Higher volumes, jump in prices boost Kenmare Resources's bottom-line

Kenmare Resources delivered a double-digit increase in sales for the first half of its financial year, on the back of record shipments during the second quarter and plans to increase production.

The company, which supplies titanium feedstock and zircon sands, said total shipments of finished products grew by 10.0% over the six months ending on 30 June, with prices up by 20% to $223 a tonne versus the year-ago period, driving a 37% jump in revenues to $140.1m.

Net profits meanwhile nearly tripled, rising from $9.38m in the first half of 2017 to $26.38m.

To take note of, record production during the second quarter offset the hit to output over the prior three months as its wet concentrator plant A encountered a higher-slimes area.

The resulting lower volumes meant that cash operating costs per tonne increased by 16% to $152 a tonne, although the company guided towards lower unit costs in the back half of 2018, driven by increased production volumes.

Significantly, according to analysts at Canaccord Genuity, during the reporting period Kenmare also approved building its high-grade WCP C Dredge Mining Project, which it anticipated would be completed by the end of 2019.

Canaccord's Des Kilalea and Tim Huff believed the shares' rating had been negatively impacted for a year or more by the lack of certainty around capex projects and the "perception" of little output growth, as well as some overhang of lender-owned shares.

The project, which was scheduled to ramp-up at the end of 2019, would boost output by between 15% and 20%, the broker said.

Kilalea and Huff had a 'buy' recommendation and 475p target price on the company's shares.

Mozambique-focused Kenmare also managed to reduce its debt pile, cutting it from $34.1m as of year-end 2017 to $9.3m.

At period-end, cash on hand stood $84.0m, up from $63.0m in the year ago period.

As of 1512 BST, shares of Kenmare were changing hands at 228.0p and trading up by 0.44% for the session.