JOHANNESBURG (miningweekly.com) - LSE-listed Kenmare Resources achieved strong financial results for the six months to June 30, with the titanium and zircon producer having generated $48.4-million in operating cash flow through the shipment of 589 t at increased prices.

The miner further recorded a 37% increase in revenue, as a result of increased prices and sales volumes, to $140-million, while earnings before interest, taxes, depreciation and amortisation increased by 60% year-on-year to $47-million.

Kenmare’s debt reduced to $9.3-million, from $34.1-million as at December 31, 2017.

The miner doubled its profit margin to about 19%, with profits of $26.4-million having been generated in the first half of the year.

Average received free-on-board prices rose in the first half of the year to $223/t, representing a 20% increase year-on-year.

Unit cash operating costs increased by 16% in the first half of this year to $152/t, principally as a result of the company’s full-year production guidance being weighted towards the second half of the year, the miner said on Monday.

Meanwhile Kenmare MD Michael Carvill said the miner’s capital projects and studies are progressing well, with the company working towards a significant increase in production by 2021, which will be funded by internally generated cash flow and the company’s balance sheet.

He told Mining Weekly Online that Kenmare’s board of directors have approved the development of the high-grade Wet Concentrator Plant (WCP) C dredge mining project, a capital efficient project which is expected to deliver an internal rate of return (IRR) of at least 30%.

The WCP C project, which is expected to have a life-of-mine of about ten years, is estimated to cost about $45-million, with commissioning expected to take place near the end of 2019.

The project will include a dredge and concentrator plant, which Carvill explained will be smaller than Kenmare’s existing two concentrator plants.

WCP C, which will operate at about 500 t/h, is specifically designed to address high-grade areas in the ore zone, he added, noting that Kenmare is currently unable to access this area with its existing equipment.

The WCP C project follows the successful start of commissioning on the upgrade of WCP B, in Northern Mozambique.

“We’re very pleased that the project went well; it was completed on time and under budget,” Carvill tells Mining Weekly Online.

OUTLOOK

Ilmenite prices increased by about 11% in the first six months of this year, while zircon has experienced an “extremely strong market” owing to supply constraints.

“We don’t see that anything will rapidly remove the supply constraints and, consequently, we see that the zircon price will continue improving into the second half of the year,” he told Mining Weekly Online.

Kenmare’s production guidance for the year will be weighted towards the second half and will result in the production of between 900 000 t and one-million tonnes of ilmenite and between 65 000 t and 72 000 t of zircon.

Meanwhile, Carvill pointed out that Kenmare’s WCP A plant had undertaken a 180º turn, which led to more frequent repositioning of the dredges, the wet concentrator plant and services.

However, Carvill pointed out that this turn was successfully executed.

Grid power supply had also experienced some outages, inhibiting production to some extent in the first half of the year.

“The combination of all of those [factors now being a thing of the past], and with the expected production towards the second half of the year, we expect operating costs per ton to reduce in the second half as an increased production reduces our spread of fixed cost,” Carvill said, noting that this will lead to a lower operating cost per tonne.