Exploration company Kenmare Resources has said it remained profitable in the first half of the year even though production was weaker. It also confirmed it would pay an interim dividend to shareholders.
The company said the interim dividend of $0.0231 (1.9 cent) per share represented 20 per cent of profit after tax, in line with its dividend policy.
The mining company has also appointed former Irish Stock Exchange chief Deirdre Somers to its board. Ms Somers will also become a member of Kenmare's audit and risk committee.
Operating costs at the explorer were $96.9 million for the first half of the year, largely in line with the same period of 2019. However, unit costs were 20 per cent higher at $183 per tonne, as production volumes lowered and costs were largely fixed.
Revenues were down 5 per cent at $116.8 million as shipment volumes fell and freight costs declined, with earnings before interest, taxes, depreciation and amortisation declining 13 per cent to $37.2 million. Profit after tax was down to $12.7 million, compared with $21.9 million a year earlier.
Kenmare said it had cash and cash equivalents of $98.6 million at the end of the six months, compared with a figure of $13.7 million at the end of December, and net debt was $52.7 million.
"Our performance during the first half of 2020 demonstrated Kenmare's resilience and agility, effectively managing many challenges posed by the Covid-19 pandemic to continue to produce and ship our products safely," said managing director Michael Carvill.
Kenmare, which operates the Moma titanium minerals mine in northern Mozambique, said market conditions for titanium feedstocks continued to strengthen in the first six months of 2020, with ilmenite prices rising 28 per cent to $217 per tonne.
“We have agreements for the majority of our H2 2020 ilmenite production, although market conditions are expected to become more subdued in the second half of the year,” Mr Carvill said.
The company said it had excavated ore volumes of 18.5 million tonnes for the first half of the year, hitting a new quarterly record of 10.3 million tonnes in the second quarter of 2020.
Its heavy mineral concentrate production was 558,400 tonnes, a decrease which the company attributed to anticipated lower ore grades. Total finished product production was 410,600 tonnes, with reduced concentrate having an impact. Total shipments were 413,700 tonnes, a 14 per cent decrease compared with the same period in 2018, but shipment volumes are expected to be stronger in the second half of the year.
The group has updated its guidance for the year, saying it expected shipping volumes to be higher than updated production volumes in 2020.
“We believe that even with a few cases of Covid, we can continue to operate, we can look after those people well and get them medically evacuated; we can ensure it doesn’t flow through the rest of the operation,” Mr Carvill said.
Kenmare said total capital expenditure for the year is expected to be $142 million, in line with previous guidance of $141.5 million, with $59 million incurred in the first half of the year.
Total cash operating costs in 2020 are expected to be lower than previously guided, and are now estimated at $152-$160 million, as production volumes lower and savings are made on fuel prices and exchange rates. Cash operating costs per tonne are anticipated to be $180-$196 per tonne.
Kenmare said it was actively managing Covid-19-related disruption to the relocation of its Wet Concentrator Plant B, with the first group of specialist contractors required for the move completing the necessary quarantine and now working on site. Mining is set to begin at the new Pilivili site in the fourth quarter.
“With close to $100 million of cash at the end of June, we are financially well resourced to complete the . . . move and continue to pay dividends,” Mr Carvill said.