‘Challenging’ quarter for Kenmare Resources but production remains on track

Miner Kenmare Resources said the first quarter of the year was “challenging” after operations were significantly disrupted by a lightning strike, but had little impact on guidance for the year.

In a trading update for the quarter ending March 31st, the company said production of its main product, ilmenite, fell 20 per cent to 204,300 tonnes due to an 18 per cent decline in the amount of heavy mineral concentrate processed and lower recoveries. Primary zircon production fell by 12 per cent to 11,400 tonnes.

Kenmare, which is listed in Dublin and London, said production would be at the lower end of its guidance for the year.

Finished goods shipments were up 17 per cent year-on-year to 271,700 tonnes, with inventories drawn down by 21 per cent in the quarter.

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“The first quarter was a challenging period for Kenmare, with operations and production significantly disrupted by a severe lightning strike in February,” said Michael Carvill, managing director of Kenmare.

“Despite this, production guidance for the year remains unchanged, albeit towards the bottom end of guidance for ilmenite and rutile.

“The market for ilmenite stabilised in Q1 2023, with evidence of spot price increases in recent weeks supported by recovering Chinese pigment demand.

“While received prices are lower than the peaks achieved in 2022, they nevertheless remain near all-time highs.”

In a note to investors, Davy analysts highlighted softening demand for zircon in the second half of 2022 and the first quarter of 2023, but said supply had decreased due to production issues in Australia and South Africa, stabilising prices.