Kenmare Resources Share Discussion Threads

[wheniamfree] 12/4/2018 05:58

“Excellent progress has been made to reduce unit operating costs in recent years, through a combination of higher product volumes and cost saving measures. However, WCP A and B will encounter lower mineral grades as they enter the later years of their mine paths in the Namalope ore zone. The impact of this reduction in grade will be offset by some additional mining capacity, process improvements and increasing plant operating time, facilitated by enhanced business systems and equipment upgrades, together with continued training and up-skilling of our workforce.”

Note the word “offset”.

Where is the expectations of growth or does that come in 2021 when they begin to mine better grades?

“Kenmare continued to grow production in 2017, as targeted, with production volumes for all products achieving new records, particularly ilmenite which has been operating at an annualised rate of circa 1 million tonnes per annum since mid-2016. It is planned that production will remain at approximately this level until Wet Concentrator Plant (WCP) B begins mining the Pilivili deposit in 2021 after completion of its mine path in the Namalope ore zone.”

Q1 2018 and production is already down?? Furthermore production to remain at 1m tonnes until 2021 - that is contradictory to what was stated in the first paragraph and both are taken from the same RNS!?

“Ilmenite prices continued to rise through 2017, albeit at a slower rate in the second half of the year as low-grade concentrates were induced into the market and Chinese environmental inspections caused disruption. Received prices are expected to average at higher levels in 2018, supported by continued demand growth and a reduction of low quality ilmenite supplied from stockpiles.”

Low quality ilmenite, as stated in the RNS the grades are continued to expect to fall until 2021. So pricing will not be as strong for Kenmare as perhaps the rest of the market.
You pay for quality, investors wish to see growth, if these unforeseen circumstances keep occurring - that will have a negative impact on production and figures. The profits need to increase YoY for share price appreciation. It isn’t like they maintain their rating and pay a divi or offer any of it back to SHs, no they pay themselves fat salaries and bonuses for the excessive board count and spend their money on capex to expand production figures (which as per above are expected to remain at 1m tonnes until 2021) to help offset the falling grades ergo treading water.

It’s all in the RNS. I just fail to see how you can claim to offset falling grades and increase production and then in the same announcement state that production figures will remain the same despite the concentrator upgrade. Which is it? If Q1 is anything to go by I’d suggest a contraction as opposed to expansion.

[wheniamfree] 12/4/2018 05:43

“Kenmare Resources output slips due to project outages.

StockMarketWire.com - Kenmare Resources said production of all of its key mineral sands decreased in the first quarter following planned and unplanned stoppages at its operations in Mozambique.

Excavated ore volumes slipped 7% on-year to 7.8m tons, as production of ilmenite, zircon and rutile fell 18%, 9% and 5%, respectively.

Shipments of finished products, however, increased by 4% to 252,700 tonnes.


At 1:25pm: [LON:KMR] Kenmare Resources PLC share price was -4p at 226p.”


Short and to the point minus all the fluff.

[wheniamfree] 12/4/2018 05:37

Yes that would make sense, Kenmare pay for a report from their appointed advisor (who of course is on a retainer anyway).

And for that pleasure the analysts collating the information and writing the report lay down a bearish sentiment.

I can see how that would end up, bye bye retainer, advisor and whilst your at it / stick that report in the bin.

If someone was paying you a wedge for services and asked you to do a coverage note how would you stage it? Of course it will be bullish!

So naive it’s untrue.

[donkey40] 11/4/2018 22:41

At least they declare upfront who they pay. The reader can make up their own mind thereafter - no lack of disclosure from those engaged by the company to help explain and articulate what they are about. I imagine given the recent history Mgmt will be keen to ensure there will be no blow back from disgruntled punters if the future turns out to be less spectacular that it perhaps promised.

If only all companies were so transparent in their disclosures or efforts to promote !!

[wheniamfree] 11/4/2018 21:46

As per the footnote;

“H&P Advisory Ltd is a Retained Advisor to Kenmare Resources. The cost of producing this material has been covered by Kenmare Resources as part of a contractual engagement with H&P.”

Would it ever be anything but a bull case?

[donkey40] 11/4/2018 21:23

Posted over on LSE under another alias.

[donkey40] 11/4/2018 21:22

Jeez - you really are a Richard. Have read your first line - now GFY. Could not care WTF you have to say. Shove it far as far up as it goes mate.

[wheniamfree] 11/4/2018 21:11

Spoon feeding time again donkey?

Not too difficult to grasp the above, but in simplistic terms - given the history of Kenmare as a new investor I would wish to see a sensibly balanced approach of growth offset by some form of stability.

Kenmare is at the full exposure of the cycle, whilst that can be fruitful it can also be critical and at an early stage of steadying the ships it would make more sense to have an appropriate balance or risk against reward. The market has not confirmed a bull run just yet.

Let’s hope it doesn’t take a turn leaving the boats slammed by the waves. ....again.

[donkey40] 11/4/2018 17:05

What is your point here Whendy - “You would assume a more risk averse strategy would be a sensible approach to instil confidence to investors”

Just in case I am about to head down the wrong path of interpretation.

[wheniamfree] 11/4/2018 16:47

Cap on the contrary, some of my investments are within mining stocks that are also cyclical. I actually agree on a few of your points, my points around a form of hedge is due to the performance of the company historically. You would assume a more risk averse strategy would be a sensible approach to instil confidence to investors. That is not the case here, as for the comment around sales agreements as I mentioned earlier this is one of a few methods that could be undertaken.

Whilst opex reduction is key, the mention of capex for value accretion is lost in the context of Kenmare.
A $20m outlay to upgrade a plant to increase production of stable or increasing grade output would show growth. Capex to offset a falling grade or drops in production numbers is remedial, hence the anology of treading water.
Let the figures do the talking I would say, as per donkeys comment on average of grades - unless there are pockets of improvement then the year has begun at a lesser figure and therefore if history repeats is likely to fall further as the excavation progresses. That will not be realised until Q2 therefore that calculation is a little short sighted to say the least.

[donkey40] 11/4/2018 16:16

Hey there Cap. Don’t mind Whindy - that’s all he is - gas and wind.

My figures tell me the grade in last quarter is pretty much same as achieved for all 4 quarters in 2017. Overall waste is worse than Qtr 4 but same or better than Qtrs 1-3. Production %s achieved are very similar. Closing stocks are same as year end - unless my eyes are playing tricks. Selling price I suspect has shot ahead. And this is traditionally the quiet Qtr.

I find it amusing this is first quarter ever (that I can remember) they tell us the dredge had to turn. Big drama no doubt that - just turn the wheel for longer surely at 1mph speed. Hold on tight boys, you might fall in. Problems problems problems - no-one in their right mind would hold this dog of a stock !!

[caposoka] 11/4/2018 12:56

Sounds like investing in a cyclical mining stock is not for you. The risks you refer to are intrinsic. Hedging for a company like KMR in practical terms is not available, certainly not at a reasonable cost, because in the long run you are paying a premium for someone else to take over one of your risks and KMR is a high risk/reward investment. The solutions are to get your unit costs down so you can survive the bad times, capex in value accretive developments or enter long term partnerships with key customers (a form of hedging). Writing a series of negative posts about a company simply to have a go at a fellow poster doesn’t add any value for anyone.

[wheniamfree] 11/4/2018 12:28

Where is the chief operations officer spending most of his time?

If the answer is not onsite then how is he to correctly and efficiently oversee operations? That surely would be a basic requirement?

[wheniamfree] 11/4/2018 12:20

Restoration of growth is needed, whilst sales prices may increase that is commodity based risk and out of the companies control.

There is no diversification into other areas to offset this risk so (as before) the company has full exposure to macro-economics, history has shown this is a real risk.

Sale price increase is also negated by the clear fall in grades and production figures.
The balance for this and remediation steps are to increase capex on plant and process. Whilst that does help resolve the issue it also culls any prospect of growth.

The dredges are peddling like mad against the current but on the surface they don’t appear to be going anywhere fast. Whilst a profit was realised at the last results there is a large exposure remaining to various risks including dependancy on commodity prices.
If ilmenite and zircon prices become subdued then what? Secondly how long are these contract of sales in place for in terms of renegotiations, are they per quarter? Surely that would be a valid hedging strategy.

Whilst no instruments exist at present to allow for puts etc. I am sure they could hedge in a multitude of different ways.

[caposoka] 11/4/2018 11:40

Yes - production a little low / disappointing. Still, applying expected sales prices to the production achieved equates to a 60M revenue for the quarter. Production and sales prices set to increase throughout the rest of the year. Compare this to Y2017 revenue of 210M. Not bad. On the right path.

[wheniamfree] 11/4/2018 07:47

Let’s see how the market responds, grades continue to fall and production reduced by a fairly large %. Whilst a 180 turn of the dredge and maintenance may have been planned why is there no elaboration on the other “unforeseen circumstances” ?

More stock depletion to keep sales figures up, I wonder how that will hold when the upgrade to concentrator B for some $20m is underway.

More jam tomorrow imho.

[datahead] 11/4/2018 07:29

Rock today for sure ! Still need 4plus to breakeven but got some good buys at below 230p so happy enuf

[donkey40] 10/4/2018 20:49

Lord you are full of poop, you really are. You must wake up every morning, look and say ‘I am amazing; I am the best’.

Have u bought any KMR yet - please please don’t !!

[wheniamfree] 10/4/2018 18:50

It isn’t a shot donkey. Continue to play the big man behind the keyboard.

You’ll have fun explaining the situation to your wife and daughters I’m sure.

Question is, was it all worth it? Probably not.

[donkey40] 10/4/2018 17:54

Mate - you just go right on ahead and give it your best shot. Bon chance !

[donkey40] 10/4/2018 13:27

The more you talk, the stupider you sound.

[wheniamfree] 10/4/2018 12:37

“Luckily for him, his loss elsewhere could turn out well now he is getting real and proper insight into a company with real business, assets and revenues.”

And I need to get over myself?

Not sure what losses you refer to since I’m sat in profit. How is Kenmare working for you post your wipeout?

Tongue in cheek comment in reference your life work so after 2 years of trolling and multiple bans from various forums it isn’t your life’s work? Longest humour in history?

Such a shame it was all an act, unfortunately for you breaking various rules and laws has a consequence and I’ll gladly spend my time ensuring that these are progressed.

[donkey40] 10/4/2018 11:56

No I didn’t post that. I posted it was my life’s work to annoy Tlou Energy investors. Which was tongue in cheek - but you are such an anally retentive creature you see humour in nothing.

As for being educated - I presume you think you are educating people here. Again, more insight into your personality - that you think whatever you post is fact, gospel, truth the whole truth so help me gawd.

Man - would you ever get over yourself !!

You been promoting a different company that promises much, was being over-hyped for months on end, had a bit of a run on the market that fizzled out due to certain setbacks, and now we wait to see if management can get on top of and ahead of the game. They will have learned a salutary lesson hopefully - do not over-promise when it comes to Africa.

Step back mate and get a proper understanding of the picture rather than think the sun shines from your nether regions.

You can always tell a fool; sadly you cannot tell him much.