Kenmare reports lower FY output on power supply challenges

JOHANNESBURG (miningweekly.com) – The share price of LSE-listed Kenmare Resources fell by as much as 26% on Monday morning, as the company announced lower output at its Moma mine, in Mozambique.

The mineral sands miner produced 1.1-million tonnes of heavy mineral concentrate in 2015 – 15% less than the 1.29-million tonnes produced the year before. Ilmenite production fell 11% year-on-year to 763 500 t but rutile output rose 2% year-on-year to 51 800 t.

“Power interruptions and instability have been the key bottleneck to production at the Moma mine in recent years and acutely felt in the first quarter of 2015, when flooding resulted in a prolonged outage,” said Kenmare MD Michael Carvill.

Production stoppages related to the installation of new electricity infrastructure had further hampered output in the last quarter of the year.

Carvill noted, however, that the quality and consistency of power supply had improved since State-owned utility Electricidade de Moçambique, in December, installed additional power transmission infrastructure, which had increased transmission capacity to 163 MW.

Dredge operating times were expected to improve this year, following the upgrade to the power lines.

Kenmare was also targeting improvements in its dredge operations this year through the implementation of improved maintenance tactics, improved operator routines and additional engineering skills.

Meanwhile, the miner reported that it had successfully contained its cash operating costs in 2015.

Kenmare’s bank loans stood at $341.9-million and its cash equivalents at $14.3-million as at December 31.

The company’s share price on the LSE fell by 26% to 0.48p a share on Monday morning, compared with Friday’s close of 0.65p, but was trading at 0.57p a share on Monday afternoon – down 12.71% on Friday’s close.