Kenmare shareholders set to reap dividends in October

Kenmare Resources is set to pay out its first ever dividend this October, the company's chief executive said today as he showed strong results for the full year.

The figures

Revenues increased 26 per cent to $262m (£200m), while earnings before interest, tax, depreciation and amortisation (Ebitda) grew 54 per cent to $93m.

Meanwhile, profit before tax trebled to $56m and the company wiped out its $34m debt to show a net cash position of nearly $14m.

Why it’s interesting

The swing from net debt to net cash will be seen by the company as an important milestone for the development of the firm.

Coupled with rising profits it will allow Kenmare to pay its first dividend to shareholders this October.

The dividend will be “modest”, but will provide a boost to shareholders.

Revenues per tonne of the company’s ilmenite - a major component in titanium - increased in 2018. However a softening in the market towards the end of the year caused concern for the firm. But volumes have been strong in the first quarter of 2019 and prices are starting to tick up, pushing the market in the right direction for Kenmare.

The company is already the largest ilmenite supplier in the world, and is upgrading its capacity to get to 1.2m tonnes by the end of 2020.

This will allow it to feed the company’s separation plant, which has a capacity of 1.2m.

What Kenmare said

Chief executive Michael Carvill told City A.M. once Kenmare had reached the 1.2m target, that would be a natural ceiling on production increases, at which point it would pour cash towards substantially increasing dividends.

“For the medium term that’s a stop on our investment levels, we’d like to operate at 1.2m tonnes and at that stage start to pay significant dividends to our shareholders, rather than simply turning around and re-investing in the projects,” Carvill said.

“Our objective is to get there as soon as possible, stop at that level, operate the company, produce good returns, pay our shareholders something and see what happens three or four years down the line.”

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