September 28, 2010
It is not often that I see Gimlet floored but this morning was one of those occasions. He had been trawling through the newspapers, tut tutting about the Pope’s visit to England and murmuring approval at the government’s radical multi-billion pound fund for financing the ‘Greening’ of small businesses. This is part of an energy efficiency scheme under which small and medium size businesses will receive loans to replace their old energy hungry equipment with the cash repaid from savings made from their energy bills. Suddenly I noticed that Gimlet had gone silent and had developed that furrow in his brow which indicates bamboozlement. Finally he folded the paper and handed it to me.
“Who on earth is Colette Rooney?” he asked, “everywhere I look I come across the woman’s name. I thought she was a novelist.”
I looked at the headline he was referring to. He clearly hadn’t read what came after.
“You mean Coleen Rooney, not Colette,” I said.
“Am I supposed to have heard of her?” said Gimlet, “has she made some important discovery, a cure for Alzheimer’s perhaps?”
I told him that she had discovered her husband with a prostitute.
“Ah, another Profumo affair,” said Gimlet, “Is her husband in the cabinet?”
For a moment it occurred to me that this might be Gimlets bone dry sense of humour at work but I quickly realized it wasn’t.
I explained that Coleen was the wife of a man called Wayne Rooney who played football for Manchester United. He gave me a sort of goggle-eyed look.
“Has the world gone completely mad,” he exclaimed, “wherever I look, whatever I listen to, there are these Rooney people. Now you tell me he plays football. It seems hardly credible.”
The fact is that the Rooneys are headline news in England because people like the Rooneys are the heroes of today. In days gone by aspiring young sportsmen and women achieved greatness by reaching the top in their field. They were paid very little but considered representing their country as sufficient reward. These were inspirational role models who led by example and conducted themselves as sporting champions should. Today most sportsmen are paid a fortune. They develop huge egos which their limited brains aren’t able to cope with and that’s when the trouble begins. Once you believe you can walk on water, you are closer to drowning. Cricketers are an exception’ they tumble for different reasons; temptation, corruption and threat but for many the allure of sly girls in short dresses often proves too much to resist. Spotting a photograph of the Rooneys on the opposite page, I pointed it out to Gimlet.
“Good god!,” exclaimed Gimlet, “To be sure she’s no pretty Coleen.” He paused. “Speaking of Ireland,” the connection wasn’t obvious, “Have you ever visited the little town of Kenmare in the south of county Kerry?”
I said that I hadn’t and asked him the reason for the question.
“Just wondered,” he said, “I have been studying a company called Kenmare Resources. They own the Moma project and I strongly recommend them as a Buy.”
I said I thought thought they were in the art market.
“Touche,” said Gimlet, “the Moma that Kenmare own is an ilmenite mine on the north east coast of Mozambique, not to be confused with the Museum of Modern Art on 53rd street in Manhattan!”
Kenmare operates one of the world’s largest and potentially lowest cost resources of ilmenite, rutile and zircon on the north east coast of Mozambique. In March they successfully raised US$ 270m to fully fund their Stage 2 expansion at Moma and at the end of May released record production figures and operating levels. The widely held view regarding Titanium dioxide is that we are heading for a severe feedstock shortage as well as a tightening of the zircon market. Now that they have raised the cash, Kenmare is in a position to expand the Moma mine as well as paying down their subordinated debt. The mine predominantly produces two types of product; titanium feedstocks for Ti02 pigment production, titanium metal fabrication and welding rods and zircon products for use in ceramics, foundries, refractors and nuclear casting rods.
Ilmenite accounts for around 91% of the world’s consumption of titanium minerals and the quality of the ilmenite products from Moma is such that no further beneficiation is necessary for pigment manufacture. In addition there is no requirement for expensive smelters to upgrade the Ti02 content.
The market for titanium minerals is determined by demand for Ti02 pigment. DuPont, the world’s largest producer forecast pigment growth rates in the range of 5 to 10% between now and 2015. Meanwhile the US Geological Survey is forecasting that unless new mines are developed, the heavy reliance in the US on imports of titanium mineral concentrates is likely to increase as the mines belonging to DuPont and Iluka are depleted over the next 10 years. It is unlikely that any unapproved projects will be brought into production before at earliest 2015. Firstly it requires significantly higher prices to induce supply and secondly because of the time needed to construct such a project.
The stock today stands at 19p and Gimlet sees a 12 month target of 35p as realistic.
Looking at Gimlet’s recent stock tips, Aquarius Platinum which we recommended on 7th September at 305p is today at 329p. Petra diamonds which we recommended the12th of August at 65p is today at 73.75p.
Now that Gimlet has agreed to my writing up his stock tips he is keen that we keep an eye on their progress.
“There is very little point in writing your bits and pieces if you don’t follow it up,” says Gimlet. He is right of course.
Constantly full of surprises, I was nevertheless astonished by what came next.
“What are you doing on Sunday?” he asked.
I told him that I had nothing planned.
“Excellent! In that case I thought we could drive up to Bolton. They are playing Manchester United and as I have tickets, we can watch Mr Rooney in action! That is if they pick him for the team.”
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