Full-year results from Kenmare Resources show that, despite delays, it's planned phase II ramp-up at its Moma mine in Mozambique should be largely complete by October. However, with the technical issues that hampered production at Moma only partly resolved, there could be further costs to come.
Kenmare's phased ramp-up of titanium dioxide feedstock was held back because it encountered elevated clay levels within its ore-body, resulting in a 12 per cent year-on-year reduction in output to 842,900 tonnes. To counter this, Kenmare made improvements to its wet concentrator plant, in addition to supplementing its existing dredging activities with a dry mining operation. Though these measures are helping to bring phase II back on track, the latter initiative will feed through into higher unit costs.
Nevertheless, the exponential growth in prices for ilmenite, rutile and zircon allowed Kenmare to book a $52.9m (£33.3m) operating profit in 2011 against a loss of $3.52m the previous year. And, though global prices softened following a slowdown in the Chinese property market, they have remained at historically high levels in 2012. Additionally, Kenmare has switched from multi-year negotiations to a six-month contract regime, thus allowing the company to benefit from forecast strong prices.
Prior to these figures, Merrion Stockbrokers anticipated 2012 EPS of 9.7¢ (from 1.4¢ last year).
| KENMARE RESOURCES (KMR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 50p | MARKET VALUE: | £1.21bn | |
| TOUCH: | 50-51p | 12-MONTH HIGH: | 63p | LOW: 30p |
| DIVIDEND YIELD: | nil | PE RATIO: | 81 | |
| NET ASSET VALUE: | 21¢ | NET DEBT: | 51% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2007 | nil | -9.6 | -1.40 | nil |
| 2008 | nil | 0.3 | 0.05 | nil |
| 2009 | 26.7 | -30.4 | -3.59 | nil |
| 2010 | 91.6 | -16.3 | -0.80 | nil |
| 2011 | 167 | 18.2 | 0.99 | nil |
| % change | +83 | - | - | - |
£1 = $1.59 | ||||
