Kenmare upbeat about Mozambique mine

KENMARE RESOURCES said yesterday that it has almost completed a programme designed to tackle problems that have delayed full production at its titanium mine in Mozambique.

The company said a number of difficulties frustrated its ability to bring the mine to full production last year. These included a sub-contractor missing deadlines, deficiencies in plant and equipment, and a cyclone.

Kenmare asked its contractor to take part in performance tests on the mine’s facilities last November. The company said that the test “failed to achieve the required performance criteria outlined in the contract in a number of key areas”.

This enabled it to present the contractor with a set of projects that Kenmare considered necessary to reach full production, and to insist that they be implemented immediately. The company said in a statement yesterday that this programme is now 75 per cent complete, and added that it was confident that the Mozambique mine would reach full production in the second half of this year.

During the year, the company appointed Jacob Deysel as chief operations officer and James White as general manager of the titanium mine.

As a result of the delay in bringing the mine to full production, Kenmare entered talks with its bankers last year. The company recently announced that it has deferred loan repayments and renegotiated terms with its lenders.

Kenmare published financial results yesterday showing that foreign exchange gains and deposit interest left it with a $345,000 profit in 2008.

“During 2008, operating and financial costs net of revenue earned for the period, totalling $60.1 million, were capitalised in property, plant and equipment as construction was not yet complete and as the mine was not yet capable of operating close to design capacity,” the company’s statement said yesterday.

Kenmare drew down a total of $334.8 million in senior and subordinated loans, $121.7 million of which were denominated in euro.

Earnings per share were 4.5 cent last year. Total assets were $589 million.