Kenmare lifts H1 production

JOHANNESBURG (miningweekly.com) – LSE-listed Kenmare Resources production surged in the first half of the year as power supply stabilised and recoveries increased, while improvement is being seen in the sulphate ilmenite market as supply/demand conditions continue to tighten.

Kenmare on Tuesday posted considerable increases in production as the Moma titanium minerals mine, in northern Mozambique, bounced back from debilitating power instability last year and continued to report higher tonnes mined and increased grades, as well as higher nonmagnetic recoveries and maximisation projects.

The total shipments of finished products in the first six months of this year increased 7% to 441 700 t, with second-quarter shipments up 133% to 309 000 t on the preceding quarter and setting a new quarterly product shipment record.

Heavy mineral concentrate production in the first-half under review increased 33% to 606 100 t, while ilmenite production increased 24% during the first half of 2016 to 402 900 t.

Kenmare posted a 20% rise in zircon production to 23 800 t and rutile output of 3 000 t, a 7% uptick on the corresponding half-year in 2015.

The titanium miner mined 14.4-million tonnes of ore during the half-year under review – a 26% jump on the prior corresponding period last year.

Production in the second half of the year is expected to increase further on the back of an uptick in dry mining, grade and operating time.

“The strengthening of the balance sheet, allied with falling cash costs and consistent productivity gains at Moma, positions Kenmare to benefit from the improvement in the titanium feedstock market we are currently experiencing as higher ilmenite prices are reflected in revenues for the second half of 2016,” said MD Michael Carvill.

Kenmare saw improvement in the sulphate ilmenite market in the second quarter of the year, with supply and demand conditions tightening, as a result of improved offtake, price increases, improved global demand conditions and a continued decline of ilmenite supply owing to mine closures, depletion and poor mining economics.

Excess ilmenite inventories have also seemingly dwindled, with Kenmare’s market intelligence pointing to low inventory levels at other ilmenite producers, explained Carvill.

Meanwhile, as the company sells the bulk of its ilmenite production on long-term contracts with yearly or six-monthly price renegotiations, the first-half price increases registered for ilmenite will feed through into revenues during the second half of the year.

Chinese domestic ilmenite prices have been steadily increasing since the beginning of the year and Kenmare implemented price increases on spot sales during the second quarter to be shipped in the third quarter.

Meanwhile, the zircon market experienced further price weakness owing to competitive positioning for sales among producers.

“It is anticipated that a recent price increase announcement by a major zircon producer will reverse the downward price trend seen in recent months and help to provide some stability to the market,” Carvill said.