Kenmare project ahead of schedule

MINING and minerals exploration company Kenmare Resources said yesterday that construction of its Moma titanium mine project in Mozambique is running ahead of schedule.

The group also confirmed at its AGM in Dublin that it was actively pursuing an AIDS awareness programme in the African state.

Moma is a costal town that fronts on to the Indian ocean and like many other African states AIDS is a major health issue that has to be tackled urgently.

Despite the AIDS backdrop, shareholders were given an upbeat presentation at the meeting.

The Moma project was 28% completed at the end of June and should be finished in late September, six weeks earlier than planned.

First production is expected in the last quarter of 2006, and the mine has an 80-year lifespan.

Moma will have the capacity to produce 701,000 tonnes of ilmenite per annum, an increase on the previously reported production volume of 615,000 tonnes. Ilmenite is most commonly used to manufacture white pigment used in paint, plastics, fabrics and paper.

Chief executive Michael Carvill, speaking after the meeting, said the group had total borrowings of $270m. It has generated no earnings since its foundation in 1993. Mr Carvill said the company could achieve net profits of $30m in the first year, judging from the current market price for the product. That figure is based on a turnover of $100m in the first full year.

Net operating margins are up at 75%, said Mr Carvill.

Funding for the mine is well spread. KFW in Germany, which was set up after WWII to fund the Marshall Plan for the devastated German economy, has lent $40m.

The European Investment Bank, the government of South Africa and others have also contributed substantial funds to the project.

South African bank ABSA, now owned by Barclays Bank, is the one major private bank involved. It provides about $80m of the $270m debt. Mr Carvill said the project will be good for the country and for Kenmare’s shareholders.

The government of Mozambique will get up to $30m in royalties and taxes annually, while it is the group’s intention that the local people will also do well from the mine.

“That’s the reason why we are involved in the AIDS awareness campaign. It would not be acceptable that the disease would increase when a company of Kenmare’s size was doing well out of the area,” said Mr Carvill.

Shareholders were told they could look forward to a dividend sooner rather than later.