Kenmare Resources Shipments Run Ahead Despite WCP A Ramp-Up, Weak Prices

Key Points

• Shipments are ahead of plan despite weak mineral sands prices, with first-half shipments of 556,000 tonnes putting Kenmare on track to exceed 1.1 million tonnes for the full year. Management said moving finished goods inventory into cash is the top priority in 2026.
• Production was hit by ramp-up issues at WCP A, including dredge performance problems and lower ore grades, which dragged down heavy mineral concentrate and ilmenite output. Kenmare now expects 2026 ilmenite production to be roughly in line with its 800,000-tonne guidance rather than above it.
• Market conditions are mixed: ilmenite pricing softened, while zircon prices strengthened materially on supply constraints. The company also boosted concentrates output through a new ZrTi product and continues talks with Mozambique over renewing its key operating agreement.

Kenmare Resources LON: KMR said first-half shipments were ahead of the run rate needed to meet its full-year guidance, as the miner focused on converting elevated finished goods inventory into cash amid weaker mineral sands pricing.

Managing Director Tom Hickey told investors that shipments are the company’s “highest priority” in 2026, rather than production volumes, because Kenmare entered the year with substantial finished goods inventory. The company reported first-half shipments of 556,000 tonnes and said it remains on track for annual shipments guidance of more than 1.1 million tonnes.

Kenmare owns and operates the Moma Titanium Minerals Mine in Mozambique, where it produces ilmenite, rutile and zircon. Hickey said the company accounts for about 6% of global titanium minerals supply and a similar proportion of Mozambique’s exports. He also noted that titanium has been included on critical minerals lists in Europe, the U.K. and the U.S.

Production affected by WCP A ramp-up

Chief Operating Officer Ben Baxter said the first half was a safe period, with no lost-time injuries recorded. However, heavy mineral concentrate production fell 37% year over year, reflecting expected lower ore grades as mining at Namalope nears its end, as well as lower excavated ore volumes tied to a slower-than-expected ramp-up of WCP A.

Ilmenite production declined 40%, slightly more than the fall in heavy mineral concentrate, due to lower ilmenite grades in the concentrate. Kenmare now expects 2026 ilmenite production to be approximately in line with its 800,000-tonne guidance level, rather than exceeding it.

Baxter said nearly all major construction and installation work on WCP A has been completed, with the plant now in operation. Kenmare had guided to $30 million of development capital expenditure this year, of which $23 million was spent in the first half, leaving $7 million expected in the second half.

The ramp-up has been held back by dredge performance issues, including repeated problems with swing winch brakes and premature wear in parts of the dredge. Baxter said Kenmare has agreed a permanent solution for the swing winch brake issue under design warranty with the manufacturer, while some pumping system components remain under investigation.

Kenmare expects production to strengthen in the second half, supported by WCP B, the restart of dry mining, progressive improvements at WCP A and the planned start-up of a second selective mining operation in the fourth quarter.

ZrTi boosts concentrates output

A new product, ZrTi, materially lifted concentrates production. Hickey said ZrTi was previously a waste stream, but Kenmare has identified market interest in the material and expects it to remain part of sales in future years, though not at 2026 levels because the company is currently processing a historic stockpile.

Baxter said concentrates production increased 770% year over year due to the conversion of that stockpile into saleable product. He added that Kenmare has “clear routes to sale” for the material through the rest of 2026 and into 2027.

In the Q&A session, Hickey said Kenmare’s planning assumption is for ZrTi volumes of roughly 30,000 to 40,000 tonnes per year going forward, although the company would prefer to recover more of its primary products — ilmenite, zircon and rutile — and produce less ZrTi over time.

Market conditions diverge by product

Head of Marketing Cillian Murphy said demand across Kenmare’s product suite was solid in the second quarter, supporting stronger shipments. Ilmenite demand was stable in pigment applications and strong in titanium metal applications, but pricing weakened as expected during the quarter.

Murphy said the ilmenite market is showing different dynamics across regions. In China, higher sulfur and sulfuric acid prices linked to the war in the Middle East have given chloride pigment a competitive advantage, supporting demand for the type of ilmenite Kenmare sells into that market. However, continued supply growth from African concentrates and Chinese domestic ilmenite production pressured overall pricing.

Zircon markets were stronger. Hickey said zircon pricing improved materially in the first half, supported by producer actions to manage supply and by an “unfortunate fire” at Grande Côte in Senegal that removed supply from the market. Murphy said zircon prices increased across all regions in the second quarter and continued rising into the third quarter.

Liquidity and debt position

Chief Financial Officer James McCullough did not present separately during the transcript, but Hickey outlined the company’s liquidity position. Kenmare increased its revolving credit facility by $30 million to $230 million during the first half and amended covenants to provide additional flexibility.

Net debt stood at $176 million at June 30. Hickey said the company received $14 million in customer receipts in the first week of July, which would have left net debt broadly flat versus year-end. He said the business was cash-flow positive before development capital expenditure in the first half, despite what Kenmare hopes is near the bottom of the market cycle.

Mozambique agreement talks continue

Hickey said Kenmare continues to negotiate renewal of its Implementation Agreement with the Mozambique government. The prior agreement nominally expired at the end of 2024, but Kenmare is operating under legacy terms while talks continue.

The company has proposed $200 million of investment in the asset and $50 million of social investment over a 20-year renewal period. Hickey said the main issue under discussion is royalties. Historically, Kenmare paid 1%, and it has proposed a progressive increase from 2.5% at the start of the renewal period to 3.5% over 20 years, along with withholding tax.

Hickey said Kenmare prefers a negotiated agreement but would be prepared to pursue arbitration in Washington if the government made demands that were unacceptable or unaffordable. He added that there is no formal timeline for renewal, though he said he is hopeful the process is “nearer the end than the beginning.”

Kenmare’s next scheduled update will be its half-year results, expected on Aug. 19.

About Kenmare Resources LON: KMR

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