Exploration group Kenmare Resources is on track to start extracting titanium from its plant in Mozambique in the final quarter of 2006 as scheduled.

The Dublin-based company, which yesterday announced a profit of $3.75 million (€3.07 million) in the first half of the year as a result of foreign exchange gains on euro-denominated debt, said the Moma Titanium Mineral Sands Project is now 41 per cent complete.

This compares with 28 per cent complete at the time of the group's agm in July and is in line with its expectations, according to Tony McCluskey, the group's finance director. Most of the steelwork and process components have arrived safely at the site and assembly will start this month.

"The project is on track and on budget and we are happy with its progress," said Mr McCluskey.

Once up and running, the Moma plant will produce more than 700,000 tonnes of ilmenite each year, which will be shipped to northern Europe and North America, for use in the production of paints, plastics and paper.

Kenmare has a licence to dig for more than 70 million tonnes of ilmenite, meaning that there is potential to grow the plant in the future, said Mr McCluskey. The site will also produce about 17,000 tonnes of rutile and 60,000 tonnes of zircon each year.

Kenmare is seeking to take advantage of a recent increase in demand for titanium pigment, which stems from an increase in use in parts of China and India as well as a decline in reserves.

The market for titanium pigment is expected to grow at about 3 per cent a year, while demand for zircon is strong, with prices rising to about $700 per metric tonne, compared with the company's $500-tonne initial estimate.

The company had no sales in the first half of the year and will not make a "proper" profit from operations until extractions start.