Kenmare shares up on full production forecast

SHARES in Kenmare Resources – the Irish mineral exploration specialist – crept up over 3.5% yesterday, to 29c, on the back of a positive set of interim results and an indication that it will reach full production at its chief asset by the end of this year.

The company – whose main asset is the Moma Titanium Minerals mine in Mozambique – yesterday reported a pre-tax loss of $199,000 (€138,740) for the first six months of 2009; significantly down from a loss of just under $8.1 million for the same period last year. Kenmare’s loss per share level was up slightly – year-on-year – from just above the 1c mark to 2c.

Management backed up yesterday’s results and loss reduction by saying that it is close to completing its performance improvement project and is totally focused on delivering on its previous forecast of reaching full production at Moma before the end of December. “We are delighted that the performance improvement project is virtually finished and has been completed according to schedule. As a consequence, we are on target for full production before the end of the year,” Kenmare’s chairman Charles Carvill said.

In relation to falling mineral demands and reduced output across the mining industry, Kenmare’s management pointed to industry commentators’ forecasts that a bottoming out of that cycle will happen during the final quarter of this year, with strong growth expected to be restored next year.

In the second quarter of 2009, Kenmare saw a 23% increase (quarter-on-quarter) in the production of heavy mineral concentrate (HMC); production of ilmenite was up 12.2%, production of zircon was up 45%, and production of rutile increased 158%. The aforementioned performance improvement project is 97% complete, compared with 75% four months ago. This, according to management, has contributed to the company’s steady increase in output.

“Results have continued to improve with July being a record month for HMC and ilmenite production,” it added yesterday.