JOHANNESBURG (miningweekly.com) – London-listed Kenmare Resources’ revenue for the six months ended June 30, remained flat at $81.2-million, as increases in sales volumes were offset by lower prices and weak market conditions.
During the period under review, the company lifted its ilmenite, zircon and rutile sales 36% to 399 000 t; however, average realised prices declined 23% for ilmenite and 7% for primary zircon.
Meanwhile, Kenmare’s heavy mineral concentrate production increased 26% to 604 200 t in the six months, while ilmenite output was up 47% and zircon production up 12% to 445 600 t and 21 400 t respectively.
Total operating costs, including the cost of sales, rose to $99.1-million, up from $72.4-million in the prior corresponding period; however, the company reduced its cash production cost per tonne of finished product by 14%.
Kenmare posted an operating loss for the period of $17.9-million, compared with a $6.9-million operating profit during the prior corresponding period, while also widening its net loss to $31.8-million, compared with the net loss of $10.2-million in the first half of 2013.
“A significant proportion of global production is struggling to cover cash operating costs, before debt service or return on capital. This is an unsustainable situation.
“Although there have been some production cuts, these have been negated by new supply coming on stream, which was incentivised by previously high prices and these new volumes are delaying a recovery in prices,” Kenmare MD Michael Carvill pointed out.
He added that Kenmare had made substantial progress in reducing unit costs, conserving cash and improving production.
“We expect results for the full year to benefit from a more favourable sales mix, increased volumes and targeted cost reductions,” he said.
Carvill further noted that the company had recently concluded an agreement with lenders, which provided Kenmare with greater financial flexibility during the currently subdued pricing environment.