Slide 1: 2016 Results Presentation
2016 Results Presentation Wednesday, 22 March 2017 Michael Carvill, Managing Director Tony McCluskey, Finance Director
Slide 2: Disclaimer
Disclaimer This Presentation (the “Presentation”) based, or any other written or oral made. These assumptions and has been prepared and issued by information made available in connection judgments may or may not prove to be Kenmare Resources plc (the “Company” with the Company. correct and there can
Slide 3: 2016 Highlights
2016 Highlights Delivering growth • Record production and shipments for all products in 2016 • 5‐15% increase in ilmenite production forecast for 2017 Driving efficient operations • Unit cash costs down 18% • Targeting lower costs in 2017 Rebalanced • Strong balance sheet – net debt down 88% t
Slide 4: Operating Overview
Operating Overview Annual Production (000t) EBITDA (US$m) 1,200 90 125 80 1,000 100 70 800 60 75 50 600 50 40 400 30 25 20 200 0 10 0 0 ‐25 2012 2013 2014 2015 2016 2017* 2012 2013 2014 2015 2016 Ilmenite (LHS) Zircon (LHS) H1 H2 FY US$26.6m improvement in H2/H1 EBITDA - revenue per tonne up 16% i
Slide 5: 2017 Guidance
2017 Guidance 2016 Production 2017 Guidance* YoY % Change Production Ilmenite kt 903,300 950,000‐1,050,000 5‐16% Zircon kt 68,200 72,000‐83,000 6‐22% of which primary kt 44,900 47,000‐52,500 5‐17% of which secondary kt 23,300 25,000‐30,500 7‐31% Rutile kt 7,800 9,000‐10,000 15‐28% Costs Total cash o
Slide 6: 2016 Financial Results
2016 Financial Results
Slide 7: 2016 Overview
2016 Overview 2016 EBITDA of US$5.2m • negative US$10.7m in H1 / positive US$15.9m in H2 Record annual production & shipment of finished products Average received prices down 22% on 2015 • H2 2016 prices up 16% on H1 2016 Cash cost/t of finished products down 18% from 2015 • increased produc
Slide 8: 2016 Income Statement Review
2016 Income Statement Review 2016 2015 Comment US$m US$m Revenue 141.5 142.6 Revenue down 1%, volumes up 28% but revenue per tonne down 22% Cost of Sales & Other Opex (166.8) (189.9) Down 12% Operating loss (25.3) (47.3) 47% improvement Net finance costs (27.9) (37.3) Reduced debt from July 2016 at
Slide 9: 2016 Revenue Review
2016 Revenue Review Shipments (000’s tonnes) FOB Price (US$/tonne) 1 2 700 $200 $1,000 600 $175 500 $150 $750 400 $125 300 $100 $500 200 100 $75 0 $50 $250 H1 2015 H2 2015 H1 2016 H2 2016 H1 2015 H2 2015 H1 2016 H2 2016 Ilmenite Primary Zircon Secondary Zircon Ilmenite (LHS) Primary Zircon (RHS) H
Slide 10: 2016 Cash Operating Costs
2016 Cash Operating Costs 2016 2015 US$m US$m Cost of Sales 144.0 168.1 Other Operating Costs 22.8 21.8 Freight (CIF charged to customers) (5.4) (3.7) Total costs less freight 161.4 186.2 Depreciation (30.6) (35.8) Share‐based payments (0.4) 0.7 Finished product movements 3.0 (14.7) Adjusted cash op
Slide 11: Sustainable Cost Reductions
Sustainable Cost Reductions $220 1,250 Production volumes (kt tonnes) Cash operating cost (US$/t) $200 $180 1,000 $160 $140 750 $120 $100 500 2012 2013 2014 2015 2016 2017* Final Production (RHS) Unit cash costs (LHS) 2016 Cash Operating Cost US$136/t, 18% reduction on 2015 Finished product prod
Slide 12: Capital Costs
Capital Costs Sustaining capital expected to average US$20m annually in medium term 2016 sustaining capital constrained at US$6.7m (US$5.6m) 2017 sustaining capital approx. US$25m: • including US$5m carry‐over given low 2016 sustaining capital • heavy mobile equipment replacement will reduce h
Slide 13: Transformed Balance Sheet Post Capital Raise
Transformed Balance Sheet Post Capital Raise Net Debt (US$m) Interest Rates (%) 400 10% 350 9% 300 250 8% 200 7% 150 6% 100 50 5% 0 4% 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 Reduced gross debt to US$102.6m1 • All USD denominated with extended term, reduce interest ra
Slide 14: Recapitalisation and Debt Restructuring
Recapitalisation and Debt Restructuring Capital raise ‐ total capital raised of US$275m US$154.6m Placing and Open Offer US$20.4m Lender Underwriting 109.6m shares on issue following 1 for 200 consolidation of shares Debt restructuring – simplified debt structure and enhanced working capital p
Slide 15: Balance Sheet Review at Dec 2016
Balance Sheet Review at 31 Dec 2016 31/12/2016 31/12/2015 Comment US$m US$m Property, plant & equipment 793.9 835.0 US$6.7m additions less US$30.6m deprectiation,US$10.1m arbitration and US$7.1m mine closure cost adjustment Inventories 47.8 46.2 Final mineral products US$30.6m, consumables US$17.2m
Slide 16: Operations & Market Review
Operations & Market Review
Slide 17: Operational Review
Operational Review Safety improvements • LTIFR* decreased to 0.20 from 0.47 Production improvements ‐ Finished Products up 19% • Power stability • Improved grade • Improved maintenance leading to higher mechanical availability and utilisation • Introduction of supplemental mining at WCP B Cost
Slide 18: Market Overview
Market Overview Sichuan ilmenite spot price TZMI TiO2 Feedstock Supply/Demand (RMB/tonne) ('000 TiO2 units) 1750 8,000 1500 7,500 1250 7,000 6,500 1000 6,000 750 5,500 500 5,000 250 4,500 0 4,000 2000 2002 2004 2006 2008 2010 2012 2014 2016f 2018f 2020f Jan‐16 Feb‐16 Mar‐16 Apr‐16 May‐16 Jun‐16 Jul‐
Slide 19: Summary
Summary
Slide 20: Company Strategy
Company Strategy Structured and disciplined approach to capital management ST Short Term MT Medium Term LT Longer Term Maintain robust balance sheet and Optimise mining capacity for 01 Capture 100+ year life of mine 01 generate free cash flow 01 market conditions Increase utilisation rates and Poten
Slide 21: Summary
Summary 30 100+ year10 largest TiO2 2016 3rd Years in Mozambique feedstock Years in production producer LOM globally of global 1,323 93% Employees Mozambican 7% TiO2 feedstock production Net Debt ↓88% HoH 10 Ilmenite production 2017 guidance ↑ 5 – 16 % Cash of US$57.7m (31.12.16) Cash costs guidance
Slide 22: Appendices
Appendices
Slide 23: 2016 Cash Operating Costs
2016 Cash Operating Costs Operating costs largely fixed, labour reduced as a result of 2015 wage agreement and favourable FX movements 23
Slide 24: 2016 Revenue Review - Annual
2016 Revenue Review ‐ Annual Volume/Mix Movement Pricing Movement (FOB)1 2 2016 sales volumes increased by 28% to record levels of 1,024,200 tonnes (2015: 800,400 tonnes) Total revenue US$141.5m broadly flat on 2015 US$142.6m Ilmenite volumes up 28%, prices (FOB) down 22% Primary zircon volu
Slide 25: Debt repayment profile excluding cash sweep
Debt repayment profile excluding cash sweep (US$m) 25 20 15 10 5 0 Aug‐16 Aug‐17 Aug‐18 Aug‐19 Aug‐20 Aug‐21 Feb‐17 Feb‐18 Feb‐19 Feb‐20 Feb‐21 Feb‐22 Simplified debt structure Repayment holiday until February 2018, providing enhanced financial flexibility Reduced interest rates All debt now
Slide 26: Group Lenders at December 2016
Group Lenders at 31 December 2016 Loan principal Loan interest Loan balance US$ 000 US$ 000 US$ 000 Senior Loans AfDB 4,273 76 4,349 Absa 14,651 265 14,916 EAIF 495 9 503 EIB 1,550 28 1,578 FMO 1,637 29 1,666 KfW IPEX‐Bank (Hermes) 1,298 23 1,321 KfW IPEX‐Bank (MIGA) 1,497 27 1,524 Total Senior Loan
Slide 27: Adjusted Cash Operating Costs
Adjusted Cash Operating Costs 2016 2015 Change YoY US$M US$M US$M % Logistics & Travel 11,615 11,885 ‐270 ‐2% Distribution Costs 6,095 7,655 ‐1,560 ‐20% Labour payroll 34,405 41,293 ‐6,888 ‐17% Repairs & Maintenance 28,315 24,736 3,579 14% Power 11,086 10,050 1,036 10% Fuel 10,892 13,910 ‐3,018 ‐22%
Slide 28: Operations schematic
Operations schematic Wet 1) Concentrator (4) Dune Rehabilitation Heavy Mineral Concentrate Magnetic Separation Wet High Intensity Gravity ’ | | 3} Magnetic Separation Separation Rutile Zircon tImenite HiiPumeteys Transhipment Electrostatic + Jett’ Vessel Separation aw y Market ; Customer Bulk Carrie
Slide 29: Map of license areas
Map of license areas The map shows i exploration licences ¢ Nampula and mining concessions Province A held by Kenmare: i Nampula 20km Mogincual hs Nametil e Mozambique Maputo
Slide 30: Pilivili
Pilivili Pilivili resource definition has improved : 266Mt resource @ 3.9% Total Heavy Mineral (THM) Larger deposit than previously thought Highest ilmenite and zircon grades in Kenmare portfolio 20km from existing Mineral Separation Plant Dredge mineable, clean white sands Strong expect
Slide 31: Congolone
Congolone Congolone is a sizeable orebody: 280Mt resource @ 3.5% THM High dunes and free flowing sand, low mining risk ‐ easy to dredge Better grade than Nataka and high TiO2 content ilmenite HMC to be transported to Moma MSP Long life operation 20yrs+ Potentially lower unit costs from h
Slide 32: Near term development opportunities
Near term development opportunities Any potential investment will be subject to market conditions and return levels Additional mining capacity will be required to offset declining grades or final product production will fall Two main areas of focus: Upgrade WCP B • Potential for 20% additional cap
Slide 33: Longer term development options
Longer term development options Maintaining a strong balance sheet is a priority WCP A and WCP B mine plan moved to Nataka after Namalope • WCP A moves in 2025‐26 • WCB B moves in 2021‐22 Potentially higher grade, easier and more deliverable mining opportunities Further ore body and processing