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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Kenmare Resources Plc | LSE:KMR | London | Ordinary Share | IE00BDC5DG00 | ORD EUR0.001 (CDI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -2.50 | -0.75% | 330.50 | 320.50 | 324.50 | 333.00 | 324.00 | 333.00 | 57,282 | 16:35:21 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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Kenmare Resources plc ("Kenmare" or "the Group")
19 March 2020
2019 Preliminary Results
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,
today announces its preliminary results for the twelve months to 31
December 2019.
Statement from Michael Carvill, Managing Director:
"While 2019 was another year of robust financial and operational
performance for Kenmare, the recent outbreak of COVID-19 presents global
challenges and uncertainties. The safety and wellbeing of our employees
and our host communities remain our overriding priorities. To date there
has not been a confirmed case of COVID-19 in Mozambique and there have
been no material adverse effects on production at Moma, however
stringent risk mitigation procedures have been implemented at site.
Ilmenite customer demand remains strong and market pricing has continued
to advance year to date. It is likely that there will be some adverse
effects on the business this year but the extent is difficult to
predict. We will continue to monitor the situation closely and adjust
our plans as appropriate.
During 2019 we continued to advance our growth programme. The second of
our three development projects, the construction of Wet Concentrator
Plant C, produced its first Heavy Mineral Concentrate in February 2020.
The third project, the relocation of WCP B, is currently progressing on
track for Q3 2020. Following completion of this growth programme,
Kenmare expects to be positioned in the first quartile of the industry
revenue to cost curve.
Average received prices for our products increased by 8% in 2019
compared to 2018 and tight ilmenite market conditions have continued in
Q1 2020. We see a positive long-term outlook for all our products due to
the depletion of existing mines and limited supply from new mines in the
coming years, coupled with continued demand growth.
The Group has a robust financial position, with gross cash of US$81.2
million at year-end 2019, and we were pleased to have secured our new
debt facilities in December 2019. Kenmare is pleased to declare its
maiden full year dividend of 8.18 US cents per share, in line with our
policy to return a minimum of 20% of profit after tax. We look forward
to increasing returns to shareholders from next year, once we have
completed our growth programme."
Overview
-- Maiden full year 2019 dividend declared of USc8.18 per share, comprised
of a USc2.66 interim dividend (paid in October 2019) and a final USc5.52
per share (to be paid in May 2020)
-- Revenues of US$270.9 million, representing a 3% increase compared to 2018
(US$262.2 million) due to an increased average sales price, partially
offset by reduced volumes
-- EBITDA of US$92.6 million in line with 2018 (US$93.3 million),
representing a 36% EBITDA margin (2018: 38%)
-- Profit after tax of US$44.8 million, representing a 12% decrease compared
to 2018 (US$50.9 million) due primarily to increased net finance costs,
foreign exchange losses and increased depreciation charges
-- Net cash position of US$13.7 million at year-end 2019 in line with 2018
(US$13.5 million)
-- New debt facilities secured, providing the Group with additional
financial flexibility as a result of the extended maturity profile and
increased liquidity, positioning Kenmare strongly to fund its growth
programme in 2020
-- Ilmenite production within 1% of original FY 2019 guidance range and
original guidance achieved for all other products
-- Total shipments of finished products of 1,029,300 tonnes, representing a
4% decrease compared to 2018 (1,074,400 tonnes), due primarily to poor
weather impacting loading rates in the first nine months of the year,
partially offset by a record quarter in Q4 2019
-- Cash operating costs per tonne of US$158 per tonne within original
guidance range, representing a 9% increase compared to 2018 (US$145 per
tonne), due primarily to lower production volumes in 2019
-- Net ilmenite unit costs of US$81 per tonne in line with 2018 (2018: US$79
per tonne) due to increased co-product revenues
-- Post-period end, first HMC production delivered from WCP C and project
expected to be completed within US$45 million budget
-- Project execution of relocation of WCP B to Pilivili on track, including
construction of purpose-built road
Results conference call
Kenmare will host a conference call and webcast for analysts, investors
and media today at 9:00am UK time. Participant dial-in numbers for the
conference call are as follows (a pin code is not required to access the
call):
UK: +443333009035
Ireland: +35312232017
To access the webcast please visit
https://www.globenewswire.com/Tracker?data=h1OhKRSSyOAgHDHWk2BuEW2yViZLWqm8dgMe6rvsm0ZH6vziLR91edii33ykcHOItzq1eY8iJR-Mj3uYWukpWYpg1a15g4XCeak8QVmUYYw=
www.kenmareresources.com
For further information, please contact:
Kenmare Resources plc
Jeremy Dibb / Katharine Sutton
Investor Relations
Tel: +353 1 671 0411
Mob: + 353 87 943 0367 / + 353 87 663 0875
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 7% of global titanium
feedstocks and the Group 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.
CHAIRMAN'S STATEMENT
Dear shareholders,
Building on the momentum of 2018, I'm pleased to report that in 2019 and
early 2020 we have continued to make strong progress towards increasing
production of ilmenite to 1.2 million tonnes per annum from 2021, plus
co-products. Our average received commodity price also increased by 8%
in 2019, supported by robust demand for ilmenite and continuing supply
constraints.
Moma is one of the largest titanium minerals deposits in the world and
our outlined growth projects are expected both to increase top line
revenues and materially improve our margins from 2021, providing
stronger cash flow stability. However, I am mindful that the
implications of the global COVID-19 outbreak are developing rapidly and
whilst we are taking all pragmatic steps to respond to this
unprecedented situation the effect on our business is uncertain.
Shareholder returns and increased financial flexibility
Following the announcement of our dividend policy in 2018, I am pleased
to report that in October 2019 we paid our maiden interim dividend of
USc2.66 per share, in line with our policy to return a minimum of 20% of
profit after tax to shareholders. The Board is recommending a final
dividend of USc5.52 per share, resulting in a 2019 full year dividend of
USc8.18 per share, based on 2019 profit after tax of US$44.8 million and
earnings per share (basic) of US$0.41 (2018: US$0.46).
From 2021, following the completion of our growth projects, we expect to
generate stronger free cash flow, providing an opportunity to deliver
increased shareholder returns.
In 2019 we also enhanced our financial flexibility through the signing
of new debt facilities to refinance our former project loans. These new
facilities are more suited to our position as an established producer
and provide additional headroom during this period of increased capital
expenditure.
Growth strategy
Between 2018 and 2020 we are investing approximately US$160 million in
three development projects to achieve our targeted production rate of
1.2 million tonnes per annum, supported by strong market conditions for
titanium feedstocks.
In 2019 we also successfully introduced a new concentrate product to the
market, providing us with an avenue to generate revenue from monazite, a
mineral containing Rare Earth Oxides (REOs) used in a range of
applications including renewable energy, thus expanding our margins.
Sustainable and responsible operations
In addition to operational delivery and progressing our growth programme,
we have maintained focus on being a responsible corporate citizen to
ensure shared prosperity for all stakeholders. In 2019, through the
Kenmare Moma Development Association (KMAD), we invested US$1.4 million
into community initiatives. We appreciate the continued support of the
government of Mozambique and the regulatory and regional authorities in
country, as well as our host communities.
We were delighted that our efforts to be a responsible corporate citizen
were recognised at the Chartered Accountants Ireland Published Accounts
Awards, with Kenmare winning the Best Social Responsibility Reporting
Award.
Corporate governance
Continuing the theme of responsibility, and as part of our focus on
corporate governance best practice, in October 2019 the Board approved
the establishment of a Sustainability Committee. Chaired by Elizabeth
Headon, the Committee will ensure that Kenmare has the appropriate
strategies, policies and operational controls in place to maintain a
socially responsible business.
We are committed to professional and ethically sound standards in all
that we do.
Board development
We continue to refresh the composition of the Board to ensure that it is
has the skills, experience and diversity required to operate
effectively. We recognise the need for a broad range of views to support
and challenge management in the execution of Kenmare's strategy.
Consequently, we were delighted to announce the appointment of Dr. Elaine Dorward-King as a Non-Executive Director in November 2019. Elaine's 30 years of experience in the mining, chemicals and engineering industries, including in mineral sands, combined with her sustainability expertise, will enable her to make a strong contribution to the Group and will complement the existing experience of the Board. Outlook Our current mine plan extends beyond 2040 based on the expanded production rate of 1.2 million tonnes per annum of ilmenite, following the expected completion of our growth programme in Q4 2020. Cash operating costs per tonne are anticipated to reduce as a result of this higher production and we expect to deliver significantly stronger free cash flow. We currently expect this to position us to deliver increased capital returns to shareholders, not withstanding the global impact of COVID-19. We will continue to work closely with all our partners, including our host government, local communities and customers, to ensure that we create value for all of our stakeholders. Acknowledgements As we acknowledge another robust, dynamic and profitable year for Kenmare, I would like to offer my sincere thanks to all employees and the management team. As a Board, we set the ambitious task of delivering a substantial growth programme, while continuing to achieve operational targets and paying a maiden dividend, and through our team's hard work and dedication these targets have been achieved. Finally, I would like to express my gratitude to our shareholders for their continued support and trust in the Group. We are well-positioned to deliver long-term, sustainable growth. STEVEN MCTIERNAN Chairman MANAGING DIRECTOR'S STATEMENT 2019 marked another significant step in the development of Kenmare, including the payment of our maiden dividend. We achieved record excavated ore tonnes during the year, following the successful 20% capacity upgrade of WCP B during 2018, and we maintained our strong focus on safety. Our plans to increase production progressed well, with the development of WCP C bringing us closer to our target of 1.2 million tonnes per annum of ilmenite by 2021. Through this 35% production increase on 2019 volumes, we will also achieve significant margin expansion, elevating us to the first quartile of the industry revenue to cost curve. Looking ahead to the remainder of 2020, it's difficult to predict the full impact of COVID-19. However, with our market-leading position, supported by a long-life tier one asset, and a compelling growth strategy, we are in good shape. Safety As always at Kenmare, the health, safety and wellbeing of our people and our host communities are our highest priorities. In 2019 we achieved a LTIFR of 0.27 per 200,000 man-hours worked and we retained our five-star NOSA safety accreditation for the fourth consecutive year. We introduced a number of new safety initiatives, including theatre workshops and the Golden Rules of Safety, and we will continue to target further improvement. As promised last year, we also redoubled our efforts towards community safety through education, hosting workshops on road safety in schools within our host communities. Sustainability At Kenmare, our actions are informed by our guiding principles: We Care, We Grow, We Excel. Environmental stewardship and being a responsible corporate citizen are at the heart of all we do. I would like to express my thanks to our stakeholders in Mozambique for their support during the past year, including our employees, host communities, local suppliers and the Government. We continue to be an engaged participant in the Extractive Industries Transparency Initiative (EITI), with Kenmare representatives having been on Mozambique's EITI co-ordinating committee since its inception in 2009. Our people are central to the delivery of our strategy. At the end of 2019 we had over 1,420 employees and 96% of our employees at the Moma Mine were Mozambican. The Moma workforce received over 13,800 hours of training during 2019 as we believe that development opportunities are central to attracting and retaining the best people. In 2019, through the Kenmare Moma Development Association (KMAD), US$1.4 million was invested in community initiatives. Operational performance 2019 was a record year for excavated ore (36.8 million tonnes), driven by the 20% upgrade of WCP B, a dredge automation project and utilisation improvements. Ilmenite production was within 1% of its original guidance range (892,900 tonnes) and guidance was achieved for all other products. Q4 2019 was a record quarter for shipments (352,900 tonnes), improving on the previous quarterly record by 10%. Despite poor weather conditions impacting loading rates in the first three quarters, 2019 shipments totalled over one million tonnes of finished products for the fourth consecutive year. Total cash operating costs and unit costs were within the respective original guidance ranges. From 2021 we expect unit costs to decrease, driving stronger margins and providing resilience against commodity price volatility. 1.2 Mtpa ilmenite production from 2021 Following the successful commissioning of the WCP B upgrade in 2018, in 2019 we built our third mining plant: WCP C. WCP C is mining a high grade area of the Namalope ore zone and adds 500 tonnes per hour of additional mining capacity. The project is expected to be delivered within its budget of US$45 million and is an important step in sustaining our targeted production rate of 1.2 million tonnes per annum of ilmenite. WCP C is now operating well and providing a meaningful contribution to Moma's production. Project execution for the relocation of WCP B to the high grade Pilivili ore zone is well underway and currently currently currently on schedule. The project includes the construction of a 23km road, the installation of an electrical substation and the establishment of a 17km positive displacement pumping system. The move is on track to take place in Q3 2020, with commissioning anticipated in Q4 2020. From 2021 we expect our production to account for approximately 10% of global supply of titanium feedstocks, supported by growing global demand. Eamonn Keenan I want to take this opportunity to remember our colleague Eamonn Keenan. He was one of the first members of the Kenmare team, and as Sales and Marketing manager he was responsible for developing the market for our products. Following a short illness, Eamonn sadly passed away on 9 October 2019. Like all of our team, I am deeply saddened by Eamonn's death. We worked together for over 25 years and he was a highly valued colleague and friend. Eamonn played a key role in helping Kenmare to grow into the Company it is today, and he was well respected throughout the mineral sands industry. His memory will be honoured by all who knew and worked with him. Product markets The ilmenite and rutile we produce are used to make titanium dioxide pigment, which imparts whiteness and opacity in the production of paper, paint and plastic. Kenmare continues to be the largest global supplier of merchant ilmenite and the fourth largest producer of titanium feedstocks. Zircon's principal use is in the manufacture of ceramics. Based on analysis of historic trends, we expect that demand for all of our products will increase in line with global growth in gross domestic product and emerging market urbanisation. In 2019 Kenmare achieved higher average prices for titanium feedstocks (ilmenite and rutile) than in 2018, but lower average prices for zircon. Ilmenite prices increased by 7% during 2019 and prices in H2 2019 increased by more than 10% compared to H1 2019. Prices have increased further in the early months of 2020 due to strong global demand and continuing supply constraints. While Kenmare is profitable at current price levels, prices remain largely insufficient to incentivise new greenfield production, supporting tight ilmenite market conditions in the longer term. It is difficult to predict the adverse impact on the market this year due to the global COVID-19 outbreak. However, we have yet to see any negative impact on customer demand or market pricing for titanium minerals. To the extent that there is a general decline in global economic activity, this is likely to affect our end product markets. Zircon prices decreased by 5% in 2019 as a result of slower global growth leading to lower demand, coincident with increased supply. This resulted in softer pricing, particularly in the Chinese market. We believe that 2020 is likely to be a challenging year for the zircon industry as the market remains in oversupply and producer inventories are high. Following the outbreak of COVID-19 we have seen further pressure on zircon prices. However, global zircon production is forecast to decline in the coming years, with mine closures and ore body depletion at a number of operations, supporting higher long-term prices. Outlook Following the recent global outbreak of COVID-19, Kenmare has been taking actions to mitigate the potential impact of the virus. Our highest priority is to protect all our employees and the local communities in Mozambique. To minimise the potential for COVID-19 to spread to the operations, the Group has instigated strict procedures for access to the Mine and we have implemented heightened health protocols. We have also imposed restrictions on travel for all employees. The Group is working closely with its on-site contractors and evaluating the potential impacts on its operations and supply chain, on the execution of its development projects and on its customers, which may be adversely affected. We believe that the fundamentals for all of our products remain positive. At Kenmare, we will continue to focus on the three pillars of
our strategy: growth, margin expansion and shareholder returns.
Partnership and sustainability will also remain key priorities.
With a globally significant asset, a robust balance sheet and a strong
team, we are well positioned to meet any challenges that might arise and
to create new opportunities. We will aim to deliver superior value as we
responsibly meet global demand for our 'quality-of-life' minerals.
MICHAEL CARVILL
Managing Director
Unaudited consolidated statement of financial position
As at 31 December 2019
2019 2018
Notes US$'000 US$'000
Assets
Non-current assets
Property, plant and equipment 9 852,035 806,011
Deferred tax asset 469 --
852,504 806,011
Current assets
Inventories 51,846 53,872
Trade and other receivables 41,177 22,445
Cash and cash equivalents 10 81,177 97,030
174,200 173,347
Total assets 1,026,704 979,358
Equity
Capital and reserves attributable to the
Company's equity holders
Called-up share capital 11 215,046 215,046
Share premium 545,729 730,897
Other reserves 37,202 35,671
Retained earnings 93,851 (133,179)
Total equity 891,828 848,435
Liabilities
Non-current liabilities
Bank loans 12 60,736 61,905
Lease liabilities 3,091 --
Provisions 28,351 22,359
92,178 84,264
Current liabilities
Bank loans 12 167 21,558
Lease liabilities 1,363 --
Other financial liabilities -- 1
Trade and other payables 36,044 22,592
Tax liabilities 4,381 1,071
Provisions 743 1,437
42,698 46,659
Total liabilities 134,876 130,923
Total equity and liabilities 1,026,704 979,358
Unaudited consolidated statement of comprehensive income
For the financial year ended 31 December 2019
2019 2018
Notes US$'000 US$'000
Revenue 2 270,944 262,199
Cost of sales 4 (178,432) (168,251)
Gross profit 92,512 93,948
Other operating costs 5 (33,289) (31,012)
Operating profit 59,223 62,936
Finance income 1,536 871
Finance costs 6 (8,920) (7,751)
Foreign exchange (loss)/gain (1,884) 48
Profit before tax 49,955 56,104
Income tax expense 7 (5,152) (5,230)
Profit for the financial year and total comprehensive
income for the financial year 44,803 50,874
Attributable to equity holders 44,803 50,874
US$ per US$ per
share share
Profit per share: Basic 8 0.41 0.46
Profit per share: Diluted 8 0.40 0.46
Unaudited consolidated statement of changes in equity
For the financial year ended 31 December 2019
Called-Up Share Share Retained Share-Based Payment
Capital Premium Earnings Undenominated Capital Reserve Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1
January 2018 215,046 730,897 (184,053) 11,336 22,915 796,141
Profit for the
financial
year -- -- 50,874 -- -- 50,874
Transactions
with owners of
the Company
Contributions
and
distribution
Share-based
payments -- -- -- -- 1,420 1,420
Balance at 1
January 2019 215,046 730,897 (133,179) 11,336 24,335 848,435
Capital
reduction -- (185,253) 185,253 -- -- --
Profit for the
financial
year -- -- 44,803 -- -- 44,803
Transactions
with owners of
the Company
Contributions
and
distributions
Share-based
payments -- -- -- -- 1,787 1,787
Shares issued 85 (256) (171)
Dividends -- -- (3,026) -- -- (3,026)
Balance at 31
December 215,046 545,729 93,851 11,336 25,866 891,828
Retained Earnings
Retained earnings comprise the expenses on the issue of equity in July
2016 and accumulated profit and losses in the current and prior
financial years.
On 5 December 2018, shareholders approved a resolution to reduce the
capital of the Company in order to eliminate historic losses. On 1
February 2019, the High Court of Ireland confirmed this resolution. The
reduction of capital and elimination of losses took effect on 5 February
2019 which resulted in share premium being reduced by US$185.3 million
and retained earnings being increased by US$185.3 million.
Share-Based Payment Reserve
The share-based payment reserve arises on the grant of share options and
shares to employees and consultants under the share option schemes.
Unaudited consolidated statement of cash flows
For the financial year ended 31 December 2019
2019 2018
Notes US$'000 US$'000
Operating activities
Profit for the financial year after tax 44,803 50,874
Adjustment for:
Foreign exchange movement 1,884 (48)
Share-based payments 1,616 1,420
Finance income (1,536) (871)
Finance costs 6 8,920 7,751
Income tax expense 5,152 5,230
Depreciation 9 33,381 30,442
Decrease in other financial liabilities (1) (7)
(Decrease)/increase in provisions (655) 210
Decrease/(increase) in inventories 2,026 (1,166)
(Increase)/decrease in trade and other receivables (20,235) 1,558
Increase/(decrease) in trade and other payables 7,882 (3,080)
Income tax paid (2,310) --
Interest received 1,536 871
Interest paid (6,094) (6,227)
Net cash from operating activities 76,369 86,957
Investing activities
Additions to property, plant and equipment 9 (64,750) (39,761)
Net cash used in investing activities (64,750) (39,761)
Financing activities
Dividends paid (3,026) --
Repayment of debt 12 (84,168) (19,048)
Drawdown of debt 12 67,258 --
Debt transaction fees paid 12 (6,522) --
Payment of lease liabilities (967) --
Net cash used in financing activities (27,425) (19,048)
Net (decrease)/increase in cash and cash equivalents (15,806) 28,148
Cash and cash equivalents at the beginning of the
financial year 97,030 68,774
Effect of exchange rate changes on cash and cash
equivalents (47) 108
Cash and cash equivalents at the end of the financial
year 10 81,177 97,030
Unaudited notes to the consolidated financial statements
For the financial year ended 31 December 2019
1. Statement of Accounting Policies
On 19 March 2020, the Directors approved the preliminary results for
publication. While the unaudited consolidated financial statements for
the year ended 31 December 2019, from which the preliminary results have
been extracted, are prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union, these
preliminary results do not contain sufficient information to comply with
IFRS. The Directors expect to publish the full financial statements that
comply with IFRS as adopted by the European Union in March 2020.
Based on the Group's cash flow forecast, the Directors believe that the
Group has adequate resources for the foreseeable future and continue to
adopt the going concern basis of accounting in preparing the annual
financial statements.
The auditors, KPMG have not yet issued their audit opinion on the
financial statements in respect of the year ended 31 December 2019. The
financial information included within this unaudited preliminary results
statement for the years ended 31 December 2019 and 31 December 2018 does
not constitute the statutory financial statements of the Group within
the meaning of section 293 of the Companies Act 2014. The Group
financial information in this preliminary statement for the year ended
31 December 2019 is unaudited. A copy of the statutory financial
statements in respect of the year ended 31 December 2019 will be annexed
to the next annual return and filed with the Registrar of Companies.
The Group financial information for the year ended 31 December 2018
included in this preliminary statement represents an abbreviated version
of the Group's financial statements for that year. The statutory
financial statements for the Group for the year ended 31 December 2018,
upon which the auditors, Deloitte, have issued an unqualified opinion,
were annexed to the annual return of the Company and filed with the
Registrar of Companies.
Changes in accounting policies
The most significant change in accounting policy arises from the
adoption of IFRS 16 Leases, and this is described in detail below.
The Group has adopted IFRIC 23 Uncertainty over Income Tax Treatments
which is effective for accounting periods beginning on or after 1
January 2019. The interpretation is applied to the determination of
taxable profit (tax loss), tax bases, unused tax losses, unused tax
credits and tax rates, when there is uncertainty over income tax
treatments under IAS 12. The adoption of this interpretation has not had
a material impact on the financial statements of the Group.
IFRS 16 Leases
IFRS 16 Leases introduced a single accounting model for lessees. As a
result, the Group, as a lessee, has recognised right-of-use assets
representing its rights to use the underlying assets and lease
liabilities representing its obligation to make lease payments on the
Statement of Financial Position.
The Group has applied IFRS 16 using the modified retrospective approach,
under which the liability is recognised as the present value of the
outstanding rentals at 1 January 2019. Accordingly, the comparative
information presented for 2018 has not been restated i.e. it is
presented, as previously reported, under IAS 17 and related
interpretations. The details of the changes in accounting policies are
disclosed below.
Definition of a lease
Previously, the Group determined at contract inception whether an
arrangement was, or contained, a lease under IAS 17 Leases and IFRIC 4
Determining whether an arrangement contains a lease. The Group now
assesses whether a contract is, or contains, a lease based on the new
definition of a lease. Under IFRS 16, a contract is, or contains, a
lease if the contract conveys a right to control the use of an
identified asset for a period of time in exchange for consideration.
On transition to IFRS 16, the Group elected to apply the practical
expedient to grandfather the assessment of which transactions are
leases. It applied IFRS 16 only to contracts that were previously
identified as leases. Contracts that were not identified as leases under
IAS 17 and IFRIC 4 were not reassessed. Therefore, the definition of a
lease under IFRS 16 has been applied only to contracts entered into or
changed on or after 1 January 2019.
At inception or on reassessment of a contract that contains a lease
component, the Group allocates the consideration in the contract to each
lease and non-lease component on the basis of their relative stand-alone
prices.
As a lessee -- transition
The Group leases its head office at Styne House, Dublin, its Mozambique
country office in Maputo and electricity generators at the Mine. As a
lessee, the Group previously classified each of their leases as
operating leases based on its assessment of whether the lease
transferred substantially all of the risks and rewards of ownership.
Under IFRS 16, the Group recognises right-of-use assets and lease
liabilities for these leases - i.e. these leases are on-balance sheet.
On transition, lease liabilities were measured at the present value of
the remaining lease payments, discounted at the Group's incremental
borrowing rate as at 1 January 2019. Right-of-use assets were measured
at amounts equal to the lease liability.
When measuring lease liabilities for leases that were classified as
operating leases, the Group discounted lease payments using an
appropriate discount rate based on the Group's incremental borrowing
rate at 1 January 2019. The weighted average rate applied was 7%. This
rate has been determined by taking into account the Group borrowing rate,
term of the lease, currency, security and other factors. The Group
presents right-of-use assets in 'property, plant and equipment', which
is the same line item as it presents underlying assets of the same
nature that it owns. The carrying amount of right-of-use assets as at 31
December 2019 is US$4.3 million.
The Groups presents lease liabilities on the face of the Statement of
Financial Position.
Impacts on transition and for the period
Impact on transition 1 January 2019
---------------------------------------------------- --------------
US$'000
---------------------------------------------------- --------------
Right-of-use asset presented in property, plant and
equipment 5,043
---------------------------------------------------- --------------
Lease liabilities 5,043
---------------------------------------------------- --------------
The Maputo office lease was entered into in February 2019 and the Group
recognised an additional right-of-use asset presented in property, plant
and equipment and a lease liability of US$0.4 million. Also, in relation
to those leases under IFRS 16, the Group has recognised depreciation and
interest costs, instead of an operating lease expense. During the year
ended 31 December 2019, the Group recognised US$1.1 million of
depreciation charges and US$0.4 million of interest costs in respect of
these leases. During the year the Group paid lease principal of US$1.0
million and lease interest of US$0.4 million.
1 January 2019
---------------------------------------------------------- --------------
US$'000
---------------------------------------------------------- --------------
Operating lease commitments at 31 December 2018 as
disclosed in the
Group's consolidated financial statements 6,257
---------------------------------------------------------- --------------
The effect of discounting using the incremental borrowing
rate at 1 January 2019 (1,214)
---------------------------------------------------------- --------------
Lease liabilities recognised at 1 January 2019 5,043
---------------------------------------------------------- --------------
2. Revenue
2019 2018
US$'000 US$'000
Sale of mineral products 270,944 262,199
During the financial year, the Group sold 1,029,300 tonnes (2018:
1,074,300 tonnes) of finished products ilmenite, rutile, zircon and
concentrates to customers at a sales value of US$270.9 million (2018:
US$262.2 million).
Revenue from major products
2019 2018
US$'000 US$'000
Ilmenite 182,980 181,776
Zircon 60,545 59,772
Rutile 8,047 5,038
Concentrates 19,372 15,613
Total 270,944 262,199
Geographical information
2019 2018
US$'000 US$'000
Revenue from external customers
China 127,333 103,196
USA 27,500 27,760
Italy 31,177 22,871
Rest of the world 84,934 108,372
Total 270,944 262,199
The Group's revenue from external customers is generated by the Moma
Titanium Minerals Mine, the non-current assets of which are US$847.5
million (2018: US$802.2 million).
Information about major customers
2019 2018
US$'000 US$'000
Revenue from external customers
Largest customer 36,522 37,625
Second largest customer 29,564 29,814
Third largest customer 29,316 28,474
Fourth largest customer 29,235 25,079
Total 124,637 120,922
All revenues are generated by the Moma Titanium Minerals Mine.
3. Segment reporting
Information on the operations of the Moma Titanium Minerals Mine in
Mozambique is reported to the Group's Board for the purposes of resource
allocation and assessment of segment performance. The principal
categories for disaggregating revenue are by product type and by country
of the customer's location. The product types are ilmenite, zircon,
rutile and concentrates. Concentrates includes secondary zircon and
mineral sands concentrates. Information regarding the Group's operating
segment is reported below.
Segment revenues and results
2019 2018
US$'000 US$'000
Moma Titanium Minerals Mine
Revenue 270,944 262,199
Cost of sales (178,432) (168,251)
Gross profit 92,512 93,948
Other operating costs (28,260) (26,960)
Segment operating profit 64,252 66,988
Other corporate operating costs (5,029) (4,052)
Group operating profit 59,223 62,936
Finance income 1,536 871
Finance expenses (8,920) (7,751)
Foreign exchange (loss)/gain (1,884) 48
Profit before tax 49,955 56,104
Income tax expense (5,152) (5,230)
Profit for the financial year 44,803 50,874
Segment assets
Moma Titanium Minerals Mine assets 976,077 922,652
Corporate assets 50,627 56,706
Total assets 1,026,704 979,358
Segment liabilities
Moma Titanium Minerals Mine liabilities 129,808 125,656
Corporate liabilities 5,068 5,267
Total liabilities 134,876 130,923
Other segment information
Depreciation and amortisation
Moma Titanium Minerals Mine 33,045 30,307
Corporate 336 135
Total 33,381 30,442
Additions to non-current assets
Moma Titanium Minerals Mine 72,191 39,606
Corporate 1,722 445
Total 73,913 40,051
Corporate assets consist of the Company's and other subsidiary
undertakings property, plant and equipment including right-of-use assets,
cash and cash equivalents and prepayments at the reporting date.
Corporate liabilities consist of trade and other payables at the
reporting date.
The additions to non-currents assets included US$5.4 million (2018: US$
nil) relating to right of use assets.
4. Cost of sales
2019 2018
US$'000 US$'000
Opening stock of mineral products 31,037 30,882
Production costs 145,058 141,997
Depreciation 28,830 26,409
Closing stock of mineral products (26,493) (31,037)
Total 178,432 168,251
Mineral products consist of finished products and heavy mineral
concentrate. Mineral stock drawdown in the year was US$4.5 million
(2018: US$0.1 million increase).
5. Other operating costs
2019 2018
US$'000 US$'000
Distribution costs 9,398 9,458
Freight and demurrage costs 17,603 16,873
Administration costs 6,288 4,681
Total 33,289 31,012
Distribution costs of US$9.4 million (2018: US$9.5 million) represent
the cost of running the Mine's finished product storage, jetty and
marine fleet. Included in distribution costs is depreciation of US$4.1
million (2018: US$3.9 million). Freight costs of US$15.3 million (2018:
US$16.3 million) arise from sales to customers on a CIF or CFR basis.
Demurrage costs were US$2.3 million (2018: US$0.6 million) during the
financial year. Administration costs of US$6.3 million (2018: US$4.7
million) are the Group administration costs and include depreciation of
US$0.3 million (2018: US$0.1 million) and a share-based payment expense
of US$1.8 million (2018: US$1.4 million).
6. Finance costs
2019 2018
US$'000 US$'000
Interest on bank borrowings 5,031 5,871
Fees on debt redemption 1,555 --
Interest on lease liabilities 378 --
Factoring fees 1,496 1,409
Unwinding of discount on mine closure provision 460 471
Total 8,920 7,751
All interest has been expensed in the financial year.
7. Income tax expense
2019 2018
US$'000 US$'000
Corporation tax 5,621 1,070
Deferred tax (469) 4,160
Total 5,152 5,230
Reconciliation of effective tax rate
Profit before tax 49,955 56,104
Profit before tax multiplied by the applicable tax
rate (12.5%) 6,244 7,013
Differences in effective tax rates on overseas earnings (623) (1,783)
Recognition of deferred tax asset (469) --
Total 5,152 5,230
During the year the KMML Mozambique Branch had taxable profits of
US$15.9 million (2018: US$14.6 million) resulting in an income tax
expense of US$5.6 million (2018: US$5.2 million) being recognised. The
income tax rate applicable to taxable profits of KMML Mozambique Branch
is 35% (2018: 35%).
KMML Mozambique Branch has elected, and the fiscal regime applicable to
mining allows for, the option to deduct, as an allowable deduction,
depreciation of exploration and development expense and capital
expenditure over the life of mine. Tax losses may be carried forward for
three years.
During the year the Kenmare Resources plc had taxable profits of US$20.2
million (2018: US$ nil) which were offset against tax losses. At the
reporting date, the Company has unused tax losses of US$3.8 million
(2018: US$24.0) resulting in the recognition of a deferred tax asset of
US$0.5 million (2018: US$ nil) at 31 December 2019.
8. Earnings per share
The calculation of the basic and diluted earnings per share attributable
to the ordinary equity holders of the Company is based on the following
data:
2019 2018
US$'000 US$'000
Profit for the financial year attributable to equity
holders of the Company 44,803 50,874
2019 2018
Number of shares Number of shares
Average number of issued ordinary shares 109,601,551 109,601,551
Weighted number of shares issued during the financial
year 18,541 --
Weighted average number of issued ordinary shares
for
the purpose of basic earnings per share 109,620,092 109,601,551
Effect of dilutive potential ordinary shares:
Share awards 1,554,807 1,028,523
Weighted average number of ordinary shares for
the purposes of diluted earnings per share 111,174,899 110,630,074
US$ per share US$ per share
Earnings per share: basic 0.41 0.46
Earnings per share: diluted 0.40 0.46
9. Property, plant and equipment
Group
Plant & Development Construction Other
Equipment Expenditure In Progress Assets Total
US$'000 US$'000 US$'000 US$'000 US$'000
Cost
At 1 January 2018 780,171 250,326 30,245 54,621 1,115,363
Transfer
to/(from)
construction in
progress 13,690 -- (28,034) 14,344 --
Additions during
the financial
year 179 -- 39,427 445 40,051
Disposals (941) -- -- (5,959) (6,900)
Adjustment to
mine closure
cost 2,772 -- -- -- 2,772
At 31 December
2018 795,871 250,326 41,638 63,451 1,151,286
Adjustment on
initial
application of
IFRS 16 Leases 3,321 -- -- 1,722 5,043
At 1 January 2019 799,192 250,326 41,638 65,173 1,156,329
Transfer
to/(from)
construction in
progress 12,158 -- (20,779) 8,621 --
Additions during
the financial
year 829 67,311 344 68,484
Additions of
right-of-use
asset under
lease -- -- -- 386 386
Disposals (92) -- -- (5,167) (5,259)
Adjustment to
mine closure
cost 5,492 -- -- -- 5,492
At 31 December
2019 817,579 250,326 88,170 69,357 1,225,432
Accumulated
Depreciation
At 1 January 2018 165,899 121,023 -- 34,811 321,733
Charge for the
financial year 22,041 5,500 -- 2,901 30,442
Disposals (941) -- -- (5,959) (6,900)
At 1 January 2019 186,999 126,523 -- 31,753 345,275
Charge for the
financial year 22,429 4,103 -- 6,849 33,381
Disposals (92) -- -- (5,167) (5,259)
At 31 December
2019 209,336 130,626 -- 33,435 373,397
Carrying Amount
At 31 December
2019 608,243 119,700 88,170 35,922 852,035
At 31 December
2018 608,872 123,803 41,638 31,698 806,011
At each reporting date, the Group assesses whether there is any
indication that property, plant and equipment may be impaired. The Group
considers the relationship between its market capitalisation and its
book value, among other factors, when reviewing for indicators for
impairment. As at 31 December 2019, the market capitalisation of the
Group was below the book value of net assets which is considered an
indicator of impairment of assets.
The Group carried out an impairment review of property, plant and
equipment as at 31 December 2019. The cash-generating unit for the
purpose of impairment testing is the Moma Titanium Minerals Mine. The
basis on which the Mine is assessed is its value-in-use. The cash flow
forecast employed for the value-in-use computation is from a life of
mine financial model. The recoverable amount obtained from the financial
model represents the present value of the future pre-tax, pre-finance
cash flows discounted at 11.5%.
Key assumptions include the following:
-- The discount rate is based on the Group's weighted average cost
of capital. This rate is a best estimate of the current market
assessment of the time value of money and the risks specific to the Mine,
taking into consideration country risk, currency risk and price risk.
The factors making up the cost of equity, cost of debt and capital
structure have changed from the prior year review resulting in a
discount rate of 11.5% (2018: 12%). The Group does not consider it
appropriate to apply the full current country risk premium for
Mozambique to the calculation of the Group's weighted average cost of
capital as it believes the specific circumstances which have resulted in
the risk premium increase over the past number of years are not
appropriate to the specific circumstances of the Moma Mine. Hence,
country risk premium applicable to the calculation of the cost of equity
has been adjusted accordingly. Using a discount rate of 11.5%, the
recoverable amount is greater than the carrying amount by US$139.0
million (2018: US$201.3 million). The discount rate is a significant
factor in determining the recoverable amount. A 2.0% increase in the
discount rate to 13.5% reduces the recoverable amount by US$139.0
million. The reduction in the recoverable amount from the prior year is
a result of reduced cash flows due to the factors detailed below net of
the reduction in the discount rate from 12% to 11.5%.
-- A mine plan based on the Namalope, Nataka, Pilivili and Mualadi
proved and probable reserves and resources. Specific resource material
is included only where there is a high degree of confidence in its
economic extraction. The Mine life assumption of 40 years has not
changed from the prior year review.
-- Average annual production is approximately 1.1 million tonnes
(2018: 1.1 million tonnes) of ilmenite and co-products zircon, rutile
and concentrates over the life of the mine. This mine plan does not
include investment in additional mining capacity. Certain minimum stocks
of final and intermediate products are assumed to be maintained at
period ends. The average annual production of final products has
increased slightly from the prior year due to an update of the
production forecast.
-- Product sales prices are based on contract prices as stipulated
in marketing agreements with customers, or where contracts are based on
market prices or production is not currently contracted, prices are
forecast by the Group taking into account independent titanium mineral
sands expertise provided by TiPMC Solutions and management expectations
including general inflation of 2% per annum. Forecast prices provided by
TiPMC Solutions have been reviewed and found to be consistent by the
Group with other external sources of information. Average forecast
product sales prices have decreased slightly from the prior year end
review as a result of revised forecast pricing. A 5% reduction in
average sales prices over the life of mine reduces the recoverable
amount by US$139.0 million.
-- Operating costs are based on approved budget costs for 2020
taking into account the current running costs of the Mine and escalated
by 2% per annum thereafter. Average forecast operating costs have
increased from the prior year end review as a result of increased
operating costs in 2019, which formed the basis for the 2020 budget and
life of mine forecast thereafter. A 9% increase in operating costs over
the life of mine reduces the recoverable amount by US$139.0 million.
-- Capital costs are based on a life of mine capital plan including
inflation at 2% per annum from 2020. Average forecast capital costs have
increased from the prior year end review based on updated sustaining and
development capital plans required to maintain the existing plant over
the life of mine. The forecast takes into account reasonable cost
increases and therefore a sensitivity to this assumption which would
give rise to a reduction in the recoverable amount has not been applied.
As a result of the review no impairment provision was recognised in the
current financial year. No impairment was recognised in the prior
financial year. Given the recent past volatility and sensitivities of
the forecast to the discount rate, pricing and to a lesser extent
operating costs the impairment loss of US$64.8 million which was
recognised in the Consolidated Statement of Comprehensive Income in 2014
is not reversed.
An adjustment to the mine closure cost of US$5.5 million (2018: US$2.8
million) was made during the year as a result of a change in the
estimated closure cost to take into account the construction of WCP C
and a reduction in the related discount rate.
10. Cash and cash equivalents
2019 2018
US$'000 US$'000
Parent Company and other subsidiary accounts 81,177 55,101
Project Companies' accounts - 41,929
81,177 97,030
Cash and cash equivalents comprise cash balances held for the purposes
of meeting short-term cash commitments and investments which are readily
convertible to a known amount of cash and are subject to an
insignificant risk of change in value. Where investments are categorised
as cash equivalents, the related balances have a maturity of three
months or less from the date of investment.
Interest rate risk
Cash at bank earns interest at variable rates based on daily bank
deposit rates, which may be zero. Short-term deposits are made for
varying periods of between one day and three months, depending on the
cash requirements of the Group, and earn interest at the respective
short-term deposit rates. The interest rate profile of the Group's cash
balances at the financial year end was as follows:
2019 2018
US$'000 US$'000
Cash and cash equivalents at variable interest rate 77,734 70,789
Cash at bank on which no interest is received 3,443 26,241
81,177 97,030
Currency risk
The currency profile of cash and cash equivalents at the financial year
end is as follows:
2019 2018
US$'000 US$'000
US Dollar 77,777 94,556
South African Rand 2,056 1,956
Mozambican Metical 1,062 307
Euro 121 109
Sterling 101 51
Renminbi 41 33
Australian Dollars 19 18
81,177 97,030
Fluctuations in the currencies noted above will impact on the Group's
financial results.
Credit risk
The credit risk on cash and cash equivalents is limited because funds
available to the Group are deposited with banks with high credit ratings
assigned by international credit rating agencies. For deposits in excess
of US$50 million the Group requires that the institution has an A
(S&P)/A2 (Moody's) long-term rating. For deposits in excess of US$20
million or South African Rand-denominated deposits, the Group requires
that the institution has a BBB+ (S&P)/Baa1 (Moody's) long-term rating.
US$50.9 million of the bank deposits are with Barclays Bank PLC, which
has a long-term credit rating of A Stable (S&P)/A-1 Stable (Moody's).
US$26.8 million of the bank deposits are with HSBC Bank plc which has a
long-term credit rating of AA- Negative (S&P)/Aa3 Negative (Moody's).
11. Called-up share capital
2019 2018
EUR'000 EUR'000
Authorised share capital
181,000,000 ordinary shares of EUR0.001 each 181 181
4,000,000,000 deferred shares of EUR0.059995 each 239,980 239,980
240,161 240,161
2019 2018
US$'000 US$'000
Allotted, called up and fully paid
Opening balance
109,601,551 ordinary shares of EUR0.001 each 120 120
2,781,905,503 deferred shares of EUR0.059995 each 214,926 214,926
Total called-up share capital 215,046 215,046
Issued during the year
55,929 ordinary shares of EUR0.001 each -- --
Closing balance
109,657,480 (2018: 109,601,551) ordinary shares of
EUR0.001 each 120 120
2,781,905,503 deferred shares of EUR0.059995 each 214,926 214,926
Total called-up share capital 215,046 215,046
55,929 ordinary shares were issued during the year as a result of the
exercise of share awards.
12. Bank loans
2019 2018
US$'000 US$'000
Borrowings 60,903 83,463
The borrowings are repayable as follows:
Less than one year 167 21,558
Between two and five years 57,651 61,905
More than five years 9,608 --
67,426 83,463
Future finance charges (6,523) --
Amount due for settlement 60,903 83,463
Borrowings
On 11 December 2019 the Group entered into debt facilities with Absa
Bank Limited (acting through its Corporate and Investment Banking
Division) ("Absa"), The Emerging Africa Infrastructure Fund (part of the
Private Infrastructure Development Group) ("EAIF"), Nedbank Limited
(acting through its Nedbank Corporate and Investment Banking division)
("Nedbank"), Rand Merchant Bank and Standard Bank Group ("Standard
Bank"). Rothschild & Co. acted as financial adviser to the Group on the
transaction.
The debt facilities comprise a US$110 million Term Loan Facility and a
US$40 million Revolving Credit Facility. The debt facilities accommodate
a future Mine Closure Guarantee Facility of up to US$40 million. The
total debt facility over which security is in place is up to US$190
million. The transaction costs for arrangement of the new debt
facilities amounted to US$6.5 million.
The Term Loan Facility has a final maturity date of 11 March 2025.
Interest is at LIBOR plus 5.40% per annum. Repayment is in seven equal
semi-annual instalments, beginning 11 March 2022.
The Revolving Credit Facility has a final maturity date of 11 December
2022 extendable by up to 24 months at the lenders' discretion. Interest
is at LIBOR plus 5.00% per annum.
In addition, the facilities accommodate the later inclusion of a Mine
Closure Guarantee Facility of up to US$40 million (increasing from US$3
million to a maximum of US$40 million over five years), which will share
the security package with the Term Loan Facility and Revolving Credit
Facility on a pro rata and pari passu basis. The security package
consists of a pledge of the shares of Kenmare Moma Processing
(Mauritius) Limited and Kenmare Moma Mining (Mauritius) Limited, a
pledge of intercompany loans, a security interest in Group bank accounts
located outside of Mozambique and China, and conditional assignments of
certain contractual rights of the borrowers.
At 31 December 2019 total debt of US$60.9 million was recognised by the
Group being the drawdown of US$67.3 million before transaction costs of
US$6.5 million plus interest amortised of US$0.1 million.
US$63.5 million of the drawdown was used to repay previous debt
principal and interest as at 18 December 2019.
Covenants
The key financial covenants as at 31 December 2019 are detailed below:
As at Covenant
31 December
2019
------------------
Interest Coverage Ratio 12.50:1 4.00:1
Net Debt to EBITDA -0.15:1 2.00:1
Debt Service Coverage Ratio N/A 1.20:1
Liquidity US$121,000,000 US$15,000,000
------------------
Net Debt is defined as total financial indebtedness excluding leases
less consolidated cash and cash equivalents.
Liquidity is defined as consolidated cash and cash equivalents plus
undrawn amounts of the Revolving Credit Facility.
Reserve Tail Covenant
As at 31 December and 30 June or any other date as at which the Group
updates its Reserves Report, the Reserve Tail Ratio must exceed 30%.
Borrowings interest, currency and liquidity risk
The loan facilities are arranged at variable rates and expose the Group
to cash flow interest rate risk. Variable rates are based on six-month
LIBOR. The borrowing rate at financial year end was 7.3% (2018: 7.3%).
The interest rate profile of the Group's loan balances at the financial
year end was as follows:
2019 2018
US$'000 US$'000
Variable rate debt 60,903 83,463
The fair value of the Group's borrowings of US$60.9 million (2018:
US$83.2 million) has been calculated by discounting the expected future
cash flows at a market rate of 7.3% (2018: 6.0%).
Under the assumption that all other variables remain constant, a 1%
change in the six-month LIBOR rate results in a US$0.7 million (2018:
US$0.9 million) change in finance costs for the financial year.
The currency profile of loans at the financial year end is as follows:
2019 2018
US$'000 US$'000
US Dollars 60,903 83,463
The above sensitivity analyses are estimates of the impact of market
risks assuming the specified change occurs. Actual results in the future
may differ materially from these results due to developments in the
global financial markets which may cause fluctuations in interest rates
to vary from the assumptions made above and therefore should not be
considered a projection of likely future events.
Glossary - Alternative Performance Measures
Certain financial measures set out in the Annual Report to 31 December
2019 are not defined under International Financial Reporting Standards
(IFRSs), but represent additional measures used by the Board to assess
performance and for reporting both internally and to shareholders and
other external users. Presentation of these Alternative Performance
Measures (APMs) provides useful supplemental information which, when
viewed in conjunction with the Group's IFRS financial information,
allows for a more meaningful understanding of the underlying financial
and operating performance of the Group.
These non-IFRS measures should not be considered as an alternative to
financial measures as defined under IFRSs.
Descriptions of the APMs included in this report, as well as their
relevance for the Group, are disclosed below.
APM Description Relevance
Revenue (FOB) Revenue excluding freight Eliminates the effects of freight to provide the product
price
EBITDA Operating profit/loss before depreciation and Eliminates the effects of financing, tax and depreciation
amortisation to allow assessment of the earnings and performance
of the Group
EBITDA margin Percentage of EBITDA to Revenue (FOB) Provides a Group margin to allow for assessment of
the earnings and performance of the Group
Capital costs Additions to property, plant and equipment in the Provides the amount spent by the Company on additions
period to property, plant and equipment in the period
Cash operating cost per tonne of finished product Total costs less freight and other non-cash costs, Eliminates the non-cash impact on costs to identify
produced including inventory movements, divided by final product the actual cash outlay for production and, as production
production (tonnes) levels increase or decrease, highlights operational
performance by providing a comparable cash cost per
tonne of product produced over time
Cash operating cost per tonne of ilmenite net of Cash operating costs less FOB revenue of zircon, rutile Eliminates the non-cash impact on costs to identify
co-products and mineral sands concentrates, divided by ilmenite the actual cash outlay for production and, as production
production (tonnes) levels increase or decrease, highlights operational
performance by providing a comparable cash cost per
tonne of ilmenite produced over time
Net cash/debt Bank loans before transaction costs, loan amendment Measures the amount the Group would have to raise
fees and expenses net of cash and cash equivalents through refinancing, asset sale or equity issue if
its debt were to fall due immediately, and aids in
developing an understanding of the
leveraging of the Group
Mining -- HMC produced Heavy mineral concentrate extracted from mineral sands Provides a measure of heavy mineral concentrate extracted
deposits and which include ilmenite, zircon, rutile, from the Mine
concentrates and other heavy minerals and silica
Processing -- finished products produced Finished products produced by the mineral separation Provides a measure of finished products produced from
process the processing plants
Marketing -- finished products shipped Finished products shipped to customers during the Provides a measure of finished products shipped to
period customers
LTIFR Lost time injury frequency rate Measures the number of injuries causing lost time
per 200,000 man hours worked on site
AI All injuries Provides the number of injuries at the Mine in the
year
Revenue
2015 2016 2017 2018 2019
US$m US$m US$m US$m US$m
Revenue 142.6 141.5 208.3 262.2 270.9
Freight (3.7) (5.3) (5.4) (16.3) (15.4)
Revenue (FOB) 138.9 136.2 202.9 245.9 255.5
EBITDA
2015 2016 2017 2018 2019
US$m US$m US$m US$m US$m
Operating profit/(loss) (47.3) (25.4) 28.5 62.9 59.2
Depreciation and amortisation 35.8 30.6 32.0 30.4 33.4
EBITDA (11.5) 5.2 60.5 93.3 92.6
EBITDA margin
2015 2016 2017 2018 2019
US$m US$m US$m US$m US$m
EBITDA (11.5) 5.2 60.5 93.3 92.6
Revenue (FOB) 138.9 136.2 202.9 245.9 255.5
EBITDA margin (%) -8 4 30 38 36
Cash operating cost per tonne of finished product
2015 2016 2017 2018 2019
US$m US$m US$m US$m US$m
Cost of sales 168.1 144.0 156.6 168.3 178.4
Other operating costs 21.8 22.8 23.2 31.0 33.3
Total operating costs 189.9 166.8 179.8 199.3 211.7
Freight charges (3.7) (5.4) (5.5) (16.3) (15.4)
Total operating costs less
freight 186.2 161.4 174.3 183.0 196.3
Non-cash costs
Depreciation and amortisation (35.8) (30.6) (32.0) (30.4) (33.4)
Share-based payments 0.7 (0.4) (1.0) (1.4) (1.8)
Mineral product inventory
movements (14.7) 3.0 0.3 0.1 (4.5)
Total cash operating costs 136.4 133.4 141.6 151.3 156.6
Final product production
tonnes 821,300 979,300 1,081,300 1,043,300 988,300
Cash operating cost per tonne US$166 US$136 US$131 US$145 US$158
of finished product
Cash operating cost per tonne of ilmenite
2015 2016 2017 2018 2019
US$m US$m US$m US$m US$m
Total cash operating costs 136.4 133.4 141.6 151.3 156.6
Less FOB revenue from co-products zircon,
rutile and mineral sands concentrate (39.2) (36.6) (50.4) (75.1) (84.5)
Total cash costs less co-product revenue 97.2 96.8 91.2 76.2 72.1
Ilmenite product production tonnes 763,500 903,300 998,200 958,500 892,900
Cash operating cost per tonne of ilmenite US$127 US$107 US$91 US$79 US$81
Net cash/debt
2015 2016 2017 2018 2019
US$m US$m US$m US$m US$m
Bank debt (341.9) (102.6) (102.9) (83.5) (60.9)
Loan amendment fees and
expenses (25.9) - - - -
Transaction costs - - - - (6.6)
Gross debt (367.8) (102.6) (102.9) (83.5) (67.5)
Cash and cash equivalents 14.4 57.8 68.8 97.0 81.2
Net cash/(debt) (353.4) (44.8) (34.1) 13.5 13.7
(END) Dow Jones Newswires
March 19, 2020 03:00 ET (07:00 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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