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Significant update to Kenmare Resources’ earnings forecasts

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Michael Carvill, managing director of Kenmare Resources

Michael Carvill, managing director of Kenmare Resources

Michael Carvill, managing director of Kenmare Resources

Earnings forecasts for mining company Kenmare Resources have been “materially” updated by analysts at stockbrokers Davy.

Kenmare produces ilmenite, the primary ore of titanium, which is used in the manufacture of a number of consumer goods including paints, fabrics, paper and cosmetics.

The stockbrokers have upgraded their earnings before interest, taxation, depreciation and amortisation (ebitda) forecasts for the Mozambique-focused group by 10pc in respect of last year, and by 43pc for 2022.

Kenmare is now forecast to report ebitda of $210m (€185m) for 2021 and $244.2m (€215m) for 2022, respectively.

The ebitda forecast for 2023 has been increased by 9pc at the company, whose CEO is Michael Carvill.

The earnings per share forecasts for Kenmare have been increased by 14pc and 90pc for 2021 and 2022.

“As indicated after the Q4 trading statement, we are upgrading our forecasts materially to reflect the ongoing strength of pricing and the benefits from the tender offer,” said Davy analyst Colin Grant.

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“We expect 2022 to be a record year in terms of revenues, earnings, margins and cash flows, and estimate that the company will have net cash of around $22m by year end.”

In a note, Mr Grant said the analysis now assumes an ilmenite price of $275 per tonne in 2021, up from $255 per tonne previously.

It also assumes that ilmenite will rise to $300 per tonne this year, up from a previous estimate of $237 per tonne.

“And we have increased our 2023 forecast to $260 per tonne from $230 per tonne,” Mr Grant said.

In December Kenmare completed the buy-back of 13.5pc of the company’s issued share capital and a return of $81.6m to eligible shareholders. It will release its 2021 preliminary results on March 23.


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