Kenmare dividend delayed by debt

Kenmare Resources has identified 2013 as being a potential watershed year for the company as it focuses on getting to a position where it can start paying a dividend to shareholders.

However, the Dublin-headquartered mining company’s chairman, Justin Loasby, said yesterday that the company must meet some conditions of its financing agreements, including paying off the deferred portion, $96.5m (€74.11m), of the subordinated debt that helped with the original funding of the company’s Moma titanium mine in Mozambique.

“We are working towards achieving this objective as soon as possible,” he said.

A first dividend is still a little while off yet, as Kenmare is likely to begin paying off its subordinated debt in the next 18 months. When asked about dividend policy at Kenmare’s 2012 AGM, Mr Loasby said the board was conscious that investors were keen to see payments and the matter would be considered at “an appropriate moment”.

Yesterday, Mr Loasby said: “Shareholders have supported the company, with great patience, during the long investment period, and the board remains focused on getting to a position where our net cash inflows from operations will enable us to start paying dividends to our shareholders, at prudent levels.”

Kenmare yesterday reported after-tax profits of $49.5m for 2012; up from $23.7m in 2011. Pre-tax profits increased from $18.2m to $52.8m. As recently announced, Kenmare’s annual revenues increased by 40% to €234.6m last year, with production levels surpassing 772,300 tonnes.

It also reiterated that the Phase 2 expansion of the Moma mine is in the commissioning stage, a move which should, by the end of this year, increase production capacity by 50%.

Mr Loasby said this development could mark a turning point for the company.

“In my view, 2013 is going to be a watershed year for Kenmare,” he said. “Until now, the company has been developing and building its assets at Moma. With the 50% expansion coming on stream, we are now at the point where we can concentrate on operating the assets to achieve a sustainable return on the investment which has gone into their development.”

Kenmare’s share price was up by nearly 9% in Dublin yesterday, closing at 39c.