Kenmare shares hit by delays to expansion project
IRISH mining firm Kenmare Resources has continued to attract robust pricing for forward delivery of its ilmenite ore, but shares in the company fell after it said an expansion project is running behind schedule.
Kenmare, which owns an ilmenite mine in Mozambique, said it has secured prices of between $300 (€229) and $400 per tonne of ilmenite for the first half of 2012.
At the beginning of 2011, ilmenite prices were hovering around $100 per tonne and rose to close to $400 per tonne by the year end.
Ilmenite is processed to make titanium dioxide, which is used in the manufacture of products such as paint and plastic. Kenmare's mine in Mozambique also produces rutile which is also used in paints, plastics and food; and zircon, which is used in ceramics.
Kenmare said its revenues last year rose 83pc to $167.5m. In the fourth quarter of 2011, it shipped 192,400 tonnes of finished products, up from 188,200 tonnes in the third quarter. It produced 225,600 tonnes of heavy mineral concentrate in the fourth quarter, up 15pc on the previous three months.
Much of Kenmare's output eventually finds its way to the Chinese market in one form or another, where it's used in the country's construction industry.
The company said yesterday that there was reduced demand for zircon-based products in the last quarter as China's government sought to cool its property market. It added that longer term growth there is still expected to be "substantial" and sustainable, leading to a "strong pricing environment" for ilmenite and rutile, with some softening of zircon prices in coming months.
"The company is therefore now in a position to more fully benefit from prevailing market conditions," it said.
But Kenmare added that its phase-two expansion of its Moma mine has been held up due to delays by a contractor in issuing some drawings for an extended mineral separation plant.
"This delay has regrettably extended the scheduled completion date of the expansion project well into the second half of this year," the company said.
Shares in the company declined 1.7pc in Dublin to close at 55.7c.