The Chinese construction boom in the early part of the millennium led to rising capacity across a range of industrial feedstocks. This included ilmenite – the main source of titanium dioxide, commonly used in paints, pigments and plastics. But the mineral sands industry (like so many others) overestimated forward demand from the People’s Republic, so prices remained in the doldrums for an extended period.
However, the latest half-year figures for Kenmare Resources (KMR) suggest that demand is catching up. The re-balancing has been evident since the start of last year, according to managing director Michael Carvill, but the macro improvement shouldn’t detract from the producer’s improved operational performance.
Total shipments were up by a fifth to 535,700 tonnes, while Kenmare hit its targeted production rate of 1m tonnes in the 12 months through to June 2017. Increased volumes and underlying prices resulted in a surge in revenue and a turnaround in cash profits to $29.8m (£22.9m) from a loss of £10.7m in the first half of 2016. The increased scale of production, coupled with record zircon volumes, fed through to a 14 per cent reduction in unit cash costs.
Canaccord Genuity gives pre-tax profits of $38m for the 2017 year-end, leading to EPS of 31¢, against losses of $17m and 28¢ in 2016.
| KENMARE RESOURCES (KMR) | ||||
| ORD PRICE: | 254p | MARKET VALUE: | £278m | |
| TOUCH: | 245-260p | 12-MONTH HIGH: | 366p | LOW: 235p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 1 | |
| NET ASSET VALUE: | 717¢ | NET DEBT: | 5% | |
| Half-year to | Turnover | Pre-tax | Earnings per | Dividend |
| 30 Jun | ($m) | profit ($m) | share (¢) | per share (¢) |
| 2016 | 56.2 | -49.1 | -339 | nil |
| 2017 | 102 | 9.8 | 9.0 | nil |
| % change | +82 | - | - | - |
| Ex-div: | - | |||
| Payment: | - | |||
| £1 =- $1.287 | ||||
