Kenmare Resources PLC on Wednesday said it was on track to hit 2024 production guidance after a ‘challenging’ 2023 saw sales and profits fall.

Shares in Kenmare Resources rose 1.3% to 303.00 pence in London on Wednesday morning.

The producer of titanium minerals and zircon from Moma titanium minerals mine in northern Mozambique said pretax profit in 2023 declined by one third to $149.9 million from $222.1 million the year prior, as sales slipped and costs increased

Revenue decreased by 13% to $458.5 million from $526.0 million, while the cost of sales ticked up by 4.3% to $294.9 million from $282.7 million.

Mineral product revenue fell 12% to $437.1 million from $498.3 million, driven by a 10% lower average price received for Kenmare‘s products, due to weaker markets and a 3% reduction in shipments.

Managing Director Michael Carvill, who is stepping down later this year, said it was a ‘sound’ financial performance delivered against a backdrop of ‘operational challenges and a weaker product market’.

Kenmare said it had faced a number of operational challenges, principally an unusually severe lightning strike, that led to a downward revision of its ilmenite production guidance for the year.

Ilmenite production of 986,300 tonnes in 2023, was 9% lower than the 1.1 million delivered in 2022, broadly in line with a 9% reduction in heavy mineral concentrate processed.

Ilmenite production guidance for 2024 is 950,000 to 1,050,000 tonnes, Kenmare said.

The company expects production in 2024 to be second half weighted, with first quarter production expected to be in line with last year, followed by a ‘material’ uplift in the second quarter.

Carvill commented that with 2024 ‘well underway, Kenmare is on track to achieve its annual production guidance, although production is still expected to be second half weighted. The markets for our products have been stronger than anticipated in 2024 to date, driven by improving demand for titanium pigment.’

‘The challenges faced by the pigment market prompted producers to sustain lower-than-normal inventories throughout 2023,’ the company said.

‘We believe the rebuilding of these inventories through increased utilisation rates in 2024 will support demand for ilmenite. Market dynamics continue to favour Kenmare’s ilmenite and we also benefit from our first quartile margin position, allowing us to generate positive cash flow throughout the commodity price cycle.’

Kenmare noted ilmenite prices are holding up well in early 2024.

Kenmare announced a final dividend of 38.54 US cents, down from 43.33 cents last year, taking the total payout to 56.04 cents, up 3.2% from 54.31 cents a year ago.

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