Kenmare expects non-cash impairment from revised pricing assumptions

(Sharecast News) - Kenmare Resources said in an update on Wednesday that it expects to book a non-cash impairment charge of up to $125m in its half-year results, citing revised long-term pricing assumptions due to an uncertain market outlook for titanium feedstocks. However, the miner said the charge would not affect operations, projects, financing, or its ability to pay dividends.

The London-listed company, which operates the Moma titanium minerals mine in northern Mozambique, reported a 5% year-on-year increase in heavy mineral concentrate (HMC) production to 358,300 tonnes in the second quarter, as higher ore grades offset a decline in excavated volumes.

Ilmenite production rose 3% to 245,400 tonnes, while shipments fell 23% to 181,800 tonnes due to adverse weather and vessel maintenance.

"Kenmare continued to experience consistent demand for all of its products in the second quarter, with ilmenite prices remaining stable during the first half, and we have a strong order book for H2," said managing director Tom Hickey.

"However, uncertainty regarding market conditions in the medium term has led us to slightly lower our long-term pricing assumptions.

"While this is disappointing, it will be a non-cash charge with no anticipated impact on our operations, projects or financing facilities or the company's ability to pay dividends."

Kenmare reaffirmed its full-year production and cost guidance, with higher second-half output expected as new dredges come online as part of the $341m upgrade of Wet Concentrator Plant A.

Commissioning of the upgraded plant remains on track for later in the third quarter.

The company also confirmed it had been added to the FTSE4Good Index Series and maintained its dividend policy, guiding for an interim payout of between eight and 12 US cents per share.

It said it was planning to disregard the impairment charge in determining its full-year dividend.

As at 30 June, net debt stood at $83.1m, up from $25m at the end of 2024, reflecting capital investment and the final 2024 dividend payment.

Kenmare said it expected net debt to remain elevated until the second half of 2026, when free cash flow was forecast to increase.

Kenmare said its first half results would be published on 20 August.

At 1254 BST, shares in Kenmare Resources were down 2.93% at 315.47p.

Reporting by Josh White for Sharecast.com.