Kenmare Resources’s future ‘not dependent on takeover’

Kenmare Resources chief, Michael Carvill has said that the company’s future is not dependent on it being taken over and says it has a viable independent future if not acquired.

Speaking directly after the mining firm’s AGM in Dublin, yesterday, Mr Carvill said that the board is not building its business plan around what may or may not be forthcoming in the form of any offer from Australian company, Iluka Resources or any other potential investor. He said cost reduction, debt management and generally placing Kenmare in a position to be able to reward shareholders when market conditions improve are the current main priorities.

Kenmare — which owns and operates the Moma titanium mine in Mozambique — has expressed openness to an approach from Perth-based Iluka and is remaining open to dialogue, in the best interests of its shareholders.

A revised non-binding takeover proposal, from Iluka, values a potential takeover of Kenmare at around €265m. Last week, Iluka’s managing director, David Robb said that for the Kenmare offer to proceed, his board “need to have confidence around the financial merit and the value creation opportunity for our shareholders and our ability to manage Kenmare’s operation for the benefit of all stakeholders.” That suggested that any deal is in its very early stages.

Iluka, last week, reported post-tax losses of $62.5m for 2014, down from an $18.5m profit in the previous year and dragged down by an $86.5m non-cash impairment charge relating to its US operations, which it intends to try and re-energise.

A number of pre-conditions exist on the deal. While Mr Carvill was somewhat bound by what he could say, yesterday, he declined to comment on whether he was hopeful or expectant of a deal being reached. However, he suggested the pre-conditions that need to be reached, in order to facilitate a transaction, are “significant”.

Kenmare made a €91m loss last year and has been struggling with falling product prices and muted demand for ilmenite. However, management told shareholders the firm is well-placed for an anticipated pick-up, adding its restructured debt arrangements have been “very helpful”.