Kenmare revenues fall below expectations
Published 26/08/2011 | 05:00
KENMARE Resources posted results below expectations yesterday but promised a dramatic boost to earnings next year, when it will be able to capitalise on higher prices for its key products.
Dublin-listed Kenmare, which mines ilmenite and zircon from its Moma mine in Mozambique, had sales of $56m (€39m) in the first half of the year as poor weather and shipping delays forced the company to postpone the sale of $20m worth of minerals until the second half.
Earnings before interest, tax and amortisation were more than four times higher than the same period last year at $19.7m but below forecasts of $25.7m.
The company hopes profits will rise sharply as old contracts come to an end and new contracts reflect the recent surge in prices for ilmenite and Zircon driven by demand from China.
"Unless there is a dramatic change in prices back down again . . . there will be a dramatic change in our revenue per tonne gained and therefore a huge difference in our EBITDA," managing director Michael Carvill said.
"We will suddenly see all of that unrealised market gain -- we get to capture that."
Kenmare saw prices for its ilmenite stocks increase by 30pc during the first half of this year compared to a year ago, but prices in the market leapt by 200pc in the same period due to demand and a lack of capacity, Mr Carvill said.
Ilmenite is mostly used to make titanium dioxide, a pigment used in paints, plastics, paper, fabrics and inks and there is large demand for it from Asia.
Kenmare is expanding the production potential of its Moma mine and Mr Carvill said he expected full production at expanded capacity at the site, on the northeast coast of Mozambique, from the end of next year.
The company is searching for a new chairman and Mr Carvill said the board was talking to one prospective candidate at the moment.
Shares in the group have climbed 29pc this year, making them the third-best performers on the ISEQ and ensuring that the company has the tenth largest weighting on the ISEQ Overall Index.