Kenmare Resources received a boost in the first-half from rising demand for titanium, which pushed prices up. It's also increasing production at its heavy minerals mine at Moma in Mozambique, so shipments of ilmenite rose by a third and practically doubled for zirconite. The group remained loss-making at the operating level, though, but a $22.1m (£14m) foreign exchange gain pushed the headline pre-tax numbers into the black. However, since mid-summer the US dollar has weakened against the euro, so the foreign exchange gain may be trimmed back at the full-year stage.
Nevertheless, prospects look encouraging. Titanium demand is forecast to rise 15 per cent this year and sales so far in the third quarter demonstrate that prices are still heading north. Production costs continue to come down, too, and Kenmare plans to expand production from Moma by 50 per cent, financed by the recent $270m placing. What's more, exploration at Moma has lifted reserve estimates of ilmenite to 27m tonnes - so the expansion should give Kenmare a 10 per cent share of the world's titanium market and a 6 per cent slice of the zircon market.
For the full-year broker Mirabaud expects cash profits of $20.6m, with a loss per share of 1c (2009: $30.4m loss/3.6c loss per share).
KENMARE RESOURCES (KMR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 19p | MARKET VALUE: | £ 457m | |
| TOUCH: | 18-19p | 12-MONTH HIGH: | 26p | LOW: 9p |
| DIVIDEND YIELD: | Nil | PE RATIO: | NA | |
| NET ASSET VALUE: | 20c | NET DEBT: | 16% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (c) | Net div per share (c) |
|---|---|---|---|---|
| 2009 | 26.7 | -0.20 | -0.02 | nil |
| 2010 | 40.6 | 1.15 | 0.07 | nil |
| % change | +52 | - | - | - |
Ex-div:- Payment:- £1=$1.54 | ||||
