Kenmare Resources Q2 & H1 2017 Production Report

 
TIDMKMR 
 
 
   Kenmare Resources plc ("Kenmare" or "the Company") 
 
   12 July 2017 
 
 
 
   Q2 & H1 2017 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 2017. 
 
   Statement from Michael Carvill, Managing Director: 
 
   "Kenmare has delivered strong production in H1 2017, with all production 
metrics up substantially over the prior year's equivalent, supporting 
guidance for 2017. Good progress is being made to increase the 
production of primary zircon and the average quality of these products. 
These improvements drive increased margins for the business, which is 
also benefitting from substantially higher average received prices in 
comparison to 2016." 
 
   Overview 
 
 
   -- Heavy Mineral Concentrate ("HMC") production increased by 8% to 359,200 
      tonnes (Q2 2016: 331,300 tonnes) 
 
   -- Ilmenite production increased by 14% to 248,300 tonnes (Q2 2016: 217,900 
      tonnes) 
 
   -- Primary zircon production increased by 18% to 12,900 tonnes (Q2 2016: 
      10,900 tonnes) 
 
   -- Total shipments of finished products were down 10% to 279,600 tonnes, due 
      to normal variations in shipping schedules (Q2 2016: 309,000 tonnes) 
 
   -- Ilmenite and zircon prices increased in Q2 2017 
 
 
   Production 
 
   Production from the Moma Mine in Q2 & H1 2017 was as follows: 
 
 
 
 
                       Q2-2017   Q2-2016   Q1-2017    H1-2017    H1-2016 
                       Tonnes    % Change  % Change    Tonnes    % Change 
Excavated Ore *       8,976,000       22%        7%  17,383,000       20% 
Grade*                    4.46%       -9%       -8%       4.66%        1% 
Production 
 HMC                    359,200        8%        2%     712,700       18% 
 Ilmenite               248,300       14%       -3%     504,800       25% 
 Zircon                  19,200       14%        4%      37,700       32% 
 of which primary        12,900       18%        1%      25,700       33% 
 of which secondary       6,300        5%       11%      12,000       30% 
Rutile                    2,300       21%        5%       4,400       47% 
Shipments               279,600      -10%        9%     535,700       21% 
 
 
   * Excavated Ore and grade prior to any floor losses. 
 
   In Q2 2017, Kenmare mined 8,976,000 tonnes of ore at an average grade of 
4.46% and produced 359,200 tonnes of HMC. Finished product volumes for 
the period included 248,300 tonnes of ilmenite and 19,200 tonnes of 
zircon (including 6,300 tonnes of a lower grade secondary zircon 
product). 
 
   The tonnage of ore excavated was up 7% in comparison to Q1 2017, as 
mining reliability continued to improve and supplementary mining helped 
to sustain throughputs. As expected, grades reduced by 8% in Q2 2017 
compared with Q1 2017, while HMC production rose 2%. Grades are forecast 
to be lower in H2 2017, though HMC production volumes are expected to be 
broadly maintained as improvements in operating times and supplementary 
mining operations will compensate for the grade decline. 
 
   Ilmenite production for the quarter was 248,300 tonnes, down 3% on Q1 
2017, as a result of increased circuit maintenance and campaigns to 
retreat spillage stockpiles, but up 14% compared to Q2 2016, reflecting 
the operating time improvements seen over the past year. 
 
   Zircon production for the period increased 14% to 19,200 tonnes, with 
primary production increasing 18% and secondary production increasing 5% 
in comparison to Q2 2016. Increased outputs of higher grade primary 
products are a result of improving recoveries, with further increases 
expected in H2 2017. 
 
   Kenmare shipped 279,600 tonnes of finished products in Q2 2017, 
comprising 250,000 tonnes of ilmenite, 26,600 tonnes of zircon 
(including 9,400 tonnes of secondary grade zircon) and 3,000 tonnes of 
rutile. The decline versus the 309,000 tonnes in Q2 2016 was due to 
normal shipping schedule variations. Shipping capacity will be reduced 
in Q3 2017, as one of the Company's two transhipment barges is currently 
undergoing maintenance required every five years to comply with marine 
classification regulations. The vessel is expected to return to service 
in Q3, with no impact on shipping volumes for the year. 
 
   Closing stock of HMC at the end of Q2 2017 was 59,300 tonnes, compared 
with 22,100 tonnes at the beginning of the quarter. Closing stock of 
intermediate magnetic concentrate at the end of the period was 61,500 
tonnes. Closing stock of finished products at the end of Q2 2017 was 
202,500 tonnes, of which 49,300 tonnes were being held for a customer 
and which have been paid for. 
 
   Market 
 
   Following a solid Q1 2017, Kenmare's ilmenite sales volumes were 
maintained in Q2 2017 at an increased average price per tonne. Kenmare 
has agreed further price increases for contracted volumes in H2 2017 in 
comparison to H1 2017, though there has been a recent drop in domestic 
Chinese spot prices. 
 
   Increased pigment production volumes and rising ilmenite prices have led 
some pigment producers to increase feedstock inventories, to offset 
further prices increases and ensure supply. Higher ilmenite prices have 
also incentivised additional supply, as noted in Kenmare's Q1 2017 
Production Update. This is partially attributable to stockpiles of low 
quality ilmenite and concentrates entering the market, which are not 
expected to be a source of long term supply. These factors, in 
combination with seasonally weaker Chinese pigment demand have resulted 
in weaker Chinese offtake of ilmenite in recent weeks, as customers take 
a more cautious approach to buying. 
 
   The outlook for zircon continues to improve as supply constraints become 
more evident and demand continues to recover. Kenmare has successfully 
implemented price increases for Q3 2017 zircon shipments in line with 
the general movement in the market, following more modest increases 
achieved in H1 2017. 
 
   The Company's half-yearly results in respect of the six months ended 30 
June 2017 will be issued on 22 August 2017. 
 
   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] 
 
   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

July 12, 2017 02:00 ET (06:00 GMT)

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