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Interim Results

Kenmare operating losses narrow

24 August 2016 08:04

Kenmare Resources' revenues fell to US$56.2 million innthe six months to the end of June (H1 2015: US$73.9 million).

It said this was a result of lower average prices due to pricing and subsequent contracts being at the bottom of the cycle in late 2015, and a reduced value sales mix during the period.

Kenmare says the ilmenite market has shown signs of recovery in recent months with prices increasing.

Cash operating costs per tonne of finished product declined 22% in H1 2016 to US$153 per tonne (H1 2015: US$197 per tonne), a result of continued cost savings and increased production.

Losses before interest, tax, depreciation and amortisation were virtually unchanged - US$10.7 million compared with US$10.6 million a year ago despite commodity prices reaching their lowest point in the period.

Operating losses reduced to US$24.9 million (H1 2015: US$27.2 million).

Managing director Michael Carvill said: "The company has made significant progress in reducing unit operating costs by 22% during the period, through cost savings and increased production. Further reductions are expected in the second half of the year as higher production is generated from increased grade levels, volumes of ore mined, recoveries and operating time. Prices received for our products in H1 2016 are a reflection of the weak market conditions experienced at the end of 2015, when prices for the majority of H1 2016 shipments were struck.

"I am pleased with the recent improvement in ilmenite prices from their low point, following four years of decline, and expect higher prices to flow through our revenues in H2 2016 and thereafter. The conclusion of the capital restructuring has provided the Company with a robust balance sheet, reduced interest payments and enhanced liquidity and will position the business to take advantage of what we believe will be a sustained recovery in the market."

At 8:04am: (LON:KMR) Kenmare Resources PLC share price was -2.5p at 272.5p

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