JOHANNESBURG (miningweekly.com) – As talks continue with London-listed Kenmare Resources’ lenders and advisers over debt amendments, Australian mineral sands miner Iluka Resources has been undertaking significant technical and non-technical due diligence in efforts to progress the proposed takeover of the Irish miner.
Kenmare said in an update to shareholders on Thursday that Iluka had visited Kenmare’s Dublin headquarters and its Moma titanium minerals mine, in Mozambique, as discussions continued.
The company entered into the negotiations during October last year, after initially rejecting a nonbinding conditional proposal from Iluka in June.
Kenmare previously told its shareholders that it believed the proposal, which had been based on a share for share exchange, with Kenmare shareholders receiving 0.036 Iluka shares for each Kenmare share held, did not recognise the value inherent in the Moma project as a long-life, low-cost asset.
Meanwhile, constructive discussions continued with Kenmare’s lenders and their advisers to reach an agreement on amending the terms of debt to deal with any potential default relating to the January 31 budget requirement and provide a basis for a more sustainable debt structure.
The company had been focusing on conserving cash and controlling costs “against a background of market conditions” adversely impacting cash generation.
During the third quarter of 2014, Kenmare renegotiated debt repayments to provide greater financing flexibility.
“Kenmare agreed a project financing amendment, which removed the requirement to make scheduled principal payments of senior debt and payments of interest and principal of subordinated debt falling due in August 2014, February 2015 and August 2015,” the company explained.
An extension to March 2016 for a $20-million corporate loan was also agreed with Absa during the quarter.
The miner said it would continue work on optimising its capital structure.
This comes as Kenmare on Thursday released a statement in response to a large share price dip.
The company told shareholders that it was unaware of any reason for the recent significant adverse share price movements, which saw a 18.58% drop in its share price between Wednesday and Thursday morning.
However, the share price started rising later in the day, reaching £2.85 by 17:00.