The Irish company Kenmare Resources that operates a dredge mine in Moma district, on the coast of the northern Mozambican province of Nampula, announced on 20 June that its lenders have agreed to a debt restructuring plan.
Under the plan, the Omani sovereign wealth fund (SCRF) will invest $100 million and Kenmare intends to raise at least a further $175 million through issuing securities.
However, the company noted the termination by mutual consent of the conditional agreement it had with the Chinese company King Ally Holdings, under which it would have received a $100 million in return for ownership of up to 29.9 per cent of Kenmare.
The Moma mine extracts ilmenite, rutile, and zircon from titanium-bearing heavy mineral sands. However, falling prices and a nineteen per cent drop in output last year has put Kenmare in deep financial difficulty. Raising funds to pay its creditors has been slower than expected and the company defaulted on its loans at the end of January.
Commenting on progress towards solving Kenmare's debt difficulties, managing director Michael Carvill stated, "we are pleased that we have signed an agreement for the investment of a hundred million dollars by SGRF and are encouraged by the level of interest shown by a broad range of investors".
Carvill also made reference to the low global prices for its minerals, adding "the product market is already showing a long-awaited improvement in prices, reversing four years of significant downward pressure".
Kenmare expects to complete its capital restructuring by the beginning of August. Shares in the company rose by over 18 per cent on the London Stock Exchange following the announcement.
Ilmenite (iron titanium oxide) and rutile (titanium dioxide) are used to make white pigments for paints, paper, and plastic. Titanium can be extracted from these ores and used to manufacture metallic parts where light weight and high strength are needed. Zircon (zirconium silicate) is used for abrasive and insulating purposes.
