DevonianDracula
05 Sep 2016
Re: Ilmenite prices N2M,More relatively positive market news out there. On September 1st there was a report published to the effect that Iluka was fast-tracking a largely ilmenite producing project in Sri Lanka at Puttalam. The article indicated that this would take an investment of more than US$540 million, with an annual production of circa 700,000 tonnes of ilmenite, with on a read through of Iluka's resource figures something like 30,000 tonnes zircon & 40,000 of rutile, and implied that production would commence in 2019. On the 2nd, Iluka put out a statement to the effect that they are performing a pre-feasibility study over a two year period. Subject to that, and regulatory and other matters, they would/might then move to a definitive feasibility study.As a consequence, the potential capital cost of such a project remains uncertain, while potential start dates for project work and then production remain very vague. Previously I had been concerned that they might start production during 2019, with some impact on future ilmenite prices. Now it looks unlikely much before 2022 at the earliest, and by that time KMR should be debt free and cash rich.You can also see the "Chinese ilmenite prices have increased by over 50% in the past few months" on page 22 of KMR's H1 results presentation, and also "Chinese imported volumes of titanium ore up 22% year to date". It is worth noting that in 2012 total TiO2 feedstock supply ('000 TiO2 units) was circa 7,200, while for 2016 the forecast is circa 6,200 on page 23. This represents and significant, reduction, so there is hope for ongoing increases in the price of ilmenite, given that the same forecasts to 2020 project demand greater than supply. GLA.
Nice to Michu
02 Sep 2016
Re: Ilmenite prices Nice One DD. Continued positive direction indeed. A 20% increase in a month is a WOW to me but I'm a million miles from an expert in these prices and the volatility therein ( something I may now look to get into more... but that may be a tricky undertaking )I recently saw a headline - a subscription piece and I'm not subscribing - of Ilmenite prices up 50% per cent from March lows and to a novice like me that seems EXTREMELY good news. (If I'm not comparing apples and pears etc. ) Fully understood that pricing is often agreed many months in advance - but as you've said there's some spot business too - but such upticks have got to be bottom line majorly significant in the not too distant future? ( Some of that already priced in granted as share prices are somewhat forward looking )
DevonianDracula
01 Sep 2016
Re: Ilmenite prices And from Caposoka on the darkside:"Updated spot prices: [link] ore, 50-52% TiO2:25.07.16, range 770-79018.08.16, range 850-90030.08.16, range 1000-1050Continued positive direction."Again, I am not certain how those figures would turn into US$ for KMR, were they selling spot (shipping costs, 5.5% duty and perhaps/probably 17% sales tax, as the ruidow prices are quoted including tax.Still, the US$/Rmb exchange rate is not much changed over the period, while the increase from July to August 30th range between +29.87% and +32.9%. GLA
DevonianDracula
31 Aug 2016
Re: Ilmenite prices N2M,You are welcome. I am not too optimistic about (much) of an impact on H2 revenues, as my read from the H1 financials, presentation & conference call, is that most of expected H2 production is already committed, although it is possible that part was on a spot price basis. A bit of an irony that I spotted it at the start of a day when miners have come under the cosh. Still if Chinese spot prices for African TiO2 have increased by over 16% in two weeks, it is a good auger for 2017.To be seen the equivalent figures as we move into November & December, when H1 2017 prices will be agreed, as in the meantime prices can go up or down!
Nice to Michu
31 Aug 2016
Re: Ilmenite prices Very good sleuthing DD.The recent results left plenty of room for improvement and to that end ilmenite prices keeping ticking up is extremely important here. I know cost management is important too and they continue to manage costs down bit by bit.. but the game changer here is the prices they achieve... and off the back of increasing prices I'm expecting- aka hoping for - a positive step change in the next financials..,, I have high hopes for this in 2017 especially
DevonianDracula
31 Aug 2016
Re: Ilmenite prices 5.5% duty, thanks. 17% consumption tax should probably not apply at the import stage, unlike a VAT, but who knows. Key point is that on August 18th, the comparable figures were RMB850 to 900. The direction is positive, even if we do not know what these prices would equate to in US$ on loading from Moma.
Kinyara Bill
31 Aug 2016
Re: Ilmenite prices [link] duty and vat?
DevonianDracula
31 Aug 2016
Ilmenite prices The latest ruidow.com:[link] ore, 50-52% TiO2 at 1,000 to 1,050 Rmb per ton including tax. That makes US$149.48 to 157.16 at 6.6809 Rmb/$. Anyone know what % tax would be included?
DevonianDracula
30 Aug 2016
JP JP Morgan Cazenove today reaffirms its neutral investment rating on Kenmare Resources PLC (LON:KMR) and raised its price target to 252p (from 232p).For what that is worth.
DevonianDracula
30 Aug 2016
Re: Light tunnel end of etc KB,The half-year results conference call, which can be found on the KMR website/investors/annual accounts is worth listening to. Bucklerfern also posted his summary on the lse bb a few days back.For me, the key points, in addition to the tightening market and rising prices are:1) prices are generally fixed in advance for six months, so H1 prices fixed around November/December;2) 2016 production guidance of 950,000 tonnes of ilmenite +/-10% remain. However that figure is unlikely to be exceeded and the figure amount is likely a little bit less;3) 2016 cash cost per tonne of US$141 guidance should be close to the real full year figure, which may well be a little lower. The breakdown between fixed and variable is approximately 80/20, and as a consequence, higher levels of production should see total cash costs increasing only slightly. Working on this assumption, if 2016 ilmenite production exactly 950,000 tonnes with zircon & rutile production in the same proportions as for H1, the total cash costs per tonne would be circa US$120.09 for H2 and US$133.99 for the full year;Other indications were that some of the H1 costs should be one-off, (US$5 million? of legal costs re arbitration, etc, that zircon & rutile recoveries are improving, and that the 103,000 tonnes paid for in advance as of 30.06.2016 may all be delivered during H2, but that a bit could be carried over into 2017. Also zircon shipments are lumpy, so for H1 were rather low. GLA
DevonianDracula
30 Aug 2016
Re: Of concern or not? The political situation in any host country is always something of a concern. That having been said, the current tensions between Frelimo and Renamo have been on the slow burner for years now, even if occasionally it does look as though the milk may boil over here and there.The mine at Moma is in the Nampula province, which is one of those that Renamo says that they won in the last elections, and which they would like to govern now.As in many parts of the world, various parties can feel that they can do a "good job" for their people, perhaps including the back pockets of their senior members.
myepic
30 Aug 2016
Of concern or not? I am not fully aware of Mozambique geopolitics - is the linked article something that should concern us or is it just a typical TIA Mozambique week?[link]
Kinyara Bill
27 Aug 2016
Light tunnel end of etc [link] in the range US$145-150 and KMR potentially makes money out of ilmenite.....this would be a big deal if it comes to pass (though KMR may have to wait until H1 2017 given that their orders tend to be negotiated in advance, though not sure what % are spot price?). Point being that if the markets see that KMR is profitable then the SP could move fast. Note if cost per tonne is US$141 as per guidance, then an average price of US$150 see a profit of circa US$8 million on sales of ilmenite alone....and that profit doubles for an additional US$10 on price per tonne which is not unrealistic. Add in profits from zircon and rutile and things are looking more rosy all of a sudden. Might explain why the market was not fazed by a US$50 million loss in H1 2016.....
DevonianDracula
25 Aug 2016
Re: H1 results-BF-LSE An interesting post on the darkside from bucklerfern:"The numbers deserve some further analysis. To get as low as $56.2m off 441,700 tonnes of product implies an average product price of $127/t (including Z). That would imply average ilmenite across CI/SI of somewhere in the region of $80/t. SI might have hit that but I suspect CI did not come near that.Need to consider advance payment for 103,900 tonnes which has not been recognised as revenue yet. Sales $56.2m, receipts $65.2m, receivables, $8.2m. Stripping out circa 3k of Zircon, ilmenite in inventory is being valued at ~ $120/t. So, potential revenue of ~ $12m not recognised in H1 falls into H2 and a further $15m or so in unsold goodies that could be run down further in H2.Aside the timing issues, pre-payments, unrecognised revenue, deferred this that and the other, I make the financial performance in H1 closer to $75m, with weighted average product price $169/t against cost $153/t, operating cash $7m (not far off what's reported). This is not outstanding. However, it is in line with expectations for the prevailing market conditions. It is not however, nearly as bad as a quick peruse of the numbers suggests.Over on II there was some comment on interest. Total was ~ $20m but most accrued, so there is no great cash benefit in H2 arising from interest reduction following the restructuring.What we will see in H2 is genuine ilmenite price increases hitting the bottom line, and what we might see for FY results following is a revenue surprise comprising the recognition of revenue deferred alongside increased shipments at higher product prices."I both agree and disagree:1) Average realised sales price per tonne in H1 must have been circa US$80. Awful. However, if you look to spot ilmenite prices as per the Results Presentation, Chinese spot prices have increased from about US$74 to circa US$125 over 6/7 months. H1 sales in general were at late 2015 prices, and included "low grade" Ilmenite, so unfortunately US$80 looks about right. The 103,900 tonnes in stock at 30/06/2016 "sold in advance" for US$12.4 million indicate US$119.3 per tonne, which could give an indicative average selling price for H2 deliveries, and that applied to actual H1 deliveries would have given revenues of circa US$72.2 million, which while still not enough to cover all operating costs, would have been much better. However, what as been sold is in the past and cannot be recovered, so I would not restate H1 figures in any way other than to reduce revenues marginally to recognise that H1 shipments were 7,300 tonnes higher than production, or to increase it a bit more to recognise shipment of zircon & rutlie being 4,609 tonnes less than production while 11,928 tonnes of ilmenite were sold from stock.2) For H2, I can see the weighted average sales price per tonne somewhere in the range of $163 to $170, but even if the Chines spot price for ilmenite keeps on increasing during H2, it is unlikely to impact H2 revenues much, but would largely feed through only in 2017. Still, if H2 production and shipments hit the 2016 guidance, then H2 would probaby see a resonable net profit before accounting for debt write-off, etc. Even if H2 production and sales quantities are no great than H1's, at least revenues should be above cash costs. GLA
myepic
25 Aug 2016
Already in the mix Well as far as I can see the bulk of the money behind recent refinance is institutional , my bet is that they have already factored in the figures before getting involved
