Kenmare Resources Report On Payments To Governments 2019

 
TIDMKMR 
 
 
   Kenmare Resources plc ("Kenmare" or "the Company") 
 
   26 May 2020 
 
   Report on payments to governments 2019 
 
   Introduction 
 
   This report details payments to governments made by Kenmare Resources 
plc (the "Company") and its subsidiary undertakings (the "Group") for 
the financial year ended 31 December 2019. 
 
   This report has been prepared in accordance with the requirements of 
Part 2A of the Transparency (Directive 2004/109/EC) Regulations, 2007 
(as amended) ("Part 2A") and Part 26 of the Companies Act 2014 ("Part 
26"). Part 2A and Part 26 enact in Ireland domestic rules in line with 
Directive 2013/34/EU (the "EU Accounting Directive (2013)) and apply to 
large Irish incorporated companies, like the Company, that are involved 
in the exploration, discovery, development, and extraction of minerals. 
 
   This report is available for download at 
https://www.globenewswire.com/Tracker?data=swAXFPDgjyyt7mY0N16twI0vlPp4Hq38Jy-dKTj_E3XWoNKyp5_FG4br-mGQ6l1Xdgvky53UlIR7Y7m8194LvrpayVYJr3tWqo6NIQiu_5PQX57EI2mgypYY2GZ2jm1TYNX6_t2MzosZDiZZP9u2LaS374f1TPFIOaT2VYv6fdKi1WSS6Um3hjqCtBQggDbQh1pNsOWgIHJNYXk14BQ8eA== 
www.kenmareresources.com/investors/reports-and-presentations 
 
   Kenmare Resources plc 
 
   Kenmare Resources plc is an Irish incorporated company with a premium 
listing on the London Stock Exchange and a secondary listing on Euronext 
Dublin. The principal activity of the Group is the operation of the Moma 
Titanium Minerals Mine (the "Moma Mine"). The Moma Mine is located on 
the northern coast of Mozambique and is one of the world's largest 
producers of minerals sands products, accounting for production of 
approximately 7% of the global titanium feedstocks, and supplying to 
customers operating in over 15 countries across the globe. The products 
the Group produces are key raw materials, ultimately consumed in 
everyday "quality-of-life" products such as paints, plastics and ceramic 
tiles. 
 
   The Group consists of the parent company (Kenmare Resources plc) and its 
subsidiary undertakings. The mining operations at the Moma Mine are 
carried out by the Mozambique branch of Kenmare Moma Mining (Mauritius) 
Limited Mozambique Branch ("KMML") and downstream processing is 
undertaken by the Mozambique branch of Kenmare Moma Processing 
(Mauritius) Limited ("KMPL"), both of which are wholly-owned subsidiary 
undertakings of the Company. KMML and KMPL account for 100% of the 
Group's turnover and 94% of the Group's total assets. Therefore, all 
revenues and operating costs of the Group's mining and processing 
operations are recorded by KMML and KMPL within the same tax 
jurisdiction, namely Mozambique. 
 
   The parent company, Kenmare Resources plc, conducts no direct 
exploration or mining activities. The Group's corporate costs are 
recorded by the parent company. 
 
   Scope of report 
 
   Disclosure of payments to governments is required in respect of payments 
arising from the exploration, discovery, development and extraction of 
minerals; the payments included within this report therefore relate to 
the Group's mining and processing activities at the Moma Mine in 
Mozambique. 
 
   Groups are required to prepare a consolidated report disclosing payments 
made by the parent company and its subsidiary undertakings. Accordingly, 
this report reflects payments made by the Group companies conducting 
mining and processing activities, namely KMML and KMPL. The Group owns 
100% of these entities and the amounts reflect 100% of the payments made 
by these subsidiary undertakings. 
 
   Payments 
 
   The payments disclosed in this report are on a cash basis. 
 
   The payments made to governments are required to be analysed into the 
following categories: 
 
 
   -- Production entitlements 
 
   -- Taxes - taxes levied on the income, production or profits of companies, 
      excluding taxes levied on consumption, value added taxes, personal income 
      taxes, sales taxes, property taxes or municipal charges. 
 
 
   KMML is subject to a corporation tax rate of 35% of the taxable profits 
of its Mozambique branch. Taxable profits of the branch are calculated 
by reference to the cash costs of producing heavy mineral concentrate 
("HMC") net of allowable tax deductions and increased by a defined 
margin. 
 
   KMML's Mozambique branch produces one product from its mining activities, 
namely HMC. This HMC is sold to KMPL which processes it into finished 
products (ilmenite, zircon, rutile and mineral sands concentrate), which 
are exported worldwide to third party customers. The cash costs of 
mining include the costs of mine face preparation, dredging and dry 
mining operations, wet contractor plant operations, rehabilitation and 
support services. 
 
   The margin applied to the cash costs of mining is stipulated in the 
Mineral Licensing Contract, dated 21 January 2002. The contract is 
between KMML and the Ministry of Mineral Resources and Energy (MIREME) 
of the Republic of Mozambique, acting for and on behalf of the 
Government of the Republic of Mozambique, which details the terms and 
conditions for the exploration, development and production of heavy 
minerals in the areas of Moma, Congolone and Quinga. The margin is 
determined by dividing the prices for sale of finished products to third 
party customers earned by KMPL in the year by the prices earned in the 
prior year, adjusted for inflation and applying this factor to the prior 
year margin. For the fiscal year ending 31 December 2019 the margin was 
43.7%. 
 
   KMPL has the benefit of operating within an Industrial Free Zone ("IFZ") 
and as an IFZ company, it is exempted from corporation tax. 
 
 
   -- Royalties -- typically amounts levied based on production levels or 
      revenues. 
 
 
   KMML is subject to a mining royalty of 3% based on HMC sold to KMPL. The 
royalty is calculated by multiplying the cash costs of producing HMC, 
plus the margin as detailed above by 3%. 
 
   KMPL is subject to a revenue royalty of 1% on revenue recognised. 
 
 
   -- Dividends 
 
   -- Bonuses - signature, discovery and production bonuses. 
 
   -- Fees - licence fees, rental fees, entry fees and other considerations for 
      mining licences or concessions. 
 
   -- Infrastructure improvements - payments to governments for infrastructure 
      other than in circumstances where the infrastructure is expected to be 
      primarily dedicated to operational activities throughout its useful life. 
      Payments that form part of the Group's social investment activities 
      (which are primarily organised and administered by Kenmare Moma 
      Development Association) are excluded. Such payments would include 
      contributions in respect of local schools, healthcare or community 
      facilities, or improvements to the general environment of local 
      communities. 
 
 
   Government 
 
   "Government" means any national, regional or local authority of a 
country, and includes a department, agency or undertaking that is a 
subsidiary undertaking where the authority is the parent undertaking. 
 
   All payments referred to this report are made to the Government of 
Mozambique or its agencies; in particular, they are made to Autoridade 
Tributária Unidade dos Grandes Contribuintes--Nampula, a department 
of the Mozambican tax authority. 
 
   Materiality 
 
   Under Part 2A and Part 26, a payment need not be disclosed if it is a 
single payment of less than the equivalent of EUR100,000 or a series of 
related payments in a single year whose total is less than the 
equivalent of EUR100,000. 
 
   Analysis by project/entity 
 
   An analysis of payments by project is required where payments are 
attributable to specific projects. Projects are defined as operational 
activities which are governed by a single contract, licence, lease, 
concession or similar legal agreement, and form the basis for payment 
liabilities with a government. Where agreements are substantially 
interconnected in operating and geographical terms, with substantially 
similar terms, those agreements should be treated as a single project. 
Payments may be disclosed at an entity level where payments are made in 
respect of obligations imposed at that entity level rather than at a 
project level. Payments below are disclosed at the entity level for KMML 
and KMPL, which between them operate the Moma Mine, which is treated as 
one project for purposes of this Report. 
 
   Rounding 
 
   The amounts shown in this report have been rounded to the nearest 
US$1,000. 
 
   PAYMENTS TO GOVERNMENTS -- 2019 
 
 
 
 
              Production                                                    Infrastructure 
             entitlements   Taxes   Royalties  Dividends  Bonuses   Fees     improvements    Total 
               US$'000     US$'000   US$'000    US$'000   US$'000  US$'000     US$'000      US$'000 
Country summary 
Government 
 of 
 Mozambique             -    2,310      5,603          -        -        -               -    7,913 
Total                   -    2,310      5,603          -        -        -               -    7,913 
 
Entity report 
KMML                    -    2,310      3,180          -        -        -               -    5,490 
KMPL                    -        -      2,423          -        -        -               -    2,423 
Total                   -    2,310      5,603          -        -        -               -    7,913 
 
 
   This report for Kenmare Resources plc (registered number 37550) was 
approved by the Directors of the Company on 22 May 2020 and signed on 
their behalf by 
 
   Michael Carvill, Director 
 
   Tony McCluskey, Director 
 
 
 
   For further information, please contact: 
 
 
 
   Kenmare Resources plc 
 
   Jeremy Dibb / Katharine Sutton 
 
   Investor Relations 
 
   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. 
 
 
 
 
 
 

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May 26, 2020 02:00 ET (06:00 GMT)

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