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Kenmare Resources suspends guidance on coronavirus uncertainty

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Kenmare head Michael Carvill

Kenmare head Michael Carvill

Kenmare head Michael Carvill

Mozambique-focused Kenmare Resources has suspended its guidance for this year on the back of uncertainty brought about by the coronavirus.

In a trading update, the Dublin-listed company said recent Covid-19 restrictions are having an operational impact on it, and may also result in a delay in the move of its wet concentrator plant B.

Were this to happen, it would negatively affect production this year.

In the first three months of 2020 heavy mineral concentrate (“HMC”) production fell 31pc to 248,100 tonnes as a result of an anticipated decrease in ore grades and a decrease in excavated ore.

Average monthly HMC production is forecast to increase from now on.

Prices for ilmenite, Kenmare’s main product, increased for the fourth consecutive quarter in the first three months of the year, as demand continued to outstrip supply.

In order to maximise its liquidity and financial flexibility, the company has drawn down the remaining $42.7m of its loan facility.

At the end of March, Kenmare had cash and cash equivalents of $102.4m.  Debt was $111.4m, resulting in overall net debt of $9m.

Job Langbroek, analyst at Davy Stockbrokers, said Kenmare's decision to suspend its guidance is "sensible" given production scheduled for the year assumes a successful outcome to expansion plans.

"Perhaps most importantly at this juncture, management has also moved to maximise liquidity available, ensuring timely financing of its projects should they proceed as planned," Mr Langbroek said.

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