Business

Kenmare chief says ‘nobody banging on our door’ after investor calls for sale

Titanium minerals miner plans €46m dividend after ‘second strongest’ earnings in its history

Kenmare managing director Michael Carvill: he has announced he will be stepping down later this year from his position at the company he founded in 1986. Photograph: Dara Mac Dónaill

Joe Brennan
Wed Mar 20 2024 - 08:06

Kenmare Resources’s outgoing managing director of 38 years has rejected calls from a leading shareholder for the minerals miner to put itself up for sale, adding that the intervention has not sparked any bid approaches.

It comes after London-based JO Hambro, which owns just over 6 per cent of Kenmare, said in February it had written to the board of the company calling on it to assess its “strategic options”, adding that it favours an outright sale of the Dublin-listed company as its stock languishes at a depressed value.

“Nobody’s banging on our door,” Michael Carville, who plans to step down later on this year, told The Irish Times after the company reported annual results. “Our board does not have the same view as the shareholder with regard to the best strategy for Kenmare.”

Kenmare Resources, one of the leading global producers of titanium minerals and zircon, said it plans to pay a total of $50 million (€46m) in dividends on last year’s earnings, bringing distributions to shareholders since 2019 to $250 million.

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Earnings before interest, tax, depreciation and amortisation (ebitda) last year came to $220.3 million, the company said on Wednesday, which it said was its “second strongest” ever result – but 26 per cent below the out-turn for 2022 due to a decline in mineral prices.

The average price achieved for Kenmare’s suite of products, including ilmenite, which is used in the manufacture of everything from paints and plastics to ceramics and textiles, soared by 42 per cent in 2022 to $463 per tonne amid tight global supplies in the wake of the peak of the Covid-19 pandemic and Russia’s invasion of Ukraine. However, average prices fell back last year by almost 10 per cent to $418 per tonne, according to Mr Carville. Ilmenite prices have eased further so far this year. Meanwhile, production was hit at the company’s Moma mine in Mozambique early last year by a severe lightning strike.

Shares in Kenmare, which accounts for approximately 7 per cent of global titanium feedstocks production, are down by almost a third over the past 12 months. Davy analyst Colin Grant highlighted the company’s cheap stock price in a note to clients, saying its three-year rolling ebitda – of $732 million – was more than double the company’s enterprise value, including debt, at the end of last year.

Mr Grant told analysts on a call that he did not think it was the “appropriate time to put the company up for sale at the moment”, specifically when ilmenite prices are in a cyclical downturn.

The managing director, who founded the company in 1986, said last week that he plans to step in August, but would be available in a consultancy capacity until at least the end of the year to help with an orderly change at the helm.

The company is currently working on a project upgrade of its main mining plant and moving it to a different location at Moma, which is expected to cost is $341 million by 2027 but will, according to the company, “secure production for decades to come”. The Moma mine is estimated to have a 100-year lifespan from now based on current production rates.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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