Power outage hits Kenmare production as revenue falls
Published 29/04/2016 | 08:27
Production at Irish mining company Kenmare was slowed by a 57-day power outage at its Mozambique mine, which in turn caused revenues to dip to $142.6m (€125m) last year.
Heavy mineral concentrate production slowed by 15pc down to 1.1 million tonnes while production of ilmenite fell by 11pc to 763,500 tonnes.
The drop in output caused group EBITDA to swing to negative $11.5m down from a positive of $9.4m last year.
Cash flow in the year increased to plus $3m, up from minus $18.8m in 2014.
Kenmare managing director Michael Carvill said the company's balance sheet has been over reliant on debt for this stage of the commodity cycle.
"The cost of debt service and the risk it poses to the Company intensified the decline in our share price during 2015.
"Kenmare has proposed a radical deleveraging plan which will create a robust balance sheet and allow the company to benefit from the expected recovery in titanium feedstock prices and sales volume growth," Mr Carvill said.
The company's new deleveraging plan aims to raise $100m by selling stock in the firm to British Virgin Island-listed King Ally Holdings.
Kenmare is also looking to source another $200m from Oman's sovereign wealth fund and its existing shareholders.
The mining firm will look to gain $100m from the Oman fund.
Stockbroker firm Numis said the plan would be good for the company that defaulted on its debts earlier in the year.
"After a challenging 2015, Kenmare’s production now appears to have turned a corner with the reduction in shipments appearing to be largely a timing issue. The deleveraging plan would be a positive for the company, however, we note that the lenders have not yet agreed to it."