London-listed titanium and zircon producer Kenmare Resources has declared an interim dividend of $0.10 apiece for the six months ended June 30.

The board has recommended the interim dividend and assured shareholders that the company remains well capitalised to fund its development project and future shareholder returns.

The development project relates to an upgrade on its Wet Concentrator Plant A at the Moma mine, in Mozambique, which is due for commissioning in the third quarter.

The company generated $159-million of mineral product revenue in the period, with adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) totalling $47.2-million – representing a margin of 30%.

Revenue and adjusted Ebitda decreased by 3% and 25% year-on-year, respectively, owing to higher operating costs.

Kenmare reported an adjusted profit after tax of $6.1-million for the six months under review, which marks a 71% year-on-year decrease.

Kenmare, however, remains on track to achieve its full-year production and cost guidance, including between 930 000 t and 1.05-million tonnes of ilmenite production, with shipments expected to be stronger in the second half of the year.

The company produced 670 600 t of heavy mineral concentrate in the six months under review, marking a 2% year-on-year increase. Total finished product output of 500 800 t in the period increased by 2% year-on-year.

The company is looking to supplement its shipping capacity by renting a third transshipment vessel in the coming months.

MD Tom Hickey says demand for Kenmare’s products remains strong, supported by a stable global pigment market and consistent growth in the titanium metal market.

Additionally, ilmenite prices were only marginally below those of the second half of last year.

Kenmare stands by its prediction for lower longer-term pricing, which led to a non-cash impairment of $100-million on its assets in the reporting period. However, since it is a non-cash charge, Hickey does not expect this to impact on operations, dividends, projects or financing facilities.

Hickey is concerned, however, about the protracted process of negotiating the renewal of Moma’s implementation agreement with the Mozambique government, which has been ongoing for three years.

“While we remain hopeful of a successful conclusion to negotiations, we reserve the right to safeguard Kenmare’s contractual entitlements, up to and including arbitration, if an agreement cannot be reached,” he states.

At the end of June, Kenmare’s net debt stood at $85.1-million, including cash and cash equivalents of $46.5-million and a $70-million undrawn revolving credit facility.