Kenmare Resources Plc · LSE:KMR
Kenmare Resources — Investor Presentation (October 2013)
38 slides from Kenmare Resources's investor presentation, October 2013
Slide 1: Kenmare Resources plc – Moma Titanium Minerals Mine, October 2013 Update
Kenmare Resources plc Moma Titanium Minerals Mine October 2013 Update
Slide 2: Disclaimer
Disclaimer This Confidential Presentation (the “Presentation”) has been prepared and issued by Kenmare Resources plc (the “Company” or “Kenmare”). While this Presentation has been prepared in good faith, the Company and its respective officers, employees, agents and representatives expressly discla
Slide 3: Kenmare Resources at a Glance
Kenmare Resources at a Glance Kenmare quick facts Location of mine Moma Mine, North-east Coast Mozambique Products (market share)(1) Titanium feedstock (approximately 8% global supply) One of the world’s largest known titanium minerals Mine life deposits with 100+ years at expanded production levels
Slide 4: Mozambique Overview
Mozambique Overview Quick facts (2012) Capital Maputo Government type Presidential Democratic Republic S&P (B+ / Stable) Ratings Moma Fitch (B+ / Positive) Mine Nominal GDP US$14.6bn Total Debt / GDP (2011) 32.1% Net FDIs / GDP 10.0% GDP Growth 7.4% Population 25 million International natural resour
Slide 5: Moma Mine Simplified Flowsheet
Moma Mine Simplified Flowsheet Slurry Pipeline Slurry Pipeline 5
Slide 6: Low Cost Production – Competitive Advantage
Low Cost Production – Competitive Advantage Export Processing Mining 6
Slide 7: Plants & Export Facilities
Plants & Export Facilities Dredging & Wet Concentrator Plant Mineral Separation Plant Export Jetty 7
Slide 8: Moma Mine Mining Licence
Moma Mine Mining Licence Reserves and resources (Mt) Reserves Ilmenite Rutile Zircon Proved 8.3 0.2 0.6 Probable 16.8 0.3 1.1 Total P&P 25.1 0.5 1.7 Resources Ilmenite Rutile Zircon Measured 7.2 0.2 0.6 Indicated 4.6 0.1 0.3 Total M&I 11.8 0.3 0.9 Inferred 158.2 3.7 11.1 Total M,I&I 170.0 4.0 12.0 C
Slide 9: Quarterly Production 2013
Quarterly Production 2013 HMC Production 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 Q1 Q2 Q3 Ilmenite Production Zircon Production 200 25 180 160 20 140 120 15 100 80 10 60 40 5 20 - 0 Q1 Q2 Q3 Q1 Q2 Q3 Secondary Zircon Zircon 9
Slide 10: Health & Safety
Health & Safety 12 Month Rolling Lost Time Injury Frequency Rate 0.50 0.40 0.30 0.20 0.10 - Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Kenmare LTIFR 0.43 Compares favourably with South African mineral sands peers 10
Slide 11: Kenmare Moma Development Association
Kenmare Moma Development Association Five-Year Plan being Implemented Support from First Class Partners: WWF, FMO, Clusa, Mozmed & MIGA Community Projects: Health Projects: Health Clinic at Moma in operation, Malaria Eradication Income Generation: Savings & Credit, Horticulture, Poultry,
Slide 12: Phase II Expansion Ramp-Up
Phase II Expansion Ramp-Up 12
Slide 13: Phase II Expansion – Mining
Phase II Expansion – Mining Existing Wet Concentrator Plant A (WCP A) Upgrade of WCP A increased spiral feed Enhanced HMC production design capacity from 3,000 to 3,500 tph 2,000 tph of 2,000 tph of >2,000 tph of mineral sands mineral sands mineral sands New Wet Concentrator Plant B (WCP B) or
Slide 14: Phase II Expansion – Processing
Phase II Expansion – Processing Mineral Separation Plant (MSP) Expanded capacity from 135 tph to Enhanced processing plant design 225 tph 225 tph of heavy minerals concentrate (HMC) feed New Wet High Intensity Magnetic Separation (WHIMS) circuit New Wet High Intensity Magnet More efficient u
Slide 15: Phase II Expansion – Ramping Up
Phase II Expansion – Ramping Up 3rd dredge - fully operational WCP B - processing ore WHIMS - processing HMC MSP - making final products 15
Slide 16: Industry Overview
Industry Overview 16
Slide 17: Demand For TiO2 Feedstock Is Primarily Driven By Pigment Consumption
Demand For TiO2 Feedstock Is Primarily Driven By Pigment Consumption Description End uses Ilmenite and rutile are naturally occurring minerals Titanium feedstocks are used predominantly to produce containing TiO2 titanium dioxide pigment that is favoured for its brilliant Ilmenite contains bet
Slide 18: Demand For Zircon Is Primarily Driven By The Ceramics Industry
Demand For Zircon Is Primarily Driven By The Ceramics Industry Description End uses Zircon is a zirconium silicate mineral produced as a co-product of In the ceramics industry for the production of opacifier and frit titanium minerals mining compounds for decorative wall and floor tiles and sani
Slide 19: China – Key Source Of Growth In Pigment Demand
China - Key Source Of Growth In Pigment HistoricalDemand PigmentFor Demand 20 Years Growth Global Pigment Demand (1991 - 2011) ('000 tonnes) 6,000 3.0% CAGR 5,000 4,000 3,000 2,000 17.0% CAGR 1,000 0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 China WORLD 19
Slide 20: Future Pigment Demand Expected To Grow Above Historical Rate
Future Pigment Demand Expected To Grow At Above Historical Growth Rate Global Pigment Demand 1991- 2020 ('000 tonnes) 8,000 7,000 6,000 5,000 4,000 Growth 2011 to 2020 3,000 Historical 3.0% CAGR from 1991 to 2011 UPSIDE CASE 3.8% CAGR 2,000 BASE CASE 3.2% CAGR DOWNSIDE CASE 2.8% CAGR 1,000 - 1991 19
Slide 21: Pigment Demand Growth Drivers
Pigment Demand Growth Drivers Pigment Consumption Intensity of TiO2 in 20121 Demand growth drivers in developing economies: 60 Pigment intensity of use at early stage of Canada growth curve USA Japan W. Europe 50 Increasing per capita GDP Urbanisation trends GDP US$ '000 per capita 40 Per
Slide 22: Titanium Feedstock Supply Constraints
Titanium Feedstock Supply Constraints Strong demand recovery post GFC from H2 2009 until mid-2011 led to tight supply conditions Global market share TiO2 feedstock producers 20121 Curtailment of production and destocking by pigment industry since H2 2011 has alleviated short term feedstock marke
Slide 23: TiO2 Feedstock Supply/Demand
TiO2 Feedstock Supply/Demand TOTAL TiO2 Feedstock Supply/Demand (with Committed Supply Projects) 12,000 Existing Supply NEW Supply Total Feedstock Demand 10,000 8,000 '000 TiO2 units 6,000 4,000 2,000 - 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Source: Kenmare September 2013 23
Slide 24: TiO2 Feedstock Market Outlook
TiO2 Feedstock Market Outlook Strong upward pigment pricing pressure in 2010/11 led to overstocking by end customers ahead of price increases – demand slowed by end 2011 Pigment producers were slow to moderate production – high pigment inventory build by mid-2012 led to curtailment in production
Slide 25: Zircon Market Outlook
Zircon Market Outlook Prices bottomed at end of Q1 2013 following sharp correction during the previous 8 months Improving demand outlook is evident in most regions New price level is encouraging greater use of zircon – some reversal of substitution is evident in ceramics sector Stable to mod
Slide 26: Financials
Financials 26
Slide 27: Income Statements
Income Statements H1 ‘13 2012 2011 US$m US$m US$m Revenue 79.3 234.6 167.5 CoS & Opex (72.4) (154.2) (114.6) Operating profit 6.9 80.4 52.9 Net finance costs (17.5) (27.0) (28.4) Foreign exchange gain/(loss) 1.4 (0.6) (6.3) Loss/Profit before tax (9.2) 52.8 18.2 Tax (charge) / credit (1.0) (3.3) 5.5
Slide 28: Revenue H1 2009 to H1 2013
Revenue H1 2009 to H1 2013 140,000 120,000 100,000 80,000 US$'000 60,000 40,000 20,000 0 H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 6 Monthly 28
Slide 29: H1 2013 Cash Operating Costs
H1 2013 Cash Operating Costs Labour Repairs & 31% Maintenance 21% Power and fuel 12% Production Overheads 13% Distribution costs 6% Other 17% 29
Slide 30: Balance Sheet Review
Balance Sheet Review June 13 Dec. 12 Dec. 11 Comment on movement US$m US$m US$m Property, plant & equipment 962.9 887.5 714.1 Largely expansion investment Deferred tax asset 1.2 2.2 5.5 Used with increasing profitability Inventories 34.2 22.4 25.8 Increase in product stocks & spares Trade & other re
Slide 31: Group Debt
Group Debt Group Debt at 30 June 2013: US$358.5m (2012: US$324.4m) Lenders: Project - Absa, KfW, FMO, EIB, EAIF & AfDB; KR plc - Absa/Barclays. Guarantors: ECIC (of Absa), MIGA & Hermes (of KfW). Average interest rate at June 2013 was 8.7%. Senior project loans: US$93.4m, floating @ LIBOR
Slide 32: Key Company Highlights
Key Company Highlights Long life ore body producing high quality products Low cost mining, efficient materials handling, well-established producer 50% expansion completed and ramping up production Significant share of global feedstock supply of titanium minerals Projected medium and longer term mark
Slide 33: Kenmare Resources plc contact details
Kenmare Resources plc Chatham House , Chatham Street Dublin 2, Ireland www.kenmareresources.com 33
Slide 34: Appendix
Appendix 34
Slide 35: Reserves & Resources
Reserves & Resources Reserves & resources table % % Ore Ilmenite Ilmenite % Rutile % Zircon THM Ilmenite Rutile Zircon Ore reserves zone Category (Mt) % THM in THM in ore in ore in ore (Mt) (Mt) (Mt) (Mt) Namalope Proved 234 4.4 82 3.6 0.081 0.26 10.0 8.3 0.19 0.62 Namalope Probable 163 3.6 82 3.0 0
Slide 36: Operations Review
Operations Review The Moma Mine Operating Characteristics Kenmare's expanded operating capacity is 1.2mtpa of >3mt have been shipped to date ilmenite, plus co-products zircon and rutile Coastal location; no overland transport Mining performed by three dredges floating in two artificial Sur
Slide 37: Titanium Industry Flowchart
Titanium Industry Flowchart HARD ROCK MINING BEACH SAND MINING (open pit mining) (dredge and dry mining) MINING PROCESSING & (wet and dry concentration) PROCESSING ILMENITE LEUCOXENE RUTILE ZIRCON TITANIUM SLAG SYNTHETIC RUTILE UPGRADING PIG IRON Titanium Tetrachloride TITANIUM SPONGE (TiCl4) Produc
Slide 38: History
History 1986: Kenmare start-up 1992: Enters BHP 2001 – Feasibility 2010: Phase II Mineral Sands Joint studies on the Moma Expansion funding Venture Mine were completed in & commence February 2001 development 1980’s 1990’s 2000’s 2010’s 1987: Exploration in 1992 – 1999: 1999: BHP 2004 – 2010: 2004 –
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