Kenmare Resources Q1 2017 Production Update

 
TIDMKMR 
 
 
   Kenmare Resources plc ("Kenmare" or "the Company") 
 
   13 April 2017 
 
   Q1 2017 Production Update 
 
   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 ending 31 March 
2017. 
 
   Statement from Michael Carvill, Managing Director: 
 
   "Kenmare has delivered solid production in Q1, particularly for the main 
revenue generating products of ilmenite and primary zircon, in what has 
traditionally been a lower producing quarter. Q1 cash generation at the 
Mine has continued the trend of quarter on quarter improvement, since 
bottoming in Q2 2016. The Company remains on track in its strategy of 
maximising cash generation through increasing production and reducing 
cash costs in what remains a strong market for our products." 
 
   Overview 
 
 
   -- Heavy Mineral Concentrate ("HMC") production increased by 29% to 353,500 
      tonnes (Q1 2016: 274,800 tonnes) 
 
   -- Ilmenite production increased by 39% to 256,500 tonnes (Q1 2016: 185,000 
      tonnes) 
 
   -- Zircon production increased by 59% to 18,500 tonnes (Q1 2016: 11,600 
      tonnes) 
 
   -- Total shipments of finished products were up 93% to 256,100 tonnes (Q1 
      2016: 132,700 tonnes) 
 
   -- Q1 production supports guidance of 950,000-1,050,000 tonnes of ilmenite 
      in 2017 (plus associated by-products), up 5-16% on 2016 production 
 
   -- Demand for ilmenite remained strong in Q1, resulting in further price 
      increases 
 
 
   Production 
 
   Production from the Moma Mine in Q1 2017 was as follows: 
 
 
 
 
                       Q1-2017    Q1-2016   Variance   Q4-2016   Variance 
                       tonnes     tonnes       %       tonnes       % 
Excavated Ore *       8,407,000  7,061,000       19%  8,510,000       -1% 
Grade*                    4.86%      4.32%       13%      5.95%      -18% 
Production 
 HMC                    353,500    274,800       29%    474,300      -25% 
 Ilmenite               256,500    185,000       39%    256,900        0% 
 Zircon                  18,500     11,600       59%     20,000       -8% 
 of which primary        12,800      8,300       54%     13,400       -4% 
 of which secondary       5,700      3,300       73%      6,700      -15% 
Rutile                    2,200      1,100      100%      2,300       -4% 
Shipments               256,100    132,700       93%    301,800      -15% 
 
 
   * Excavated Ore and grade prior to any floor losses. 
 
   In Q1 2017, Kenmare mined 8.4 million tonnes of ore, up 19% on Q1 2016, 
at an average grade of 4.86%, producing 353,500 tonnes of HMC, a 29% 
increase on Q1 2016. Finished product volumes for the period included 
256,500 tonnes of ilmenite, up 39%, and 18,500 tonnes of zircon 
(including 5,700 tonnes of a lower grade secondary zircon product), up 
59%. 
 
   HMC production rose by 29% to 353,500 tonnes (Q1 2016: 274,800 tonnes), 
benefitting from increased utilisation levels and supplemental mining. 
However, HMC production declined in comparison with Q4 2016, in line 
with previously guided lower grade expectations for 2017. 
 
   Ilmenite production increased by 39% to 256,500 tonnes (Q1 2016: 185,000 
tonnes), maintaining the record production levels achieved in Q4 2016. 
 
   Total zircon production includes a 54% increase in primary zircon 
production to 12,800 tonnes (Q1 2016: 8,300 tonnes). Secondary zircon 
volumes increased by 73% to 5,700 tonnes (Q1 2016: 3,300 tonnes) as 
recoveries from waste streams increased. Project work has continued with 
the aim of increasing the proportion of primary zircon production to 
further enhance revenues. This led to an increase in intermediate 
stockpiles during the period which we expect to normalise through the 
year. 
 
   The Moma Mine has continued to benefit from increased stability and 
reliability of electricity supplied by Electricidade de Moçambique 
("EdM") in Q1 2017. In addition, the supplementary diesel-powered 
generators were utilised to protect power stability against inclement 
weather through the rainy season. 
 
   During Q1 2017 Kenmare shipped 256,100 tonnes of finished products, 
comprised of 245,000 tonnes of ilmenite, 10,100 tonnes of zircon 
(including 3,300 tonnes of secondary grade zircon) and 1,000 tonnes of 
rutile. 
 
   Closing stock of HMC at the end of Q1 2017 was 22,100 tonnes, compared 
with 66,500 tonnes at the start of the year. Closing stock of 
intermediate magnetic concentrate at the end of the period was 70,500 
tonnes. Closing stock of finished products at the end of Q1 2017 was 
212,200 tonnes, of which 60,000 tonnes were being held for a customer 
and which have been paid for. 
 
   Market 
 
   Demand for ilmenite was strong in Q1 2017, due to solid offtake in the 
Chinese spot market for pigment and slag production. Demand for imported 
ore also benefitted from some disruption in Chinese domestic ilmenite 
production, due to stricter enforcement of environmental regulations. 
This was despite an increase in ilmenite by-product volumes in H2 2016 
due to higher iron ore prices. Output from Southern India has also 
reduced in recent months due to a mining ban imposed by the authorities, 
subject to a pending court case. Ilmenite prices have increased strongly 
in the past 12 months and are expected to incentivise the restart of 
some supply to meet additional demand, which may lead to a moderation of 
future price increases as the market reaches greater equilibrium. 
 
   Market conditions for zircon are improving, industry inventories have 
reduced and modest price increases have been achieved. 
 
   For further information, please contact: 
 
   Kenmare Resources plc 
 
   Michael Carvill, Managing Director 
 
   Tel: [phone] 
 
 
   Tony McCluskey, Financial Director 
 
   Tel: [phone] 
 
 
   Jeremy Dibb, Corporate Development and Investor Relations Manager 
 
   Tel: [phone] 
 
   Mob: + 353 87 943 0367 
 
   Murray 
 
 
   Joe Heron / Aimee Beale 
 
 
   Tel: [phone] 
 
 
   Mob: [phone] 
 
 
   Buchanan 
 
   Bobby Morse / Chris Judd 
 
   Tel: [phone] 
 
   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. 
 
   This announcement is distributed by Nasdaq Corporate Solutions on behalf 
of Nasdaq Corporate Solutions clients. 
 
   The issuer of this announcement warrants that they are solely 
responsible for the content, accuracy and originality of the information 
contained therein. 
 
   Source: Kenmare Resources via Globenewswire 
 
 
  http://www.kenmareresources.com/ 
 

(END) Dow Jones Newswires

April 13, 2017 02:00 ET (06:00 GMT)

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