Global titanium minerals and zircon producer Kenmare Resources increased its interim dividend for the six months ended June 30 to just under $0.11 apiece, on the back of strong market conditions for all of its products, MD Michael Carvill tells Mining Weekly.
This was a 51% increase compared with the interim dividend paid for the 2021 interim period.
The dividend is in line with Kenmare’s targeted dividend payout ratio of 25% of profit after tax for the year.
The strong market conditions experienced in the six months under review led to a record average received price of $429/t, supporting record first-half revenues.
Earnings before interest, taxes, depreciation and amortisation increased by 28% year-on-year to $105.5-million, resulting in a 30% increase in profit after tax of $62.5-million, which gave Kenmare the confidence to increase its dividend.
Revenue on a free-on-board (FoB) basis was $182.1-million, a 9% increase owing to a higher average price received for Kenmare’s finished products, which is noted to have more than offset lower shipment volumes.
“After a challenging first five months of the year, production improved in late May and this has continued for the 12 weeks since then. At this run rate, we remain on track to achieve guidance, albeit at the bottom of the range,” Carvill says.
He notes that Kenmare ended the period with a robust balance sheet, having reduced net debt by $17.3-million.
“We expect that our financial position will continue to strengthen in [the second half of this year], as shipments are anticipated to increase and our order book is largely committed,” Carvill avers.
Strong market conditions for all of Kenmare’s products continued in the period and demand has remained robust so far in the third quarter, supported by low global inventories.
Kenmare operates the Moma titanium minerals mine in northern Mozambique.
Heavy minerals concentrate (HMC) production was 738 300 t, an 8% year-on-year decrease, owing primarily to higher slimes levels, with a 7% reduction in ore grades and a 2% reduction in excavated ore tonnes.
Total finished product output was 550 700 t, a 10% decrease, broadly in line with the 9% reduction in HMC processed.
Total shipments amounted to 424 300 t, a 29% year-on-year decrease, owing primarily to poorer weather conditions and reduced shipping capacity as a result of the Bronagh J transshipment vessel undergoing its planned five-yearly dry dock maintenance work.
“As a result of this maintenance work, shipping was lower than expected and we were not able to use the strong demand to release more material into the market, and consequently, we built up finished goods inventory,” Carvill explains.
However, he notes that, with the vessel expected back on site this week, the company expects it will be able to release finished goods inventory that was built up for the remainder of this year.
Further, the company also had to contend with two cyclones during the period, Carvill informs, with each having a considerable effect on the company’s ability to produce material.
The rotary uninterruptible power supply (RUPS) project began operation in May and has proved successful at mitigating electrical supply disruptions. Carvill explains that the RUPS protects Kenmare’s mineral separation plant from volatility in the transmission grid, as it uses hydropower.
“The RUPS ensures that the mineral separation plant gets seamless, steady power supply. Since it has been commissioned, it has been working fantastically, transforming the way that we can manage our separation,” Carvill acclaims.
Meanwhile, work is continuing on the prefeasibility study (PFS) for Nataka, where wet concentrator plant A is due to be relocated in 2025.
While the PFS is not yet finalised, initial estimates suggest the capital cost will not be less than $225-million.