Kenmare Resources
Kenmare Resources plc is quoted on the official lists of the Irish and London Stock Exchanges. The principal activities of the Group are the exploration for commercial deposits of natural resources and the development and operation of mines. Kenmare Resources main asset is the Moma Titanium Minerals Mine, located on the coast of Mozambique. The Moma Mine contains reserves of heavy minerals which include the titanium minerals ilmenite and rutile, as well as the high-value zircon mineral.
Canaccord Adams ups Kenmare Resources target price after visit to Mozambique operations
Investment banker Canaccord Adams reinforced its ‘buy’ recommendation and upped its target price for mineral sands producer Kenmare Resources (LSE: KMR) after paying a visit to its operation in Mozambique to examine the improvements and measure up the pathway to its planned 50% expansion to 1.2Mtpa (million tones per annum) of ilmenite plus associated co-products zircon and rutile.
As a result, Canaccord said it found the operation to be almost totally transformed from what it was a year ago, being well progressed towards Stage 1 full capacity of 800,000 tpa. Heavy mineral concentrate production had already reached 80% of capacity at 225,000 tonnes in Q3 and was on track to hit 100% by the end of the year, while the production of ilmenite and zircon, which account for 93% of steady revenue, was set to reach 95% and 85% of capacity respectively by the end of the year.
Once the expansion materializes, the equity share of operation cash flow would increase 37% from US$75 million to US$103 million per annum. Canaccord is also projecting cash costs to fall from US$66 per ton in 2010 to US$55 per ton post the expansion.
As a result the target price for the stock was upped to 40 pence per share from the previous target of 35 pence. Canaccord said its net asset value (NAV) after the expansion would increase 17% from 42 pence to 49 pence per share, more than double the company’s current share price of 23 pence. For the valuation, the investment bank has assumed the cost of the planned expansion to be at the top of the current estimates of US$160-200 million and 100% equity funding.
Kenmare currently has US$10 million in cash, expecting a further US$10 million from operations in February and US$8.4 million from the warrants in December, which should be sufficient for the payment of US$19 million to the banks, which will be due in February. Other risks listed by Canaccord included the weakness of product prices observed over the past two years and the remoteness of the area of operation as the equipment was far from technical support and delivery times were long.
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Other Kenmare Resources articles
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05/03/10 Kenmare to raise £179.6m to expand Moma titanium operation
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19/08/09 Kenmare Resources crosses the line in the sand
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20/07/09 Kenmare Resources turns the titanium corner
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19/09/06 Kenmare Resources brings Massive titanium project to fruition
Other Kenmare Resources news
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26/01/10 Kenmare Resources says mineral concentrate production at Moma mine reaches design level in Q4
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25/01/10 Kenmare aims to double titanium production at Moma, Mozambique
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23/12/09 Kenmare Resources agrees beneficial settlement with contractor at Moma minerals mine in Mozambique
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20/11/09 Kenmare Resources Secures £5 Million through Warrant Underwriting Agreement
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19/11/09 Kenmare Resources Provides Buying Opportunity Following Operational Improvements - Liberum Capital
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18/11/09 Kenmare Resources says production at Moma titanium minerals mine improving further in third quarter
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27/10/09 Kenmare Resources development association KMAD wins Nedbank Socio-Economic Award
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29/09/09 Kenmare Resources wins government award for Kenmare Moma Development Association
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01/09/09 Kenmare Resources narrows losses, Moma mine on track for full production
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30/06/09 Kenmare Resources raises £10.3 mln via placing