KENMARE, the UK listed mineral sands miner, forecast strong demand for its products this year but acknowledged prices for first quarter shipments were weaker.
Kenmare operates the Moma mine in northern Mozambique where it processes ilmenite which is used in pigments and which it sells to China. It also produces rutile and zircon.
Commenting in a production update on Wednesday, Kenmare MD Michael Carvill said price declines for pigment last year led to some caution among producers who responded by destocking. Carvill said “rebuilding of these inventories through increased utilisation rates in 2024 will support demand for ilmenite”.
But he added that Kenmare was “experiencing lower pricing” in the first quarter than it achieved last year.
Despite this, Kenmare has forecast ilmenite production of 950,000 to 1.05 million tons for the 2024 financial year. Production for the 12 months ended December 2023 was 986,300 tons. This was within revised guidance following a rocky first quarter in which electrical storms damaged plant components, interrupting production. It had first guided the market to ilmenite production of 1.05 and 1.15 million tons in 2023.
Zircon and rutile production has been guided to 45,000 to 50,000 tons and 8,000 to 9,000 tons respectively.
Total cash operating costs are expected to increase to between $219m and $243m for 2024. While total operating costs for 2023 are to be published at the firm’s full year results in March, it expected them to come in at the upper end of its guided $208m to $228m range. Unit costs for 2023 were guided to $198 to $218 per ton for 2024.
Kenmare also said its next large capital project, the moving of dredging equipment from Moma’s Namalope resource to Nataka would cost $341m, exceeding its previous cost guidance of $316m to $331m. A definitive feasibility study for the project is due to be completed in the second quarter.
The $71m capital cost increase of the project related to changes in scope and design, additional indirect costs related to engineering, procurement and construction management, and contingencies.
As previously reported by Miningmx, Kenmare expected to pay a final dividend of $50m after ending the year with $20.7m in net cash. Shares in the company are 25% weaker over the last 12 months. On a one week basis, the share is 6.5% lower.
