Irish titanium and zircon miner Kenmare Resources has defaulted on its debts after failing to reach agreement with lenders on a new deleveraging plan by an agreed deadline of January 31st. The explorer said however, negotiations with banks on a deal are ongoing.
At the end of December, bank loans amounted to $341.9 million and cash and cash equivalents were $14.3 million. Lenders agreed to defer payment of $2.3 million in fees last April.
The proposed deleveraging plan, which was announced in early December, includes a $100 million investment by the State General Reserve Fund (SGRF) of the Sultanate of Oman.
In a statement issued on Monday, Kenmare said it continues to monitor and manage its liquidity positions and currently retains the support of its lenders.
“Although there can be no certainty that these matters will be agreed or that the deleveraging plan can be implemented, the Board of Kenmare looks forward to progressing this plan and the related capital raising, subject to the support and co-operation of lenders and key shareholders, and with the indicated support of SGRF,” it said.
Mining disruptions
The exploration company, which operates the Moma Titanium Minerals Mine in northern Mozambique, said ore mined last year was down 19 per cent to 27,532,000 tonnes due to power interruptions and flooding damage in the first quarter. Heavy mineral concentrate production was down 15 per cent to 1,100,600 tonnes while ilmenite production fell 11 per cent to 763,500 tonnes. Zircon production rose 2 per cent to 51,800 tonnes. Secondary zircon production increased by 72 per cent to 12,400 tonnes.
Kenmare said full-year shipments of finished products were flat at 800,400 tonnes. It added that ilmenite prices fell late last year due to increased competition among producers.
"Power interruptions and instability have been the key bottleneck to production at the Moma Mine in recent years and acutely felt in the first quarter of 2015, when flooding resulting in a prolonged outage. However, the investment by EdM to enhance the transmission infrastructure has resulted in a step change in the quality and consistency of our power supply since coming on line in late December," said managing director Michael Carvill.
“Prices of ilmenite, our major product, have remained under pressure in the fourth quarter of 2015. However, the recent closures of titanomagnetite mines in Russia and China and the reduction of feedstock inventories at Chinese ports are encouraging,” he added.
