Mozambique mine success reduces Kenmare group losses

KENMARE Resources, whose ilmenite mine will account for over 2% of Mozambique’s economy at full production, reported a dramatic fall in losses due to lower operating expenses in the first half of 2007.

Ilmenite is used extensively in the pigment, plastic and paper industries. Shipment of product is due to start in November as the group’s Moma mine moves to production.

Moma is estimated to generate export sales of about $75 million (€53m) per annum at full production or $1.5 billion (€1bn) over the life of the project and could contribute up to 2.4% to the GDP of Mozambique, according to the African Development Bank.

For the six months to June 30, 2007, the company reported a pre-tax loss of $96,000 (€68,000) compared with a loss of $3.45m (€2.4m) a year earlier.

Because it had taken over mining operations at the Moma project it was spared the contractor costs which saw operating expenses drop to $1.7m (€1.2m) from €4.95m over the period.

Kenmare’s capital commitments at June 30 amounted to $41.2m (€29m) and it has access to sufficient sources of funding to cover those expenditures, it said.

By the year-end the group intends to be producing 800,000 tonnes of ilmenite product per annum which represents the full capacity of the mine.

It also announced yesterday the expansion of its ilmenite mining project in Australia to 1.2m tonnes per year.

Group chairman Charles Carvill said the outlook for the group was strong: “Prices for ilmenite are rising and almost all of our output has now been allocated.”

Kenmare also said that in addition to the output from the present facility, most of the proposed output from its expansion to 1.2m tonnes per annum of ilmenite production in Australia can now be earmarked to specific customers.

As the plant moves closer to getting into full production Mr Carvill said the management was extremely satisfied with the way the entire project has been handled.