Kenmare guidance warns of lower ore production
Mining company Kenmare Resources, which focuses its operations on Mozambique, has lowered its 2019 full year production guidance by 3pc.
The Dublin-listed group had previously expected to produce 900,000 to 960,000 tonnes of the titanium ore ilmenite over the 12-month period.
The company has now guided that production will come in at around 873,000-900,000 tonnes. The reduction is blamed on issues with automation and power.
Automation of the first of the two dredges at Kenmare's wet concentrator plant A is in progress. However, the company reports that implementation of this project has been "more challenging" than expected, resulting in unplanned production downtime.
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In recent weeks the company has also experienced reduced power reliability, due to upgrade work being undertaken on the national power grid in Mozambique. This contributed to decreased heavy mineral concentrate production during the fourth quarter of this year.
The upgrade work on the transmission grid is now complete.
Meanwhile, whilst total cash operating cost guidance remains unchanged at $151m-$167m (€135m-€150m), cash operating cost per tonne guidance has been revised to $160-$165 per tonne from $150-$160 per tonne, due to the reduced production volumes.
The production outlook for all other products and shipping volumes remains unchanged.
Kenmare said it still expects total shipments in financial year 2019 to be above one million tonnes due to strong inventory availability. It "continues to experience tight market conditions and upward price momentum for titanium feedstocks".
Shares in Kenmare initially fell up to 5.5pc in early trade yesterday but clawed back almost all those losses, closing down 0.6pc.
Last week the company negotiated new debt facilities. They comprise a $110m (€99m) term loan facility and a $40m revolving credit facility.
They will be used in part to repay in full the existing senior and subordinated project loans, of which $64m is outstanding. In addition, the funding will be used for working capital purposes.
The facilities provide for a future mine closure guarantee facility of up to $40m, sharing in security.