Mining firm Kenmare Resources sees record revenue despite production issues

Production of titanium impacted by lightning strikes at company's mine in Mozambique earlier this year

Kenmare Resources managing director Michael Carvill said production in the first half of 2023 was 'unfortunately lower than our expectations, primarily due to a severe lightning strike in the first quarter and its lingering impact'.

Irish mining company Kenmare Resources has posted record revenues despite production being impacted by lightning strikes at its site in Mozambique earlier this year.

The company operates the Moma Titanium Minerals Mine in northern Mozambique and is one of the world’s largest producers of titanium minerals and zircon. 

The mine’s production accounts for about 7% of the world’s titanium feedstocks, which the company supplies to customers in 15 countries.

According to the company’s half-year financial results, it generated revenue of $242.9m (€222.4m) — up 23% from $197.3m last year.

Most of this came from an increase in revenue from mineral products, which generated $229.7m (€210m) — up 26% from the same period in 2022. 

The company said this was due to a 31% increase in shipment volumes supported by a drawdown of finished product stockpiles.

Revenue from the company’s freight operations dropped from $15.2m to $13.2m.

Michael Carvill, managing director of Kenmare Resources, said production in the first half of 2023 was “unfortunately lower than our expectations, primarily due to a severe lightning strike in the first quarter and its lingering impact”.

Heavy mineral concentrate (HMC) production was 633,900 tonnes during the first six months of the year representing a 14% decrease compared to the same period last year.

In addition, poor power quality as interruptions from the grid and unplanned maintenance by Electricidade de Moçambique reduced mining operating hours.

However, product pricing and strong shipment volumes between January and June drove record revenues for the company.

Earnings before interest, taxes, depreciation and amortisation was up 6% to $110m compared to last year with profit after tax increasing to $67.8m (€62m) — up from $62.5m last year.

However, Kenmare did see operating costs increase to $230 per tonne of finished product. This is up 24% from $185 per tonne during the first six months of 2022.

Total operating costs in between January and June $162.6m, a 32% increase from $123.3m compared to 2022. 

As of the end of June, net cash increased to $42.3m — up from $25.7m at the end of December 2022.

Kenmare expects higher HMC production in the second half of the year.

“While market demand remains slightly muted, we expect strong financial performance in H2, with cash flows continuing to support all expected expenditures and shareholder returns,” the company said.

The company also announced a share buyback of $30m.