Kenmare placing gathers Eur5.7m

Exploration group Kenmare Resources has placed more than 25 million shares, raising £4.02 million sterling (€5.7 million) before expenses to fund work related to its Moma mine project in Mozambique.

The placing, which dilutes existing holdings by 9.6 per cent, will net £3.7 million for the group, which is finalising proposals to build a mine in the African state. The 25,125,00 shares were placed at a price of 16p, a slight discount to Thursday's closing price of 17.5p.

Kenmare managing director Mr Michael Carvill said the money would be used to dismantle a mineral separation plant it had acquired in western Australia and relocate it at the Moma site. The company had initially thought this work would form part of existing implementation contracts but this work is now four months behind and the plant needs to be moved from its present location.

The balance of the proceeds from the placing will be used for ongoing administrative and operating costs connected with the proposed mine.

Participants in the placing have also been granted warrants exercisable at 18p and expiring two years after their grant date. One warrant will be issued for every two shares subscribed for.

The placing of up to 10 per cent of company stock was approved at its last annual general meeting. However, the exercise of the warrants, which will further dilute existing investors holdings, will require approval at the company's next annual meeting.

Kenmare also produced interim figures yesterday showing a pre-tax loss of $221,766 (€196,462) in the six months to the end of June last. This compares with a profit of $542,558 in the same period in 2002.

The company attributed the loss largely to the effect of foreign exchange losses on the Australian dollar.

Kenmare chairman Mr Charles Carvill said the company hoped to put one of two proposals to build the mine to lenders within a month. Loans of more than €100 million are dependent on lender approval of the contract details.

Kenmare hopes to complete construction work by the end of 2005 and begin shipping zircon, ilmenite and rutile in early 2006.