Kenmare Resources Q3 2019 Production Report

 
TIDMKMR 
 
 
   Kenmare Resources plc ("Kenmare" or "the Company" or "the Group") 
 
   16 October 2019 
 
   Q3 2019 Production Report 
 
   Kenmare Resources plc (LSE:KMR, ISE:KMR), one of the leading global 
producers of titanium minerals and zircon, which operates the Moma 
Titanium Minerals Mine (the "Mine" or "Moma") in northern Mozambique, is 
pleased to provide a trading update for the third quarter ending 30 
September 2019 ("Q3 2019"). 
 
   Statement from Michael Carvill, Managing Director: 
 
   "Production and operating costs continued to track well against our 
guidance in the third quarter and we remain in line on both metrics. 
With the dredge and major components of the Wet Concentrator Plant for 
the WCP C development now on site, our growth projects to deliver 1.2 
million tonnes per annum of ilmenite continue to advance. We are on 
track to commence commissioning of WCP C later this year. 
 
   The ilmenite market remained tight in Q3 2019, with strong demand for 
ilmenite suitable for upgrading to slag driving higher prices, despite 
softer pigment market conditions. We have secured higher prices for 
ilmenite spot shipments in Q4 2019. Although the zircon market has 
experienced some weakness in 2019, we believe the fundamentals for all 
of our products remain positive due to emerging supply constraints. 
 
   We are delighted to be paying our maiden dividend on 25 October 2019, 
delivering on our strategy to provide shareholder returns, in addition 
to growth and margin expansion." 
 
   Q3 2019 overview 
 
 
   -- Lost time injury frequency rate ("LTIFR") of 0.20 per 200,000 man-hours 
      worked for the 12-months to 30 September 2019 (30 September 2018: 0.29) 
 
   -- 9% increase in Heavy Mineral Concentrate ("HMC") production to 304,100 
      tonnes compared to Q3 2018, as a result of a 10% increase in tonnes of 
      excavated ore 
 
   -- Ore grades in line with Q3 2018 at 3.63% (Q3 2018: 3.62%), but 
      representing an increase of 18% compared to Q2 2019 at 3.07%, as expected 
 
   -- Ilmenite production of 230,800 tonnes, in line with Q3 2018 (233,900 
      tonnes) 
 
   -- 27% increase in primary zircon production to 12,900 tonnes (Q3 2018: 
      10,200 tonnes) and 26% increase in rutile production to 2,100 tonnes (Q3 
      2018: 1,700 tonnes) mainly due to spillage retreatment during Q3 2019 
 
   -- 78% increase in concentrates production to 10,700 tonnes (Q3 2018: 6,000 
      tonnes), benefitting from the introduction of a mineral sands concentrate 
      product 
 
   -- 3% decrease in total shipments of finished products to 192,900 tonnes (Q3 
      2018: 198,900 tonnes) - 2019 total shipment volumes are expected to be in 
      excess of 1 million tonnes (2018: 1,074,400 tonnes) 
 
   -- The Wet Concentrator Plant ("WCP") C development project remains on track 
      to commence commissioning in Q4 2019 
 
   -- Ilmenite market conditions remained tight in Q3 2019, with higher prices 
      achieved than in Q2 2019 and further spot price increases agreed with 
      customers for Q4 2019 
 
   -- Zircon prices weakened in Q3 2019 due to slower global growth concerns, 
      however long-term fundamentals remain strong due to supply constraints, 
      despite short-term oversupply 
 
   Production 
 
   Production from the Moma Mine in Q3 2019 was as follows: 
 
 
 
 
                    Q3 2019    Q3 2018                Q2 2019 
-----------------  ---------  ---------  ----------  ---------  ---------- 
                    tonnes     tonnes    % variance   tonnes    % variance 
-----------------  ---------  ---------  ----------  ---------  ---------- 
Excavated ore(1)   9,219,500  8,411,000         10%  9,907,000         -7% 
-----------------  ---------  ---------  ----------  ---------  ---------- 
Grade(1)               3.63%      3.62%          0%      3.07%         18% 
-----------------  ---------  ---------  ----------  ---------  ---------- 
Production 
-----------------  ---------  ---------  ----------  ---------  ---------- 
HMC production       304,100    279,900          9%    274,700         11% 
-----------------  ---------  ---------  ----------  ---------  ---------- 
HMC consumption      318,800    313,100          2%    285,600         12% 
-----------------  ---------  ---------  ----------  ---------  ---------- 
Ilmenite             230,800    233,900         -1%    220,100          5% 
-----------------  ---------  ---------  ----------  ---------  ---------- 
Primary zircon        12,900     10,200         26%     11,000         18% 
-----------------  ---------  ---------  ----------  ---------  ---------- 
Rutile                 2,100      1,700         24%      2,200         -5% 
-----------------  ---------  ---------  ----------  ---------  ---------- 
Concentrates(2)       10,700      6,000         78%      9,400         14% 
-----------------  ---------  ---------  ----------  ---------  ---------- 
Shipments            192,900    198,900         -3%    307,000        -37% 
-----------------  ---------  ---------  ----------  ---------  ---------- 
 
 
   1. Excavated ore and grade prior to any floor losses. 
 
   2. Concentrates include secondary zircon and mineral sands concentrate. 
 
 
   Kenmare recorded a LTIFR of 0.20 per 200,000 man-hours worked for the 12 
months to 30 September 2019, due to two lost time injuries in Q3 2019 
(30 September 2018: 0.29). After a strong safety performance in the 
first half of the year, with a LTIFR of 0.12 for the 12 months to 30 
June 2019, the Company has increased its focus on risk assessment and 
personal accountability. 
 
   At the end of the third quarter, Kenmare remains on track to achieve its 
2019 production and cost guidance. 
 
   During Q3 2019, Kenmare mined 9.2 million tonnes of ore at an average 
grade of 3.63%, producing 304,100 tonnes of HMC. This represents a 9% 
increase compared to Q3 2018 (279,900 tonnes), benefitting from the 20% 
capacity increase at WCP B, which was commissioned in Q4 2018, the WCP B 
dredge automation project and continued utilisation improvements. 
However, as anticipated in the mine plan, excavated ore decreased by 7% 
compared to Q2 2019 primarily as a result of more challenging mining 
conditions. 
 
   Ore grades in Q3 2019 were in line with Q3 2018 (3.62%) but increased by 
18% compared to Q2 2019 (3.07%). As previously stated, Q2 2019 was 
expected to be the lowest grade quarter of the year and consequently 
stronger ore grades were mined in Q3 2019, in line with the mine plan. 
 
   Ilmenite production in Q3 2019 was in line with Q3 2018 (233,900 tonnes) 
at 230,800 tonnes. Ilmenite production remained flat as increased HMC 
consumption in Q3 2019 was offset by higher processed volumes of 
intermediate magnetic concentrate in Q3 2018 (and Q2 2019). 
 
   Kenmare delivered stronger production of all other products in Q3 2019 
compared to the corresponding quarter in 2018. The Company recorded a 
26% increase in primary zircon production to 12,900 tonnes (Q3 2018: 
10,200 tonnes) and a 24% increase in rutile production to 2,100 tonnes 
(Q3 2018: 1,700 tonnes), as a result of stable operating conditions and 
spillage retreatment in Q3 2019. 
 
   Concentrates production increased by 78% in Q3 2019 to 10,700 tonnes, 
benefitting from the introduction of a mineral sands concentrate product 
in Q4 2018. 
 
   Kenmare shipped 192,900 tonnes of finished products during the period 
(Q3 2018: 198,900 tonnes), which comprised 174,000 tonnes of ilmenite, 
8,500 tonnes of primary zircon, 3,800 tonnes of rutile and 6,600 tonnes 
of concentrates. 
 
   Shipments in Q3 2019 were lower than expected due to poor weather 
conditions impacting loading rates. In late Q3 2019 approximately 35,000 
tonnes of a larger shipment were loaded onto a customer vessel and will 
be reported with shipments in Q4 2019. If the 35,000 tonnes had been 
recorded in Q3, the Company's shipments for the period would have 
increased by 15% compared to Q3 2018. The Company expects shipments to 
increase significantly in Q4 2019, due to strong customer demand and 
seasonally improved weather conditions. Total shipments of finished 
products for the full year 2019 are expected to be in excess of 1 
million tonnes (2018: 1,074,400 tonnes). 
 
   Closing stock of HMC at the end of Q3 2019 was 10,900 tonnes, compared 
with 25,600 tonnes at the end of Q2 2019. Closing stock of finished 
products at the end of Q3 2019 was 286,400 tonnes (Q2 2019: 222,800 
tonnes). 
 
   Capital projects update 
 
   Kenmare previously announced three development projects that together 
have the objective of increasing ilmenite production to 1.2 million 
tonnes (plus co-products) per annum on a sustainable basis from 2021. 
The first development project, a 20% expansion of WCP B, was 
commissioned in late 2018. 
 
   During Q3 2019 project execution for the second development project, the 
construction of WCP C, continued to advance on time and within budget. 
The dredge was commissioned at the shipbuilder's yard in the Netherlands 
and shipped to Nacala in Mozambique, which is the closest major port to 
the Moma Mine. The dredge arrived in Nacala on 1 October 2019 and is in 
the process of being transported by road to the Moma Mine. Parts of the 
wet concentrator plant, which is being fabricated in South Africa, are 
also arriving at the mine. The project remains on track to commence 
commissioning in Q4 2019. 
 
   Project execution is also underway for the third development project, 
the relocation of WCP B to the high grade Pilivili ore zone. The 
contract for civil engineering work, including the construction of the 
purpose-built road and other key contracts, was awarded during Q3 2019. 
Kenmare expected the environmental, social and health impact assessment 
("ESHIA") for the road to be approved during Q3 2019 but the timing was 
impacted by administrative delays. The ESHIA approval is now expected 
during Q4 2019, however work has commenced on the purpose-built road 
within the existing Namalope and Pilivili licence areas. The relocation 

of WCP B is scheduled to be completed in Q3 2020, with commissioning in 
Q4 2020. 
 
   Market update 
 
   Demand for pigment, the main consumer of titanium feedstocks, remains 
subdued due to global economic uncertainties affecting purchasing 
behaviour in key regions. However, market conditions for titanium 
feedstocks were tight in Q3 2019 as a result of constrained titanium 
feedstock supply. The Company believes that demand for products of a 
comparable quality to Kenmare's ilmenite exceeds the available supply. 
As a result, higher prices were achieved in Q3 2019 compared to Q2 2019 
and further spot price increases have been agreed with customers for Q4 
2019. 
 
   The increase in demand for Kenmare's ilmenite is being driven by 
purchases for upgrading into high grade feedstocks, for which Chinese 
domestic ilmenite is unsuitable. Coupled with this, supply remains 
constrained from historically large ilmenite producers, such as India 
and Vietnam. These supply constraints have been partially offset by 
increased domestic ilmenite production in China, supported by strong 
iron ore and vanadium prices. 
 
   The zircon market weakened in Q3 2019, primarily due to slower global 
growth and disruption to downstream industries in China. This resulted 
in some price softening in Q3 2019, primarily in the Chinese market. 
Kenmare expects global zircon supply constraints to emerge as existing 
mines deplete and production reduces in the coming years, which should 
aid pricing levels in the medium term. 
 
   Kenmare believes that the long-term fundamentals for all of the 
Company's products remain strong. 
 
   For further information, please contact: 
 
   Kenmare Resources plc 
 
   Jeremy Dibb / Katharine Sutton 
 
   Investor Relations 
 
   https://www.globenewswire.com/Tracker?data=WcquUHAatN2yikoN9ZamABKovf0r5bzFtG3jEqlKAd8fY-VwJrzyl1S3ZlHJlxcxdFyzFVgPQYe0T_1P6n2ymBcyzAOQWFCmbO-ZTwVEvFU= 
[e-mail] 
 
   Tel: [phone] 
 
   Mob: + 353 87 943 0367 / + 353 87 663 0875 
 
   Murray (PR advisor) 
 
   Joe Heron 
 
   Tel: [phone] 
 
   Mob: [phone] 
 
   About Kenmare Resources 
 
   Kenmare Resources plc is one of the world's largest producers of mineral 
sands products. Listed on the London Stock Exchange and the Euronext 
Dublin, Kenmare operates the Moma Titanium Minerals Mine in Mozambique. 
Moma's production accounts for approximately 7% of global titanium 
feedstocks and the Company supplies to customers operating in more than 
15 countries. Kenmare produces raw materials that are ultimately 
consumed in everyday "quality-of life" items such as paints, plastics 
and ceramic tiles. 
 
   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. 
 
 
 
 

(END) Dow Jones Newswires

October 16, 2019 02:00 ET (06:00 GMT)

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