Michael Carvill, founder of Kenmare Resources, has initiated a £473 million bid for the company, collaborating with Oryx Global Partners. Despite challenges such as declining titanium prices and political unrest in Mozambique, Carvill’s confidence in Moma’s intrinsic value is notable. Analysts project a possible revised offer, hoping for a sale if agreeable terms are met.
Michael Carvill, founder of Kenmare Resources, has returned to the company amidst challenging conditions for its Moma mine in Mozambique. The mine currently faces declining titanium mineral prices, political unrest, and the need to negotiate a new royalties deal, all while undergoing significant investment. Despite these challenges, Mr. Carvill appears optimistic about acquiring the company, having partnered with Abu Dhabi-based Oryx Global Partners for a £473 million bid, which represents a 92% premium over the market value at the time.
The proposed £5.30 per share offer was rejected by Kenmare as it was deemed to undervalue the company. Nonetheless, the partnership has been granted access to Kenmare’s financials, hinting at a possible revised offer in the future. Other significant players, such as Rio Tinto and International Resources Holding, have shown interest in Kenmare, particularly during activist campaigns aimed at pushing for a sale.
Analysts, including Richard Hatch from Berenberg, speculate that Carvill, well acquainted with the company’s potential, recognizes a higher intrinsic value than the current market reflects. His belief in Moma is rooted in decades of developing relationships with local authorities and overseeing project operations. A notable shareholder expressed optimism that a sale is likely, contingent on agreeable terms.
Since its inception in 1986, Kenmare has seen varied successes and challenges, transitioning from failed ventures in the Philippines and Sudan to becoming the world’s largest supplier of ilmenite, a vital mineral for several industries. Peak valuations occurred 13 years ago, prior to significant declines in demand linked to shifting market dynamics. The company’s financial stability fluctuated with the broader economic landscape, with analysts projecting a concerning dip in earnings to $220 million in 2023 due to falling prices.
Carvill has historically emphasized the long-term potential of Moma, boasting a lifespan of over 100 years at its current production rates. His unwavering commitment to the mine and belief in its value underscore his determination to potentially secure the company, despite the ongoing downturn in titanium market prices and internal challenges at Kenmare.
In summary, Michael Carvill’s return to Kenmare Resources and his bid for the company signifies a complex interplay of optimism amid market difficulties. Although the initial offer was rejected, the potential for an increased bid reflects a belief in the intrinsic value of the Moma mine. With historical challenges and market fluctuations in mind, Carvill’s experience and long-term vision may ultimately lead to a successful acquisition if he can align with investor expectations and address the company’s pressing issues.
Original Source: www.irishtimes.com
