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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| -1.50 | -0.45% | 331.50 | 328.50 | 332.00 | 335.50 | 328.50 | 334.50 | 228,456 | 16:29:42 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMKMR
Kenmare Resources plc ("Kenmare" or "the Company" or "the Group")
20 August 2019
Half-yearly results for the six months to 30 June 2019 and maiden
dividend
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 half year results for the six month period ended 30
June 2019 ("H1 2019") and declares its maiden dividend.
Statement from Michael Carvill, Managing Director:
"I'm proud to declare our maiden dividend of USc2.66 per share,
following the announcement of our dividend policy in 2018. Now is the
appropriate time to begin making shareholder returns due to our balance
sheet strength, improving free cash flow profile and long-life
resources.
Operationally, we continue to deliver robust results. Excavated ore
volumes in H1 2019 set a new record and we are on track to achieve our
full year guidance on all stated metrics. We also expect strong shipping
volumes in the second half of the year, which, combined with positive
pricing dynamics, are expected to boost revenues and profitability. We
have already seen ilmenite price increases in Q3 2019 and markets are
expected to remain tight, with positive long-term fundamentals.
Our development programme is progressing on schedule, with the objective
of increasing production to 1.2 million tonnes per annum of ilmenite
from 2021 at reduced cash operating costs per tonne. We look forward to
providing shareholders with a compelling combination of growth and
returns."
H1 2019 overview
Operations
-- Continued strong safety performance with a lost time injury frequency
rate ("LTIFR") of 0.12 per 200,000 man-hours worked in H1 2019 (H1 2018:
0.30)
-- Kenmare is on track to achieve its full year ("FY") 2019 guidance on all
stated metrics
-- Despite an 18% increase in tonnes of excavated ore, Heavy Mineral
Concentrate ("HMC") production decreased by 8% to 633,400 tonnes in H1
2019 (H1 2018: 688,900 tonnes), due to planned mining of lower ore grades,
with grades expected to improve in H2 2019
-- 2% increase in ilmenite production to 458,200 tonnes (H1 2018: 449,500
tonnes) and marginal increase in primary zircon production to 23,100
tonnes (H1 2018: 23,000 tonnes) primarily due to stronger recoveries
-- 82% increase in concentrates production to 19,500 tonnes (H1 2018: 10,700
tonnes), benefitting from the introduction of a mineral sands concentrate
product
-- 18% decrease in total shipments of finished products to 483,500 tonnes
(H1 2018: 589,200 tonnes) due primarily to adverse weather conditions --
FY 2019 total shipment volumes are expected to be in line with 2018 as
there is capacity in the shipping schedule in H2 2019 to ship additional
volumes
-- Dredge and accompanying Wet Concentrator Plant ("WCP") C progressing on
time and on budget for commissioning to commence in Q4 2019
-- Project execution has commenced for the relocation of WCP B to Pilivili,
following successful completion of a Definitive Feasibility Study ("DFS")
and Board approval
Financials and markets
-- Maiden dividend of USc2.66 per share
-- 7% increase in average received free on board ("FOB") prices to US$239
per tonne in H1 2019 compared to H1 2018, reflecting stronger market
conditions
-- Total cash operating costs of US$152 per tonne, in line with H1 2018 and
within the FY 2019 guidance range of US$150-160 per tonne
-- 12% decrease in revenues to US$122.7 million in H1 2019 (H1 2018:
US$140.1 million) due to an 18% reduction in finished product shipments,
partially offset by 7% higher average FOB prices -- revenues are expected
to strengthen in H2 2019 as shipping volumes increase
-- 11% decrease in EBITDA to US$42.8 million (H1 2018: US$48.2 million) and
20% decrease in profit before tax to US$22.8 million (H1 2018: US$28.8
million), due primarily to lower shipping volumes
-- 17% decrease in net profit after tax to US$21.9 million (H1 2018: US$26.4
million)
-- At the end of H1 2019 Kenmare had a net cash position of US$3.5 million
(31 December 2018: US$13.5 million net cash)
-- Market conditions for ilmenite strengthened in H1 2019, with markets
expected to remain tight, supporting higher prices in H2 2019
-- Zircon market remained stable in H1 2019 but is expected to be subdued in
H2 2019, while long-term fundamentals remain strong due to supply
constraints
Results conference call & presentation
The Company will host a briefing and a conference call for analysts,
investors and media today at 9:00am UK time. The briefing will be held
at the Capital Room, Threadneedles Hotel, 5 Threadneedle Street, London,
EC2R 8AY, UK and participant dial-in numbers for the conference call are
as follows (a pin code is not required to access the call):
UK: +44 203 194 0544
Ireland: +353 1 696 8182
The webcast will be available at
https://www.globenewswire.com/Tracker?data=ICrTbKBylQUVpws6U3Wrpgvw5ac7W8a8asW-DxFLJXDomYUlRhSbdz98M6V9cKMkhm16jnFAhxKij-y6zDmJmpZjGTjaOE-IgzaduPtx7Ko=
www.kenmareresources.com and playback of the webcast will be available
at:
https://www.globenewswire.com/Tracker?data=ICrTbKBylQUVpws6U3Wrpgvw5ac7W8a8asW-DxFLJXBCXXZo0Ki5aytEtx3GAlX1FxLd7vD-ttPQvB--NRL03y_EmP7dIgUSyDc8z6MCOofbpJ7Sc97MaBlxfNIXNMs3J1jfG0l94YhF7jdfBbxhzsbpdYm-gA7BAWuT41W3bZsGz2i84ImRA9y0rWex1wDYZ0DYC6CKF9z9mS4xPMblaA==
www.kenmareresources.com/investors/reports-and-presentations.
The Half Yearly Financial Report for the period ended 30 June 2019 is
also available at
https://www.globenewswire.com/Tracker?data=ICrTbKBylQUVpws6U3Wrpgvw5ac7W8a8asW-DxFLJXBCXXZo0Ki5aytEtx3GAlX1FxLd7vD-ttPQvB--NRL03xi4rjjorurAUyWCgFR-qka4TU1wm-BK8iL1MaZmorce-4eqcbO27aFa-DixLGeSl5ksd-nfScujLGAidBU7hXXuNzxCCsjCL2LNRzJwekgT0Pq_TMSBLGUPrP0TyND0jg==
www.kenmareresources.com/investors/reports-and-presentations.
For further information, please contact:
Kenmare Resources plc
Michael Carvill, Managing Director
Tel: +353 1 671 0411
Tony McCluskey, Financial Director
Tel: +353 1 671 0411
Jeremy Dibb, Corporate Development and Investor Relations Manager
Tel: +353 1 671 0411
Mob: + 353 87 943 0367
Murray
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. The Company supplies 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.
INTERIM MANAGEMENT REPORT
Group Results
Production, revenue, cost, EBITDA and profit after tax results for H1
2019 were as follows:
H1 2019 H1 2018 % Change
-------------------------------------------------- ------- ------- --------
Production (tonnes)
-------------------------------------------------- ------- ------- --------
Heavy mineral concentrate(1) 633,400 688,900 -8%
-------------------------------------------------- ------- ------- --------
Ilmenite(1) 458,200 449,500 2%
-------------------------------------------------- ------- ------- --------
Primary zircon(1) 23,100 23,000 0%
-------------------------------------------------- ------- ------- --------
Rutile(1) 4,400 4,100 7%
-------------------------------------------------- ------- ------- --------
Concentrates(1,2) 19,500 10,700 82%
-------------------------------------------------- ------- ------- --------
Total finished products(1) 505,200 487,300 4%
-------------------------------------------------- ------- ------- --------
Revenue (US$ million) 122.7 140.1 -12%
-------------------------------------------------- ------- ------- --------
Freight (US$ million) 7.3 8.8 -17%
-------------------------------------------------- ------- ------- --------
Revenue FOB (US$ million)(1) 115.4 131.3 -12%
-------------------------------------------------- ------- ------- --------
Finished products shipped (tonnes)(1) 483,500 589,200 -18%
-------------------------------------------------- ------- ------- --------
Average price (FOB) per tonne (US$/t) 239 223 7%
-------------------------------------------------- ------- ------- --------
Total operating costs (US$ million)(3) 96.6 107.9 -10%
-------------------------------------------------- ------- ------- --------
Total cash operating costs (US$ million)(4) 76.9 73.6 4%
-------------------------------------------------- ------- ------- --------
Cash operating cost per tonne of finished product
(US$/t)(1) 152 151 0%
-------------------------------------------------- ------- ------- --------
Cash operating cost per tonne of ilmenite (net of
co-products) (US$/t)(1) 78 88 -11%
-------------------------------------------------- ------- ------- --------
EBITDA (US$ million)(1) 42.8 48.2 -11%
-------------------------------------------------- ------- ------- --------
Profit before tax 22.8 28.8 -21%
-------------------------------------------------- ------- ------- --------
Notes
1. Additional information in relation to Alternative Performance Measures
("APMs") is disclosed in the Glossary
2. Concentrates includes secondary zircon and mineral sands concentrate
3. Total operating costs consists of cost of sales and other operating costs
as reported in the income statement. Included in operating costs are
depreciation and amortisation.
4. Total cash costs consists of total operating costs less freight and
non-cash costs, including inventory movements.
Operations
Kenmare continued its strong safety performance in H1 2019, with a LTIFR
of 0.12 per 200,000 man-hours worked to 30 June 2019 (H1 2018: 0.30).
Two lost time injuries were recorded during H1 2019 and Kenmare is
focused on improving its safety performance further, with new
initiatives, including the Golden Rules of Safety, introduced in the
period.
During H1 2019, Kenmare set a new record for excavated ore volumes,
mining 19.2 million tonnes at an average grade of 3.56% and producing
633,400 tonnes of HMC. Although excavated ore tonnes increased 18%
during the period (H1 2018: 16.2 million tonnes), HMC production
decreased by 8% compared to H1 2018 (688,900 tonnes), due to planned
mining of lower ore grades (H1 2018: 4.60%). Q2 2019 was forecast to be
the lowest grade quarter of the year and consequently higher grades are
anticipated for the remainder of the year.
The increase in excavated ore during H1 2019 was due primarily to the
ramp up of production from WCP B, following a 20% capacity upgrade in
2018 and further optimisation work undertaken during Q2 2019. Production
from WCP B averaged 2,500 tonnes per hour ("tph") in June 2019, in
excess of the targeted nameplate capacity of 2,400 tph. A further
increase in excavated ore volumes is expected in H2 2019, due to higher
average WCP B throughput and Projecto Oitenta.
Despite the lower HMC production during H1 2019, ilmenite production
increased by 2% to 458,200 tonnes during the period (H1 2018: 449,500
tonnes), primarily as a result of higher recoveries.
Primary zircon production was marginally higher than in the
corresponding period in 2018 at 23,100 tonnes (H1 2018: 23,000 tonnes)
and rutile production increased by 7% to 4,400 tonnes (H1 2018: 4,100
tonnes).
Concentrates production was 19,500 tonnes during H1 2019, representing
an increase of 82% compared to the corresponding period in 2018 (H1
2018: 10,700 tonnes). This increase was largely due to the introduction
of a mineral sands concentrate product, following the successful
commissioning of this product stream in Q4 2018. The first mineral sands
concentrate shipment was despatched from Moma during Q2 2019.
Kenmare shipped 483,500 tonnes of finished products during the period,
which represents an 18% decrease compared to H1 2018 (589,200 tonnes)
and comprised 438,500 tonnes of ilmenite, 24,300 tonnes of primary
zircon, 4,200 tonnes of rutile and 16,500 tonnes of concentrates. Q1
2019 shipments were significantly impacted by adverse weather conditions,
including Cyclone Idai, and unscheduled maintenance work on the product
dispatch conveyor. In Q2 2019, shipments increased by 74% compared to Q1
2019, despite further adverse weather and continued poor sea conditions.
The Company expects shipments to increase further in Q3 2019, despite
the third quarter typically being seasonally weaker, and management
remains confident that total shipping volumes in 2019 will be in line
with 2018 volumes.
Closing stock of HMC at the end of H1 2019 was 25,600 tonnes, compared
with 19,600 tonnes at the end of 2018. Closing stock of finished
products at the end of H1 2019 was 222,200 tonnes (2018: 200,000
tonnes).
Capital projects
Kenmare previously announced three development projects that together
have the objective of increasing ilmenite production by approximately
20% to 1.2 million tonnes (plus co-products) per annum on a sustainable
basis from 2021.
By the end of 2018 the first development project, a 20% expansion of WCP
B, was commissioned, on time and at a cost more than 35% below budget.
Further optimisation work was completed on WCP B during H1 2019,
including feed distribution improvements and as a result, in combination
with favourable mining conditions, WCP B exceeded targeted nameplate
capacity in June 2019. Other factors that contributed to higher
throughput were the commissioning of the dredge automation project at
WCP B during Q2 2019, as planned, and continued utilisation improvements
as a result of Projecto Oitenta, which is focused on increasing mine
utilisation from 70% to 80%.
The second development project, the construction of WCP C and its
accompanying dredge, continues to progress on time and on budget, with
commissioning scheduled to commence in Q4 2019. The dredge was launched
at the shipbuilder's yard in the Netherlands in May 2019 and it is due
to be dismantled in late August 2019, before being shipped to site in
Mozambique. The construction of the WCP also remains on track, with the
starter pond and construction site also in line with the project
delivery timeline.
Following completion of a DFS, project execution commenced in June 2019
for the third development project. The DFS confirmed the technical and
economic feasibility of the relocation of WCP B to the high grade
Pilivili ore zone and it was subsequently approved by the Board. The
contract for civil engineering work, including the construction of a
purpose-built road, was awarded earlier in August 2019. The relocation
of WCP B is scheduled to be completed in Q3 2020, with commissioning in
Q4 2020.
For more information about relocation of WCP B to Pilivili, an
announcement entitled, 'Results of DFS for Relocation of Wet
Concentrator Plant B to Pilivili', dated 4 June 2019, is available at
https://www.globenewswire.com/Tracker?data=ZUP7EJ-blYe93YkYXaVhpTX_WzWcPmGsKY-iHW3gK1oHD5Y0iqP-Ug1USjyZVOC7xLAR3Lier8IiIdrA_VrBhg-ZvPp5M3j-0fMCBdzreivsnYBfZx8ynM3D7KY52XbALDaN3SWsfHorv-N6WesyOR92ARFOnMmIkHE9gHdeDTHJQ18C83I-haQUCEgxs8jY
https://www.kenmareresources.com/investors/regulatory-news and the
Investor Presentation June 2019 is available at
https://www.globenewswire.com/Tracker?data=ZUP7EJ-blYe93YkYXaVhpTX_WzWcPmGsKY-iHW3gK1oHD5Y0iqP-Ug1USjyZVOC7Er5PjkqXxE0cEI5Ivb0Y1wwWPSOTJqX6bmXCGKXpfGUEj1GrP-T6iGnTX_qvU7jrkOVb1Oho0OZN9X8BQlRfbmFp9PN7S1HIgmZ_yXmLVco_Kf1X3S2Ubt8EXmgdmOBuj0vDv5vL81anV5JhDqwnP2COmFY4hUn3xKSoPFob-6s=
https://www.kenmareresources.com/investors/reports-and-presentations. An
animation outlining the various stages of the move of WCP B from
Namalope to Pilivili is available at
https://www.globenewswire.com/Tracker?data=ZUP7EJ-blYe93YkYXaVhpTX_WzWcPmGsKY-iHW3gK1pTlVtp54tyH7wdQRzO492WLzhrTajRfJuOFqOKlR16FAXFeeJr-38s52XHxoPWkJ3hVzFVgU0pupoyXBt6mna8zRo7B-9f4kIkizV_8qD9tZxsmoBV7SBg21t-jhbix9OKFEsnXnkCxjUMrbmzMLAhXam6U9AbynTEPECjDkna2o1j0pYNtp5-F2D1_gNfqwh1pL86IRMkPgUmryc166Fu7dP28VmqBAUadtTEkRCC2a_BQ1WfKfHkg9WLfVsumbHvvLTvbY4-wQ0BdBoAVAR3CSzF4yYyh4_PlZJYKqiV5CLIm2PdRTlq2NLZrecbp3BEa48RYQDc8EDhG_itddnE_3xcS0tSD0jqnhy_iN-WFA==
https://www.kenmareresources.com/media/video-library.
Market
The ilmenite market was stable in Q1 2019 and strengthened in Q2 2019,
leading to higher received prices during the first half of the year,
compared to H2 2018. Pigment production was weaker in the first half as
product inventories were consumed, although demand for ilmenite remained
stable as pigment plants increased consumption relative to other more
expensive feedstocks. Pigment production is expected to increase in H2
2019, as inventories have reduced, despite slower economic growth
forecast.
Global ilmenite supply remained constrained due to the continued mining
ban in India, the delayed renewal of export quotas in Vietnam, reduced
production from depleting mines in Africa and Australia and no new
supply or restarts of production forecast in the short term. Chinese
domestic ilmenite production continued to be strong, buoyed by high iron
ore prices and vanadium credits.
Chinese pigment production was also robust in H1 2019, with solid demand
for imported ilmenite in the spot market. The shift towards chloride
pigment in China became evident as two new chloride pigment lines were
commissioned and these lines rely on imported titanium feedstocks.
The summer months are typically a quiet period for the titanium
feedstocks market, but ilmenite demand has remained strong into the
start of Q3 2019. Kenmare's received ilmenite prices increased in Q2
2019 and this trend has continued into Q3 2019, due to a heightened
demand for use in chloride plants. The ilmenite market is expected to
remain tight in H2 2019, due to robust demand and lower supply.
The zircon market was stable in H1 2019, following very strong market
conditions in the first nine months of 2018, which led to more volume
being introduced to the market in late 2018. Zircon demand has been
slower than expected due to political tensions dampening sentiment in
the global market and demand is expected to remain subdued for the
remainder of the year. Long-term fundamentals for zircon remain positive,
as significant mine depletion is anticipated in the coming years.
Financial
Kenmare delivered a robust financial performance in H1 2019, despite
challenging weather conditions leading to lower total finished products
shipped. The Company expects to deliver stronger revenues and increased
profitability in H2 2019, as shipping volumes are expected to be second
half weighted and higher ilmenite prices have been agreed for H2.
Revenues decreased by 12% to US$122.7 million in H1 2019 (H1 2018:
US$140.1 million), due primarily to an 18% decrease in tonnes of
finished products sold to 483,500 tonnes (H1 2018: 589,200 tonnes),
partially offset by a 7% increase in the average FOB sales price. The
decrease in finished products sold was due to the previously disclosed
adverse weather conditions and unscheduled maintenance work.
Cost of sales decreased to US$79.6 million in H1 2019, compared to
US$92.5 million in H1 2018, reflecting the lower finished product
volumes sold in the period. Depreciation and amortisation included in
cost of sales increased by US$0.6 million (H1 2018: US$1.2 million) in
the period as a result of the increased investment in heavy mobile
equipment in the last year
Other operating costs of freight, demurrage and distribution costs
totalled US$13.3 million (H1 2018: US$13.8 million) in H1 2019. This 4%
decrease was largely as a result of fewer shipments to customers on a
cost, insurance and freight ("CIF") or cost and freight ("CFR") basis
and higher demurrage costs incurred as a result of delays in shipments,
due to poor sea conditions. Administration and marketing costs increased
to US$2.8 million (H1 2018: US$1.0 million). The share-based payment
cost in the period was US$0.9 million (H1 2018: US$0.6 million).
Total cash operating costs increased by 4% to US$76.9 million in H1 2019
(H1 2018: US$73.6 million), principally as a result of additional
demurrage costs and an adjustment to the consumables spares stock.
Payroll, maintenance and logistics costs decreased during the period,
offset by higher fuel costs as a result of higher diesel prices.
The total cash operating cost of finished product was US$152 per tonne
in H1 2019, in line with the same period in 2018 (US$151 per tonne), due
to the higher finished product production in H1 2019 offsetting the
higher cash operating costs. The total cash operating cost for H1 2019
is within the FY 2019 guidance range of US$150-160 per tonne and Kenmare
is targeting a further reduction in cash operating costs to US$120-130
per tonne (in 2018 real terms) from 2021.
The total cash operating cost of ilmenite (net of revenue from
co-products) was US$78 per tonne in H1 2019, representing an 11%
decrease compared to H1 2018. This decrease was due to higher co-product
prices and marginally stronger ilmenite production in H1 2019.
Kenmare generated EBITDA of US$42.8 million in H1 2019 (H1 2018: US$48.2
million), representing an 11% decrease compared to H1 2018. The gross
profit for the period was US$43.1 million (H1 2018: US$47.6 million) and
the operating profit was US$26.1 million (H1 2018: US$32.2 million). The
decrease in EBITDA and operating profit is primarily a result of reduced
revenue in H1 2019. The Company expects stronger revenues in H2 2019 as
shipping volumes increase.
Net finance costs decreased by 26% in H1 2019 to US$2.8 million (H1
2018: US$3.8 million), as a result of reduced debt and additional
deposit interest earned in the period.
The Group reported a foreign exchange loss of US$0.5 million (H1 2018:
US$0.4 million gain) on non-US Dollar payables net of a gain on non-US
Dollar cash and bank balances.
A tax expense of US$0.9 million (H1 2018: US$2.4 million) was incurred
in the period. This was a result of income tax of US$2.1 million (H1
2018: US$2.4 million) on the income of Kenmare Moma Mining (Mauritius)
Limited net of a deferred tax asset recognised in Kenmare Resources plc
of US$1.2 million (H1 2018: nil). This has resulted in a net profit
after tax of US$21.9 million for the period (H1 2018: US$26.4 million).
During the period, additions to property, plant and equipment were
US$24.8 million (H1 2018: US$13.4 million), reflecting spending on
sustaining and development capital expenditure.
On transition to IFRS 16 Leases effective 1 January 2019, the Group
recognised additional right-of-use assets presented in property, plant
and equipment and lease liabilities of US$5.0 million for the head
office lease and the electricity generator lease. 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 lease liability of US$0.4 million. The Group discounted lease
payments at appropriate incremental borrowing rates. The weighted
average rate applied is 7%. The Group has recognised depreciation of
US$0.5 million and interest costs of US$0.2 million instead of operating
lease expense during the six months ended 30 June 2019.
Depreciation during the period increased to US$16.7 million, compared to
US$16.0 million in H1 2018, as a result of additions to property, plant
and equipment. The Group carried out an impairment review of property,
plant and equipment at the period end and the key assumptions of this
review are set out in Note 5 of the Financial Statements. No impairment
provision is required as a result of this review.
Inventory at the period end amounted to US$58.6 million (2018: US$53.9
million), consisting of intermediate and final mineral products of
US$36.2 million (2018: US$31.0 million) and consumables and spares of
US$22.4 million (2018: US$22.9 million). Closing stock of HMC at the end
of H1 2019 was 25,600 tonnes (2018: 19,600 tonnes). Closing stock of
finished products at the end of H1 2019 was 222,200 tonnes (2018:
200,000 tonnes).
Trade and other receivables amounted to US$46.6 million (2018: US$22.4
million), of which US$39.1 million (2018: US$17.4 million) were trade
receivables from the sale of mineral products and US$7.5 million (2018:
US$5.0 million) was comprised of prepayments to suppliers and insurance
premia. The increase in trade receivables is due to the timing of
shipments weighted to the period end.
Trade and other payables were US$27.3 million (2018: US$22.6 million),
the increase from the prior periods principally due to an increase in
the development capital spend in the period.
The increase in trade and other receivables (US$24.6 million) together
with the investment in inventory (US$4.7 million) net of the decrease in
trade and other payables (US$0.4 million) reduced cash flow from
operations for the period by US$29.7 million (H1 2018: US$8.8 million).
On 1 February 2019, US$9.5 million of loan principal was repaid,
resulting in bank loans of US$73.5 million (2018: US$83.5 million) at
the end of the period. Cash and cash equivalents as at 30 June 2019
amounted to US$77.0 million (2018: US$97.0 million), resulting in a net
cash position of US$3.5 million (2018: US$13.5 million).
Maiden dividend
In October 2018 Kenmare announced a dividend policy as part of its
strategy to create and deliver shareholder value. The dividend policy is
to return a minimum of 20% of profit after tax to shareholders per annum,
subject to prevailing product market conditions, split in the
approximate proportion of one-third to be paid as an interim dividend,
two-thirds to be paid as a final dividend.
Today the Company announces its maiden dividend, in line with this
policy. The Board has declared an interim dividend of USc2.66 per share
based on the results for H1 2019, for a total distribution of
approximately US$2.9 million. The Company proposes to pay the interim
dividend on 25 October 2019 to shareholders of record at the close of
business on 27 September 2019.
The dividend timetable is as follows:
Announcement of interim dividend 20 August 2019
Ex-Dividend Date 26 September 2019
Record Date 27 September 2019
Payment Date 25 October 2019
All dividends will be paid by cheque. The dividend will be subject to
dividend withholding tax, although certain classes of shareholder may
qualify for exemption. The Company does not offer a scrip dividend or
any other dividend reinvestment plan. Shareholders can elect for the
dividend to be payable in either pounds sterling, euros or United States
dollars.The dividend will be converted to into pounds sterling or euros
using the published foreign exchange rates from the Central Bank of
Ireland on the Record Date.
Kenmare expects to pay approximately 20% of profit after tax per annum
dividends in 2019 and 2020 due to the capital requirement for its three
outlined development projects. Following completion of these development
projects, the Company expects to be positioned to make higher capital
returns from 2021.
Community
The Moma Mine has a mine life of over 100 years. Kenmare takes a
long-term approach to its relationship with its host communities. The
Kenmare Moma Development Association ("KMAD") continued to support local
communities during the period through its economic, social and
infrastructure projects.
In 2017 KMAD constructed the first technical school in the region,
including classrooms, teachers' housing and a security post, and in 2018
KMAD funded vocational training courses on subjects including welding,
mechanics and construction. In H1 2019 construction of phase two of the
technical school was approaching completion, with KMAD constructing
additional classrooms, additional teachers' housing, a library, a
computer room and an administrative block.
KMAD also continued to work with Mozambican non-government organisation
Facilidade to further improve primary education in the Moma Mine's host communities. A pilot programme undertaken in 2018 yielded encouraging results, so KMAD has committed to support the programme for three years. Construction has also commenced on a primary school in Cabula village. Healthcare development is another of KMAD's focuses and in H1 2019 KMAD funded rehabilitation works for the Mititicoma health centre. These included repairing the roof, repainting the buildings and undertaking general maintenance works. A new ambulance has also been funded and it is expected to arrive during Q3 2019. For regular updates on KMAD's community initiatives, please follow Kenmare on social media: Facebook ( https://www.globenewswire.com/Tracker?data=ZUP7EJ-blYe93YkYXaVhpU44FGWlk9JvFSETvKTFQWtTNJ0U6W1Ry_xpxjw4iBTEGyWapxjwZ7LHsQ50T_FneDwmTO_MyENZ7Kh1FtVAPWpxCHtJqHseGZ7A-eJE-3yD_Lr1tT6BkDQCUCQMBI3qBXr7Cgyeg2aHTNELvnOFtLs= https://www.facebook.com/KenmareResourcesplc), LinkedIn ( https://www.globenewswire.com/Tracker?data=ZUP7EJ-blYe93YkYXaVhpYSiCNW-5Wa_Yh0txXCX16qTbLCupvnawXVv1acAz7Jcjg99Y4ayQe0ZHmtYJN-2uQiPsD0fod6CmPah_4f9mQkczIdyT768tNkgLwEOiLOfI29rZfOti_C3BBSDYXS7rXt4jMpFmwOfHngiDgPOyG-b-BWTQNHVPiiur3M42WWU https://www.linkedin.com/company/kenmare-resources-plc) and Twitter ( https://www.globenewswire.com/Tracker?data=ZUP7EJ-blYe93YkYXaVhpewuZ64HNIUWzoPHx52twBziTJeFQ8ZLP3SS9GBCVrogMdkbotmohIoWaouy-EN7WndW176LjpEsjd_Mm4ovAd4KXmwG4zJ5-WTMeJusjWKp https://twitter.com/KenmareRes). Outlook At the end of the first half of the year, Kenmare remains on track to achieve its 2019 guidance on all stated metrics. Production is expected to increase in the second half of the year due to forecast higher grades and continued robust excavated ore volumes. Revenue and profitability are also anticipated to strengthen as shipping volumes increase and the ilmenite market is expected to remain tight, supporting our proposed dividend payments. Kenmare's development projects are progressing on schedule and on budget, with WCP C expected to be in commissioning during Q4 2019. Despite its capital programme and debt repayments, the Company is well-positioned to deliver its maiden dividend. Looking further ahead, the Company is making solid progress towards its target of 1.2 million tonnes per annum of ilmenite production from 2021, which is expected to reduce unit cash operating costs. Lower unit costs will help to protect cash flow generation through the commodity price cycle. Kenmare is on track to deliver strong growth and sustained shareholder returns. Principal risks and uncertainties There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. A detailed explanation of the risks and uncertainties and how the Group seeks to mitigate the risks, can be found on pages 38 to 43 of the Annual Report for the year ended 31 December 2018. Loss of mining licences Risk: The Group's mining activities require licences and approvals to be in place in the relevant mining areas in northern Mozambique. The Group may lose, become restricted, or not receive the necessary approvals for it to operate in current or future mining licence areas in northern Mozambique. Potential impact: A loss of or failure to maintain or obtain a relevant mining licence could significantly affect the Group's ability to operate, its ability to generate cash and the valuation of the Company's assets. Country risk Risk: The Group's operations are located entirely in Mozambique. There may be potential adverse financial or operational impacts from changes in the political, economic, fiscal or regulatory circumstances in Mozambique. Potential impact: Kenmare has operated in Mozambique since 1987; however, it remains subject to risks similar to those prevailing in many developing nations, including economic and social instability, changing regulatory requirements and increased taxes, etc. Such events may cause significant disruption to the operation or cause an increase in costs in order to ameliorate their impact. Country risk is a factor in determining the economics of the Mine and increasing country risk may have an effect on the Group's financial results. Geotechnical risk Risk: An external berm failure at the Moma Mine could result in a major slimes/water spill, potentially impacting local communities and the production plant. Potential impact: The nature of dredge mining gives rise to the creation of artificial ponds and a potential for failure of the berm system, which surrounds the ponds. A failure of a berm could cause loss of life and cessation of the operation of the mining WCPs for a prolonged period. During H1 2019 Kenmare undertook a geotechnical risk review specifically focussed on mine tailings deposition, using Kenmare and external independent geotechnical consultants, concluding that existing tailings compositions and current management designs and practices sufficiently mitigate tailings risks. Severe weather events Risk: The location of the Group's operations on the northern Mozambican coast gives rise to risk from cyclone activity and severe flooding. Such events pose significant risk to the safety of mine staff, contractors and visitors, as well as to physical damage to the Mine. Potential impact: In extreme weather circumstances, there is a risk of loss of life. There is a risk of physical damage to the production plant, which may result in an inability to operate the Mine. Extreme weather events are foreseeable, thereby allowing for disaster planning. Less severe adverse weather could impact supply logistics to and from the Mine. Uncertainty over physical characteristics of the orebody Risk: Orebody characteristics may not conform to existing geological or other expectations or may have an unanticipated effect on production. Potential impact: Physical characteristics of an orebody, including divergence from expectations may cause reduced production levels or a necessity to incur increased production costs in order to maintain production at the intended level. Power supply and transmission risk Risk: The Mine is reliant on the delivery of stable and continuous electric power from the Cahora Bassa Dam via a power transmission line to the Mine. Potential impact: Significant disruption to, or instability in, the power supply at the Mine could have a material and adverse effect on the ability to operate the Mine or to operate it in the lowest cost manner, thereby adversely affecting production volumes and/or operating costs. Asset damage or loss Risk: The operation of a large mining and processing facility carries an inherent risk of technical failure of equipment, fires and other accidents. Potential impact: An occurrence of these risks could result in damage to or destruction of key mining, processing or shipping facilities at the Mine. Loss of key assets could result in disruption to production or shipping, significant replacement cost and consequential monetary losses. Health Safety & Environment Risk: The operation of a large mining and processing facility carries a potential risk to the health and safety of mine staff, visitors and the local community. A potential for environmental damage to the surrounding areas also exists. Potential impact: The improper use of machinery, technical failure of certain equipment or failure to meet and maintain appropriate safety standards could result in significant injury, loss of life or significant negative impact on the surrounding environment and/or communities. Project execution risk Risk: Kenmare is in the course of execution the WCP C project and the WCP B move to Pilivili. As with all construction and other major projects, the execution of each of these development projects carries a potential risk of being delayed or exceeding the allocated budget as a result of numerous factors, some of which are outside of Kenmare's control. Potential impact: A delay in executing a development project could lead to sub-optimal cash generation; a significant cost increase could have a negative impact on the cash position and liquidity of the Group. Resource statement risk Risk: A material misstatement in the reserves and resources statement. Potential impact: A material misstatement could materially adversely impact on the Company's valuation. IT security risk Risk: The Group is dependent on the employment of advanced information systems and is exposed to risks of failure in the operation of these systems. Further, the Group is exposed to security threats through cybercrime. Potential impact: A failure in these systems could lead to disruption to critical business systems, loss or theft of confidential information, competitive advantage or intellectual property and financial and/or reputational harm. Industry Cyclicality Risk: The Group's revenue generation may be significantly and adversely affected by declines in the demand for and prices of the ilmenite, zircon, rutile and concentrate products that it produces. During rising commodity markets, there may be upward pressure on operating and capital costs. Potential impact: Failure of the Group to respond on a timely basis and/or adequately to unfavourable product market events beyond its control and/or pressure on operating or capital costs may adversely affect financial performance. Customer concentration Risk: The customer base for the Group's ilmenite, zircon, rutile and concentrate products is concentrated. Potential impact: The Group's revenue generation may be significantly affected if there ceases to be demand for its products from major
existing customers and it is unable to further expand its customer base
in respect of the relevant product.
Foreign currency risk
Risk: The Group's revenues are entirely denominated in US Dollars,
whereas costs are denominated in a number of currencies including South
African Rand, Mozambican Meticais, Euros and US Dollars.
Potential impact: The nature and location of the Mine and the intrinsic
volatility of exchange rates give rise to an ongoing significant
probability of occurrence of an adverse exchange rate fluctuation. The
impact of such a fluctuation could be large across calendar years.
Financing risk
Risk: The inability to secure access to funding as required for future
development capital expenditure.
Potential impact: Significant development capital expenditures may need
to be funded in the medium term. A failure to generate sufficient
operating cash flows or to obtain funding would lead to a failure or
delay in executing development projects that could lead to sub-optimal
cash generation.
Loan default risk
Risk: The inability to meet existing loan repayment obligations as they
become due or comply with loan covenants.
Potential impact: The Group does not believe that a significant risk
exists in meeting the current repayment obligations or to comply with
loan covenants.
Related party transactions
There have been no material changes in the related party transactions
affecting the financial position or the performance of the Group in the
period since publication of the 2018 Annual Report other than those
disclosed in Note 13 to the condensed consolidated financial statements.
Going Concern
As stated in Note 1 to the condensed consolidated financial statements,
based on the Group's forecasts and projections the Directors are
satisfied that the Group has sufficient resources to continue in
operation for the foreseeable future, a period of not less than twelve
months from the date of this report. Accordingly, they continue to adopt
the going concern basis in preparing the condensed consolidated
financial statements.
Events after the Statement of Financial Position Date
There have been no significant events since the 30 June 2019 which would
have a significant impact on the financial statements of the Group.
Forward-looking statements
This report contains certain forward-looking statements. These
statements are made by the Directors in good faith based on the
information available to them up to the time of their approval of this
report, and such statements should be treated with caution due to the
inherent uncertainties, including both economic and business risk
factors, underlying any such forward-looking information.
On behalf of the Board,
Managing Director Financial Director
Michael Carvill Tony McCluskey
20 August 2019 20 August 2019
INDEPENT REVIEW REPORT TO KENMARE RESOURCES PLC
Introduction
We have been engaged by Kenmare Resources plc ('the Company') to review
the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2019 which comprises the
condensed consolidated interim income statement, the condensed
consolidated interim statement of other comprehensive income, the
condensed consolidated interim statement of financial position, the
condensed consolidated interim statement of cash flows, the condensed
consolidated interim statement of changes in equity and the related
explanatory notes. Our review was conducted having regard to the
Financial Reporting Council's ("FRCs") International Standard on Review
Engagements ("ISRE") (UK and Ireland) 2410, 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity'.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the
half-yearly report for the six months ended 30 June 2019 is not prepared,
in all material respects, in accordance with IAS 34 'Interim Financial
Reporting' as adopted by the EU, the Transparency (Directive
2004/109/EC) Regulations 2007, and the Transparency Rules of the Central
Bank of Ireland.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing
the half-yearly financial report in accordance with the Transparency
Directive and the Transparency Rules of the Central Bank of Ireland.
As disclosed in Note 1, the annual financial statements of the Group are
prepared in accordance with International Financial Reporting Standards
as adopted by the EU. The directors are responsible for ensuring that
the condensed set of financial statements included in the half-yearly
financial report in accordance with IAS 34 Interim Financial Reporting
as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the
condensed set of financial statements in the half-yearly financial
report based on our review.
Scope of review
We conducted our review having regard to the Financial Reporting
Council's International Standard on Review Engagements (UK and Ireland)
2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity. A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially less
in scope than an audit conducted in accordance with International
Standards on Auditing (Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an
audit opinion.
We read the other information contained in the half-yearly financial
report to identify material inconsistencies with the information in the
condensed set of financial statements and to identify any information
that is apparently materially incorrect based on, or materially
inconsistent, the knowledge acquired by us in the course of performing
the review. If we become aware of any apparent material misstatements or
inconsistencies, we consider the implications for our report.
INDEPENT REVIEW REPORT TO KENMARE RESOURCES PLC (CONTINUED)
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms
of our engagement to assist the Company in meeting the requirements of
the Transparency Directive and the Transparency Rules of the Central
Bank of Ireland. Our review has been undertaken so that we might state
to the Company those matters we are required to state to it in this
report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company for our review work, for this report, or for the conclusions we
have reached.
David Meagher
For and on behalf of KPMG
Chartered Accountants, Statutory Audit firm
1 Stokes Place
St. Stephen's Green
Dublin 2
20 August 2019
KENMARE RESOURCES PLC
GROUP CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2019
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
30 June 30 June 31 Dec
2019 2018 2018
Notes US$'000 US$'000 US$'000
Revenue 2 122,706 140,144 262,199
Cost of sales (79,606) (92,538) (168,251)
--------- --------- -------------
Gross profit 43,100 47,606 93,948
Other operating costs (17,028) (15,434) (31,012)
--------- --------- -------------
Operating profit 26,072 32,172 62,936
Finance income 853 197 871
Finance costs (3,653) (4,015) (7,751)
Foreign exchange (loss)/gain (507) 436 48
--------- --------- -------------
Profit before tax 22,765 28,790 56,104
Income tax expense (864) (2,406) (5,230)
--------- --------- -------------
Profit and total comprehensive
income for the period/year 21,901 26,384 50,874
--------- --------- -------------
Attributable to equity holders 21,901 26,384 50,874
--------- --------- -------------
US$ per US$ per
share share US$ per share
Earnings per share: basic 4 0.20 0.24 0.46
--------- --------- -------------
Earnings per share: diluted 4 0.20 0.24 0.46
--------- --------- -------------
The accompanying notes form part of these condensed consolidated
financial statements.
KENMARE RESOURCES PLC
GROUP CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2019 2018 2018
Notes US$'000 US$'000 US$'000
Assets
Non-current assets
Property, plant and equipment 5 823,224 789,586 806,011
Deferred tax asset 1,170 1,753 -
--------- --------- ---------
824,394 791,339 806,011
--------- --------- ---------
Current assets
Inventories 58,568 44,470 53,872
Trade and other receivables 6 46,577 39,635 22,445
Cash and cash equivalents 77,047 83,975 97,030
--------- --------- ---------
182,192 168,080 173,347
--------- --------- ---------
Total assets 1,006,586 959,419 979,358
--------- --------- ---------
Equity
Capital and reserves attributable to the Company's
equity holders
Called-up share capital 7 215,046 215,046 215,046
Share premium 7 545,644 730,897 730,897
Retained earnings/(losses) 73,975 (157,669) (133,179)
Undenominated capital 11,336 11,336 11,336
Share based payment reserve 25,188 23,492 24,335
--------- --------- ---------
Total equity 871,189 823,102 848,435
--------- --------- ---------
Liabilities
Non-current liabilities
Borrowings 8 51,948 71,778 61,905
Lease liabilities 9 3,929 - -
Provisions 10 26,706 17,651 22,359
--------- --------- ---------
82,583 89,429 84,264
--------- --------- ---------
Current liabilities
Borrowings 8 21,558 21,500 21,558
Lease liabilities 9 1,043 - -
Provisions 10 1,437 1,720 1,437
Other financial liability - 3 1
Tax liabilities 1,499 - 1,071
Trade and other payables 11 27,277 23,665 22,592
--------- --------- ---------
52,814 46,888 46,659
--------- --------- ---------
Total liabilities 135,397 136,317 130,923
--------- --------- ---------
Total equity and liabilities 1,006,586 959,419 979,358
--------- --------- ---------
The accompanying notes form part of these condensed consolidated
financial statements.
KENMARE RESOURCES PLC
UNAUDITED GROUP CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2019
Notes Called-Up Share Retained Undenominated Share Total
Share Premium Earnings Capital Based
Capital Payment
Reserve
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 January 2018 215,046 730,897 (184,053) 11,336 22,915 796,141
Profit for the period - - 26,384 - - 26,384
Share-based payments 12 - - - - 577 577
---------- ---------- ------------- ------- --------
Balance at 30 June 2018 215,046 730,897 (157,669) 11,336 23,492 823,102
--------- ---------- ---------- ------------- ------- --------
Profit for the period - - 24,490 - - 24,490
Share-based payments - - - - 843 843
Balance at 31 December 2018 215,046 730,897 (133,179) 11,336 24,335 848,435
--------- ---------- ---------- ------------- ------- --------
Profit for the period - - 21,901 - - 21,901
Share-based payments 12 - - - - 853 853
----- --------- ---------- ---------- -------------
Capital reduction
7 - (185,253) 185,253 - - -
--------- ---------- ---------- ------------- ------- --------
Balance at 30 June 2019
215,046 545,644 73,975 11,336 25,188 871,189
--------- ---------- ---------- ------------- ------- --------
The accompanying notes form part of these condensed consolidated
financial statements.
KENMARE RESOURCES PLC
GROUP CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2019
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
30 June 30 June 31 Dec
2019 2018 2018
US$'000 US$'000 US$'000
Cash flows from operating activities
Profit for the financial period/year before
tax 22,765 28,790 56,104
Adjustment for:
Foreign exchange movement 507 (436) (48)
Share-based payments 853 577 1,420
Finance income (853) (197) (871)
Finance costs 3,653 3,347 7,751
Depreciation 16,654 15,996 30,442
Decrease in other financial liability - (5) (7)
Increase in provisions 477 280 210
Income tax paid (1,605) - -
--------- --------- ---------
Operating cash inflow 42,451 48,352 95,001
(Increase)/decrease in inventories (4,696) 8,237 (1,166)
(Increase)/decrease in trade and other
receivables (24,610) (14,223) 1,558
Decrease in trade and other payables (431) (2,752) (3,080)
--------- --------- ---------
Cash generated by operations 12,714 39,614 92,313
Interest received 853 197 871
Interest paid (3,189) (3,171) (6,227)
--------- --------- ---------
Net cash from operating activities 10,378 36,640 86,957
--------- --------- ---------
Cash flows from investing activities
Additions to property, plant and equipment (20,183) (11,762) (39,761)
--------- --------- ---------
Net cash used in investing activities (20,183) (11,762) (39,761)
--------- --------- ---------
Cash flows used in financing activities
Repayment of borrowings (9,524) (9,524) (19,048)
Payment of obligations under leases (677) - -
--------- --------- ---------
Net cash used in financing activities (10,201) (9,524) (19,048)
--------- --------- ---------
Net (decrease)/increase in cash and cash
equivalents (20,006) 15,354 28,148
Cash and cash equivalents at the beginning of
period/year 97,030 68,774 68,774
Effect of exchange rate changes on cash and
cash equivalents 23 (153) 108
--------- --------- ---------
Cash and cash equivalents at end of
period/year 77,047 83,975 97,030
--------- --------- ---------
The accompanying notes form part of these condensed consolidated
financial statements.
KENMARE RESOURCES PLC
UNAUDITED NOTES TO THE GROUP CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODED 30 JUNE 2019
1. BASIS OF PREPARATION AND GOING CONCERN
Basis of preparation
The annual financial statements of Kenmare Resources plc ('the Group')
are prepared in accordance with IFRSs as adopted by the European Union.
The Group Condensed Consolidated Financial Statements for the six months
ended 30 June 2019 have been prepared in accordance with the
Transparency (Directive 2004/109/EC) Regulations 2007, as amended, the
Transparency Rules of the Central Bank of Ireland and with IAS 34
'Interim Financial Reporting', as adopted by the European Union.
The financial information presented in this document does not constitute
statutory financial statements. The amounts presented in the Half Yearly
Financial Statements for the six months ended 30 June 2019 and the
corresponding amounts for the six months ended 30 June 2018 have been
reviewed but not audited. The independent review report is on pages 12
and 13. The preparation of the Half Yearly Financial Statements requires
the Directors to make judgements, estimates and assumptions that affect
the application of policies and reported amounts of certain assets,
liabilities, revenues and expenses together with disclosure of assets
and liabilities. Estimates and underlying assumptions relevant to these
financial statements are disclosed in the notes.
The financial information for the year ended 31 December 2018, presented
herein, is an abbreviated version of the annual financial statements for
the Group in respect of the year ended 31 December 2018. The Group's
annual financial statements in respect of the year ended 31 December
2018 have been filed in the Companies Registration Office and the
independent auditors issued an unqualified audit report thereon. The
annual report is available on the Company's website at
www.kenmareresources.com.
Going Concern
Based on the Group's forecast, the Directors are satisfied that the
Group has sufficient resources to continue in operation for the
foreseeable future, a period of not less than twelve months from the
date of this report. Accordingly, they continue to adopt the going
concern basis in preparing the condensed consolidation statements.
Key assumptions upon which the Group's forecast is based include a mine
plan covering production using the Namalope, Nataka and Pilivili proved
and probable reserves as set out in the mineral reserves and resources
table. Production levels for the purpose of the forecast are
approximately 1.1 million tonnes per annum of ilmenite plus co-products,
zircon, rutile and concentrates. Assumptions for product sales prices
are based on contract prices as stipulated in marketing agreements with
customers or, where contract prices are based on market prices or
production is not yet contracted, prices are forecast taking into
account independent titanium mineral sands expertise provided by TiPMC
Solutions and management expectations. Forecast prices provided by TiPMC
Solutions are reviewed by the Group for consistency with other external
sources of information. Operating costs are based on approved budget
costs for 2019, taking into account the current running costs of the
Mine and escalated by 2% per annum thereafter. Capital costs are based
on the capital plans and include escalation at 2% per annum.
Changes in accounting policies
Aside from the adoption of IFRS 16 Leases, which is described below, the
accounting policies and methods of computation adopted in the
preparation of the Group Condensed Consolidated Financial Statements are
the same as those applied in the Annual Report for the financial year
ended 31 December 2018 and are described in the Annual Report.
The Group has adopted IFRIC 23 Uncertainty over Income Tax Treatments
which is effective for accounting periods beginning 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.
A number of other new standards are effective from 1 January 2019 but
they do not have a material effect on the Group's financial statements.
IFRS 16 Leases
The Group has initially adopted IFRS 16 Leases from 1 January 2019. IFRS
16 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. Lessor accounting remains similar to previous accounting
policies.
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
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 leases as operating or finance
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 most
leases - i.e. these leases are on-balance sheet.
The Group presents right-of-use assets in 'property, plant and
equipment', the same line item as it presents underlying assets of the
same nature that it owns. The carrying amounts of right-of-use assets
are US$4.9 million as at 30 June 2019.
The Groups presents lease liabilities on the face of the statement of
financial position.
Significant accounting policies
The Group recognises a right-of-use asset and a lease liability at the
lease commencement date. The right-of-use asset is initially measured at
cost (being the present value of the lease liabilities), and
subsequently at cost less any accumulated depreciation and impairment
losses, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the
lease payments that are not paid at the commencement date, discounted
using the interest rate implicit in the lease or, if that rate cannot be
readily determined, the Group's incremental borrowing rate. Generally,
the Group uses its incremental borrowing rate as the discount rate. The
Group has applied judgement to determine the discount rate.
The lease liability is subsequently increased by the interest cost on
the lease liability and decreased by lease payments made. It is
remeasured when there is a change in future lease payments arising from
a change in an index or rate, a change in the estimate of the amount
expected to be payable under a residual value guarantee, or as
appropriate, changes in the assessment of whether a purchase or
extension option is reasonably certain to be exercised or a termination
option is reasonably certain not to be exercised.
The Group has applied judgement to determine the lease term for some
lease contracts in which it is a lessee that include renewal options.
The assessment of whether the Group is reasonably certain to exercise
such options impacts the lease term, which significantly affects the
amount of lease liabilities and right-of-use assets recognised.
Transition
Previously, the Group classified leases as operating leases under IAS
17. At transition, for leases classified as operating leases under IAS
17, 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 are measured at
amounts equal to the lease liability.
Impacts on transition and for the period
On transition to IFRS 16, the Group recognised additional right-of-use
assets presented in property, plant and equipment and lease liabilities
for the head office lease and the electricity generator lease. The
impact on transition is summarised below.
1 January 19
---------------------------------------------------- ------------
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 lease liability of US$0.4 million.
1 January 19
---------------------------------------------------------- ------------
US$'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
---------------------------------------------------------- ------------
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 is 7%.
As a result of initially applying IFRS 16, in relation to the leases
that were previously classified as operating leases and leases entered
into in the period, the Group recognised US$5.0 million of right-of-use
assets and lease liabilities as at 30 June 2019. Also, in relation to
those leases under IFRS 16, the Group has recognised depreciation and
interest costs, instead of operating lease expense. During the six
months ended 30 June 2019, the Group recognised US$0.5 million of
depreciation charges and US$0.2 million of interest costs from these
leases.
2. SEGMENTAL INFORMATION AND REVENUE DISCLOSURES
Information on the operations of the Moma Titanium Minerals Mine in
Mozambique is reported to the Group's Board for the purposes of resource
allocation and assessment of segment performance. The principal
categories for disaggregating revenue are by product type and by country
of the customer's location. The product types are ilmenite, zircon,
rutile and concentrates. Concentrates includes secondary zircon and
mineral sands concentrates. Information regarding the Group's operating
segment is reported below.
Unaudited Unaudited Audited
----------------------------------- ---------- ---------- ---------
30 June 19 30 June 18 31 Dec 18
----------------------------------- ---------- ---------- ---------
US$'000 US$'000 US$'000
----------------------------------- ---------- ---------- ---------
Segment revenues and results
----------------------------------- ---------- ---------- ---------
Moma Titanium Minerals Mine
----------------------------------- ---------- ---------- ---------
Revenue 122,706 140,144 262,199
----------------------------------- ---------- ---------- ---------
Cost of sales (79,606) (92,538) (168,251)
----------------------------------- ---------- ---------- ---------
Gross profit 43,100 47,606 93,948
----------------------------------- ---------- ---------- ---------
Other operating costs (13,869) (13,858) (26,960)
----------------------------------- ---------- ---------- ---------
Segment operating profit 29,231 33,748 66,988
----------------------------------- ---------- ---------- ---------
Other corporate operating costs (3,159) (1,576) (4,052)
----------------------------------- ---------- ---------- ---------
Group operating profit 26,072 32,172 62,936
----------------------------------- ---------- ---------- ---------
Finance income 853 197 871
----------------------------------- ---------- ---------- ---------
Finance expense (3,653) (4,015) (7,751)
----------------------------------- ---------- ---------- ---------
Foreign exchange (loss)/gain (507) 436 48
----------------------------------- ---------- ---------- ---------
Profit before tax 22,765 28,790 56,104
----------------------------------- ---------- ---------- ---------
Income tax expense (864) (2,406) (5,230)
----------------------------------- ---------- ---------- ---------
Profit for the period/year 21,901 26,384 50,874
----------------------------------- ---------- ---------- ---------
Segment assets
----------------------------------- ---------- ---------- ---------
Moma Titanium Minerals Mine assets 953,475 900,366 922,652
----------------------------------- ---------- ---------- ---------
Corporate assets 53,111 59,053 56,706
----------------------------------- ---------- ---------- ---------
Total assets 1,006,586 959,419 979,358
----------------------------------- ---------- ---------- ---------
Revenue by products
----------------------------------- ---------- ---------- ---------
Ilmenite 79,806 102,819 181,776
----------------------------------- ---------- ---------- ---------
Zircon 30,866 28,633 59,772
----------------------------------- ---------- ---------- ---------
Rutile 3,359 2,088 5,038
----------------------------------- ---------- ---------- ---------
Concentrates 8,675 6,604 15,613
----------------------------------- ---------- ---------- ---------
Total 122,706 140,144 262,199
----------------------------------- ---------- ---------- ---------
Revenue by country
----------------------------------- ---------- ---------- ---------
China 51,814 59,890 103,196
----------------------------------- ---------- ---------- ---------
USA 20,302 13,593 27,760
----------------------------------- ---------- ---------- ---------
Italy 12,319 12,414 22,871
----------------------------------- ---------- ---------- ---------
Rest of the World 38,271 54,247 108,372
----------------------------------- ---------- ---------- ---------
Total 122,706 140,144 262,199
----------------------------------- ---------- ---------- ---------
3. SEASONALITY OF SALE OF MINERAL PRODUCTS
Sales of the Group's mineral products are not seasonal in nature.
4. 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:
Unaudited Unaudited Audited
-------------------------------------------------- ----------- ----------- -----------
30 June 19 30 June 18 31 Dec 18
-------------------------------------------------- ----------- ----------- -----------
US$'000 US$'000 US$'000
-------------------------------------------------- ----------- ----------- -----------
Profit for the period/year attributable to equity
holders of the Company 21,901 26,384 50,874
-------------------------------------------------- ----------- ----------- -----------
Unaudited Unaudited Audited
-------------------------------------------------- ----------- ----------- -----------
30 June 19 30 June 18 31 Dec 18
-------------------------------------------------- ----------- ----------- -----------
Number of Number of Number of
-------------------------------------------------- ----------- ----------- -----------
Shares Shares Shares
-------------------------------------------------- ----------- ----------- -----------
Weighted average number of issued ordinary shares
-------------------------------------------------- ----------- ----------- -----------
for the purposes of basic earnings per share 109,601,551 109,601,551 109,601,551
-------------------------------------------------- ----------- ----------- -----------
Effect of dilutive potential ordinary shares:
-------------------------------------------------- ----------- ----------- -----------
Share awards 1,550,567 907,276 1,028,523
-------------------------------------------------- ----------- ----------- -----------
Weighted average number of ordinary shares for
--------------------------------------------------------------- ----------- -----------
the purpose of diluted earnings per share 111,152,118 110,508,827 110,630,074
-------------------------------------------------- ----------- ----------- -----------
US$ per US$ per US$ per
share share share
-------------------------------------------------- ----------- ----------- -----------
Earnings per share: basic 0.20 0.24 0.46
-------------------------------------------------- ----------- ----------- -----------
Earnings per share: diluted 0.20 0.24 0.46
-------------------------------------------------- ----------- ----------- -----------
5. PROPERTY, PLANT AND EQUIPMENT
Plant Development Construction Other Total
--------------------------------------------------- --------- ----------- ------------ -------- ----------
& Expenditure in Progress Assets
Equipment
--------------------------------------------------- --------- ----------- ------------ -------- ----------
US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Cost
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Balance at 1 January 2018 780,171 250,326 30,245 54,621 1,115,363
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Transfer to/(from) construction in progress 1,719 - (3,086) 1,367 -
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Additions during the period 171 - 12,858 414 13,443
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Disposals during the period (941) - - (5,959) (6,900)
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Adjustment to the mine closure provision (1,491) - - - (1,491)
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Balance at 30 June 2018 779,629 250,326 40,017 50,443 1,120,415
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Transfer to/(from) construction in progress 11,971 - (24,948) 12,977 -
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Additions during the period 8 - 26,569 31 26,608
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Adjustment to mine closure provision 4,263 - - - 4,263
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Balance at 31 December 2018 795,871 250,326 41,638 63,451 1,151,286
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Adjustment on initial application of IFRS16 Leases 3,321 - - 1,722 5,043
at 1 January 2019
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Transfer to/(from) construction in progress 5,697 - (10,264) 4,567 -
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Additions during the period (231) - 24,905 125 24,799
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Addition of right-of-use asset under lease
- - - 386 386
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Disposals during the period (92) - - (4,850) (4,942)
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Adjustment to the mine closure provision 3,639 - - - 3,639
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Balance at 30 June 2019 808,205 250,326 56,279 65,401 1,180,211
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Accumulated Depreciation
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Balance at 1 January 2018 165,899 121,023 - 34,811 321,733
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Charge for the period 11,881 2,840 - 1,275 15,996
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Disposals during the period (941) - - (5,959) (6,900)
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Balance at 30 June 2018 176,839 123,863 - 30,127 330,829
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Charge for the period 10,160 2,660 - 1,626 14,446
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Balance at 31 December 2018 186,999 126,523 - 31,753 345,275
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Charge for the period 11,219 2,111 - 3,324 16,654
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Disposals during the period (92) - - (4,850) (4,942)
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Balance at 30 June 2019 198,126 128,634 - 30,227 356,987
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Carrying Amount
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Balance at 30 June 2019 610,079 121,692 56,279 35,174 823,224
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Balance at 30 June 2018 602,790 126,463 40,017 20,316 789,586
--------------------------------------------------- --------- ----------- ------------ -------- ----------
Balance at 31 December 2018 608,872 123,803 41,638 31,698 806,011
--------------------------------------------------- --------- ----------- ------------ -------- ----------
There was an adjustment to the mine closure provision of US$3.6 million
during the period as result of a change in the estimated 40-year
discount rate decreasing from 3.2% to 2.8%, details of which are set out
in Note 10.
On initial application of IFRS 16 Leases the Group recognised US$5.0
million of right-of-use assets and US$5.0 million of lease liabilities
as detailed in Note 9. During the period the Group entered into a lease
agreement and recognised an additional right-of-use asset of US$0.4
million. During the six months ended 30 June 2019, the Group recognised
US$0.5 million of depreciation in relation to right-of-use assets.
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 30 June 2019, the market capitalisation of the Group
was below the book value of net assets which is considered an indicator
of a potential trigger for the impairment of assets.
The Group carried out an impairment review of property, plant and
equipment. The cash-generating unit for the purpose of impairment
testing is the Moma Titanium Minerals Mine. The basis on which the
recoverable amount of the Moma Titanium Minerals 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 12% (31
December 2018: 12%).
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 year-end review however the discount rate has remained
unchanged at 12%. The Group does not consider it appropriate to apply the
full current country risk premium to the calculation of the Group's
weighted average cost of capital as it believes the specific
circumstances which have resulted in the county risk increase over the
past number of years are not appropriate to the specific circumstances of
the Moma Mine. Hence, the calculation of country risk applicable to the
calculation of the cost of equity has been adjusted accordingly.
Using a discount rate of 12%, the recoverable amount is greater than the
carrying amount by US$101.7 million (31 December 2018: US$201.3
million). The decrease in the recoverable amount from the year-end
review is a result of updated forecast sales pricing and operating
costs.
The discount rate is a significant factor in determining the recoverable
amount. A 1% increase in the discount rate to 13% which management
believes could be a reasonably possible change in this assumption, would
result in the recoverable amount being greater than the carrying amount
by US$25.9 million (31 December 2018: US$114.7 million).
-- The mine plan is based on the Namalope, Nataka and Pilivili proved and
probable reserves. The Mine life assumption of 40 years has not changed
from the prior year review. The mine plan assumes all licences and mining
concessions will be renewed during the Mine life.
-- Average annual production is approximately 1.1 million tonnes (2018: 1.1
million tonnes) of ilmenite plus 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.
-- 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 yet 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 are reviewed and found to be consistent by the Group with
other external sources of information. Average forecast product sales
prices have decreased over the life of mine from the prior year end
review as a result of revised forecast pricing. A 4% reduction in average
sales prices over the life of mine reduces the recoverable amount by
US$101.7 million.
-- Operating costs are based on approved budget costs for 2019 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 updated forecast assumptions in
operating costs. An 8% increase in operating costs over the life of mine
reduces the recoverable amount by US$101.7 million.
-- Sustaining capital costs are based on a life of mine capital plan
considering inflation at 2% per annum from 2019. Average forecast
sustaining capital costs have remained relatively unchanged from the
prior year end review and are based on the sustaining 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 has not been applied which would give rise
to a reduction in the recoverable amount.
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.
During the period there were additions of US$24.8 million (2018: US$13.4
million) to property, plant and equipment consisting of sustaining
capital and the development projects mainly the construction of WCP C.
During the period there were disposals to property, plant and equipment
of US$4.9 million (2018: US$6.9 million). The assets were no longer
operational and there were no proceeds on disposal.
Substantially all the property, plant and equipment of the Group is or
will be mortgaged, pledged or otherwise secured to provide collateral
for the Group's senior and subordinated debts as detailed in Note 8.
6. TRADE AND OTHER RECEIVABLES
Unaudited Unaudited Audited
30 June 19 30 June 18 31 Dec 18
US$'000 US$'000 US$'000
Trade receivables 39,071 29,704 17,430
Prepayments and other receivables 7,506 9,931 5,015
---------- ---------- ---------
Total 46,577 39,635 22,445
---------- ---------- ---------
The carrying amount of the trade and other receivables represents the
maximum credit exposure. Before entering into sales contracts with new
customers, the Group uses an external credit scoring system to assess
the potential customer's credit quality and defines credit limits by
customer. Limits attributed to customers are reviewed regularly during
the year. Trade receivables at the period end had Moody's credit ratings
where available ranging from Ba2 to A3. All trade receivables are
current (i.e. not overdue). There has been no impairment in trade
receivables during the period. An expected credit loss of US$0.03
million has been recognised in the period.
The Group has a trade finance facility with Absa Corporate and Business
Bank for three of the Group's largest customers. In accordance with this
facility the bank purchases 80% of the receivable without recourse and
so the bank takes on the credit risk. The facility is US$30 million with
limits on the maximum amount that can be factored for each of the
customers named in the facility.
The Group has a trade facility with Barclays Bank for customers which it
sells to under letter of credit terms. Under this facility, the bank
confirms the letter of credit from the issuing bank and therefore takes
the credit risk that the issuing bank will not pay. The bank also
discounts these letters of credit thereby providing early payment of
receivables to the Group. There is no limit under the Barclays Bank
facility.
7. SHARE CAPITAL AND RESERVES
Share capital as at 30 June 2019 amounted to US$215.0 million (2018:
US$215.0 million). During the period, no ordinary shares in the Company
were issued.
On 5 December 2018, shareholders approved a resolution to reduce the
capital of Kenmare Resources plc 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$185.3 million.
8. BORROWINGS
Unaudited Unaudited Audited
------------------------------------------- ---------- ---------- ---------
30 June 19 30 June 18 31 Dec 18
------------------------------------------- ---------- ---------- ---------
US$'000 US$'000 US$'000
------------------------------------------- ---------- ---------- ---------
Project Debt
------------------------------------------- ---------- ---------- ---------
Senior debt 10,368 21,098 16,055
------------------------------------------- ---------- ---------- ---------
Subordinated debt 63,138 72,180 67,408
------------------------------------------- ---------- ---------- ---------
Total Project debt 73,506 93,278 83,463
------------------------------------------- ---------- ---------- ---------
Within one year 21,558 21,500 21,558
------------------------------------------- ---------- ---------- ---------
In the second year 19,048 19,048 19,048
------------------------------------------- ---------- ---------- ---------
In the third to fifth years 32,900 52,730 42,857
------------------------------------------- ---------- ---------- ---------
73,506 93,278 83,463
------------------------------------------- ---------- ---------- ---------
Less amounts due for settlement within 12
months (21,558) (21,500) (21,558)
------------------------------------------- ---------- ---------- ---------
Amount due for settlement after 12 months 51,948 71,778 61,905
------------------------------------------- ---------- ---------- ---------
Project debt
------------------------------------------- ---------- ---------- ---------
Balance at 1 January 83,463 102,867 102,867
------------------------------------------- ---------- ---------- ---------
Debt interest accrued 2,756 3,106 5,871
------------------------------------------- ---------- ---------- ---------
Debt interest paid (3,189) (3,171) (6,227)
------------------------------------------- ---------- ---------- ---------
Debt principal paid (9,524) (9,524) (19,048)
------------------------------------------- ---------- ---------- ---------
Balance at 30 June/31 December 73,506 93,278 83,463
------------------------------------------- ---------- ---------- ---------
Project Loans
Project Loans have been made to the Mozambique branches of Kenmare Moma
Mining (Mauritius) Limited and Kenmare Moma Processing (Mauritius)
Limited (the "Project Companies"). The Project Loans are secured by
substantially all rights and assets of the Project Companies, and,
amongst other things, the Group's shares in the Project Companies,
substantially all of the Group's cash balances and substantially all of
the Group's intercompany loans.
Senior debt ranks in priority to subordinated debt in repayment, subject
to the waterfall provision summarised below, on insolvency of the Group
and on enforcement of security.
Voting thresholds are calculated on the basis of aggregate outstanding
debt, being the aggregate of outstanding senior debt and outstanding
subordinated debt. Decisions are taken by majority Lenders (Lenders
whose principal amount of outstanding debt aggregate more than 50.1% of
all outstanding debt) or supermajority Lenders (Lenders whose principal
amount of outstanding debt aggregate more than 66.7% of all outstanding
debt).
Senior debt
The final maturity date of the senior debt is 1 February 2022. Interest
on the senior debt is payable in cash on each semi-annual payment date
(1 February and 1 August). The interest rate on each tranche of senior
debt is LIBOR plus a margin of 3.00% from and including 28 July 2016 to
and including 31 January 2020, and 3.75% thereafter.
Scheduled repayment of the senior debt and subordinated debt is based on
the following repayment schedule, the percentage being applied to total
senior and subordinated debt outstanding on 28 July 2016 of US$100
million, in each case subject to the waterfall provisions summarised
below:
Payment date Principal amount to be repaid (%)
------------- ---------------------------------
1 Feb 2018 9.52381
------------- ---------------------------------
1 Aug 2018 9.52381
------------- ---------------------------------
1 Feb 2019 9.52381
------------- ---------------------------------
1 Aug 2019 9.52381
------------- ---------------------------------
1 Feb 2020 9.52381
------------- ---------------------------------
1 Aug 2020 9.52381
------------- ---------------------------------
1 Feb 2021 9.52381
------------- ---------------------------------
1 Aug 2021 11.11111
------------- ---------------------------------
1 Feb 2022 22.22222
------------- ---------------------------------
Each principal instalment is allocated 50% to senior debt until senior
debt is fully repaid (provided that once the amount of Absa (a South
African bank and part of the lender group) senior debt is reduced to
US$10 million, Absa ceases to participate in the senior debt instalment
and thereafter participates in the subordinated instalment) with the
balance being applied to subordinated debt. The effect of the sharing
provision is that senior debt, other than Absa's senior debt, was repaid
by 1 August 2019 under the agreed amortisation schedule.
In addition to the scheduled instalments of senior debt, prepayments
based on 25% of cash available for restricted payments are required
under a cash sweep mechanism on each semi-annual payment date,
commencing 1 February 2018 unless the other conditions to making of a
restricted payment cannot be satisfied. Until the senior debt has been
repaid in full, 50% of the prepayments will be allocated to senior debt
(provided that once the amount of Absa senior debt is reduced to US$10
million, Absa ceases to participate in the senior debt prepayments and
thereafter participates in the subordinated debt prepayments) with the
balance applied to prepayments of subordinated debt. Senior debt
prepayments are applied in inverse order of maturity. During the period
there was no prepayment of debt.
Subordinated debt
The final maturity date of the subordinated debt is 1 February 2022.
Interest on the subordinated debt is payable in cash on 1 February and 1
August. The interest rate on subordinated debt is LIBOR plus a margin of
4.75% from and including 28 July 2016 to and including 31 January 2020,
and 5.50% thereafter. Subordinated Lenders will receive additional
interest allocated pro rata to principal amounts outstanding equal to
the difference between (i) interest on the senior loans calculated on
the basis of subordinated loan margins and (ii) actual interest on the
senior loans. Taken together, the margin on the senior and subordinated
loans is thus 4.75% from and including 28 July 2016 to and including 31
January 2020, and 5.50% thereafter.
Scheduled principal instalments on subordinated loans will equal the
total principal instalment due on a payment date less the principal
instalment on senior loans. In addition to the scheduled instalments,
prepayments based on 25% cash available for restricted payments less
senior debt prepayments are required under a cash sweep mechanism on
each semi-annual payment date, commencing 1 February 2018 unless the
other conditions to making of a restricted payment cannot be satisfied.
Subordinated debt prepayments are applied in inverse order of maturity.
Covenants
The Project Loans contain provisions requiring the Project Companies to
maintain certain financial covenants, including a back-ward looking debt
service cover ratio, which is set at a minimum level of 1.25:1. If the
debt service cover ratio in respect of any 6-month period from and
including 1 August to 31 January or 1 February to 31 July, is less than
the required level, an event of default arises. The DSCR ratios
calculated for the 6-month period ending 31 January 2019 and 31 July
2019 were in compliance with the required level of 1.25:1.
In addition, the Project Companies are required to maintain a
capitalisation ratio (being the ratio of aggregate project debt
outstanding to aggregate amount of shareholder interests, including
share capital, share premium, distributable and non-distributable
reserves and intercompany loans) of 55:45, as calculated on 30 June and
31 December each year. Failure to maintain the capitalisation ratio
would result in an event of default. The capitalisation ratios
calculated on 30 June 2019 was in excess of the level required under the
loan documents.
An event of default would give the lenders the right to accelerate the
debt and take any other enforcement action under the loan documents.
Acceleration would alter the maturity profile of the Group's debt and
the Group's liquidity.
The loan documents also contain certain restrictions and conditions for
the making by the Project Companies of restricted payments, which
include the payment of subordinated intercompany loans and dividends.
Payment of such amounts can be made within 45 days of a semi-annual
payment date under the loan documents and requires, amongst other things,
the payment of a cash sweep amount to lenders and the meeting of various
financial and marketing-related covenants and the funding of certain
project bank accounts. A failure to satisfy the conditions to restricted
payments could adversely affect the ability of the Project Companies to
distribute cash to its shareholders and the earnings of those
shareholders and therefore the ability of Kenmare Resources plc to pay
dividends.
Group borrowings, interest, currency and liquidity risk
The debt facilities are arranged at variable rates and expose the Group
cash flow interest rate risk. Variable rates are based on six-month
LIBOR. The average effective borrowing rate at the period end was 7.6%
(2018: 7.3%).
The interest rate profile of the Group's debt balances at the period end
was as follows:
Unaudited Unaudited Audited
30 June 19 30 June 18 31 Dec 18
US$'000 US$'000 US$'000
Variable rate debt 73,506 93,278 83,463
---------- ---------- ---------
The cash and cash equivalents at 30 June 2019 amounted to US$77.0
million (2018: US$97.0 million) of which US$73.8 million (2018: US$94.6
million) was held in US Dollars.
The fair value of the Group borrowings of US$73.2 million (2018: US$92.7
million) has been calculated by discounting the expected future cash
flows at a rate of 6%. The 6% market rate was estimated by reviewing
borrowing rates of the mining sector and other relevant market yields.
For B+ to B- rated debt the borrowing rates are in the range of 5 to 6%.
Under the assumption that all other variables remain constant, a 1%
increase/decrease in the 6-month LIBOR rate would result in a US$0.7
million (2018: US$0.5 million) increase/decrease in finance costs for
the period.
The currency profile of the bank debt at the period end was as follows:
Unaudited Unaudited Audited
30 June 19 30 June 18 31 Dec 18
US$'000 US$'000 US$'000
US Dollars 73,506 93,278 83,463
---------- ---------- ---------
The above sensitivity analyses are estimates of the effect of market
risks assuming the specified change occurs. Actual results in the future
may differ materially from these results due to the 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.
9. LEASE LIABILITIES
Unaudited Unaudited Audited
30 June 19 30 June 18 31 Dec 18
US$'000 US$'000 US$'000
Lease liabilities
Amounts due within one year 1,043 - -
Amounts due after one year 3,929 - -
---------- ---------- ---------
4,972 - -
---------- ---------- ---------
On 1 January 2019 the Group recognised leases of US$5.0 million for its
head office at Styne House, Dublin and for the electricity generators at
the Mine. The Styne House lease has a term of ten years commencing
August 2017 and rental payments are fixed for five years. This lease
obligation is denominated in Euro.
The lease for the electricity generators was renewed in November 2017
for a five-year period and rental payments are fixed for the five years.
This lease obligation is denominated in US Dollars.
In February 2019 the Group entered into a lease of US$0.4 million for
its Mozambican country office in Maputo. The office has a seven-year
term of lease commencing February 2019 and rental payments are fixed for
seven years. This lease obligation is denominated in US Dollars. The
Group has discounted lease payments using its incremental borrowing
rates. The weighted average rate applied is 7%.
The leases are discounted at an incremental borrowing rate and expose
the Group to cash flow interest rate risk.
The currency profile of the leases at the period end was as follows:
Unaudited Unaudited Audited
30 June 19 30 June 18 31 Dec 18
US$'000 US$'000 US$'000
US Dollars 3,327 - -
Euro 1,645 - -
---------- ---------- ---------
4,972 - -
---------- ---------- ---------
10. PROVISIONS
Unaudited Unaudited Audited
30 June 19 30 June 18 31 Dec 18
US$'000 US$'000 US$'000
Mine closure provision 23,733 15,369 19,863
Mine rehabilitation provision 3,253 2,558 2,776
Legal provision 1,157 1,444 1,157
---------- ---------- ---------
Total provisions 28,143 19,371 23,796
---------- ---------- ---------
Current 1,437 1,720 1,437
Non-current 26,706 17,651 22,359
---------- ---------- ---------
28,143 19,371 23,796
---------- ---------- ---------
The mine closure provision represents the Directors' best estimate of
the present value of the Group's liability for close-down, dismantling
and restoration of the mining and processing site. A corresponding
amount equal to the provision is recognised as part of property, plant
and equipment. The costs are estimated on the basis of a formal closure
plan and are subject to regular review and are estimated based on the
net present value of estimated future costs. Mine closure costs are a
normal consequence of mining, and the majority of close-down and
restoration expenditure is incurred at the end of the life of the mine.
The unwinding of the discount is recognised as a finance cost and US$0.2
million (2018: US$0.2 million) has been recognised in the profit and
loss of the condensed consolidated statement of comprehensive income for
the period.
The main assumptions used in the calculation of the estimated future
costs include:
-- a discount rate of 2.8% (2018: 3.2%);
-- an inflation rate of 2% (2018: 2%);
-- an estimated life of mine of 40 years (2018: 40 years); and
-- an estimated closure cost of US$28.8 million (2018: US$28.8 million) and
an estimated post-closure monitoring provision of US$3.9 million (2018:
US$3.9 million).
The life of mine plan is based on the Namalope, Nataka and Pilivili
proved and probable reserves as set out in the reserves and resources
table. During the period, the mine closure provision was increased by
US$3.6 million to reflect the change in the discount rate from 3.2% to
2.8%.
The discount rate is a significant factor in determining the mine
closure provision. The Group uses rates as provided by the US Treasury.
Thirty-year US Treasury yields are the longest period for which yields
are quoted. A forty-year rate to align with the estimated life of mine
has been calculated by taking the average increase in yield from ten to
twenty years and from twenty to thirty years and adding this average to
the thirty-year treasury rate to arrive at an estimated extrapolated
rate for forty years. This discount rate is deemed to provide the best
estimate to reflect current market assessment of the time value of the
money. Risks specific to the liability are included in the cost
estimate. A 1% increase in the estimated discount rate results in the
mine closure provision decreasing by US$7.7 million. A 1% decrease in
the estimated discount rate results in the mine closure provision
increasing by US$11.6 million.
The mine rehabilitation provision was increased by US$0.5 million as a
result of additional provision of US$0.8 million for areas disturbed net
of US$0.3 million released for areas rehabilitated during the period.
US$0.3 million (2018: US$0.3 million) of the mine rehabilitation
provision has been included in current liabilities to reflect the
estimated cost of rehabilitation work to be carried out over the next
year.
The legal provision relates to the costs associated with a defamation
case and further litigation brought by a former Director against the
Company. On 17 November 2010, a High Court jury delivered a verdict of
damages of EUR10 million in a defamation case taken by a former Company
Director. On 28 February 2019 the Court of Appeal ruled that the High
Court of Ireland jury award of damages, made in favour of a former
director in November 2010 be substantially reduced from EUR10 million to
EUR0.25 million. On 29 July 2019 the Supreme Court determined that the
former Director should be denied leave to appeal the Court of Appeal's
judgement to the Supreme court, and on that basis the Court of Appeal's
ruling stands.
Excluding the US$0.2 million unwinding of the discount and US$3.6
million adjustment to the mine closure provision from the movement of
provisions in the statement of financial position of US$4.3 million
results in the movement in the mine rehabilitations provision of US$0.5
million disclosed in the statement of cash flows.
11. TRADE AND OTHER PAYABLES
Included in trade and other payables at the period end is an amount of
US$4.6 million for additions to property, plant and equipment. During
the period there were foreign exchange movements of US$0.5 million in
relation to non-US Dollar payables. Excluding the above from the
movement in the statement of financial position of US$4.7 million
results in the US$0.4 million disclosed in the statement of cash flows.
12. SHARE-BASED PAYMENTS
During the period, the Group recognised share-based payment expenses of
US$0.9 million (2018: US$0.6 million) under the Kenmare Incentive Plan
and Kenmare Restricted Share Plan.
13. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in
this note.
Apart from existing remuneration arrangements there were no material
transactions or balances between the Group and its key management
personnel or members of their close families during the period under
review.
14. FAIR VALUE
The fair value of trade and other receivables, trade and other payables,
and other financial liabilities are short term and non-interest bearing
and accordingly the Directors deem that the carrying amounts are a good
approximate of their fair value.
15. DIVIDS
An interim dividend for the year ended 31 December 2019 of USc2.66 per
share was declared on 20 August 2019. The dividend payable of US$2.9
million has not been included as a liability in these financial
statements. The interim dividend is payable to all shareholders on the
Register of Members on 27 September 2019.
16. EVENTS AFTER THE STATEMENT OF FINANCIAL POSITION DATE
There have been no significant events since 30 June 2019 which would
have a significant impact on the financial statements of the Group.
17. INFORMATION
The Half Yearly Financial Report was approved by the Board on 20 August
2019.
Copies are available from the Company's registered office at 4th Floor,
Styne House, Hatch Street Upper, Dublin 2, D02 DY27, Ireland.
The report is also available on the Company's website at
www.kenmareresources.com.
RESPONSIBILITY STATEMENT
The Directors are responsible for the preparation of the Half Yearly
Financial Report in accordance with the Transparency (Directive
2004/109/EC) Regulations 2007, as amended, the Transparency Rules of the
Central Bank of Ireland, and with IAS 34, Interim Financial Reporting as
adopted by the European Union. The names and functions of the Directors
are as listed in the Group's 2018 Annual Report and Accounts. A list of
the current Directors is maintained on the Kenmare Resources plc
website:
https://www.globenewswire.com/Tracker?data=ICrTbKBylQUVpws6U3Wrpgvw5ac7W8a8asW-DxFLJXAveJ88_FSITPpqaG-jPe7IfmzdTyLoOjows7z-mlkAO9kXw_p4J7_WL-qOPyrjXadjSsSYeZ2t5IIoarQuOCvq
www.kenmareresources.com.
The Directors confirm that, to the best of their knowledge:
-- The Group condensed consolidated financial statements for the half year
ended 30 June 2019 have been prepared in accordance with IAS 34 'Interim
Financial Reporting', as adopted by the European Union;
-- The Interim Management Report includes a fair review of the information
required by Regulation 8(2) of the Transparency (Directive 2004/109/EC)
Regulations 2007, as amended being an indication of important events that
have occurred during the first six months of the financial year and their
effect on the condensed consolidated financial statements, and a
description of the principal risks and uncertainties for the remaining
six months of the year; and
-- The Interim Management Report includes a fair review of the information
required by Regulation 8(3) of the Transparency (Directive 2004/109/EC)
Regulations 2007, as amended being related party transactions that have
taken place in the first six months of the current financial year and
that materially affected the financial position or performance of the
entity during that period, and any changes in the related party
transactions described in the last annual report that could do so.
On behalf of the Board,
Managing Director Financial Director
Michael Carvill Tony McCluskey
20 August 2019 20 August 2019
Glossary - Alternative Performance Measures
Certain financial measures set out in our Half Yearly Financial Report
to 30 June 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 Company's IFRSs financial
information, allows for a more meaningful understanding of the
underlying financial and operating performance of the Group.
These non-IFRSs 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
------------------------------------------------- -------------------------------------------------------- ---------------------------------------------------------
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 loan amendment fees and expenses Measures the amount the Group would have to raise
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 (FOB)
H1 2019 H1 2018 2018
-------------- ------- ------- ------
US$m US$m US$m
-------------- ------- ------- ------
Revenue 122.7 140.1 262.2
-------------- ------- ------- ------
Freight (7.3) (8.8) (16.3)
-------------- ------- ------- ------
Revenue (FOB) 115.4 131.3 245.9
-------------- ------- ------- ------
EBITDA
H1 2019 H1 2018 2018
------------------------------ ------- ------- ----
US$m US$m US$m
------------------------------ ------- ------- ----
Operating profit 26.1 32.2 62.9
------------------------------ ------- ------- ----
Depreciation and amortisation 16.7 16.0 30.4
------------------------------ ------- ------- ----
EBITDA 42.8 48.2 93.3
------------------------------ ------- ------- ----
Cash operating cost per tonne of finished product
H1 2019 H1 2018 2018
------------------------------------------------- ------- ------- ---------
US$m US$m US$m
------------------------------------------------- ------- ------- ---------
Cost of sales 79.6 92.5 168.3
------------------------------------------------- ------- ------- ---------
Other operating costs 17.0 15.4 31.0
------------------------------------------------- ------- ------- ---------
Total operating costs 96.6 107.9 199.3
------------------------------------------------- ------- ------- ---------
Freight (7.3) (8.8) (16.3)
------------------------------------------------- ------- ------- ---------
Total operating costs less freight 89.3 99.1 183.0
------------------------------------------------- ------- ------- ---------
Non-cash costs
------------------------------------------------- ------- ------- ---------
Depreciation and amortisation (16.7) (16.0) (30.4)
------------------------------------------------- ------- ------- ---------
Share-based payments (0.9) (0.6) (1.4)
------------------------------------------------- ------- ------- ---------
Mineral product inventory movements 5.2 (8.9) 0.1
------------------------------------------------- ------- ------- ---------
Total cash operating costs 76.9 73.6 151.3
------------------------------------------------- ------- ------- ---------
Final product production tonnes 505,200 487,300 1,043,300
------------------------------------------------- ------- ------- ---------
Cash operating cost per tonne of finished product US$152 US$151 US$145
------------------------------------------------- ------- ------- ---------
Cash operating cost per tonne of ilmenite
H1 2019 H1 2018 2018
----------------------------------------------------- ------- ------- -------
US$m US$m US$m
----------------------------------------------------- ------- ------- -------
Total cash operating costs 76.9 73.6 151.3
----------------------------------------------------- ------- ------- -------
Less FOB revenue from co-products zircon, rutile and
minerals sands concentrate (41.2) (34.2) (75.1)
----------------------------------------------------- ------- ------- -------
Total cash costs less co-product revenue 35.7 39.4 76.2
----------------------------------------------------- ------- ------- -------
Ilmenite product production tonnes 458,200 449,500 958,500
----------------------------------------------------- ------- ------- -------
Cash operating cost per tonne of ilmenite US$78 US$88 US$79
----------------------------------------------------- ------- ------- -------
Net cash/debt
H1 2019 H1 2018 2018
-------------------------- ------- ------- ------
US$m US$m US$m
-------------------------- ------- ------- ------
Bank debt (73.5) (93.3) (83.5)
-------------------------- ------- ------- ------
Cash and cash equivalents 77.0 84.0 97.0
-------------------------- ------- ------- ------
Net Debt 3.5 (9.3) 13.5
-------------------------- ------- ------- ------
Glossary - terms
"CIF" The seller delivers when the goods pass the ship's rail in the
port of shipment. Seller must pay the cost and freight necessary to
bring goods to named port of destination. Risk of loss and damage are
the same as CFR. Seller also has to procure marine insurance against
buyer's risk of loss/damage during the carriage. Seller must clear the
goods for export. This term can only be used for sea transport.
"CFR" This term means the seller delivers when the goods pass the ship's
rail in port of shipment. Seller must pay the costs and freight
necessary to bring the goods to the named port of destination, but the
risks of loss or damage, as well as any additional costs due to events
occurring after the time of delivery, are transferred from seller to
buyer. Seller must clear goods for export. This term can only be used
for sea transport.
"the Company" Kenmare Resources plc
"DFS" Definitive feasibility studies are the most detailed and will
determine definitively whether to proceed with the project. A definitive
feasibility study will be the basis for capital appropriation
https://www.globenewswire.com/Tracker?data=PblbdvbwJprZ1dc-YYYICLW87gdhJ0LRrjocFArFhGSarVRdl2YGMnE69bBR-74Gab7YakzFhO-hTCgIPtQlS17ECC5OKHnfmeWflOO0XYZRE3oIJxka7y9FMLyJKciNPetQ3-EKH4ch8O8pegxG3A==
, and will provide the budget figures for the project. Detailed
feasibility studies require a significant amount of formal engineering
work and are accurate to within approximately 10-15%.
"FOB" This term means that the seller delivers when the goods pass the
ship's rail at the named port of shipment. This means the buyer has to
bear all costs and risks to the goods from that point. The seller must
clear the goods for export. This term can only be used for sea
transport.
"Group or Kenmare" Kenmare Resources plc and its subsidiary undertakings
"HMC" Heavy mineral concentrate extracted from mineral sands deposits
and which include ilmenite, zircon, rutile, concentrates and other heavy
minerals and silica
"Moma", "Moma Mine" or "the Mine" The Moma Titanium Minerals Mine
consisting of a heavy mineral sands, processing facilities and
associated infrastructure, which mine is located in the north east coast
of Mozambique under licence to the Project Companies
"MSP" Mineral Separation Plant
"Project Companies" Kenmare Moma Mining (Mauritius) Limited and Kenmare
Moma Processing (Mauritius) Limited, wholly owned subsidiary
undertakings of Kenmare Resources plc, who are incorporated in Mauritius
"WCP" Wet Concentrator Plant
"WCP A" The original WCP which started production in 2007
"WCP B" The second WCP which started production in 2013
"WCP C" The third WCP being built and commissioned in 2019
(END) Dow Jones Newswires
August 20, 2019 02:00 ET (06:00 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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