Kenmare increases output

Indeed, second-quarter production of intermediate heavy mineral concentrate was up 23 per cent from the first quarter, which translated into higher production of finished products. Ilmenite (titanium oxide) production increased 12.2 per cent, zircon production increased 45 per cent and rutile (titanium dioxide) production increased 158 per cent. July saw record production of both heavy mineral concentrate and ilmenite.

Meanwhile, the group's performance improvement project is now 97 per cent complete and management aims to achieve full production by the year-end. During the period, the company also added property, plant and equipment worth $38.1m. And Kenmare's development expenditure reached $32.8m (£23.5m), of which $13.4m was loan interest, $5.6m comprised finance fees and $13.8m reflected operating costs (net of revenue earned). The company also purchased a second trans-shipment vessel to reduce the operational risk of relying on just one vessel. This will also improve loading rates and reduce freight rates. The vessel is undergoing minor modifications in Australia and should be in operation next year.

On 30 June, the company announced a placing to raise £10.3m, too. The board has extended the exercise period on the outstanding warrants (which would otherwise have expired on 23 July) to 31 December. If exercised in their entirety, these warrants would raise approximately $9m. Moreover, on 31 July, the company entered into a trade finance facility with Absa Corporate and Business Bank to replace the facility it previously had with Barclays and which expired in January this year.

With the plant nearing operation, the company will be reporting operating costs and revenue with effect from 1 July, against the previous treatment of capitalising costs net of revenues in the development expenditure figure.

Broker Mirabaud Securities expects a full-year loss per share of 1.3¢ recovering to EPS of 2.2¢ in 2010.

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