Kenmare Resources plc is an established mining company, which operates the Moma Titanium Minerals Mine, located on the north east coast of Mozambique. The Mine has been in commercial production since 2009 and is recognised as a major supplier of mineral sand products to a global customer base operating in over 15 countries. The company is listed on the London Stock Exchange and has a market capitalisation of £440 million.
Half year results to 30 June 2023 were released on 15 August and we were delighted to have Michael Carvill, MD and Tom Hickey, FD present at a webinar for private investors. A recording of the webinar is available here.
Kenmare is the worlds largest supplier of ilmenite and has a mine in Mozambique with resources which will last for over 100 years. Capital of $1.4bn has been spent on the mine to date and this has delivered a mine capable of producing 1.2m tonnes per annum, approximately 7% of world supply. Dredge mining has a low environmental impact and the mine uses 90% renewable electricity and rehabilitates the land after mining.
There are three main areas of management focus: operating responsibly; delivering low cost production and allocating capital efficiently. In each of these areas they are performing well, although production volumes were impacted by a couple of issues in the first half of the year. Kenmare works well with local communities and are considered a trusted partner. Kenmare now sits in the lowest cost quartile for production costs. During the first quarter the mine was hit by a very severe lightening strike which caused widespread damage to electrical infrastructure and this took much longer to remedy than originally hoped for and impacted production volumes. The mine is now back to operating normally and the second half of the year has started very well. The order book is good for Q3 and they expect the tight supply/demand outlook to continue.
Despite the production issues the company was able to sell down some of its inventory which enabled them to generate a record $110m EBITDA in the first half of the year. The average sales price reduced slightly to $413/tonne principally due to shipping more ilmenite and lower levels of zircon. The company is very cash generative and finished the half year with net cash of $42m. The interim dividend was raised 59% and the company announced a share…
