23rd Jan 2014 09:27
LONDON (Alliance News) - Kenmare Resources PLC shares jumped to lead the FTSE 250 on Thursday as the titanium producer said it increased production at its Moma Mine during the fourth quarter.
In a statement on the Moma Mine for the fourth quarter and year to October 31 2013, the firm said it mined 7.66 million tonnes of ore at a grade of 6.3% during the fourth quarter of 2013, compared to 3.48 million tonnes of ore at a grade of 5.70%.
For the full-year, Kenmare mined 23.95 million tonnes of ore at a grade of 5.90%, up 22% from the 19.6 million tonnes mined in 2012 at a grade of 5.50%.
Kenmare's Moma Mine produced 311,000 tonnes of Heavy Mineral Concentrate in the fourth-quarter, compared with 157,000 tonnes of HMC in the fourth quarter of 2012. Whilst ore grade was approximately 11% higher and mining conditions improved, the principal driver of the additional 98% HMC production was the completion and ramp-up of the new dredge and concentrator plant in a second mine pond as part of the expansion of the Mine during the second half of 2013, said Kenmare.
Despite the general weaker market conditions, Kenmare said offtake of Moma ilmenite during the fourth quarter of 2013 was reasonably robust, with shipments increased by 60% to 226,600 tonnes over the previous quarter, by focusing on deliveries to existing core customers and some spot sales to Asia.
The firm said feedstock demand in the first quarter of 2014 is expected to remain subdued, an improving macro-economic outlook in all key regional markets for 2014 should lead to stronger pigment demand conditions.
At the Moma Mine, shipments of finished products in the fourth quarter 2013 were 236,400 tonnes, up from 204,100 tonnes shipped in the fourth quarter 2012.
Kenmare notes that there was a moderate softening of zircon prices during the final quarter of the year, due to seasonal weaknesses in China and Europe, as well as completion amongst suppliers to conclude year-end sales. Despite this, and a drop in zircon demand, Kenmare was able to sell substantially all of its zircon in 2013
"As the expansion project is now operating, management focus is to ensure the new facilities smoothly integrate with the original plant and to deliver increased production. Management will optimise efficiencies within operations with a view to achieving unit cost savings. In respect of Kenmare's capital structure, the Company is in on-going discussion with lenders with a view to optimising the terms of the project financing. We are also encouraged by improvements in the level of global economic activity, which should ultimately flow through to improved feedstock and zircon demand," the company said.
In the statement, the titanium producer notes that while production has increased, it has faced operational challenges at Moma, a key issue being the reliability of the power supply which has disrupted production. It says a number of initiatives have now been taken to enhance transmission capacity and address power instability issues, including the upgrade of its transmission grid, in collaboration with Electricidade de Mozambique, the state electricity transmission utility.
Looking ahead, Michael Carvill, Managing Director added, "Completion of the expansion is another important milestone in Kenmare's development. Kenmare will use the leverage of additional production capacity to drive down unit costs. We will also identify and realise operational efficiencies."
Shares in the titanium producer were trading up 3.20% at 18.69 pence per shares Thursday morning, leading the FTSE 250.
By Alice Attwood; [email protected]; @AliceAtAlliance
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