Kenmare ups dividend after super-move

Last year was a transition period for Kenmare Resources (KMR) - literally. The Mozambique-based miner moved a massive plant 23km using a new, 66m-wide road. Kenmare is a titanium and zircon producer, which means dredging a mineral-rich sand. 

Despite the costly move and some Covid-19 impacts, Kenmare has maintained its dividend and will hand shareholders a final 2020 payout of 7.69¢ (5.6p), taking the total dividend to 10¢. 

Production for the year was down 15 per cent on 2019, at 756,000 tonnes (t), dropping sales and cash profits compared to the year before. Higher ilmenite (the mineral-rich sand) prices helped the bottom line but debt also climbed because of the Wet Concentrator Plant (WCP) B move, which will cost around $127m all-up. Kenmare went from net cash of $14m at the end of 2019 to net debt of $64m as of 31 December. 

Managing director Michael Carvill said completing the WCP B move was the final step in a “multi-year growth programme” and would mean production climbed between 45 per cent and 60 per cent next year. 

Kenmare has had a difficult start to 2021, even with WCP B performing well in its new position. A wave of Covid-19 cases at the Moma operation saw 177 people needing to be isolated as of 10 March, although Carvill said production had continued with only minor interruptions. 

Consensus estimates compiled by FactSet see adjusted earnings per share leaping to 87¢ in 2021, from 15¢ last year. 

Kenmare is through this transition period and its share price has almost doubled since we last looked at it. Even with the increase, it is still worth buying. 

Last IC View: Buy, 220p, 27 May 2020