KENMARE Resources has targeted lower output for its 2026 financial year than in previous years and renegotiated covenants with lenders amid expectations of balance sheet pressure brought about by softer mineral prices and capital projects.
The Dublin-headquartered business also increased an impairment for the year ended December 2025. The market appeared to absorb the news. Shares in Kenmare are currently about 5% higher year-to-date, but 13% lower over 12 months.
There was a raft of bad news in the company’s fourth quarter production update earlier this week in which Kenmare MD Tom Hickey said net debt would remain “elevated through 2026”. Net debt increased to $158.8m end-December compared to $25m at the close of the 2024 financial year.
In response, Kenmare would target value over volume as it worked through the weaker price environment for ilmenite. Shipments for 2026 were estimated to be about 1.1 million tons which is lower than in previous years.
In addition to ilmenite, Kenmare also produces zircon and rutile. Known collectively as heavy minerals, used in paint pigments and ceramics, the products are mined from Moma, a mine in northern Mozambique.
Shipments of heavy mineral concentrates in 2025 came in at 947,900 tons. This compares to adjusted guidance in November of 870,000 and 905,000 tons. Prior to that guidance for 2025 was 1.05Mt at the top end.
Prices for ilmenite are expected to remain subdued this year owing to weaker demand from key market China where the housing market was under pressure, Kenmare said. The combination of this, coupled with ongoing (albeit lesser) capital demands this year saw Kenmare negotiate an increase in its lender covenants.
Lenders granted Kenmare’s request for a “reset” of the net debt to Ebitda covenant under its $200m revolving credit facility. This includes adjusting the full year 2025 covenant to 3x (relaxation of the previous covenant to allow for three times net debt of Ebitda). “These adjustments are intended to maintain ongoing covenant compliance through this period of elevated net debt,” said Kenmare in its update.
Kenmare increased its impairment charge to $300m for 2025 from previously identified impairment of $125m related to “slightly lower” than forecast long-term prices. The impairment also includes proposed changes to the unratified implementation agreement with the Mozambican government.
The agreement, which governs exports, and is not a mining licence, expired in 2024. Kenmare has been operating through an extension of the expired agreement and is yet to conclude a new long-term deal with the government.
Discussions between Mozambique’s president Daniel Chapo and Hickey have so far not yielded a new agreement. Considering discussions had been underway for more than a year, Kenmare considered it as “a significant concern”. Arbitration was an option if there was no new implementation agreement, it said.
In terms of its capital projects, Hickey said there had been progress during the last month on the delayed comissioning of its Wet Concentrator Plant A. Once completed, the WCP A will set up Kenmare for several decades to mine Nakata, Moma’s largest mineral deposit.
