Maputo — The Irish company Kenmare Resources, owner of the Moma Titanium Minerals Mine in the Mozambican northern province of Nampula has reported a loss of 9.6 million USD according to its financial report for the year ended 31 December 2007, published on its website on Monday.

Officially launched in October 2007, Moma Titanium Minerals Mine is set to become one of the world's largest suppliers of titanium ores.

"This loss arises primarily from foreign exchange losses on Euro-denominated debt and Kenmare's corporate operating costs, net of interest earned", explains Kenmare's chairman, Charles Carvill.

The last six months, however, have demonstrated that the Moma Mine will work well, explained Carvill, adding that "the mine has demonstrated its ability to dredge, concentrate, separate and export product whilst maintaining an excellent safety record".

While having experienced some cost increases caused mainly by salary and fuel costs, Kenmare's chairman is confident that Moma will achieve its targeted production rates in 2008 and attain its predicted low cost position in the industry.

So far, six customer vessels have been loaded with ilmenite for destinations in Europe, America and Asia (Ilmenite is one of the raw material in the production of pigments).

According to Carvill, this has been achieved despite considerable problems with certain equipment supplied under the construction contract, which has had to be replaced under warranty.

In particular, a set of vibrating screens that are an essential component of the Mineral Separation Plant, started to show signs of deterioration and the feed rate through the plant had to be reduced.

Pending supply of new, larger and more robust screens under warranty by the contractor, temporary repairs were required for this equipment and consequently the plant throughput was lower than anticipated.

The new screens have now been installed, allowing the mine to get back onto its ramp-up curve.

A cyclone, the first in over twenty years in the area, passed over Moma in early March., causing no casualties or injuries due to excellent planning.

With the installation of the new screens, and various other remedial work which has been carried out under warranty, Kenmare believe that it is well set to achieve its targeted production rate, albeit somewhat later than was originally envisaged. Therefore, full production is expected to be achieved by the last quarter of 2008.

Kenmare also plans to expand 1.2 million tonnes of ilmenite product plus associated co-products per annum, with the new capacity being targeted to be available by the end of 2009.

The market for titanium feedstock is favourable and is in a supply-constrained position. This is putting strong upward pressure on global feedstock prices, particularly for ilmenite, and has pushed up the price of imported ilmenite to China by around 50% since the start of 2008.

Despite a 5% reduction in consumption in the United States during 2007, the global demand for TiO2 feedstocks grew by 3.6%, led by strong growth in Europe and Asia, particularly China.

A similar growth rate is expected in 2008. In addition, the supply side may be further restricted by

energy shortages in South Africa, where a large proportion of the world's titanium feedstocks originate.

The zircon market has seen a slight easing of prices over the last year, due principally to artisanal production from Indonesia.

This production is viewed as coming from short-term resources which have already started to reduce. End use demand for zircon remains robust. Hence the market outlook for all our production is very positive and the Company stands to benefit from both price upside as well as the expanded production on volumes.