TIDMKMR
Kenmare Resources plc
("Kenmare" or "the Company" or "the Group")
11 May 2023
Report on Payments to Governments
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, announces the publication of its Report on Payments to
Governments.
Introduction
This report details payments to governments made by Kenmare
Resources plc (the "Company") and its subsidiary undertakings (the
"Group") for the financial year ended 31 December 2022.
This report has been prepared in accordance with the
requirements of Part 2A of the Transparency (Directive 2004/109/EC)
Regulations, 2007 (as amended) ("Part 2A"), Part 26 of the
Companies Act 2014 ("Part 26") and rule DTR 4.3A of the UK
Financial Conduct Authority's Disclosure Guidance and Transparency
Rules ("DTR 4.3A"). Part 2A and Part 26 enact in Ireland domestic
rules in line with Directive 2013/34/EU (the "EU Accounting
Directive (2013)") and apply to large Irish incorporated companies,
like the Company, that are involved in the exploration, discovery,
development, and extraction of minerals. DTR 4.3A imposes
equivalent requirements on issuers, like the Company, admitted to
trading on the London Stock Exchange that are similarly involved in
the exploration, development and extraction of minerals.
About Kenmare Resources plc
Kenmare Resources plc is an Irish incorporated company with a
premium listing on the London Stock Exchange and a secondary
listing on Euronext Dublin. Kenmare operates the Moma Titanium
Minerals Mine (the "Moma Mine"), which is located on the northern
coast of Mozambique. Moma is one of the world's largest producers
of minerals sands products, accounting for production of
approximately 7% of global titanium feedstocks and supplying to
customers operating in over 15 countries. The Group's products are
key raw materials, ultimately consumed in everyday quality-of-life
products such as paints, plastics, and ceramic tiles.
The Group consists of the parent company (Kenmare Resources plc)
and its subsidiary undertakings. The mining operations at the Moma
Mine are carried out by the Mozambique branch of Kenmare Moma
Mining (Mauritius) Limited ("KMML") and downstream processing is
undertaken by the Mozambique branch of Kenmare Moma Processing
(Mauritius) Limited ("KMPL"), both of which are wholly-owned
subsidiary undertakings of the Company. KMML and KMPL account for
100% of the Group's turnover and 99% of the Group's total assets.
Therefore, all revenues and operating costs of the Group's mining
and processing operations are recorded by KMML and KMPL within the
same tax jurisdiction, namely Mozambique.
The parent company, Kenmare Resources plc, conducts no direct
exploration or mining activities. The Group's corporate costs are
recorded by the parent company.
Scope of report
Disclosure of payments to governments is required in respect of
payments arising from the exploration, discovery, development and
extraction of minerals; the payments included within this report
therefore relate to the Group's mining and processing activities at
the Moma Mine in Mozambique.
Groups are required to prepare a consolidated report disclosing
payments made by the parent company and its subsidiary
undertakings. Accordingly, this report reflects payments made by
the Group companies conducting mining and processing activities,
namely KMML and KMPL. The Group owns 100% of these entities and the
amounts reflect 100% of the payments made by these subsidiary
undertakings.
For a broader discussion of the Group's payments to governments
and its contribution to its host communities, please see the
Group's 2022 Sustainability Report, available on the Company's
website at
www.kenmareresources.com/investors/reports-and-presentations
Payments
The payments disclosed in this report are on a cash basis.
The payments made to governments are required to be analysed
into the following categories:
-- Production entitlements - this category includes the host
government's share of production, which is usually outlined in a
production sharing agreement. In 2022, the Group did not make
relevant payments in this category.
-- Taxes - this category includes taxes paid to governments on
income, profits or production arising from the Group's exploration,
discovery, development and extraction of minerals. Taxes levied on
consumption such as value added taxes, personal income taxes and
sales taxes are excluded. KMML is subject to a corporation tax rate
of 35% of the taxable profits of its Mozambique branch. Taxable
profits of the branch are calculated by reference to the cash costs
of producing Heavy Mineral Concentrate ("HMC") net of allowable tax
deductions and increased by a defined margin.
KMML's Mozambique branch produces one product from its mining
activities, namely HMC. HMC is sold to KMPL, which processes it
into finished products (ilmenite, zircon, rutile and mineral sands
concentrate), which are exported worldwide to third party
customers. The cash costs of mining include the costs of mine face
preparation, dredging and dry mining operations, Wet Concentrator
Plant operations, rehabilitation and support services.
The margin applied to the cash costs of mining is stipulated in
the Mineral Licensing Contract, dated 21 January 2002. The contract
is between KMML and the Ministry of Mineral Resources and Energy
(MIREME) of the Republic of Mozambique, acting for and on behalf of
the Government of the Republic of Mozambique, which details the
terms and conditions for the exploration, development and
production of heavy minerals in the areas of Moma, Congolone and
Quinga. The margin is determined by dividing the prices for sale of
finished products to third party customers earned by KMPL in the
year by the prices earned in the prior year, adjusted for inflation
and applying this factor to the prior year margin. For the fiscal
year ending 31 December 2022 the margin was 66.8%.
KMPL has the benefit of operating within an Industrial Free Zone
("IFZ") and as an IFZ company, it is exempted from corporation
tax.
-- Royalties -- this category includes payments to a government
for the rights to extract minerals or other materials. Typically
amounts are levied based on production levels or revenues. KMML is
subject to a mining royalty of 3% based on HMC sold to KMPL. The
royalty is calculated by multiplying the cash costs of producing
HMC, plus the margin as detailed above, by 3%.
KMPL is subject to a revenue royalty of 1% on revenue
recognised.
-- Dividends - this category includes dividend payments other
than dividends paid to a government as an ordinary shareholder of
the Company or one of its subsidiary undertakings. In 2022, the
Group did not make relevant payments in this category.
-- Bonuses - this category includes bonuses paid to a government
for and in consideration of signature, discovery, production,
awards, grants and transfers of extraction rights and production
bonuses. In 2022, the Group did not make relevant payments in this
category.
-- Fees -- this category includes licence fees, rental fees,
entry fees and other considerations for mining licences or
concessions.
-- Infrastructure improvements -- this category includes
payments to governments for infrastructure other than in
circumstances where the infrastructure is expected to be primarily
dedicated to operational activities throughout its useful life.
Payments that form part of the Group's social investment activities
(which are primarily organised and administered by Kenmare Moma
Development Association) are excluded. Such payments would include
contributions in respect of local schools, healthcare or community
facilities, or improvements to the general environment of local
communities.
Government
"Government" means any national, regional or local authority of
a country, and includes a department, agency or undertaking that is
a subsidiary undertaking where the authority is the parent
undertaking.
All payments referred to this report are made to the Government
of Mozambique or its agencies; in particular, they are made to
Autoridade Tributária Unidade dos Grandes Contribuintes--Nampula, a
department of the Mozambican tax authority.
Analysis by project/entity
An analysis of payments by project is required where payments
are attributable to specific projects. Projects are defined as
operational activities which are governed by a single contract,
licence, lease, concession or similar legal agreement, and form the
basis for payment liabilities with a government. Where agreements
are substantially interconnected in operating and geographical
terms, with substantially similar terms, those agreements should be
treated as a single project. Payments may be disclosed at an entity
level where payments are made in respect of obligations imposed at
that entity level rather than at a project level. Payments below
are disclosed at the entity level for KMML and KMPL, which between
them operate the Moma Mine, which is treated as one project for
purposes of this Report.
Materiality
Under Part 2A and Part 26, a payment need not be disclosed if it
is a single payment of less than the equivalent of EUR100,000 or a
series of related payments in a single year whose total is less
than the equivalent of EUR100,000. Under DTR 4.3A, a payment need
not be disclosed if it is a single payment of less than the
equivalent of GBP86,000 or a series of related payments in a single
year whose total is less than the equivalent of GBP86,000.
Currency and rounding
All monetary amounts in this report refer to United States
dollars unless otherwise indicated. The amounts shown in this
report have been rounded to the nearest $1,000.
Payments to governments -- 2022
Production Infrastructure
entitlements Taxes Royalties Dividends Bonuses Fees improvements Total
----------------- ---------------- ------- ----------- ----------- --------- ------- ---------------- --------
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Country summary
Government
of Mozambique - 6,106 10,674 - - 409 - 17,189
---------------- ------- ----------- ----------- --------- ------- ---------------- --------
Total - 6,106 10,674 - - 409 - 17,189
---------------- ------- ----------- ----------- --------- ------- ---------------- --------
Entity report
KMML - 6,106 5,699 - - 409 - 12,214
KMPL - - 4,975 - - - - 4,975
---------------- ------- ----------- ----------- --------- ------- ---------------- --------
Total - 6,106 10,674 - - 409 - 17,189
---------------- ------- ----------- ----------- --------- ------- ---------------- --------
This report for Kenmare Resources plc (registered number 37550)
was approved by the Directors of the Company on 10 May 2023 and
signed on their behalf by
Michael Carvill Tom Hickey
Director Director
For further information, please contact:
Kenmare Resources plc
Jeremy Dibb / Michael Starke
Investor Relations
ir@kenmareresources.com
https://www.globenewswire.com/Tracker?data=gOiCYS1PtNvUYFiLRlmGKQl8u31q60BtZQUoYT_EKrD-qV2wRbKhZgRCtjN-xdx-5HApIeeKOyvoDItN9gEka7dGlx1bx3Aq4G9Ax7omV_e8BC8wIGFeVfADgrLkbO7xj16e4s7OLrXxEa83DzdRXf2CIHEJLDJf2rs-1Nje9pQoZ_p9TGMcGegPdMGnFyWi7QkZ1RSUTgLlxskiYHc4Apv0qwtdgcrB_xyPKqkAMq6EiSS3RWBGoFv-BwdPrQHjFKrKf0jMmwJOYL4ULvrYTA==
Tel: +353 1 671 0411
Mob: +353 87 943 036
Murray (PR advisor)
Paul O'Kane
pokane@murraygroup.ie
Tel: +353 1 498 0300
Mob: +353 86 609 0221
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 7% 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.
(END) Dow Jones Newswires
May 11, 2023 02:00 ET (06:00 GMT)
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