has become.
This looks likely to attract the attention of one of the bigger heavy mineral sands producers
of the titanium dioxide feedstock, which is led by the Chinese, with a 25% market share, while the €120bn Anglo-Australian mining house Rio Tinto is sitting on a 20% market share. With Kenmare now capitalised at €500m it could, therefore, be easily gobbled up.
Another likely mineral sands predator is the €2bn Australian Iluka Resources. It has already expressed interest in Kenmare and has a 9% market share and is more focused on this sector.
It is difficult to know how Mick Carvill will play his cards. With no obvious issues now fac- ing the company and throwing off massive amounts of cash, he is unlikely to simply sit on his hands and pay out huge dividends.
Almost certainly the Ken- mare CEO will have to facilitate a major takeout deal or maybe explore the possibility of moving into a new area.
For example, Kenmare could consider taking out Aminex, which is about to spend $150m moving into first gas production over the next two years, or what about examining again the
Ancuabe graphite mine? One way or the other, the long-term shareholders, who have almost been written down so much, should get something back over the next year, while those who joined at the time of the big 2016 refinancing (and have already doubled their money) should be happy to sit tight for the next 12 months awaiting the impressive returns set to be delivered to shareholders this year.

This pushed Kenmare to the brink of bankruptcy, with breach- es of virtually all of its banking covenants despite raising $270m from shareholders in 2010, $67m in 2012 and $90m in 2013 – a total of more than $400m.
Kenmare ended up in July 2016 with net debts of $387m but Carvill pulled a Houdini-like escape by getting the bank to con- vert $40m of debt into equity and write-off $69m, and then raised $275m in a fundraising exercise that saw the Oman sovereign wealth fund put in $100m.
Last year was not a great one for Kenmare, with finished prod- uct shipped down 17% to 853,000 tonnes in 2020. With the average price up 9% to $271 a tonne, how- ever, this left sales down only 10% to $244m, with operating profits knocked back 42% from $59m to $34m and trading margins down from 22% to 14%.
D I S R U P T I O N
The big $141m capital expen- diture programme last year (as against $69m in the preceding year) was reduced mainly due to the relocation of the concentrator plant. This disruption to produc-
tion resulted in reduced output, but the plant today has a capacity of 2,400 tonnes per hour, so the situation is now reversed. Not only is production at a record high but the ore grades are also significantly higher as the plant is working on a richer vein in the Pilvili zone. The company’s production platform has now settled north and south and will be stable for some years to come.
With everything going smoothly and Kenmare’s three wet concentrator plants working flat out, the total volume of ore grades excavated in the first quarter of 2021 increased only 10% to nine million tonnes, the more significant factor is that the total ore grades are up a hefty 37% to 4.64%.
This means that heavy mineral concentrate is up a huge 46% in the first quarter to 362,000 tonnes, with the core ilmenite production up 32% to 270,000 tonnes, while the production of the four times more valuable zir- con is up 39% to 13,000 tonnes. This resulted in total shipments
of finished products in the first quarter increasing 77% to 344,000 tonnes.
K E Y M A T E R I A L
Kenmare accounts for 7% of the total global production of key products for producing titanium dioxide, which is the key pigment feedstock to produce titanium metal. This is a key material for welding electrode fluxes, paint and ceramics, bringing brilliant whiteness to these products.

Kenmare Resources now a cash machine
THE NEW Sultan of Oman, Haitham Bin Tarik Al Said,
must be pleased with Kenmare Resources, which was saved from going under in July 2016 when the State Reserve Fund of the Sultanate of Oman acted as the lead investor in a $255m equity raise for an effecting controlling 29% stake at €2.40 a share. With Kenmare shares now trading at €5, this means that the vehicle used, Oman Investment Company, has more than doubled its $100m investment. Kenmare has now moved into serious money-making mode, with its Moma mine in Mozam- bique set to deliver huge profits over the next few years. Could a takeover now be on the cards?
When Kenmare was saved, the original investors were almost written off in a 200-for-one consolidation. Back in 2012,
the shares had traded at the equivalent of €140 a share (ie, pre-consolidation), meaning that even at today’s share price, those shareholders who are still around have suffered a 96% writedown, separate to a series of fundraisings pushed through by CEO Mick Carvill.
RIDING HIGH
Nevertheless, Kenmare is today riding high, having success- fully completed a major
logistical exercise. This
involved moving its largest
wet concentrator plant,
which weighs 7,000 tonnes
and is the width of a soc-
cer pitch, over a specially constructed 32km road
from Namalope in the
northern part of the huge six-billion tonne Moma
mine reservoir in Mozam-
bique to the Pilivili zone at
the southernmost end of
the mine.
The plant has successfully been redeployed in this rich new part of the Moma mine and is now boost- ing production by about 50%.
The effect of this increased production will push sales in the current year towards $400m while production costs per tonne are being reduced from $158 a tonne last year to $140 a tonne in the current year. With the combined impact of pushing up ilmenite from 841,000 tonnes last year to
a projected 1.2 million tonnes
in 2021, this should have a total impact of pushing last year’s $23m pre-tax profit to a lot more than $150m. This will bring earn- ings per share up to about €1, leaving the shares trading at the current €5 on a very modest five times price-earnings multiple.
After Mick Carvill decided to get Kenmare to take the sole risk on the development of the giant Moma project, he walked
his shareholders into a series of disasters, even spending heavily to increase the production by 50% during the global economic crisis. The price of ilmenite, a titanium dioxide concentrate and the core output of the mine, fell from $300 a tonne in 2010 to $130 a tonne, resulting in losses of $200m in 2014 and 2015.

Does that change anything ?

LG
Ditto Herron, who claims to have warned us all that this was coming!
No trace of this warning visible in backposts.

Cash
Paper copy in the shops in Ireland tomorrow; also online with a subscription.

It depends!!

He might (and probably had) have meant that the odds were, e.g., 3 to 1 against before but they are now 2 to 1 against; thus a decrease.
If he thought that it was odds on before, it gets more complicated.
However, either way, I think you've reinterpreted it correctly.

Part III
OTHER PLAYERS
SpotOn does have interests in providing well design and drilling project management, reservoir and field management services, as well as having an interest in the Odfjell Drilling company and Awilco Drilling, which owns some semisubmersible rigs. These are all minority investments. SpotOn also notes an association with the Norwegian engineering firm, Aker Solutions, which specialises in low-carbon emission designs, but again works with a lot of other players. The agreement Linn drew up with SpotOn in April last year offered it “exclusivity until October 31, 2020” to assess the potential of the Barryroe field and agree farm-out terms. The key to this, obviously, was funding, which would make it easy to find a service company and drillers to do the job. By the end of October, however, SpotOn had failed to deliver so Linn allowed a further one-month extension but even by then thegoods had not been delivered. Despite this, Linn went ahead and agreed a 50% farm-out deal with SpotOn, which presumably provided evidence that it was close to securing funding. This reduces Providence’s stake in the field from 80% to 40%. What is understood is that Pareto Securities, a Norwegian investment bank, has agreed to lead but not underwrite the raising of a $50m 10-year bond to partfund the project. On foot of this, the big French bank, Société Générale, is considering a $35m 10-year loan and the Norwegian government will provide a $45m export credit guarantee on the basis of using Norwegian drilling and service companies.

DEFERRED FEES
On top of this, SpotOn says that its consortium partners will defer part of their fees to the tune of $35m. This appears to bring the total inferred funding to the $165m that SpotOn signed up to. What investors need to ensure is that the key initial $50m bond is in place at the end of next month. With oil prices recovering to $60 a barrel, prompted by the rollout of vaccines worldwide and the predicted economic recovery expected to follow, the odds of this bond being put in place have decreased. What is exciting about this is that according to SpotOn’s feasibility study, the estimated breakeven point for Barryroe is $25 a barrel. This means that with 350 million barrels recoverable, the profit on the field could be of the order of $12bn, leaving the value of Providence’s potential profit share here at close to $5bn. Providence shares are currently trading at 7c, which is 99% off the €7 they traded at back in 2012 when the exploration company had just completed its last successful drilling. The current price values Providence at €50m, which is about 1% of its potential profit share from a successful development on Barryroe. This makes Providence shares look like the most underrated share on the market and they are likely to fly on the back of any confirmation that the $50m bond is actually in place.

Part II
Providence has one significant asset – its now 40% stake in the Barryroe oilfield, which has 350 million barrels recoverable and has flowed on oil on test the five times that it was drilled, most recently in 2012. While Linn is right to focus on Barryroe, it is hard to justify the dumping of all Providence’s deep water Atlantic margin licences simply in order to save money. Linn has no experience or background in the Irish offshore resource sector and as a chemical engineer does not have the academic training to fully understand the rather complex Barryroe field. This helps explain the decision to farm out the development of this field to a third party with more knowledge and experience. It was, of course, Plunkett who was in situ as chairman when Providence raised €70m in a share placing back in June 2016 at a price of 16c and then signed off on the disastrous farm-out agreement with the Chinese Apec consortium. A more obvious choice for Plunkett to have picked as CEO is Steve Boldy, the current CEO of Lansdowne Oil & Gas, Providence’s 10% minority partner in the Barryroe consortium. Boldy worked as a petroleum geologist in the Department of Energy and then spent 19 years with Amerada Hess (now Hess Corporation) as its UK and international explorations manager. In 2013 Boldy joined Ramco, which developed the Seven Heads gas field off Co Cork, just above Barryroe, before moving to Lansdowne in 2006 where, for the last 14 years, he has been studying the Barryroe oilfield. Presumably he could have been poached from Lansdowne, where he is on a salary of only €70,000. SpotOn’s own website asks if you are “looking to sell or farmout your off-shore oil and gas field for development?”. The Norwegian entity claims to have “a new approach to cost-effective offshore oil and gas field development”, whatever that means. CONSORTIUM SpotOn boasts of working with “a consortium of world leading service providers”. One of them we now know to be Schlumberger, an American oil service company that works with an array of operators so the tie-in is far from interesting. SpotOn also claims to be working with the Norwegian oil services investment company, Akastor.

Part I
Providence shareholders prepare for bond boost
IT WAS reported in the Business Post recently that Providence Resources’ farm-out partner, SpotOn Energy, had approached the Irish exploration company about a potential merger. This was not too surprising as Providence’s chairman, Pat Plunkett, and CEO Alan Linn had previously outsourced the job of finding farm-in partners to SpotOn rather than doing it themselves. The good news for investors is that the expected €50m bond placement at the end of next month could set a fire under the shares. This would not be surprising given that the company is currently valued at about 1% of its potential €5bn share of the profit from any successful development of the Barryroe oilfield.
SpotOn injected £0.5m into Providence last year courtesy of two placings and, in response to press speculation about a merger, Linn issued something of a nondenial denial earlier this month: “We are not currently involved in any merger discussions with any party.” He went on to add, however, that “we will continue to work closely with SpotOn Energy to deliver the necessary funding to develop the world-class Barryroe asset”. Linn did not say Providence has not been approached by SpotOn, simply that he is not involved in any merger discussions. Reading between the lines, if SpotOn can deliver the “necessary funding” for the agreed early development programme (EDP), then it might see little purpose in having Providence just sitting there as a sleeping partner. Rather, it would make sense to merge with Providence and run the whole show. At that stage, Linn would have no obvious central role to play despite being on a generous salary. Linn finds himself tied into SpotOn, much like Tony O’Reilly Jnr and John O’Sullivan were to Apec three years ago, which was supposed to come up with $200m funding for a five-well drilling programme, instead failing to pay even the initial $5m. Plunkett eventually pulled the plug. Why Plunkett chose Alan Linn as the new CEO remains something of a mystery. He is a chemical engineer by training, rather than a geologist or geophysicist. While he did work for major operators like Exxon, Lasmo and Cairn, it was not at a really senior level. In 2008, Linn joined Roc Oil as COO and rose to CEO in 2010 but in 2014 Roc Oil lost €31m and was subsequently suspended from the Australian Stock Exchange.
Linn then opted to jump ship and became CEO of the distressed African oil and gas company, Afren, which went into administration in July 2015 and was delisted from the London Stock Exchange. In 2017, Linn moved to Third Energy as COO but “following a strategic review of the business, the decision was made to divest the offshore business and focus on the onshore”. Linn ended up as CEO of the offshore business in July 2019 but exited six months later to join Providence in January 2020.

Fast-food
Who “wants to lift half the world out of poverty” and why should they start now?

1) I think an update could have been expected that there was a hitch in execution of the transaction before 7 months had elapsed.
2) regarding the 21p price, I assume this is between OF and Tosca? Is there a rule to prevent Tosca from completing the transaction below the current price? Either way, it doesn’t bother me and, in particular, I’m happy that this is the dilemma rather than what happens if the price had dropped to 14p.

https://www.nytimes.com/2021/01/20/business/energy-environment/suriname-oil-discovery.html

Irish
I’m a bit puzzled by the faith in Cope. She seems to have been a crucial part of the old regime and I recall several knowledgeable posters here gleefully nominating dates by which she would be booted out by the new regime.

19. Lansdowne Oil & Gas (LOGP): The Barryroe Bond
We have another “waiting game” opportunity here at Lansdowne Oil & Gas, where the hope is the multi year story of the Barryroe oil and gas field offshore Cork, Ireland, should soon reach its denouement. Having already been kicked and punched by the slings and arrows of the Green Lobby, red tape and multiple parties being involved, shareholders in Lansdowne, as well as Providence (PVR) and San Leon Energy (SLE), are all waiting for a decent conclusion. This optimism took a dent at the end of November when the “signed farm-out agreement” turned out it was missing the bond financing requirement to get the show on the road. However, given the way that the SpotOn consortium should have deep enough pockets and / or rich enough friends to find sub £100m financing against a rising oil price, a happy end to this painfully long affair should be in sight for 2021. Given that Lansdowne shares are trading below their enterprise value and have flushed out carpet baggers in what was a very crowded trade ahead of the farm-out news, even the whiff of a bond deal should lead to a decent reaction in the stock.

About not hearing from Irene!
Me too; I blocked her months ago but she still seems to appearing a quarter of the posts!

From this week's edition:
The Omanis are also 29% shareholders in Kenmare (KMR).
"A rather more interesting proposition would be for Kenmare to take out Aminex, which is at a development crossroads. It
is about to drill a significant third well to prove up its one trillion feet gas discovery, which has a gross value of $3bn at the current market price. Aminex is currently capitalised at only €15m and would need only $100m to fully develop its onshore gas discovery, with the pipeline in place. Coincidentally, the Sultanate of Oman also has a 29% shareholding in Aminex."