Production levels down for Kenmare

Production levels at Kenmare Resources’ Moma Titanium mine, in Mozambique, are expected to be slightly hampered this year because of weak power supplies in the north of the country.

The Dublin-based mining company, which completed the overall expansion of the Moma mine during the final quarter of 2013, is currently working with the country’s energy supplier, Electricidade de Mocambique (EdM) on a number of projects aimed at making the grid more reliable and boosting output.

However, improvements are expected to take most of 2014, which is likely to hinder Kenmare’s production levels.

Michael Carvill — Kenmare’s managing director — said, yesterday, that the completed expansion programme, at Moma, marks “another important milestone” in the company’s development.

He added that production should continue to improve, “as we work with local authorities to manage the power supply issues”.

In its latest trading update, issued yesterday, Kenmare said overall production, last year, was in line with expectations — a 47% increase in heavy mineral concentrate production noted (although Zircon production was down 33%), but the reliability of power supply has been a “key operational challenge” for the company.

Analyst reaction to Kenmare’s update was mixed. Davy Stockbrokers added: “The positive that we take from the statement is that shipments are ahead of our estimate.

“That said, limited detail on revenue and a focus on cost reduction would lead us to the view that pricing remains subdued and thus we retain our negative bias towards the stock.”