JOHANNESBURG (miningweekly.com) – Ireland-based exploration company Kenmare has successfully concluded discussions with lenders regarding the scheduled repayment of $11,3-million in senior debt, and other matters designed to preserve liquidity within the group that would accommodate the scheduled full production of its Moma project, in Mozambique.

Late last year, the company entered into discussions with the lenders to the to defer loan repayments, due in 2009.

Kenmare reported that it had now deferred the scheduled senior principal instalment of $11,3-million, which was due on August 4, 2009. This instalment, together with the instalment of $11,3-million originally due on February 2, 2009, and previously deferred, would be repaid starting February 1, 2010, over the remaining life of the senior loans.

The company added that these repayments would be in equal semiannual instalments and, following financial completion, include additional mandatory prepayments equal to 25% of available cash flow after senior and subordinated debt service.

Kenmare was also granted access to the contingency reserve account (CRA), which currently had a balance of $15-million, and had a waiver until  December 31, 2010 of any obligation to top up the CRA.

Furthermore, the company changed the timetable for achieving financial completion, to coincide with the Moma’ projects operational and environmental tests . Technical completion of would now to be concluded by the end of December 2010, marketing tests by the end of June 2011, and financial and legal tests to be concluded by the end of December 2012.

“Originally, all these tests were to be completed by the end of June 2009. Interest margins on subordinated loans will increase by 3% until technical completion and by 1% until financial completion. This additional margin will be payable only after senior loans have been repaid in full.”

Kenmare has agreed to pay fees to the lenders and their guarantors of $1,9-million and 28,2-million ordinary shares in the company, representing about 3,5% of the existing issued share capital.

An additional contingent fee consisting of $0,5-million and a further 28,2-million shares would be payable, in circumstances which Kenmare considered unlikely. Whether this additional contingent fee would be payable, would be determined by the end of August this year.

Kenmare noted that performance improvement projects designed to allow the facilities at Moma to reach full production in the second half of this year, were progressing.

“Management remains confident that these projects will facilitate the mine in achieving full production in the second half of 2009. Production of heavy mineral concentrate, the limiting production parameter, in the first quarter of 2009 was 142 000 t, an 18% increase on the fourth quarter of 2008.”

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