Kenmare Resources Plc · LSE:KMR
Kenmare Resources — H1 2024 Earnings Presentation
41 slides from Kenmare Resources's earnings presentation, Aug 14, 2024
Slide 1: H1 2024 Results presentation
RESPONSIBLY MEETING GLOBAL DEMAND FOR QUALITY-OF-LIFE MINERALS H1 2024 Results presentation 14 August 2024
Slide 2: Disclaimer
Disclaimer This Presentation (the “Presentation”) has been This Presentation does not constitute or form part attainable or will be realised. In particular, certain prepared and issued by Kenmare Resources plc of, and should not be construed as, an offer, statements in this Presentation relating to
Slide 3: Agenda
Agenda Introduction Andrew Webb, Chairman Financial review Tom Hickey, incoming MD & Finance Director Operational review & capital projects update Ben Baxter, Chief Operations Officer Market update Cillian Murphy, Group GM – Sales & Marketing Outlook Andrew Webb, Chairman Questions? Kenmare Resource
Slide 4: Tom Hickey appointed as Managing Director
Tom Hickey appointed as Managing Director Update on appointment of Managing Director Michael Carvill steps down as MD As announced on 15 March 2024, Kenmare founder Michael Carvill is stepping down from his Executive role and the Board after 38 years, effective 14 August 2024 Under Michael’s lea
Slide 5: Market leadership built on a robust strategy
Market leadership built on a robust strategy Strategic priorities and recent performance OPERATE • 5m hours worked in H1 without a Lost Time Injury 97% RESPONSIBLY • Construction of new district MOZAMBICAN hospital underway WORKFORCE • 1st quartile industry position DELIVER LONG LIFE, LOW-COST • WCP
Slide 6: Financial review
Financial review Tom Hickey, Finance Director Mineral Separation Plant
Slide 7: >40% EBITDA margin in H1 2024
>40% EBITDA margin in H1 2024 H1 2024 financial highlights Other highlights Average price (US$/t) Total revenue ($m) H1 2024 dividend 486 331 366 429 412 425 323 278 243 216 USc15.0/sh 282 178 197 (H1 2023: Usc17.5/sh) 165 1 2 1 2 1 2 1 1 2 1 2 1 2 1 2021 2022 2023 2024 2021 2022 2023 2024 EBITDA ($
Slide 8: Stronger revenues expected in H2
Stronger revenues expected in H2 H1 2024 income statement H1 2024 H1 2023 Mineral product revenue down 33% YoY due to 14% $ million $ million decrease in shipments and 22% decrease in average price, Mineral product revenue 154.5 229.7 impacted by lower value product mix Freight revenue 10.6 13.2
Slide 9: Shipment volume and mix to reverse in H2
Shipment volume and mix to reverse in H2 Pricing and shipping review Mineral product revenue bridge1 ($m) Shipments impacted by weather and loading issues Shipments of 477,600t, down 14% YoY due to poor weather conditions and issues with product conveyor Good order visibility, high finished prod
Slide 10: Unit costs benefitting from higher production
Unit costs benefitting from higher production H1 2024 cash operating costs reconciliation1 Total cash operating costs down 2% YoY Unit H1 2024 H1 2023 due primarily to: Cost of sales (excluding freight) $m 123.0 144.0 Small cost savings in several areas, including lower fuel costs and Administra
Slide 11: Well capitalised to fund capex and dividends
Well capitalised to fund capex and dividends Net cash flows H1 2024 cash bridge ($m) • Receivables (-$86m) • Inventory • WCP A (+$14m) upgrade • Studies • Sustaining • Net interest capital • RCF commitment fees Strong cash generation facilitated all funding requirements including dividends Kenmare R
Slide 12: Strongest balance sheet in Kenmare's history
Strongest balance sheet in Kenmare’s history Balance sheet review 30-Jun-2024 31-Dec-2023 Strong balance sheet with record net cash of $58.9m1 $ million $ million PPE included additions of $49.1m, primarily relating to Property, plant & equipment 954.0 937.2 the upgrade of WCP A, less depreciati
Slide 13: Well capitalised to fund capex and dividends
Well capitalised to fund capex and dividends A strong financial position before operational free cash flow Historically high net assets ($m) Global Capitalslag costs production met by existing 1 resources ($m) 300 400 2028 2027 250 2026 300 2025 200 RCF 150 H2 2024 200 100 Net assets 50 100 0 0 Jun-
Slide 14: $280m of shareholder returns
$280m of shareholder returns1 Interim dividend of USc15/share Dividends (USc/share) Interim Final H1 2024 profit after tax H1 2024 total dividend 54 56 $20.9m $13.4m 33 39 43 Decrease in DPS YoY H1 2024 dividend per share (DPS) 25 8 10 18 15 -14% USc15.0 6 3 8 7 11 2 2019 2020 2021 2022 2023 2024 Di
Slide 15: Operational review
Operational review Ben Baxter, Chief Operations Officer Wet Concentrator Plant B
Slide 16: Strong safety performance
Strong safety performance Lost Time Injury Frequency Rate (LTIFR) of 0.09 to 30 June 2024 Lost Time Injuries (LTIs) and rolling 12-month LTIFR 3 0.3 0.21 Lost Time Injuries 2 0.18 0.2 0.15 0.15 0.09 0.09 1 0.1 0 0.0 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 LTIs LTIFR Improving safety performa
Slide 17: Sustainability goals advanced in H1 2024
Sustainability goals advanced in H1 2024 Sustainability strategic pillars Safe and engaged workforce Thriving communities • Malaria frequency rates below • Construction of new district 3-year rolling average hospital underway • Children under 5 years old to • Community plant nurseries receive anti-m
Slide 18: On track to achieve 2024 guidance
On track to achieve 2024 guidance H1 2024 production review HMC production Ilmenite Mining 4% increase in HMC production YoY due to 7% increase in 659,000t 444,100t excavated ore volumes and higher heavy mineral recoveries, offset 4% 4% by 5% decrease in ore grades, in line with expectations H1 20
Slide 19: Targeting ~1Mt ilmenite production in 2024
Targeting ~1Mt ilmenite production in 2024 Production outlook for 2024 and beyond Loading at Kenmare’s port facilities H2 2024 has started well 2024 ilmenite production guidance is 950,000-1,050,000 tonnes Kenmare is on track to achieve 2024 guidance across all stated metrics, with higher foreca
Slide 20: Capital projects update
Capital projects update Ben Baxter, Chief Operations Officer Wet Concentrator Plant A
Slide 21: Securing future production at Moma
Securing future production at Moma No significant relocation costs post WCP A transition to Nataka Mineral Resource by ore zone (THM1) WCP A upgrade and transition to Nataka Nataka, 72% Moving WCP A to Nataka unlocks the majority of Kenmare’s 9.0bnt Mineral Resources, securing production at Moma f
Slide 22: Transforming WCP A's capabilities for Nataka
Transforming WCP A’s capabilities for Nataka High volume, low-cost mining plan for Nataka The new surge bin being trial-assembled Majority of WCP A will be new equipment Existing dredges replaced with higher capacity dredges – removing the need for dry mining New desliming circuit, screens and s
Slide 23: WCP A comfortably funded with existing facilities
WCP A comfortably funded with existing facilities Overview of capital costs for WCP A’s transition to Nataka Capital cost breakdown WCP A capex of $341m Final part of the Definitive Feasibility Study for the Tailings Storage Facility upgrade and transition of WCP A completed in Q2 $36m WCP A upgra
Slide 24: WCP B upgrade and Congolone studies continue
WCP B upgrade and Congolone studies continue Update on Definitive Feasibility Study (DFS) for WCP B upgrade and Pre-Feasibility Study (PFS) for Congolone WCP B in Pilivili WCP B upgrade Work continued on the DFS during H1 – potential to increase capacity by >40% Workstreams have been identified
Slide 25: Market update
Market update Cillian Murphy, Group General Manager – Sales & Marketing Zircon product warehouse
Slide 26: Multiple decades of consistent growth
Multiple decades of consistent growth Overview of Kenmare’s market segments for its titanium feedstocks xxx World GDP vs TiO2 pigment consumption1 Chinese titanium sponge production (‘000 tonnes) 8 600 140 120 6 100 400 Global GDP Index Million tonnes 80 4 60 200 40 2 20 0 0 - 1982 1986 2002 2006 19
Slide 27: High-quality products a key differentiator
High-quality products a key differentiator 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 conten
Slide 28: Pricing impacted by lower value product mix
Pricing impacted by lower value product mix H1 2024 market update Mineral product revenue by product (%) Rutile Concentrates Concentrates, 5% Rutile, 2% 0% 4% Zircon Zircon 15% 8% H1 2024 H1 2023 Ilmenite Ilmenite 88% 78% Demand for Kenmare’s ilmenite continues to be robust Demand for Kenmare’s pr
Slide 29: Strong order book for H2 2024
Strong order book for H2 2024 Market outlook for titanium feedstocks and zircon Titanium feedstocks Titanium feedstocks Robust demand for Kenmare’s ilmenite in H1 has continued Kenmare’s order book for H2 2024 is largely committed Currently global supply of titanium feedstocks remains sufficie
Slide 30: Outlook
Outlook Andrew Webb, Chairman Jetty with transshipment vessel
Slide 31: 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 • One of the world’s largest titanium minerals deposits • EBITDA margin of >40% in H1 2024 • >100 years of Mi
Slide 32: Appendices
Appendices Plant nursery for progressive land rehabilitation
Slide 33: Mineral sands: essential to modern life
Mineral sands: essential to modern life Two core product streams: titanium feedstocks and zircon World GDP vs TiO2 pigment consumption1 Titanium feedstocks (ilmenite and rutile) 8 600 Global GDP Index TiO2 pigment imparts whiteness and opacity in the Million tonnes 6 manufacture of paints, plastic
Slide 34: A globally significant titanium minerals mine
A globally significant titanium minerals mine Moma Mine operating schematic Low cost, bulk mining operation Low environmental impact Mature operation – in production since 2007 Primarily hydro-generated electricity (>90% of electrical Three Wet Concentrator Plants (WCPs) in operation requireme
Slide 35: First quartile margin position
First quartile margin position Kenmare’s position in the titanium minerals industry relative to peers 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 TZMI industry cost analysis puts Kenmare in the first quart
Slide 36: 2024 production guidance
2024 production guidance1 2024 ilmenite production expected to be in line with 2023 Production 2024 Guidance 2023 Actual Ilmenite tonnes 950,000-1,050,000 986,300 Primary zircon tonnes 45,000-50,000 51,100 Rutile tonnes 8,000-9,000 8,400 Concentrates2 tonnes 37,000-41,000 45,700 Costs Total cash ope
Slide 37: Structural undersupply in TiO2 market
Structural undersupply in TiO2 market Supply constraints support demand for titanium feedstocks Supply/demand balance (‘000 TiO2 units) 10,000 8,000 6,000 2018 2019 2020 2021 2022 2023f 2024f 2025f 2026f 2027f Existing Supply Feedstock demand Demand growth exceeding expected supply growth 1.5Mt Ti
Slide 38: Lower total cash operating costs in H1 2024
Lower total cash operating costs in H1 2024 Total cash operating costs breakdown Logistics & travel 6% Logistics & Other Electricity Other Electricity 6% travel 11% 13% 10% 5% Fuel Fuel 11% 12% Labour H1 2024 H1 2023 27% $107.2m Production Labour $108.8m Production overheads overheads 23% 19% 18% Re
Slide 39: Lower unit costs in H1 2024
Lower unit costs in H1 2024 Production and unit cost profile 1,400kt $280/t 1,200kt 42.8 $240/t 1,000kt $200/t Cost per tonne ($/t) Production (kt) 800kt $160/t 600kt $120/t 400kt $80/t 200kt $40/t 0kt $0/t 2019 2020 2021 2022 2023 H1-2024 Production (kt) Cost per tonne ($/t) Ilmenite Cost per tonne
Slide 40: Follow Kenmare on social media
Follow Kenmare on social media Facebook, LinkedIn and X (Twitter) Kenmare has profiles on Facebook, LinkedIn and Twitter (X), which feature regular updates on our sustainability initiatives, operational and development milestones, news flow and more Kenmare Resources – H1 2024 Results Presentation
Slide 41: Contact us
Contact us Jeremy Dibb / Katharine Sutton / Michael Starke +353 1 671 0411 ir@kenmareresources.com Follow us Dredge Operator at WCP B