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Kenmore Resources Plc (Kenmore) has further updated the market its Moma Mine Phase II (Moma).

The update pertains to the status of the mine in terms of expansion, production, market conditions and the terms of Moma financing. This follows a detailed operational update on 29 May 2013.

Moma is a titanium minerals mine in Mozambique, Southern Africa that is one of the world’s largest known titanium minerals with deposits with >200 mt of contained ilmenite.

Michael Carvill, MD, stated: “We are greatly encouraged to see the expanded facilities operating and starting to contribute meaningful production. The company’s operations team at Moma are now in full control of the plants and we all look forward to completing the ramp-up as quickly as possible”.

Expansion

All major expansion facilities are in ramp-up mode and are adding meaningful production tonnage.

Production

Production during May was 104 300 tonnes of heavy mineral concentrate (HMC), 68 100 tonnes of ilmenite and 4 300 tonnes of zircon. Production of HMC during June was steady at 101 600 tonnes. Due to a scheduled shutdown of the mineral separation plant (MSP) to integrate the new auxiliary ilmenite plant into the control systems of the existing MSP, production of ilmenite in June was at the reduced level of 36 400 tonnes and production of zircon was also reduced to 1 000 tonnes. Consequently, a stockpile of 54 800 tonnes of HMC was built up as at 30 June.

July production of HMC was approximately 100 000 tonnes, with the new wet concentrator plant (WCP B) contributing materially to this total. Approximately 80 000 tonnes of ilmenite products were produced in July, including 16 500 tonnes from the auxiliary ilmenite plant. The non-magnetic circuits, which produce zircon and rutile, were the last part of the expansion to be finished. This work is now substantially completed and the non-magnetic circuits are in ramp-up phase. Shipments during the second quarter increased to 245 600 tonnes of total products from 48 500 tonnes during the first quarter.

Market

The uneven nature of global economic activity continues to cause a drag on market prices. Market conditions are improving in the rest of the world, particularly in the United States, but Chinese economic activity remains subdued resulting in somewhat softer ilmenite prices. However, the pigment industry, the principal consumer of titanium feedstocks, has gradually reduced its finished goods inventory which had become too large in 2012 following a slow-down in off-take volumes by the paint and coatings industry. Inventory levels in the pigment industry are now approaching normal levels and this is expected to lead to a resumption of normal buying patterns and increased demand for feedstocks.

In respect of the zircon market, the demand outlook continues to improve and we have achieved some modest price increases for recent shipments.

Moma Project Financing

With the cooperation of its lenders, the company has made certain amendments to the terms of the Moma project financing. These amendments were agreed as part of on-going management of its financial resources, taking into consideration the current product market conditions and funding of remaining expansion costs. The amendments include the effective postponement of the date on which deferred subordinated debt is required to be brought current from 1 August 2014 to 1 August 2015, deferment of the 1 August 2013 principal instalment of US$13 million of senior debt to 1 August 2014 and an extension in time and quantum of the ability of the project to fund expansion-related costs from project operating cash flows.

These amendments will improve liquidity and enable Kenmare to focus on the ramp-up of expanded production, from which the company expects to generate increasing operating cash flows.

The company’s half-yearly results in respect of the six months ended 30 June 2013 will be issued on 28 August 2013.

 

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