17th Oct 2014 08:00
LONDON (Alliance News) - Kenmare Resources PLC Friday said it is continuing discussions with Iluka Resources Ltd about a potential merger of the two companies, as it reported increased production from its Moma titanium minerals mine in Mozambique.
Kenmare said said the merger talks with Iluka remain at an early stage and there is no certainty that an offer will be made. Iluka released a separate statement Friday also confirming the discussions are ongoing. The merger talks were first revealed by the two companies in June.
Kenmare saw ileminite production in Mozambique increase by 6% in the third quarter ended September 30 to 220,200 tonnes compared to 208,100 tonnes a year earlier. Primary zircon production tripled to 12,900 tonnes from 3,800 tonnes a year earlier, but secondary zircon production decreased by 10% to 1,800 tonnes from 2,000 tonnes in the second quarter.
Rutile production more than doubled in the third quarter to 1,600 tonnes from 600 tonnes a year earlier. The quality of rutile production continues to improve and should result in a higher received price for rutile, said Kenmare.
The increase in production has been slightly offset by lower mineral grades, which averaged 4.3% in the third quarter compared to 5.9% in the comparable period in 2013. It expects production to continue to increase in the fourth quarter as utilisation work on its wet concentrator plant is completed, it said.
Shipments of finished products totalled 183,200 tonnes in the third quarter, up 24% from the 147.400 tonnes reported in the third quarter of 2013. Sales comprised 166,100 tonnes of ilmenite, 13,800 tonnes of zircon (11,800 tonnes of primary and 2,000 tonnes of secondary), and 3,200 tonnes of rutile.
Kenmare also has agreed to extend its USD20 million corporate loan with Absa Bank, part of the Barclays group, which will now mature on March 31, 2016, to give the company more funding flexibility. Pursuant to this, the company is continuing to work with lenders to optimise its capital structure, it said. It reported USD29.6 million in cash at October 16.
Kenmare shares were up 3.6% to 7.00 pence per share Friday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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