Kenmare meets 2023 guidance

17th January 2024 By: Tasneem Bulbulia - Senior Contributing Editor Online

Kenmare meets 2023 guidance

The Moma titanium minerals mine

London-listed Kenmare Resources, which operates the Moma titanium minerals mine in northern Mozambique, produced 986 300 t of ilmenite for the 2023 full year, within its revised guidance range for the year.

Output of its other products met or exceeded original guidance, MD Michael Carvill said in a trading update published on January 17.

Original production guidance was achieved for primary zircon and rutile and materially exceeded for concentrates.

“Markets for our products were challenging in 2023 due to global economic uncertainty, resulting in lower pricing. However strong pigment production in China and the thriving titanium metal market drove demand for our high-quality ilmenite, relative to other titanium feedstocks.

“In 2023, we made $31-million of debt repayments, paid $58-million in dividends, bought back $30-million in shares, began the capital investment for the transition to Nataka, and finished the year with $21-million net cash. We expect total 2023 dividends to be approximately $50-million,” Carvill said.

“Kenmare achieved two-million hours worked without a lost-time injury (LTI) in December 2023. It is encouraging to see a return to strong safety performance as the health and wellbeing of our team at the Moma mine is our highest priority,” he added.

Five LTIs were recorded in the 12 months to December 31, 2023, resulting in a rolling 12-month LTI frequency rate of 0.15 per 200 000 hours worked.

Heavy mineral concentrate (HMC) production was 1.45-million tonnes in 2023, a 9% decrease compared with 2022, owing to lower ore grades and mining rates having been impacted on by power interruptions and a severe lightning strike in the first quarter.

Ilmenite production was 986 300 t in 2023, a 9% decrease compared with 2022, and broadly in line with the reduction in HMC processed.

Shipments of finished products were 1.05-million tonnes in 2023, a 3% decrease on 2022. The fourth quarter of the year was the strongest quarter of the year, with 324 900 t shipped.

A share buyback of 5.9% of Kenmare’s issued share capital for £23.6-million ($30-million) was completed in September.

Kenmare had net cash of $20.7-million at year-end 2023, with cash and cash equivalents of $71-million.

Weakness in the global economy led to lower average prices for all of Kenmare’s products in 2023.

Ilmenite production for this year is expected to be between 950 000 t and 1.05-million tonnes. Excavated ore volumes are expected to increase relative to 2023, although a conservative view of Wet Concentrator Plant (WCP) B ore grades in the wetlands and lower grades from dry mining result in production of HMC and final products being in line with 2023.

Production is anticipated to be weighted towards the second half of the year owing to the grade profile and planned maintenance on WCP B in the first quarter.

Following poor electrical reliability in 2023, Kenmare has intervened and funded the refurbishment of the Nampula statcom in the Electricidade de Moçambique (EdM) network.

This was commissioned in the fourth quarter of 2023 and is expected to provide increased stability in the regional power grid. In addition, a new 400 kW line is under construction by EdM and expected to connect to Nampula in the first half of this year, further enhancing network stability.

Closing product inventories at the end of 2023 were above normal levels, providing the opportunity to maintain sales volumes with lower production in the first half of this year.

Total cash operating costs are expected to increase to between $219-million and $243-million this year, largely owing to cost increases in production overheads and power.

Total cash operating costs for 2023 are anticipated to be towards the upper end of guidance ($208-million to $228-million).

Full details of 2023 costs will be provided when Kenmare publishes its full-year results on March 20.

Expenditure on development projects and studies is expected to be about $189-million this year. These costs primarily relate to the transition of WCP A to Nataka and feasibility studies for the upgrade works to WCP B.

Improvement projects are expected to cost $6-million this year and relate primarily to upgrades to the mineral separation plant.

Sustaining capital costs for this year are expected to be about $29-million.