Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (74360)	1/22/2011 3:19:54 PM
From: LoneClone	Read Replies (1) \| Respond to of 193081

Kenmare Resources: Hitting capacity and expanding in the squeezed titanium market Thursday, January 20, 2011 by Jamie Ashcroft proactiveinvestors.co.uk Kenmare Resources (LON:KMR) is poised to expand its Moma titanium minerals mine at an opportune time, as global titanium and mineral sand supplies struggle to keep pace with growing demand in the USA, Europe and China. The low-cost titanium feed-stock producer has been improving the performance of the Moma mine in Mozambique. All the while the macro-picture keeps getting brighter with modern technology requiring more and more of the space age metal. Moma’s output is beginning to reach capacity and Kenmare’s management already has a substantial expansion programme underway. The expansion will see Moma increase production capacity by 50 percent. This morning Kenmare released a production update for the second half of 2010. It produced 8 percent more heavy mineral concentrate in the second half, 12 percent more ilmenite, 21 percent more zircon and 147 percent more rutile. The company sold 346,202 tonnes of finished product in the second half, bringing 2010’s total shipments to 712,650 tonnes, 71 percent more than the 418,000 tonnes it sold in 2009. This strong performance is all the more impressive when considering the fact that Moma was offline for a month after an incident brought the mine to a standstill in October. Job Langbroek, analyst at Dublin-based broker Davy, emphasised that Kenmare is already beginning to benefit from the improved market conditions for its end-products. “The group reports strong demand for the product range in the quarter with good price momentum and a willingness by customers to enter into negotiations with respect to the expanded production profile of the mine,” Langbroek said. He adds: “Markets and pricing clearly continue to be very strong. The statement confirms market intelligence of a very tight zircon market with low inventories persisting into the current year.” The analyst also emphasised the company’s achievements of the past year and looked ahead to the mine expansion. “While still waiting for the landmark nameplate output of the full Moma complex to be reached, there is sufficient evidence that this is now just a matter of time. Moreover, expansion is well underway and the market for its product suite is so strong that price increases can be confidently expected in the coming year.” “Finished product sales will be a little below our expectation for 2010 but the year was never so much about the fiscal outcome but rather the delivery of a fully operating facility and the start-up of expansion.” The analyst rates Kenmare as a ‘buy’ and he recently upgraded his price target to 45 pence per share. Meanwhile John Mcgloin, Collins Stewart’s chief mining analyst, featured the stock in his daily ‘Morning Dig’ note to clients, in which he highlighted the stock's strong performance as well as the story’s positive economic backdrop. “The shares have performed well since the end of December helped by the strong outlook for mineral sands where the market is tightening,” Mcgloin said. The analyst notes recent newsflow from Kenmare’s industry peers, highlighting that Titanium Dioxide market is at its most buoyant for a decade ‘as strong demand chases limited supply’. He notes that the mineral sands market is expected to be in deficit by 2012. “This is the market into which Kenmare is delivering its expansion,” Mcgloin adds. This morning’s announcement revealed that the Moma mine was swiftly brought back on track after recent disruptions. The mining operation came to a standstill in October when the walls of a settling pond breached and flooded a village. The mine was out of action for around a month. The company has carried out extensive earthworks at the site to prevent any repetition of October’s spillage. After operations resumed the output returned to full capacity by the latter part of the fourth quarter. Despite this disruption Kenmare’s half yearly production figures have still managed to out-do the preceding six months. Moma’s heavy mineral concentrate production increased by around 8 percent, 496,190 tonnes were produced in the second half. The mineral separation plant produced 358,420 tonnes of ilmenite, 12 percent more than the first half, and 20,322 tonnes of zircon which is a 21 percent improvement. It also produced much higher quantities of rutile – which is a form of titanium dioxide – with 3,314 tonnes, 147 percent more, being produced. Kenmare stressed that it was pleased with the improvement made with the metal recoveries. Also the company recently purchased another trans-shipment vessel, which will help boost exports from Moma, with higher load-out capacity and greater flexibility. It’s export capabilities will be improved even more later this year when it completes the jetty upgrade project – which will allow the existing jetty to handle vessels on both sides – in the second quarter of 2011. Kenmare confirmed that it is advancing the implementation of its expansion project that is expected to increase Moma’s output by 50 percent. A team of 110 contract personnel and a very experienced in-house team will be working on the expansion, with full mobilisation set to get underway in the first quarter of 2011. The expansion is on schedule and production is expected to ramp up in 2012.