Kenmare Resources (LON:KMR), a London-listed producer of mineral sands in Mozambique has provided the production results for its first half of the year. Although the company confirmed it remains on track to achieve its full-year guidance, the total production of heavy mineral concentrate came in a bit light in the first semester as Kenmare was working through a zone of lower grade material (this was expected). Despite excavating almost 20% more ore in the second quarter of this year, the total HMC production fell by almost 30% to just below 275,000 tonnes due to these grade changes as the average grade in Q2 2019 fell to 3.07% compared to 4.07% in the first quarter.
The lower grades caused the ilmenite production to drop by 8% to 220,100 tonnes, but that’s not necessarily a bad thing as the ilmenite prices continued to increase throughout the second quarter. As Kenmare expects its average grades to pick up, it may well be able to sell more ilmenite in Q3 at a higher average price than it would have received in the second quarter.
Kenmare ended the semester with a small net cash position but as grades and output should be picking up in the current quarter the net cash position at the end of this year should be higher than the US$3.5M in June and the $13.5M as of the end of last year. Kenmare will report its financial results on August 20.