Kenmare expects earnings boost

KENMARE Resources expects a dramatic boost to earnings next year when it will be able to capitalise on higher prices for its key products, the mining firm said yesterday.

Kenmare, which mines ilmenite and zircon from its Moma mine in Mozambique, has not been able to take full advantage of price leaps due to existing contracts which run out at the end of this year.

“Unless there is a dramatic change in prices back down again… there will be a dramatic change in our revenue per tonne gained and, therefore, a huge difference in our EBITDA,” managing director, Michael Carvill, told Reuters in an interview.

“We will suddenly see all of that unrealised market gain — we get to capture that.”

Kenmare saw prices for its ilmenite stocks increase by 30% during the first half of this year compared to a year ago but prices in the market leapt by 200% in the same period due to demand and a lack of capacity, Mr Carvill said.

Ilmenite is mostly used to make titanium dioxide, a pigment used in paints, plastics, paper, fabrics and inks and there is large demand for it from Asia.

Kenmare posted EBITDA of $19.7 million (€13.65m) for the first half of this year compared to $4.3m a year ago.

Kenmare is expanding the production potential of its Moma mine and Mr Carvill said he expected full production, at expanded capacity at the site, from the end of next year.

The company is searching for a new chairman and Mr Carvill said the board was talking to one prospective candidate at the moment.

Its shares have risen by around a third since the start of the year.