Dublin-headquartered and London-listed Kenmare Resources has declared a maiden dividend of $0.026 apiece for the six months ended June 30.

The company announced its dividend policy last year, which entails paying out 20% of profit after tax as a minimum to shareholders.

The company reported a net profit after tax of $21.9-million in the reporting period.

MD Michael Carvill told Mining Weekly Online that there was scope for dividends to increase once the company achieved improved profit margins, following the production ramp-up that was under way.

Kenmare plans to increase ilmenite production to 1.2-million tonnes a year by 2021, on the back of the commissioning of its Wet Concentrator Plant (WCP) C in the fourth quarter and relocating its WCP B to the Pilivili ore zone.

Pilivili is the company’s highest-grade ore zone at its Moma mineral sands mine, in Mozambique. It is expected that this zone will contribute an additional 130 000 t/y of heavy mineral concentrate (HMC) production.

Meanwhile, excavated ore volumes in the reporting period set a new record with a year-on-year increase of 18%; however, HMC production decreased by 8%, owing to planned mining of lower ore grades.

Carvill expects grades to improve in the second half of the year.

HMC production decreased to 633 400 t, compared with the 688 900 t produced in the six months ended June 30, 2018.

The company achieved 2% higher year-on-year ilmenite production at 458 200 t. Primary zircon production was 23 100 t in the reporting period, compared with the 23 000 t produced in the prior comparable period.

Despite the higher output, the company reported an 18% decrease in total shipments of finished production to 483 500 t, compared with the 589 200 t shipped in the prior comparable period, owing to adverse weather conditions.

Carvill explained that total shipment volumes for this year would be in line with that of 2018, as there was capacity in the shipping schedule to ship additional volumes in the second half of the year.

He added that the weather conditions had been the result of two cyclones – Idai and Kenneth – having hit the coast of Mozambique in March and April, respectively.

The lower shipping volumes resulted in the company recording an 11% decrease in earnings before interest, taxes, depreciation and amortisation to $42.8-million, compared with $48.2-million in the prior comparable period.

MARKET VIEW

Carvill says ilmenite is mainly consumed for the production of titanium pigment - 90% of consumption. In turn, titanium pigment is used in the production of paints, pigment and plastics.

"We typically sell a third of our production to Asia, a third of our production to America and a third to Europe. At the moment, China only consumes a third to half the volume of titanium pigment per capita than the US or Europe, and we expect this to grow as China continues to increased gross domestic product and urbanisation," he points out.

In terms of zircon, the market was very strong during the first nine months of last year, notes Carvill, and that led to more low quality product coming into the market to meet this increased demand.

Prices began to moderate in the fourth quarter last year, as a result of the low quality supply entering the market and it remained stable into the first half of this year.

"The zircon market has been more subdued so far, owing to economic uncertainty causing consumers to reduce inventories. However, we believe that the long-term fundamentals for zircon remain strong due to significant supply from existing mines depleting in the next few years with little new production to offset this."