Kenmare Resources Plc · LSE:KMR
Kenmare Resources — Investor Day (April 2023)
60 slides from Kenmare Resources's investor day presentation, Apr 26, 2023
Slide 1: 2023 Capital Markets Day
RESPONSIBLY MEETING GLOBAL DEMAND FOR QUALITY-OF-LIFE MINERALS 2023 Capital Markets Day 26 April 2023
Slide 2: Disclaimer
Disclaimer This Presentation (the “Presentation”) has been This Presentation does not constitute or form part statements in this Presentation relating to future prepared and issued by Kenmare Resources plc of, and should not be construed as, an offer, financials, results, plans and expectations (the
Slide 3: Agenda
Agenda 10:00 Strategic overview - Michael Carvill, Managing Director 10:25 Delivering long-life, low-cost production – Ben Baxter, COO 11:20 Questions? 11:30 Refreshments 11:40 Market update – Cillian Murphy, Marketing Manager 12:10 Future opportunities – Ben Baxter, COO 12:25 Shareholder returns &
Slide 4: Strategic Overview
Michael Carvill, Managing Director Strategic Overview Mineral Separation Plant
Slide 5: Moma is a Tier 1 mine
Moma is a Tier 1 mine 60% EBITDA margin generated in 2022 Mineral sands are essential to modern life Used in the production of paints, paper, inks and plastics Imparts brightness and opacity to products Historical demand has shown a strong correlation with World GDP Long-life, low cost product
Slide 6: Mineral sands: essential to modern life
Mineral sands: essential to modern life Demand for Kenmare’s products is driven by global GDP growth and urbanisation in emerging markets Titanium feedstocks (ilmenite and rutile) TiO2 pigment imparts whiteness and opacity in the manufacture World GDP vs TiO2 pigment consumption1 of paints, plasti
Slide 7: Growing contribution to Mozambique
Growing contribution to Mozambique Strong transparency and governance Socio-economic contribution in Mozambique $200 million paid in taxes and royalties to date Indirect taxes Licenses Withholding taxes Corporation taxes Largest employer in the Nampula province Payroll taxes Industrial free zone
Slide 8: Foundation agreements have provided stability
Foundation agreements have provided stability Put in place over the period 2002-2004 by the project companies KMML (Mining) and KMPL (Processing) Mineral Licensing Contract (KMML) Covers all mining, handling, transportation and sale of HMC Codified set of fiscal, customs and foreign exchange rig
Slide 9: Creating lasting social and economic benefits
Creating lasting social and economic benefits KMAD aims to be a catalyst for positive social and economic change in the host communities of Kenmare’s operations Kenmare Moma Development Association (KMAD) was established in 2004 A not-for-profit organisation to implement development programmes in
Slide 10: A globally significant titanium minerals mine
A globally significant titanium minerals mine Operating schematic Low cost, bulk mining operation Low environmental impact Mature operation – in production since 2007 Primarily hydro-generated electricity (>90% of electrical requirements and 50% of total power) Three Wet Concentrator Plants (W
Slide 11: Significant resources provides optionality
Significant resources provides optionality Kenmare’s concessions cover three mineralised areas in north eastern Mozambique Kenmare Resources – 2023 Capital Markets Day 11
Slide 12: Update since last CMD
Update since last CMD Three projects successfully completed 2018 2019 2020 WCP B upgrade WCP C development WCP B move 20% capacity upgrade of WCP B WCP C delivered throughput of WCP B relocated to the Pilivili complete and delivering to 500 tph in Q2 2020 orezone scope Kenmare Resources – 2023 Capit
Slide 13: First quartile margin position attained in 2021
First quartile margin position attained in 2021 Mineral sands industry revenue to cash cost curves 8 7 6 5 4 3 2 1 2021 2018 2013 1st Q 2nd Q 4th Q 0 0% 25% 50% 75% 100% 2013 2018 2021 The latest TZMI industry cost analysis puts Kenmare in the 1st quartile for 2021 Maintaining the best possible
Slide 14: Managing slimes will leverage the value of Moma
Managing slimes will leverage the value of Moma To deliver consistent and resilient 1.2Mt pa ilmenite production What are slimes? Clay sized particles <45µm size Mining evolution at WCP A Slimes impacts operations in three ways 24 12% Mining: harder ground impacts mining rates & reduces circuit ut
Slide 15: Delivering long-life, low-cost production
Delivering long-life, low- cost production Ben Baxter, Chief Operations Officer Mining at WCP A
Slide 16: Nataka and WCP A context
Nataka and WCP A context Optimised 20 year mine plan for WCP A business continuity Nataka represents the bulk of Kenmare’s 100 year resource base Resources in contained Heavy Mineral WCP A completes mining Namalope in 2025 THM (Mt) WCP A is >50% of mining capacity Mpitini, 4% Marrua, 1% Quinga Nor
Slide 17: Mining Nataka at WCP A capacity
Mining Nataka at WCP A capacity Two new large capacity dredges to replace existing equipment WCP A existing and future capacity Dredging is the lowest cost mining solution 6,000 New dredges scoped to deliver in hardest conditions Current dredges underpowered 4,000 Increased cutting power 2,000
Slide 18: Confidence in the mining method to deliver
Confidence in the mining method to deliver Mining method always delivers to nameplate of the concentrator Extensive mining method testing Hardness indications Regulating feed with hydrogun Dredging capacity matched to Nataka ore hardness Extensive Nataka hardness drilling completed Verified with
Slide 19: Desliming enhances operational effectiveness
Desliming enhances operational effectiveness Removing slimes up-front facilitates maximum throughputs and recoveries Fundamental upgrade of WCP A Replacement of existing screening and surge bin Incorporation of an upfront desliming circuit, proven design in place at WCP B New plant is a low do
Slide 20: Removing slimes settling as a production constraint
Removing slimes settling as a production constraint Tails Storage Facility (TSF) replaces slimes paddock settling Replaces complex paddock settling systems Approaching operating limit TSF removes settling constraints that have hampered operations in past 2 years Raises plant utilisation Clea
Slide 21: Phased capital expenditure profile
Phased capital expenditure profile Early implementation mitigates pre-Nataka slimes challenges Capex $247m over three years 2023-2025, and a tail of c. $23m Capital breakdown & implementation dates over 2026/27 Strongly equipment focused for optimal Nataka production Contingency, Nataka $37m C
Slide 22: Upgraded equipment maintains low costs
Upgraded equipment maintains low costs 1st quartile industry position maintained Cash operating costs per tonne1 Operating cost composition $200/t 100% $150/t 80% $100/t 60% $50/t 40% $0/t 20% 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 0% 2023 2027 Unit operating co
Slide 23: Nataka summary and conclusions
Nataka summary and conclusions Long term delivery at nameplate capacity Development capital at WCP A will enable consistent operations at concentrator design capacity Mining feed constraint removed Addressed slimes challenges of past few years Mining Processing Tails management Mining capaci
Slide 24: Closing the 2025/26 ilmenite gap
Closing the 2025/26 ilmenite gap Maintaining 1.2Mt ilmenite production per annum 2018 CMD highlighted An ilmenite shortfall in 2025/26 as WCP A transitioned through a low grade channel to Nataka That additional capacity would be required to maintain 1.2Mtpa ilmenite production post 2027 Alternat
Slide 25: WCP B upgrade to 3,400tph
WCP B upgrade to 3,400tph Closes ilmenite gap and brings long term HMC delivery at 1.2Mt ilmenite per annum equivalent WCP B spirals plant to be upgraded by 1,000tph 1,000tph additional capacity optimal expansion size Mining Moving to a dual dredge operation Utilises original WCP A dredge Additi
Slide 26: Compelling financial return metrics
Compelling financial return metrics Closes the gap and provides long term delivery at 1.2Mt ilmenite per annum WCP B upgrade additional HMC contribution 500kt Average 250kt pa HMC, 430kt final products in first 3 years Supports steady delivery of 1.2Mt pa ilmenite 400kt Capex $41m, additional
Slide 27: Resilient delivery of 1.2Mt pa ilmenite equivalent
Resilient delivery of 1.2Mt pa ilmenite equivalent Mining eliminated as a bottleneck 2,500kt 2,000kt 1,500kt 1,000kt 500kt 0kt 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 Total HMC - Production HMC E
Slide 28: Questions?
Questions? WCP A morning briefing
Slide 29: Market update
Market update Cillian Murphy, Marketing Manager Zircon product warehouse
Slide 30: Titanium feedstock market
Titanium feedstock market Titanium feedstock uses & suppliers Titanium feedstock uses1 Titanium feedstock market share2 Welding and Other, 5% Titanium Metal, 5% Other, Rio Tinto, 21% 19% Other, 11% Paint & coatings, 50% Tronox, 8% Paper, 6% TiO2 pigment, Kenmare, 90% 7% China Ilmenite, Iluka,4% Plas
Slide 31: Titanium feedstock market
Titanium feedstock market Titanium feedstock sources and supply chain Titanium feedstock sources (TiO2 units)1 Ilmenite value chain 100% 80% 60% 40% 20% Ilmenite beneficiation (Chloride Slag & Synthetic Rutile) 0% 2016 2021 2026f Sulphate ilmenite Chloride ilmenite Rutile Leucoxene Ilmenite accoun
Slide 32: Structural undersupply in the feedstock market
Structural undersupply in the feedstock market Supply/Demand balance (‘000 TiO2 units) 10,000 8,000 6,000 4,000 2018 2019 2020 2021 2022 2023f 2024f 2025f 2026f 2027f Existing Supply Feedstock demand Demand growth exceeding expected growth in supply 1.5Mt TiO2 units (~3Mt ilmenite) of new supply
Slide 33: Structural undersupply in the feedstock market
Structural undersupply in the feedstock market Supply/Demand balance (‘000 TiO2 units) 10,000 8,000 6,000 4,000 2018 2019 2020 2021 2022 2023f 2024f 2025f 2026f 2027f Existing Supply Estimated new supply Feedstock demand Demand growth exceeding expected growth in supply 1.5Mt TiO2 units (~3Mt il
Slide 34: Titanium feedstock inventories at low levels
Titanium feedstock inventories at low levels Feedstock inventories vs normal inventory levels (‘000 TiO2 units) 2,000 1,500 1,000 500 0 -500 -1,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023f 2024f 2025f 2026f 2027f Inventories have been depleted in past several years due to
Slide 35: Strong global economic demand drivers
Strong global economic demand drivers Demand drivers for titanium feedstock TiO2 consumption & GDP per capita1 Global construction spending ($ trillion)2 5 16 Germany 4 14 TiO2 consumption per person (kg/capita) 3 Italy USA 12 China S. Korea 10 2 France 8 1 India Poland 6 0 4 -1 2 0 20 40 60 0 GDP p
Slide 36: China leading pigment production growth
China leading pigment production growth Global pigment production (‘000 tonnes)1 10,000 25% 8,000 20% 6,000 15% 4,000 10% 2,000 5% 0 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023f 2024f 2025f 2026f RoW China Chloride as a % of Chinese Production All pigment growth in rec
Slide 37: Titanium metal market growing rapidly
Titanium metal market growing rapidly Titanium is considered a critical mineral by the EU and US Increasing titanium consumption in new aircrafts1 Titanium metal important to the transition from fossil fuels 15 B787 Aerospace, industrial, chemical and defence are leading Titanium % of total demand
Slide 38: Faster demand growth for non-integrated ilmenite
Faster demand growth for non-integrated ilmenite Resource depletion supporting ilmenite demand growth High grade feedstocks depleting High-grade feedstock supply shrinking1 Reduction in supply from major rutile sources 3,000 Supply from integrated ilmenite sources for beneficiation has also been
Slide 39: Increasingly complex customer requirements
Increasingly complex customer requirements Focus on sustainable, stable suppliers Security of Supply Industry Leading Sustainability Record Strategic Resource Advantage Paradigm shift will continue to benefit Kenmare Kenmare Resources – 2023 Capital Markets Day 39
Slide 40: High-quality products a key advantage
High-quality products a key advantage Ilmenite TiO2 content required by different markets IP2 IP1 IP3 Direct chloride pigment Beneficiation China Beneficiation ex - China Chloride Slag Synthetic Rutile Sulphate pigment ex China Sulphate pigment China 44 46 48 50 52 54 56 58 60 62 64 TiO2 content O
Slide 41: Favoured supplier to the beneficiation market
Favoured supplier to the beneficiation market Kenmare ilmenite sales volume to the beneficiation market (‘000 tonnes) 600 500 400 300 200 100 1 0 2016 2017 2018 2019 2020 2021 2022 Kenmare has been actively targeting the beneficiation market and partnering to support customer growth Growth has b
Slide 42: Growing contribution from co-products
Growing contribution from co-products Co-products include zircon, rutile and monazite Total co-product revenue $m Revenue by product % (2022) 160 Rutile, 140 4% Concentrates, 8% 120 100 $ million 80 Primary zircon, 20% 60 40 Ilmenite, 68% 20 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 Kenmare Res
Slide 43: Fourth largest zircon producer
Fourth largest zircon producer Kenmare a significant zircon player Zircon uses (2022)1 Robust market dynamics Ceramics is the largest market for zircon and faces similar demand drivers to the TiO2 pigment market Zirconia & Zr Chemicals Large format tiles increasing market share for ceramics 21%
Slide 44: Kenmare’s rare earth elements
Kenmare’s rare earth elements Rare earths are considered critical minerals Composition of rare earth oxides in Kenmare monazite Rare earths vital to the energy transition Essential for the production of permanent magnets La2O3 Nd2O3 Energy generation in the form of wind turbines Fossil fuel re
Slide 45: Strong market dynamics
Strong market dynamics Growing requirements for Kenmare’s products Increasing Kenmare’s Positive demand Future demand products dynamics supply deficit for ilmenite preferred by beneficiation consumers Supportive conditions for Kenmare ilmenite products Kenmare Resources – 2023 Capital Markets Day 45
Slide 46: Future opportunities
Future opportunities Ben Baxter, Chief Operations Officer WCP B starting mining in Pilivili
Slide 47: Being ready for growth
Being ready for growth Leveraging the value of the Kenmare orebody portfolio Grade distribution in first 12 years Kenmare has over 100 years of resources Congolone is a leading option for growth Prefeasibility study currently underway Orebody characteristics Situated 90km north of the Moma
Slide 48: Freeflowing orebody
Freeflowing orebody Developing cost effective mining solution Typical view of Congolone Drilling sufficient to declare Probable Reserves for first 12 years after economic analysis is completed Mining: 2,000tph of mining delivers a 20 year life Congolone Main Dune (Dredge & dry mining) Right si
Slide 49: Congolone PFS progress
Congolone PFS progress Developing the option to become a 1.5Mtpa ilmenite producer Current status considering costing alternatives to develop the optimum value solution 1. Produce final products at an expanded Moma MSP Kenmare a 1.5Mt per annum ilmenite producer Brings project complexity (and
Slide 50: Shareholder returns & capital allocation
Shareholder returns & capital allocation Tom Hickey, Financial Director WCP A control room
Slide 51: Balancing capital returns & investment plans
Balancing capital returns & investment plans Capital allocation priorities • Sustaining capital Capital requirements • Non-discretionary capital (i.e. WCP A transition) CORE • Debt facilities of $150m originally – reducing with repayments Debt repayment / servicing • Strong balance sheet / low debt
Slide 52: Debt facilities supported prior capital expenditure
Debt facilities supported prior capital expenditure Key debt objective to maintain robust balance sheet with low levels of gearing Original facilities 31-Dec-2022 US$ million US$ million Interest rate Term Term Loan 110.0 80.8 LIBOR +5.4% March 2025 Revolving Credit Facility 40.0 - LIBOR +4.25% Dece
Slide 53: Dividend policy revised to provide stability
Dividend policy revised to provide stability Evolving the policy to target a 20-40% profit after tax payout range Dividends 2022 Historic shareholder returns Original dividend policy $60m 120% Announced in 2018 with first payment in 2019 Policy of 20% minimum profit after tax pay-out, provided $
Slide 54: Dividend policy revised to provide stability
Dividend policy revised to provide stability Evolving the policy to target a 20-40% profit after tax payout range Revised dividend policy Based on current plans and forecasts, Kenmare expects that dividends should be sustainable at or around the current absolute level for the medium term Full year
Slide 55: Maintaining efficient dividends
Maintaining efficient dividends Based on the current organisation structure, there is likely to be tax exposure on future subsidiary dividends remitted from Mozambique to Kenmare Resources Plc Prior to 2022, Kenmare primarily utilised trading profits and subsidiary capital reconstruction to create
Slide 56: Summary
Summary Michael Carvill, Managing Director Transshipment vessel loading
Slide 57: Moving forward with confidence
Moving forward with confidence Investing in future production to maintain first quartile industry position Resilient long-term production profile Maintaining first quartile industry position WCP A capabilities will be transformed with new Dredge and hydromining combination in Nataka is the desli
Slide 58: Questions?
Questions? WCP A morning briefing
Slide 59: Moving forward with confidence
Moving forward with confidence Facebook, Twitter, and LinkedIn Kenmare has profiles on Facebook, Twitter and LinkedIn, which feature regular updates on our corporate social responsibility initiatives, operational and development milestones, news flow and more Click the name of the social network
Slide 60: Contact Us
Progressive land rehabilitation Contact Us Jeremy Dibb / Michael Starke +353 1 671 0411 ir@kenmareresources.com Follow us