The share price of Kenmare Resources (LSE: KMR) the Ireland-based, London-listed mining company is currently up 4% so far this morning, followingpublication of an interim management statement for the third quarter, to September 2014, in which the company reported that total shipments of finished products increased 24% over the quarter, rising to183,200 tonnes.
The company reports that ilmenite production increased 6% during the quarter, to 220,200 tonnes, and that primary zircon production grew239% to 12,900 tonnes, as part of a 16% increase in totalzircon production.However, there was a decline of 8.5% inproduction of Heavy Mineral Concentrate,primarily as a result of a drop in ore grade and lower than expected mining volumes.
Kenmare says that ilmenite markets in China continue to remain well supplied, with new mineral sands producers focussing their sales on the Chinese market, which has further weakened prices there. Accordingly, Kenmare curtailed shipments to China during Q3 in order to contain further price erosion.
The company says that the TiO2 pigment market is expected to grow by more than the historical 3% trend line growth rate in 2014, but thatglobal growth is subject to some regional disparities. In the US, demand is consistentwith improved economic activity, Chinesepigment production continues to grow strongly, but there have been some signs of weakening in European markets since July.
It also reportedthat demand conditions in the zircon market remained stable in the quarter, that offtake support from its customers remains strong, and that its continuing to sell all itszircon.
Commenting on the management statement, Managing Director Michael Carvill said:
During the quarter we have continued to focus on previously stated plans of conserving cash and controlling costs against a background of market conditions that have adversely impacted cash generation. The upgrade of the non-magnetic circuits in Q2 2014 helped contribute in Q3 2014 to a substantial increase in primary zircon, a significant part of our revenues.
The company also provided an updatetothe announcement, made on 26 June, that ithad received a non-binding conditional proposalfrom Iluka,the worlds largest producer of zircon. Kenmare said that its engaged in discussions with Iluka regarding a potential bid. However, it cautioned that discussions remain at an early stage, and that there can be no certainty about whether an offer will be actually made nor about possible the terms if one is.
Unfortunately, this mornings rise has done little to correct Kenmares disastrous share priceperformance its still 70% down on this time last year, compared with a drop of just 4.5% in the FTSE All-Share index. And the longer-term story makes for even worse reading, with Kenmare having plunged 73% over the past five years, during with time the FTSE All-Share has risen 25%.
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Jon Wallis has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.