Slide 1: 2018 Preliminary Results Presentation
2018 Preliminary Results Presentation 13 March 2019
Slide 2: Disclaimer
Disclaimer This Presentation (the “Presentation”) has been or oral information made available in connection estimates and projections made. These prepared and issued by Kenmare Resources plc with the Company. assumptions and judgments may or may not (the “Company” or “Kenmare”). While this prove to
Slide 3: Agenda
Agenda Introduction Michael Carvill, Managing Director Financial review Tony McCluskey, Finance Director Operational review Ben Baxter, Chief Operations Officer Market update Michael Carvill, Managing Director Outlook Michael Carvill, Managing Director Q&A Kenmare Resources – 2018 Results Presentati
Slide 4: Growing from a position of strength
Growing from a position of strength • WCP B upgrade delivered on time and GROWTH >25% below budget in 2018 • >20% production growth by 2021 • EBITDA margin increased to 38% in MARGIN 2018 EXPANSION • First Mineral Sands Concentrate sales expected in 2019 SHAREHOLDER • Net cash of US$13.5m at year-en
Slide 5: Robust production, increased profitability
Robust production, increased profitability 2018 overview Operating and financial highlights Production guidance achieved for 3rd consecutive year Net cash position of US$13.5m achieved at year-end 2018 1,200 60 (2017: US$34.1m net debt) 1,000 50 Primary zircon (kt) Mid-point of original 2018 pro
Slide 6: Financial review
Financial review Tony McCluskey, Finance Director
Slide 7: Strong financial performance
Strong financial performance 2018 financial overview Revenue Sales price(1) Cash costs(2) 26% 17% 11% 2018: US$262.2m 2018: US$229/t (FOB) 2018: US$145/t 2017: US$208.3m 2017: US$195/t (FOB) 2017: US$131/t EBITDA Profit After Tax Net cash 54% 162% US$47.6m 2018: US$93.3m 2018: US$50.9m 31/12/18: US$
Slide 8: Positive market momentum
Positive market momentum 2018 revenue review (FOB) 2018 production/sales (000’s tonnes) 21% increase in total revenue to US$245.9m compared to 1,200 90 2017 3% increase in sales volumes to 1,074,400 tonnes - a new 800 60 annual record 400 30 2018 sales volumes weighted towards H1 2018 as stron
Slide 9: Increased profitability
Increased profitability 2018 Income Statement review 2018 2017 2018 revenue contribution by product (%) US$ million US$ million Primary Revenue 262.2 208.3 zircon Freight costs (16.3) (5.5) 23% Secondary Revenue (FOB) 245.9 202.8 Ilmenite zircon 69% 6% Rutile Cost of sales & other operating costs (1
Slide 10: Continued reduction in net ilmenite unit cost
Continued reduction in net ilmenite unit cost 2018 cash operating costs reconciliation Unit 2018 2017 Higher adjusted cash operating costs, due Cost of sales primarily to: US$m 168.3 156.6 Increased electricity costs due to higher Other operating costs excluding freight US$m 14.7 17.7 pricing by
Slide 11: Targeting further unit cost reductions by 2021
Targeting further unit cost reductions by 2021 Production and cash operating cost per tonne seven year profile 1,200 240 Finished product production (000’s 1,000 200 Unit costs (US$/tonne) 800 160 600 120 tonnes) 400 80 200 40 - - 2012 2013 2014 2015 2016 2017 2018 Production All-Product Costs Ilmen
Slide 12: EBITDA reflects stronger product markets
EBITDA reflects stronger product markets EBITDA bridge 2017 to 2018 120 100 -0.6 -0.1 -10.3 36.9 93.4 80 US$ millions 60 6.8 60.5 40 20 0 2017 EBITDA Sales volume Sales price Sales mix Stock Costs 2018 EBITDA movements EBITDA benefitted significantly from higher achieved prices for all products an
Slide 13: Increasing cash flow generation
Increasing cash flow generation Operating cash flow per share 80 65p/share Operating cash flow (p/share) 43p/share 40 4p/share 0 2016 2017 2018 51% increase in operating cash flow per share in 2018 compared to 2017 Kenmare Resources – 2018 Results Presentation 13
Slide 14: Strengthened balance sheet
Strengthened balance sheet Balance sheet review 31-Dec-2018 31-Dec-2017 US$ million US$ million Property, plant & equipment 806.0 793.6 Inventories 53.9 52.7 US$97.0m cash and cash equivalents at year- Trade & other receivables 22.4 25.4 end 2018 - cash balance increased in line with Deferred tax
Slide 15: US$13.5m net cash at year-end
US$13.5m net cash at year-end Net cash bridge 2017 to 2018 80 60 40 -39.8 -2.6 US$ millions -5.0 20 95.0 13.5 0 -20 -34.1 -40 -60 Net debt Dec-17 Operating cashflow Property, plant & Working capital Interest payment Net cash Dec-18 equipment changes Net cash of US$13.5m at year-end 2018, compared
Slide 16: Dividend policy announced
Dividend policy announced Shareholder returns Dividend policy Commitment to pay a minimum 20% of Profit After Tax Working towards maiden dividend in 2019 Subject to: Market conditions, debt and capital requirements Higher cash balances likely to be maintained until capital development projec
Slide 17: Operational review
Operational review Ben Baxter, Chief Operations Officer
Slide 18: Sustainable operating practices
Sustainable operating practices Safety Lowest ever Lost Time Injury Frequency Rate 67% decrease in Lost Time Injuries in 2018 compared to 2017 Rate per 200,000 man 0.6 (from 9 to 3) hours worked LTIFR of 0.12 per 200k man hours worked in 2018 – 0.4 Kenmare’s lowest ever level Strong improvemen
Slide 19: Meeting guidance for the third consecutive year
Meeting guidance for the third consecutive year Ilmenite production (000’s tonnes) Primary zircon production (000’s tonnes) 1,200 60 1,000 50 800 40 600 30 400 20 200 10 0 0 2016 2017 2018 2016 2017 2018 2018 Guidance 2018 Guidance Mid-point of original 2018 production guidance1 exceeded for all p
Slide 20: Progressing development projects
Progressing development projects 2018 2019 2020 WCP B WCP C WCP B UPGRADE DEVELOPMENT MOVE STAGE STAGE STAGE • Commissioned • Execution underway • DFS expected H1 2019 CAPITAL CAPITAL CAPITAL • <US$16 million • <US$45 million • c. US$100m Growing production to 1.2 Mtpa of ilmenite Kenmare Resources
Slide 21: Five year capital cost guidance
Five year capital cost guidance Sustaining capital Development Capital (US$m) 2019 2020 2021 2022 2023 2019: guidance of US$23m Development Studies 3 2 1 1 1 Expected US$20-25m from 2020-2025 WCP C at Namalope 39 1 0 0 0 Development capital MSP Improvements 3 3 0 0 0 2019: guidance of US$70m W
Slide 22: 2019 guidance
2019 guidance (provided 10 January 2019) Production 2019 Guidance 2018 Actual Ilmenite tonnes 900,000-960 ,000 958,500 Primary zircon tonnes 44,500-52,000 48,400 Rutile tonnes 8,100-9,500 8,200 Concentrates1 tonnes 33,500-43,500 28,200 Costs Total cash operating costs US$ m 151-167 151.3 Cash costs
Slide 23: Sustained production at higher levels from 2021
Sustained production at higher levels from 2021 20 year production profile (000’s tonnes) 2,000 1,600 1,200 800 400 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 HMC Production HMC equivalent of 1.2mt ilmenite Moma operations at full
Slide 24: Market update
Market update Michael Carvill, Managing Director
Slide 25: Global TiO2 inventories are low
Global TiO2 inventories are low Forecast supply/demand market balance 2 TiO2 units (millions tonnes) 1 0 -1 -2 2015 2016 2017 2018f 2019f 2020f 2021f 2022f 2023f Source: Company Surplus/(Deficit) Inventories Current prices profitable for existing producers Average ilmenite prices up in 2018, but s
Slide 26: Positive outlook for ilmenite and zircon
Positive outlook for ilmenite and zircon Ilmenite Forecast supply deficits for sulphate and chloride ilmenite Long-term customers increasing offtake Additional Chinese upgrading plants set to be commissioned in 2019, requiring high quality ilmenite to be imported Significant depletion from e
Slide 27: Outlook
Outlook Michael Carvill, Managing Director
Slide 28: Building on our strategy
Building on our strategy Strategy 2018 2019 Growth Low capital intensity growth to fully WCP B upgrade completed on time DFS for WCP B move to Pilivili utilise existing installed facilities and >25% below budget completed Record shipments achieved of all Commissioning of WCP C expected pro
Slide 29: Appendices
Appendices
Slide 30: Mineral sands: essential to modern life
Mineral sands: essential to modern life Two core product streams of minerals sands World GDP vs TiO2 pigment consumption Titanium feedstocks (ilmenite and rutile) TiO2 pigment imparts whiteness and opacity in the manufacture of 6 450 Global GDP Index Millions tonnes paints, plastics and paper 300
Slide 31: 2018 cash operating cost breakdown
2018 cash operating cost breakdown Logistics & Travel Other Logistics & Other 8% 10% Travel 11% Distribution Labour payroll 10% Labour payroll Costs 26% 26% 4% Distribution Costs Production 2018 4% 2017 Overheads Production 12% Overheads Repairs & 12% Fuel Maintenance Repairs & 8% 20% Fuel Maintenan
Slide 32: Adjusted cash operating costs
Adjusted cash operating costs 2018 2017 Change YoY US$M US$M US$M % Labour payroll 40.1 36.2 3.9 11% Repairs & Maintenance 30.4 31.7 (1.3) -4% Power 17.7 13.4 4.3 32% Fuel 10.9 8.1 2.8 35% Production Overheads 19.0 17.6 1.4 8% Distribution Costs 5.6 5.6 (0.0) 0% Logistics & Travel 12.1 14.0 (1.9) -1
Slide 33: Freight costs
Freight costs Annual freight costs (US$m) Shipments on CIF/CFR basis, rather than FOB, results in 18 freight included in the sales price 16.3 16.3 16 Freight is recognised in both revenues and costs equally 14 Freight costs in 2018 increased to US$16.3m (H1 2017: US$5.5m) reflecting: 12 Kenm
Slide 34: Capital costs driven by two development projects
Capital costs driven by two development projects 2018 capital costs Development capital Sustaining capital Other sustaining capital WCP C construction early works US$10.9m US$9.1m 23% of the 2018 capital costs relate to the US$40.0m commencement of WCP C construction US$20.9m US$19.1m capital costs
Slide 35: Why 1.2 million tonnes per annum of ilmenite?
Why 1.2 million tonnes per annum of ilmenite? Fully utilises our existing assets Expected quarterly grades (% Total Heavy Mineral) The Mineral Separation Plant has a capacity of 1.2 Mtpa 5% ilmenite (plus associated co-products) 4% Production of Heavy Mineral Concentrate is limited by mining 3%
Slide 36: Project timeline: low risk, phased approach
Project timeline: low risk, phased approach PFS: Pre-Feasibility study DFS: Definitive Feasibility Study Progressive workload with phased studies prior to execution Project timeline is progressing on track and on or under budget Kenmare Resources – 2018 Results Presentation 36
Slide 37: Contact Us
Contact Us Jeremy Dibb IR & Corporate Development +353 1 671 0411 ir@kenmareresources.com