Exploration firm Kenmare Resources has yielded about £3 million sterling (€5.01 million) after expenses in a placing of 29.43 million new ordinary shares priced at 11.25p sterling each.

The company will use the money to fund a definitive feasibility study for its titanium minerals project at Moma in western Mozambique and to make payments for plant acquired from an Australian exploration firm, BHP, its former partner at the site.

Kenmare's finance director, Mr Tony McCluskey, said after yesterday's extraordinary general meeting that the plant acquired from BHP cost AU$8 million, the final AU$2 million of which will be paid once full production begins at Moma. This is expected in late 2002 once the definitive feasibility study was complete and once project finance of some US$100-110 million had been secured. A Perth-based engineering firm, Minproc, had already completed elements of the study.

The plant - believed to be worth about AU$80 million - was secured at an "enormous discount", Mr McCluskey said, though Kenmare had faced a counter-bid from another mineral firm.

BHP was withdrawing from titanium production in its Australian mine at Beenup, 200km south of Perth - where the plant acquired by Kenmare was used initially - due to problems specific to the orebody there. The company had also incurred significant losses at a platinum mine in Zimbabwe, Mr McCluskey claimed.

Following these developments, BHP decided to exit from the Moma project. Mr McCluskey said Kenmare paid no consideration to secure full ownership of the project due to the structure of the joint venture arrangement. BHP had invested some US$10 million in the project, but would have acquired ownership rights only if its investment passed a threshold of $15 million.

The company intended to proceed with a valuation of the plant acquired from BHP. This would help determine the debt-equity ratio element of the funding it would seek to finance the project, Mr McCluskey said.

Tests had indicated that the orebody was larger than anticipated and analysts had projected that demand for titanium was rising. The company would apply for special tax status in Mozambique under a new scheme, Mr McCluskey said. If successful, the company would pay only a 1 per cent royalty tax and payroll tax to the government in Mozambique - corporation tax, VAT and import and export duties would be waived in this case.

Mr McCluskey said the political situation had stabilised in Mozambique since elections there in 1994.