Berenberg raises target price on Kenmare Resources

Kenmare reported its fourth-quarter production and shipment numbers on Wednesday, with results "in line with to slightly better" than Berenberg's expectation, and "in line with to marginally better" than revised guidance.

While mined ore, excavated grade, and HM concentrate production was ahead of Berenberg's estimates, the analysts said it was worth noting that yield challenges, driven by slimes, appeared to have continued.

The German bank said added that guidance was "a touch more conservative", with capex guidance at roughly $65.0m versus its $45.0m estimate. Berenberg added that capex for the group's WCP A move remained at $225.0m and questioned if some of this capex, particularly for the de-sliming circuit, could drift into 2023.

"We adjust our model for the Q4 actuals and our revised price deck. We also adjust for 2023 guidance, which negatively impacts our 2023 estimates, and assume more conservative recoveries in 2024," said the analysts.

"As we roll forward our model to 2023, this takes into account the net cash position and, as a result, our price target increases to GBp780 per share. We remain buy-rated on Kenmare, which is trading on 0.65x NAV and 1.4x 2023 EBITDA with a 30% FVFE yield and a 6% dividend yield."

Reporting by Iain Gilbert at Sharecast.com