TIDMKMR
Kenmare Resources plc ("Kenmare" or "the Company")
14 July 2021
Q2 and H1 2021 Production Report
Kenmare Resources plc (LSE:KMR, ISE:KMR), one of the leading
global producers of titanium minerals and zircon, which operates
the Moma Titanium Minerals Mine (the "Mine" or "Moma") in northern
Mozambique, is pleased to provide a trading update for the quarter
and half year ending 30 June 2021 ("Q2 2021" and "H1 2021").
Statement from Michael Carvill, Managing Director:
"Kenmare's capital investment over the last three years
continues to deliver as Q2 saw a record quarter of production for
ilmenite, improving on the record set in Q1 2021. WCP B continues
to perform well in Pilivili, supporting higher volumes of ore mined
and final product output. We remain confident in the outlook for
annual production and re-iterate our guidance of 1.1-1.2 million
tonnes of ilmenite in 2021.
We are concerned by the rise in delta variant COVID-19 cases in
Southern Africa. Therefore I'm particularly pleased that we expect
to offer COVID-19 vaccinations to all Mine employees and
contractors, as well as local communities, later this month.
Market conditions for ilmenite, and titanium feedstocks in
general, remained strong in Q2 2021 with pricing strengthening
quarter on quarter. The outlook for zircon has also continued to
improve, with price increases during the quarter and continuing to
date."
Q2 2021 overview
-- Improved Lost Time Injury Frequency Rate ("LTIFR") of 0.14 per 200,000
man-hours worked for the 12 months to 30 June 2021 (30 June 2020: 0.32),
zero lost time injuries recorded during the quarter
-- COVID-19 vaccinations of the Mine workforce and local communities are
expected to start later this month
-- Heavy Mineral Concentrate ("HMC") production of 436,600 tonnes in Q2
2021, representing a 41% increase compared to Q2 2020 (310,300 tonnes),
benefitting from higher grade and excavated ore volumes
-- Record ilmenite production of 283,900 tonnes in Q2 2021, representing a
35% increase compared to Q2 2020 (209,900 tonnes), benefitting from
increased HMC production
-- Primary zircon production of 14,900 tonnes, representing a 28% increase
compared to Q2 2020 (11,600 tonnes), also benefitting from increased HMC
production
-- Total shipments of finished products of 249,600 tonnes, representing a
14% increase compared to Q2 2020 (219,100 tonnes)
-- Kenmare expects production of all products to be within 2021 guidance
-- Strong ilmenite market conditions continued in Q2 2021 and this is
expected to continue in Q3 2021, with higher prices agreed and a strong
order book in place
-- The positive outlook for the zircon market has continued to strengthen,
with received prices rising in Q2 2021
-- At the end of H1 2021, net debt was US$76.1 million (31 December 2020:
US$64.0 million net debt), as a result of higher prices and sales being
offset by the timing of capital expenditure and a reduction in the use of
invoice factoring
Production
Production from the Moma Mine in Q2 and H1 2021 was as
follows:
Q2 2021 Q2 2020 Q1 2021 H1 2021 H1 2020
----------------- ---------- ---------- ---------- ---------- ----------
tonnes % variance % variance tonnes % variance
----------------- ---------- ---------- ---------- ---------- ----------
Excavated ore(1) 10,938,000 6% 22% 19,893,000 8%
----------------- ---------- ---------- ---------- ---------- ----------
Grade(1) 4.70% 43% 1% 4.67% 40%
----------------- ---------- ---------- ---------- ---------- ----------
Production
----------------- ---------- ---------- ---------- ---------- ----------
HMC production 436,600 41% 21% 798,500 43%
----------------- ---------- ---------- ---------- ---------- ----------
HMC consumption 423,200 36% 8% 814,400 46%
----------------- ---------- ---------- ---------- ---------- ----------
Ilmenite 283,900 35% 3% 559,000 52%
----------------- ---------- ---------- ---------- ---------- ----------
Primary zircon 14,900 28% 12% 28,200 33%
----------------- ---------- ---------- ---------- ---------- ----------
Rutile 2,200 47% 16% 4,200 45%
----------------- ---------- ---------- ---------- ---------- ----------
Concentrates(2) 11,800 31% 33% 20,700 18%
----------------- ---------- ---------- ---------- ---------- ----------
Shipments 249,600 14% -28% 594,100 44%
----------------- ---------- ---------- ---------- ---------- ----------
1. Excavated ore and grade prior to any floor losses.
2. Concentrates include secondary zircon and mineral sands concentrate.
In Q2 2021 Kenmare's rolling 12-month LTIFR was 0.14 per 200,000
man-hours worked (Q2 2020: 0.32), with zero lost time injuries
recorded during the quarter.
HMC production was 436,600 tonnes in Q2 2021, representing a 41%
increase compared to Q2 2020 (310,300 tonnes). This was a result of
a 43% increase in ore grades (to 4.7%) and a 6% increase in
excavated ore volumes (to 10.9 million tonnes), setting a new
quarterly record of HMC production. Excavated ore volumes also
increased by 22% when compared to Q1 2021, benefitting from higher
mining rates from all plants. As previously announced, grades are
expected to be maintained between 4.5-5.0% Total Heavy Mineral
until Q4 2021 (when grades are anticipated to drop to 3.7%), before
normalising at around 4.3% in 2022.
Ilmenite production rose broadly in line with increased HMC
production to 283,900 tonnes, representing a 35% increase compared
to Q2 2020 (209,900 tonnes). Despite ilmenite recoveries being
slightly lower than expected in Q2 2021, production set a new
quarterly record and recoveries have now returned to expected
levels.
Primary zircon production increased by 28% to 14,900 tonnes in
Q2 2021 (Q2 2020: 11,600 tonnes) benefitting from increased HMC
consumption. Rutile production was 2,200 tonnes, up 47% (Q2 2020:
1,500 tonnes) due to increased feed and improved circuit
recoveries. Concentrates production was 11,800 tonnes, up 31% (Q2
2020: 9,000 tonnes) also due to increased HMC consumption.
Full year guidance, as published on the 13(th) January 2021, is
maintained for all products.
Total shipments in Q2 2021 increased by 14% compared to Q2 2020
and H1 2021 shipments were up 44% on H1 2020. Kenmare shipped
249,600 tonnes of finished products during the period (Q2 2020:
219,100 tonnes), which was comprised of 235,400 tonnes of ilmenite,
10,000 tonnes of primary zircon and 4,300 tonnes of
concentrates.
Closing stock of HMC at the end of Q2 2021 was 34,300 tonnes,
compared with 20,900 tonnes at the end of Q1 2021. Closing stock of
finished products at the end of Q2 2021 was 164,100 tonnes,
compared to 101,000 tonnes at the end of Q1 2021 (Q2 2020: 156,700
tonnes).
COVID-19 update
COVID-19 cases at Moma steadily decreased through Q2 2021, with
41 people in isolation on 13 April 2021 and continued to fall to
zero by late May. However, Southern Africa has recently been
experiencing a third wave of cases, which has also led to a small
increase at site, with 15 people currently in isolation.
Protecting our people and the communities in which we operate
has always been Kenmare's highest priority. In addition to the
various physical distancing and hygiene protocols, and testing
procedures, Kenmare has been working with industry partners and the
Government of Mozambique to acquire, distribute and administer
vaccines. The vaccines are now on the way to site and vaccinations
of the mine workforce and local communities are expected to start
later this month.
Capital projects update
The capital project to move WCP B to Pilivili, including
associated infrastructure, is now substantially complete. The final
parts of the HMC pumping pipeline for WCP B operations at Pilivili
have been installed and are undergoing ramp up. Heavy mineral
product is being transported via the pipeline and a reduced
trucking operation. It is expected that the pipeline will be
operating at capacity in the coming months. The total capital cost
of the WCP B move is estimated at US$127 million, as outlined in
the Preliminary Results for 2020.
Market update
Positive market conditions prevailed for mineral sands in Q2
2021 with market prices for ilmenite, zircon and rutile all
increasing.
Ilmenite prices continued to rise through the quarter,
benefitting from strong demand. Pigment plants are operating at
high production rates, whilst the titanium metal and welding
sectors are also experiencing a strong recovery. In addition, as a
result of increased production, ilmenite sales volumes increased
52% in H1 2021 (vs H1 2020).
Despite some disruptions to major titanium feedstock producers
in Q2 2021, overall global supply has increased. This has primarily
come from China and Vietnam, in addition to ilmenite in the form of
concentrates.
The recovery in demand for zircon accelerated in Q2 2021 and
price increases were achieved for Kenmare's zircon products. The
zircon market is tight and further exacerbated by production
disruptions from zircon suppliers. Demand for Kenmare's zircon
products is currently exceeding its ability to supply.
Due to strong global demand for commodities, the freight market
has been exceptionally tight in Q2, leading to a rapid increase in
rates. These conditions are expected to persist in H2 2021.
Positive market conditions for all Kenmare's products are
expected to continue in Q3 2021, despite an expected strong freight
market having the potential to dampen received prices. We have a
strong order book for our ilmenite products and we expect to a
supportive market for rutile and zircon in H2 2021.
Finance update
On 19 May 2021, Kenmare paid its 2020 final dividend of USc7.69
per share. This was the balancing payment of a 2020 full year
dividend of USc10.00 per share, up 22% from 2019. As previously
stated, Kenmare is targeting a 25% Profit After Tax dividend
payment for 2021.
Kenmare drew down in full its US$40.0 million Revolving Credit
Facility in early April 2020, as previously announced, to provide
maximum liquidity and flexibility in an unprecedented period. The
Company repaid US$20.0 million of this facility in June 2021.
Consequently, at 30 June 2021, cash and cash equivalents were
US$56.6 million (31 December 2020: US$81.1 million) and gross bank
loans, including accrued interest, were US$132.7 million (31
December 2020: US$151.3 million). Accordingly, as at 30 June 2021,
Kenmare had net debt of US$76.1 million, compared to US$64.0
million net debt at 31 December 2020, which is mainly due to the
timing of capital expenditure payments and a reduction in the use
of invoice factoring.
Kenmare will announce its results for the six months ended 30
June 2020 on 18 August 2021.
For further information, please contact:
Kenmare Resources plc
Jeremy Dibb
Investor Relations
Tel: +353 1 671 0411
Mob: + 353 87 943 0367
Murray (PR advisor)
Joe Heron
Tel: +353 1 498 0300
Mob: +353 87 690 9735
About Kenmare Resources
Kenmare Resources plc is one of the world's largest producers of
mineral sands products. Listed on the London Stock Exchange and the
Euronext Dublin, Kenmare operates the Moma Titanium Minerals Mine
in Mozambique. Moma's production accounts for approximately 5% of
global titanium feedstocks and the Company supplies to customers
operating in more than 15 countries. Kenmare produces raw materials
that are ultimately consumed in everyday "quality-of life" items
such as paints, plastics and ceramic tiles.
Forward Looking Statements
This announcement contains some forward-looking statements that
represent Kenmare's expectations for its business, based on current
expectations about future events, which by their nature involve
risks and uncertainties. Kenmare believes that its expectations and
assumptions with respect to these forward-looking statements are
reasonable. However, because they involve risk and uncertainty,
which are in some cases beyond Kenmare's control, actual results or
performance may differ materially from those expressed or implied
by such forward-looking information.
(END) Dow Jones Newswires
July 14, 2021 02:00 ET (06:00 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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