JOHANNESBURG (miningweekly.com) – Heavy minerals concentrate (HMC) production at London-listed Kenmare Resources’ Moma mine, in Mozambique, increased by 19% to 346 200 t in the third quarter, up from the 290 200 t produced in the second quarter.

This was mostly owing to an increase in production from the mine’s Wet Concentrator Plant B.

llmenite production rose by 26% quarter-on-quarter, from 165 100 t for the quarter ended June, to 208 100 t in the three months ended September, while zircon production decreased to 5 700 t, compared with the 8 700 t produced in the previous quarter.

Kenmare stated that the reduced zircon production was mainly owing to interruptions relating to the nonmagnetic circuits, as the last part of the mine’s capacity expansion project was completed.

“Although the upgrade took longer than anticipated, the work is now complete and the ramp-up of the enhanced nonmagnetic circuits to design production levels is in line with expectations.  All circuits have been tested and have demonstrated the ability to run at design throughput levels,” Kenmare said.

The company further added that no issues – with regard to the expansion – that might be expected to have a major impact on the ramp-up or the ultimate ability of the expanded facilities to operate at nameplate capacity, had been identified to date.

The recently installed voltage stabilisation equipment was also performing its intended function in mitigating the effect of power dips. 

However, during September, there had been a number of unplanned power outages rather than power dips, and Kenmare was working closely with power utility Electricidade de Moçambique to identify and rectify the issues causing this instability.

“While production is expected to continue to increase in the fourth quarter as the expansion ramp-up proceeds, external power interruptions are a risk to achieving [our] targeted production guidance for the year,” Kenmare stated.

Meanwhile, the miner said shipments during the third quarter were lower, owing to lower-than-forecast ilmenite sales to China and some shipment delays.

Total products shipped decreased by 40% quarter-on-quarter from 245 600 t to 147 500 t.

Kenmare further stated that the near-term pricing outlook remained weak, adding that it had, however, observed some improvement in demand for ilmenite with an increased level of orders and enquiries in recent weeks.

The zircon market had continued its gradual recovery, assisted by improving demand in China and Europe. Despite some impending seasonal reduction in ceramic tile plant operating rates, demand for zircon was holding up well and the pricing outlook remained stable.

Meanwhile, the combination of weakness in pricing, lower shipments, and reduced zircon production, together with the continuing weak market conditions, have led Kenmare to conclude that an injection of capital would be required to provide the group with important near-term liquidity, as well as medium-term flexibility.

Kenmare had also previously announced that it had agreed certain amendments of the terms of the Moma project financing.

These amendments included an effective postponement of the date on which deferred subordinated debt was required to be brought current from August 1, 2014, to August 1, 2015, deferment of the August 1, 2013 principal instalment of $13-million of senior debt to August 1, 2014, and an extension in time and quantum of the ability of the project to fund expansion-related costs from project operating cash flows.

The company was also in discussion with Absa regarding an extension of $20-million of its $40-million loan to March 2015.