Kenmare Resources Share Discussion Threads

[ukgeorge] 23/7/2020 11:24

Added a few more this morning :) surely now is a good time to build a bit of a position

[dangersimpson2] 14/7/2020 15:57

Based on today's production report I'm forecasting breakeven at an EBIT level and a small loss overall, same for the full year which means potentially no dividend especially since there is high capex requirements this year on the WCP B move. They have gone from Net Cash of $13.7m at the YE to net debt of $52.7 at the half-year so $70m negative FCF, although $6m of that is the dividend payment.

Longer term there is still a decent discount to NPV if they can get to the target 1.2mtpa with WCP B on the high-grade Pilivili resource but I think I prefer Base Resources at current levels, similar discount to NPV but near-term FCF at Base is much higher and their capex is more discretionary wih their long-term growth coming from a world-class greenfield resource, rather than committed brownfield expansion.

Of course, Blujay with a market cap of $80m for an early stage unfinanced greenfield project makes both look amazing value though and shows that it is often better to sell the dream to investors than ilmenite to customers!

[donkey40] 14/7/2020 13:30

Typical trading pattern is it shows a little strength into the quarterly reports and thereafter drifts for a period of time. Given the macro environment, hard to see a reason why the stock will motor upwards - maybe dividend expectations but if there is an interim one it will be token.

[ukgeorge] 14/7/2020 13:05

From share price Angel

Kenmare Resources (KMR LN) – 194p, Mkt cap £213m – Ilmenite and rutile production fall heavily through first half
• Kenmare Resources report significant falls in ilmenite and rutile production through the first half.
• Ilmenite production fell 19% in H1
• Rutile production fell 34% in H1
• Zircon production fell 8% in H1 despite a 5% improvement on the first quarter.
• Kenmare now expects to produce 700,000-800,000t of ilmenite in 2020 vs guidance of 800,000-900,000t issued on 9 January.
• Kenmare has net debt of net debt of US$52.7m with cash of US$100m end-June and debt at US$151.3m.
• excavated ore volumes increased by 27%.
• Ilmenite prices rose to $220/t at end February and have held this level despite concerns that a fall in GDP might hit demand
• Lockdowns at some key major producers appears to have exacerbated an already tight titanium dioxide and ilmenite feedstock market.
• Demand may have been supported by Western consumers stripping shelves of paint in the days before lockdown as they prepared to use the time off productively. Sadly I wasn’t able to co-opt any furloughed youngsters into painting my house.
• Major producers are currently seen battling to make up for lost production in what we presume remains a relatively tight market.
• Kenmare “expect the market to be more subdued in the second half of the year, as the pandemic impacts both demand and supply of titanium feedstocks, but the long-term fundamentals for all of our products remain strong.”
• “Strong ilmenite market conditions continued in Q2 2020 and Kenmare has secured offtake agreements for the majority of its ilmenite production in H2 2020”
• Unemployed people in the West generally get out there and pain their houses so don’t be surprised if demand for pigments remains stronger than expected.
• Kenmare raised production of heavy mineral concentrate by 13% yoy to 310,300t in Q2 2020
• Ilmenite production fell 5% to 209,900t in Q2 due to the retreatment of spillage from the prior period.
• Zircon production rose 5% to 11,600t
• Shipments fell 29% yoy to 219,100t in Q2 but rose 13% on Q1
• Coronavirus restrictions caused delays to the relocation of Wet Concentrator Plant B with this expected to restart in in Q4.
• Mozambique now authorising work visas for contractors to site.
• Mozambique remains in a state of emergency despite only nine official coronavirus fatalities. The nation is now in its third 30-day state of emergency which constitutionally can only last for 90 days. In contrast significant casualties are seen in fighting against al-Shabab jihadists in the north where some 700 people have been killed and thousands displaced since the insurgency began two years ago.
Conclusion: Kenmare’s production report and guidance highlights how the Coronavirus lockdowns can impact mining companies and the market. Prevailing high prices for ilmenite and rutile feedstock are symptomatic of an industry which is struggling to meet demand in the face of low inventory levels.

[ukgeorge] 14/7/2020 09:14

I've just bought 2018@ 196p.

[the air marshall] 14/7/2020 08:59

Jolly good thinking, specto. Judging from your previous posts all over ADVFN there are very many more qualified than you.


Not being rude but have you thought of leaving ADVFN and starting your own blog? You could then charge people (possibly) for access to your wisdom?

[spectoacc] 14/7/2020 07:34

An extended update! Will leave someone with more knowledge to interpret it.

[donkey40] 08/7/2020 21:45

There is 1000% no rush !!

[murraybasin] 08/7/2020 15:10

I'd have been inclined to see the numbers, and outlook, before buying back in.

[datahead] 08/7/2020 14:33

all quiet here lads ? bought back in at 199 or so over the last few days - q2 numbers any day now ?

[albo] 22/5/2020 18:08

A NED spends £100k on this stock over last couple of days. Can't be a bad sign!!!

[donkey40] 14/5/2020 14:26

Thanks Cap. It is hard to see any major projects in Africa proceeding along anticipated timelines due to C19 disruptions. A frustrating continent to do business for sure!

[caposoka] 14/5/2020 12:36

More generally, thought they would be further ahead but grade drop off has been more severe than I appreciated it would be so production / cash generation is what is. KMR were comfortable enough to add USD 15m capex for Y20 in form of the MSP upgrade which should have a rapid return. Not sure of current timing with ongoing C19 issues. Yesterday did not give any positive outlook for WCP B move and getting people in and out the country. Hoping that if push comes to shove, KMR’s 5% contribution to Moz exports will lead to some exceptions being made although more realistically think greater good will prevail and they will be in same boat as everyone else. Certainly a large risk to plans at present.

[caposoka] 14/5/2020 11:33

Net cash at year end was USD 13.7m but it fell to net debt at USD 9m at Q1/20 end – ie the slide corresponds to the last trading update.

Reason for fall in cash was that approx. USD 25m of Y19 capex was kicked over into Y20 due to delay in WCP C commissioning, ie year end position was a little flattering.

[donkey40] 13/5/2020 10:15

Cap - I didn’t follow the numbers on slide 13 of 20 of AGM presentation. Saying cash of $102m and Debt $111m (before drawing the $40m RCF).
I thought net cash position was much better than that?

[donkey40] 07/5/2020 00:16

Share price strength allied with Low trading volume suggests transfer of EIB position is continuing stealthily.

[spectoacc] 29/4/2020 16:28

And not before time.

[donkey40] 29/4/2020 16:26

Both EIB and Aberforth have been remiss in their filings. Also, the volumes through the market do not support their change in shareholding’s, with EIB down 4m shares (and presumably still selling) and Aberforth filing your day they hold 4.8m shares.

What is the point of a publicly traded market if companies can seemingly circumvent the rules on notifications and thresholds.

The share price strength past couple days is however good to see. And also unexpected.

[spectoacc] 28/4/2020 14:30

A little director buying.

[donkey40] 26/4/2020 23:04

Omanis are basically the owners of KMR and given the country’s wealth is generated from gas, I feel they are a solid partner for KMR ahead. As long as KMR keeps generating cash over the years (short term blip is ok) to pay dividends. And that seems to be all that KMR is now - a one trick pony to generate cash and reward the shareholders who bailed the company (and current mgmt) out.
The 30% and 20% shareholders simply can’t start drip feeding their shares into the market and hope no one notices. With EIB gone, question is who is buying.

Plus we might get to see 150p ahead ... Maybe even 120p if things turn really nasty.

[donkey40] 20/4/2020 14:59

Lordy Lordy Lordy... So EIB are selling down at long last. 6.55m down now to 2.5m shares. Annual report shows they had 6.5m at year end and since there were no days trading where major volume was reported, this suggests EIB have been drip-feeding into the market. I wonder if they have been fully compliant with reporting rules on crossing % threshold holdings though as the drop from 6% to 2.3% now ?

But no matter. This is good news longer term imo.

[plat hunter] 19/4/2020 15:38

That is always the crux of the bickering imo.Traders buy and sell volatility and investors buy shares that are relatively cheap compared to financial strength and future cash flow projections.Unfortunately some people think that their way, is the only way to skin a cat.

[donkey40] 18/4/2020 17:40

Yes, on a stretched short term to a medium view, I agree !! Markets will, I believe, be subject to periods of heightened volatility ahead - both before and after lockdown ends. With shares here held tightly by 5 big players, maybe there will be days ahead where the share price drops again on relatively light volume to the 150p level short term (could be margin positions being unwound).

[plat hunter] 15/4/2020 11:50

Under £2 is a bargain that's all i care about.