Kenmare reports $30m loss

Exploration company Kenmare Resources has reported a loss after tax of $30.4 million and a fully underwritten equity issue to raise €200 million (£179.6 million sterling / $270 million).

The funding will be used to pay for the expansion of its Moma mine in Mozambique. The news sent Kenmare shares down over 30 per cent to 17 cent in Dublin today at 4.30pm, giving the company a market capitalisation of €154 million.

The Moma mine produces titanium dioxide feedstock which is used for making paints, paper, plastics and pharmaceuticals.

Kenmare reported a loss after tax of $30.4 million for fiscal 2009. It said during the first six months of last year costs of $13.8 million, net of revenue earned of $15.6 million and net of delay damages of $1.2 million were capitalised in development expenditure in property, plant and equipment.

Loan interest of $13.4 million and finance fees of $5.6 million were also capitalised resulting in an increase in development expenditure of $32.8 million to June 30th 2009.

Revenue for the six months from July to December amounted to $26.7 million while cost of sales totalled $35.2 million resulting in a gross loss of $8.5 million.

Distribution and administration costs for the six month period to December were $1.8 million and $1.9 million respectively. There were loan interest and finance fees of $15.5 million during the second half of the year and deposit interest earned of $0.2 million.

In addition there was a foreign exchange loss for the year of $2.9 million.

For the year, additions to property, plant and equipment amounted to $47.7 million made up of assets of $14.1 million and development expenditure of $33.6 million. At the end of fiscal 2009, net property, plant and equipment amounted to $540.9 million. Depreciation and amortization for the second half of the year was $12.9 million.

"The loss in the last six months of 2009 is a result of both the slower than planned ramp-up and the depressed feedstock market situation," the group said.

"Production, and market conditions, current and projected, are now healthier, providing encouraging indications of a significant improvement in operational and financial performance for the year ahead," it added.

In a note to investors Davy said the shares were being placed at 12 pence and the expansion would fund a 50 per cent increase in design capacity and production at Moma with the expansion completed by end 2012.