28th Aug 2015 07:50
LONDON (Alliance News) - Titanium minerals and zircon producer Kenmare Resources PLC on Friday said its production in the first half was dragged lower by weather issues and power outages, but said it is confident the situation will improve in the second half.
Kenmare said its production so far this year from the Moma mine in northern Mozambique has been hit by 57 days of storm-related grid power in the first quarter and sporadic power outages in the second half due to remedial work which had to be undertaken on the power line and as usage exceeded capacity. The mine also took a hit in late June after workers staged official industrial action, which forced a production shutdown which lasted around a week.
Due to those issues, Kenmare's illmenite production in the first half was down 27% year-on-year to 324,100 tonnes, while its zircon production rose by 11% to 23,800 tonnes. Total shipments of finished products were up 3% in the year to 412,500 tonnes, but revenue fell to USD73.9 million from USD81.2 million due to lower average prices for Kenmare's products.
The company's pretax loss for the first half was USD27.9 million, compared to a USD32.1 million loss a year earlier, as it made a USD17.4 million foreign exchange gain in the half, compared to a USD2.0 million gain a year earlier.
Kenmare expects grid power stability at Moma to improve significantly in the second half, following the installation of new power infrastructure at the site in the third quarter, and the company said its illmenite is up by 50% so far in the third quarter, compared to first half volumes.
"Production in the first half of 2015 was severely impacted by weather related power outages in the first quarter, remedial work in second quarter and unofficial industrial action in June - significantly reducing operating hours for the plant during the period," said Michael Carvill, the company's managing director.
"The outlook for the rest of the year will be further supported as the national power utility commissions equipment that will increase grid power capacity and stability," Carvill added.
Shares in Kenmare were down 9.1% to 2.50 pence on Friday morning.
By Sam Unsted; [email protected]; @SamUAtAlliance
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