Slide 1: H1 2016 Results
H1 2016 Results LISTED PREMIUM 1
Slide 2: Disclaimer
Disclaimer This Presentation (the “Presentation”) has information or opinions on which it is significant in the context of the been prepared and issued by Kenmare based, or any other written or oral statements, estimates and projections Resources plc (the “Company” or information made available in c
Slide 3: Overview
1 Overview 3
Slide 4: Kenmare Resources H1 2016 Overview
Kenmare Resources H1 2016 Overview Total shipments of finished products in H1 2016 increased 7% to a new half yearly record Cash operating costs per tonne of finished product declined 22%, a result of continued cost savings and increased production EBITDA of negative US$10.7 million remains stable y
Slide 5: Key Performance Indicators
Key Performance Indicators Production (Half-Yearly) 000t EBITDA (Half-Yearly) US$m Zircon Ilmenite Revenue EBITDA 500 100 400 80 Revenue & EBITDA US$m Tonnes '000 300 60 200 40 100 20 0 0 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 -20 HMC production increased 33%
Slide 6: Summary Results
2 Summary Results 6
Slide 7: H1 2016 Income Statement Review
H1 2016 Income Statement Review H1 ‘16 H1 ‘15 Comment US$m US$m Revenue 56.2 73.9 Revenue down 24%, volumes up 7% but average prices down 29% Cost of Sales & Opex (81.1) (101.1) Full effect of cost savings and lower deprecation Operating loss (24.9) (27.2) Net finance costs (21.5) (18.1) Higher inte
Slide 8: H1 2016 Revenue Review
H1 2016 Revenue Review Volume/Mix Movement Pricing Movement (FOB)1,2 450,000 425,000 Shipments (Tonne s) 400,000 375,000 350,000 H1 2015 H1 2016 Rutile Volume (- 8%) Secondary Zircon Volume (+ 521%) Primary Zircon Volume (- 20%) Ilmenite Volume (+ 7%) Sales volumes increased by 7% to record levels o
Slide 9: H1 2016 Cash Operating Costs Review
H1 2016 Cash Operating Costs Review H1 2016 H1 2016 H1 2015 H1 2015 US$m US$m US$m US$m Cost of sales 68.0 91.9 Other operating costs 13.1 81.1 9.2 101.1 Freight (CIF customers) (2.4) (1.6) Total costs less freight 78.7 99.5 Non-cash costs Depreciation 14.2 16.6 Share-based payments 0.1 (14.3) (0.8)
Slide 10: Half Yearly 2013 – 2016 Cash Operating Costs
Half Yearly 2013 – 2016 Cash Operating Costs Final Product Production (kt) - Right Axis Ongoing Cash Operating Cost per Tonne (US$/t) - Left Axis $250 500 450 Final Product Production ('000s tonnes) $200 400 Cost per Tonne 350 $150 300 250 $100 200 150 $50 100 50 $0 0 H1 2013 H2 2013 H1 2014 H2 2014
Slide 11: H1 2016 Cash Operating Costs
H1 2016 Cash Operating Costs Other Logistics & Travel 12% 9% Distribution Costs Production 5% Overheads Other Logistics & 13% Production 5% Travel Overheads Distribution 9% 12% Costs 5% H1 Fuel 2016 Fuel 8% 12% Labour payroll H1 25% 2015 Power Power 8% 6% Repairs & Labour payroll Maintenance 33% 20%
Slide 12: Balance Sheet Review at June 2016
Balance Sheet Review at 30 June 2016 30/6/2016 31/12/2015 Comment on 2016 & movement US$m US$m Property, plant & equipment 823.8 835.0 US$3.0m additions, US$14.2m depreciation Inventories 47.4 46.2 Higher high value mineral in stock, offset by lower plant spares Trade & other receivables 12.6 20.9 F
Slide 13: Half Yearly Capex 2013 - 2016
Half Yearly Capex 2013 - 2016 100 75 US#039; millions 50 25 0 H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 Expansion capex Sustaining capex Long period of investment completed in 2013 Sustaining capital continued to be tightly controlled in H1 2016 Expected higher sustaining capital in H2 20
Slide 14: Capital Restructuring
3 Capital Restructuring 14
Slide 15: Capital raise and debt restructuring
Capital raise and debt restructuring Capital raise - total capital raised of US$275m US$154.6m Placing and Open Offer US$20.4m Lender Underwriting 109.6m shares on issue following 1 for 200 consolidation of shares Debt restructuring – simplified debt structure and enhanced working capital position G
Slide 16: Transformed balance sheet post capital raise
Transformed balance sheet post capital raise Gross Debt (US$m)1 Cash (US$m)2 Net Debt (US$m)3 450 80 400 400 70 350 350 60 300 300 50 250 250 40 200 200 30 150 150 20 100 100 50 10 50 0 0 0 Debt pre-completion Debt post- Cash as at Minimum cash post- Net debt pre- Maximum net debt completion 31/12/2
Slide 17: Debt repayment profile
Debt repayment profile Annual Interest (US$m)1,2 Repayment Profile (US$m)2 Interest Rates (%)1 35 25 10% 30 20 8% 25 15 6% 20 15 10 4% 10 5 2% 5 0 0 0% Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19 Aug-19 Feb-20 Aug-20 Feb-21 Aug-21 Feb-22 2015 interest cost Annualised new 2015 avg. New debt New debt in
Slide 18: Market Overview
4 Market Overview 18
Slide 19: TiO2 market overview
TiO2 market overview • Demand for titanium dioxide closely Global pigment and GDP growth tracks growth in global GDP (1981-2014) 125 • Titanium feedstocks are used for the production of titanium pigment Global pigment demand growth (log x100) 100 (~90%), welding rods (~5%) and titanium metal (~5%) 7
Slide 20: Improving pigment demand and pricing
Improving pigment demand and pricing • Improved demand conditions for SunSirs TiO2 Titanium Dioxide pigment in H1 2016 in all major Pigment Index (Yuan/Tonne) regional markets 18,000 • Industry analysts and producers 17,000 report that inventory levels have 16,000 normalised 15,000 • Global plant ut
Slide 21: Tightening Chinese market conditions
Tightening Chinese market conditions Domestic Ilmenite Production Chinese Port Stocks 3,500 175 400 3,000 150 350 2,500 125 300 2,000 100 250 1,500 75 200 1,000 50 150 500 25 0 0 100 Mar-15 Mar-16 Jun-15 Sep-14 Dec-14 Sep-15 Dec-15 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Chinese
Slide 22: Chinese Imported Ilmenite
Chinese Imported Ilmenite Product Chinese imports of titanium ore Chinese ilmenite spot price 3.5 900 million of tonnes per annum 3.0 800 2.5 CNY per tonne 2.0 700 1.5 600 1.0 500 0.5 0.0 400 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Jan-16 2009 2010 2011 2012 2013 2014 2015 2016 Ann. Source: China
Slide 23: Supply/demand outlook
Supply/demand outlook • Demand is expected to continue to TZMI TiO2 Feedstock Supply/Demand ('000 TiO2 units) trend upwards with global GDP 8,000 • Primary supply demand deficit 7,000 emerges in 2015 offset by inventory drawdown 6,000 • New slag plants in China and the 5,000 Middle East will favoura
Slide 24: Appendix
(a) Appendix 24
Slide 25: Group Debt
Group Debt Group Debt at 30 June 2016: US$357.7m (2015: US$341.9m) Lenders: Absa, KfW, FMO, EIB, EAIF, & AfDB Guarantors: ECIC (of Absa), MIGA & Hermes (of KfW) Average interest rate for H1 2016 was 10.0% Super Senior: US$10.5m, floating @ LIBOR +10% Senior: US$79.5m, floating @ LIBOR + 4.3% to 5.5%
Slide 26: Group Lenders at June 2016
Group Lenders at 30 June 2016 Loan Balance Maturity US$m Super Senior Loans AfDB 0.7 2017 Absa (ECIC) 0.8 2017 EAIF 1.9 2017 EIB 4.9 2017 FMO 1.7 2017 KfW IPEX-Bank 0.5 2017 10.5 Senior Loans AfDB 21.3 2021 Absa (ECIC) 23.9 2018 EAIF 2.6 2021 EIB 8.7 2021 FMO 8.6 2019 KfW IPEX-Bank (Hermes) 6.6 2018