JOHANNESBURG (miningweekly.com) – Ireland’s Kenmare Resources reported on Friday that several steps were being taken to improve operations and output at its Moma titanium minerals operation, in Mozambique, where full production was now anticipated during the second half of the year.

In a commentary linked with the release of financial results for the year ended December 31, Kenmare chairperson Charles Carvill said that, while there had been output improvements over the past year, weather and construction problems, as well as plant underperformance, had frustrated its attempts to reach targeted output levels of 800 000 t/y.

“We remain confident that, despite the disappointing delays in achieving full production, the mine’s potential is enormous,” Carvill said, stressing that the mine’s operating cost would eventually be in the lowest quartile for titanium feedstock producers.

A detailed plan to address production issues had been developed, together with a performance improvement project (PIP) to rectify deficiencies in the plant and equipment. Since the initiation of the PIP three months ago, about 75% of it had been completed across 326 action areas.

Production of heavy mineral concentrate, the limiting parameter, increased by 18% in quarter one of 2009, compared with quarter four of 2008.

But the operating challenges were not the only concerns, with market and funding stresses also showing.

Carvill said that the prevailing difficulties faced by the world’s economies were impacting on the uptake of titanium mineral products. In particular, there has been strong inventory destocking, reducing demand by pigment producers, our key market. 

However, the bulk of the mine’s planned production for 2009 was covered under marketing contracts and the shipment schedule for the coming months remained busy.

“We are hopeful that this inventory destocking cycle is nearing completion and that normal market conditions, even if at reduced levels, will soon resume.”

The company had also reached an agreement with its lenders to defer capital repayments during 2009, to allow the company to use some $15-million available in a contingency account for project purposes, as well as to defer the financial-completion date.

“This arrangement, along with existing financial resources and an invoice discounting facility being arranged with one of the lenders, will provide the additional liquidity necessary to enable Kenmare to achieve production ramp-up plans,” Carvill said.

Kenmare’s profit after tax for the year was $0,3-million and arose from deposit interest earned and foreign exchange gains, less Kenmare corporate and exploration costs. During 2008, operating and financial costs net of revenue earned for the period, totalling $60,1-million, were capitalised in property, plant and equipment as construction was not yet complete and as the mine was not yet capable of operating close to design capacity.

Senior and subordinated loans drawn at the year-end amounted to $334,8-million, $121,7-million of which were Euro-denominated loans.

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