Business Irish

Wednesday 22 November 2017

Kenmare Resources bounces back as ilmenite prices strengthen

Kenmare Resources managing director Michael Carvill
Kenmare Resources managing director Michael Carvill
John Mulligan

John Mulligan

Mining firm Kenmare Resources had a record production year at its Moma ilmenite mine in Mozambique during 2016, with improved pricing and a major capital restructuring helping it swing back into the black.

The company generated earnings before interest, tax, depreciation and amortisation (Ebitda) of $5.2m (€4.8m) last year, compared to a negative $11.5m in 2015.

Revenue at the company was virtually unchanged at $141.4m (€130.8m), but improved productivity at Moma fed through to the bottom line.

"The ilmenite market has been experiencing a strong recovery over the past 12 months, as evidenced by the $26.6m increase in EBITDA in the second half of the year, and the market continues to improve. The period also benefited from improved shipment volumes and lower unit costs," said managing director Michael Carvill.

He confirmed that 2016 was a record year for production at the mine - one of the largest ilmenite mines in the world.

Ilmenite is a titanium ore and is used to make titanium dioxide, which has a range of applications, in the manufacture of products from paint to toothpaste.

The Moma mine also produces rutile and zircon. Kenmare mined over 30 million tonnes of ore in 2016, up 9pc on 2015.

A total $275m (€254m) of new equity was issued by Kenmare last year via a placing, open offer and lender underwriting. Of that, $200m was used to repay and discharge project debt, while $75m was used to increase cash reserves and pay fees.

Lenders received $23.8m in shares and wrote down $68.6m of debt. As a result, net debt declined last year from $374.7m at 30 June to $44.8m at the end of 2016.

Mr Carvill said the capital restructuring had been "deeply challenging", with funding secured just days after last June's Brexit vote.

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