Kenmare Resources says production getting back on track

Irish titanium and zircon miner Kenmare Resources has said production during the first half at its Moma Mine in Mozambique was severely impacted by power outages but expects that things should pick up again in the latter part of the year.

Production at the mine was severely constrained after 57 days of storm-related grid power outages, which occurred primarily in the first three months of the year. As a result, iImenite production for the first half fell by 27 per cent to 324,100 tonnes compared to 445,600 tonnes for the same period in 2014. Zircon production increased by 11 per cent to 23,800 tonnes as against 21,400 tonnes for the first six months of last year.

Total shipments of finished products in the first half rose 3 per cent to 412,000 tonnes versus 399,000 tonnes in 2014.

The Dublin-listed miner said production in the second quarter rebounded significantly but was constrained by sporadic power outages due to remediation of power lines damaged earlier in the year.

It was also impacted by unofficial industrial action, which in itself led to the loss of 9 days production. The strike action came after the company introduced changes to working patterns. Kenmare announced plans to make 162 workers at the site redundant in February because of falling mineral prices.

"The outlook for production in the second half looks stronger as the national power utility commissions equipment that will increase grid power capacity and stability," said Kenmare's managing director Michael Carvill.

The company said it mined 8,210,400 tonnes of ore at a grade of 4.64 per cent and produced 310,000 tonnes of HMC in the second quarter, compared with 8,746,100 tonnes of ore at a grade of 4.40 per cent and production of 317,200 tonnes of heavy mineral concentrate (HMC) for the same period a year earlier. Production of ilmenite was down 17 per cent to 195,100 tonnes, compared with 234,800 tonnes for the second quarter of 2014. Production of primary zircon was unchanged at 10,600 tonnes.

Kenmare said two ilmenite shipments totalling approximately 40,000 tonnes were delayed as a result of the unofficial industrial action. Despite this, sales of total finished products were up 3 per cent to 412,000 tonnes in the first half compared to 399,000 tonnes in the first six months of 2014. Sales comprised 387,400 tonnes of ilmenite, 21,800 tonnes of zircon and 2,800 of rutile. Closing stock of finished products at the end of June was 158,400 tonnes, down from 219,500 tonnes at 31 December 2014.

The company said market conditions for titanium feedstocks remained broadly unchanged during the second quarter while Zircon pricing remained stable.

Kenmare announced at the end of April that it had received a watered-down share offer from Australia’s Iluka Resources yesterday, valuing it at about €260 million (£189 million). The offer came as the mining group published its annual report, showing a loss after tax of $100.8 million (€90.7 million) for 2014.