Slide 1: H1 2014 Results
H1 2014 Results LISTED London & Edinburgh Roadshow 27-29 August PREMIUM 1
Slide 2: Disclaimer
Disclaimer This Presentation (the “Presentation”) has information or opinions on which it is significant in the context of the been prepared and issued by Kenmare based, or any other written or oral statements, estimates and projections Resources plc (the “Company” or information made available in c
Slide 3: Overview
1 Overview 3
Slide 4: Kenmare Resources H1 2014 Overview
Kenmare Resources H1 2014 Overview Continued production increases in H1 2014 vs H1 2013 (HMC +26%, Ilmenite +47%, Zircon +12%) Product price weakness and a lower zircon sales mix have constrained revenue growth (US$81.2m H1 2014 vs US$79.3m H1 2013) Management focus on mine optimisation and re
Slide 5: Key Performance Indicators
Key Performance Indicators Production (Half-Yearly) 000t Revenue & EBITDA (Half-Yearly) US$m 500 150 Zircon Ilmenite Revenue - Capitalised Revenue EBITDA 400 100 300 200 50 100 0 0 H2 2012 H1 2013 H2 2013 H1 2014 H2 2012 H1 2013 H2 2013 H1 2014 HMC production increased 26% to 604,200 tonnes (H1 20
Slide 6: Summary Results
2 Summary Results 6
Slide 7: H1 2014 Income Statement Review
H1 2014 Income Statement Review H1 ‘14 H1 ‘13 Comment US$m US$m Revenue 81.2 79.3 Sales volumes up 36%, but lower prices and product mix keep revenues flat Cost of Sales & Opex (99.1) (72.4) Costs (incl. US$8.1m extra deprecation) up - volume related Operating (loss)/profit (17.9) 6.9 Net finance co
Slide 8: H1 2014 Revenue Review
H1 2014 Revenue Review Volume/Mix Movement Pricing Movement Ilmenite Secondary Zircon Primary Zircon Ilmenite Primary Zircon Secondary Zircon 500 50 $240 $1,200 Ilmenite price per Tonne (US$) - 23% Zircon Price per tonne (US$) Ilmenite Shipments (000t) $200 $1,000 Zircon Shipments (000t) 400 40 - 7%
Slide 9: H1 2014 Cash Operating Costs Review
H1 2014 Cash Operating Costs Review H1 2014 H1 2014 H1 2013 H1 2013 US$m US$m US$m US$m Cost of sales 82.8 62.2 Other operating costs 16.2 99.0 10.2 72.4 Freight (CIF charged to customers) (4.2) (1.6) Total costs less freight 94.8 70.8 Non-cash costs Depreciation 20.1 12.0 Share-based payments 1.7 (
Slide 10: Half Yearly 2012 – 2014 Cash Operating Costs
Half Yearly 2012 – 2014 Cash Operating Costs Finished product produced Cash Cost per tonne produced 500 250 Finished Products (tonnes '000) 400 200 Cost per tonne US$m 300 150 200 100 100 50 0 0 H2 2012 H1 2013 H2 2013 H1 2014 Cost/t for total finished products (ilmenite, zircon & rutile) is US$17
Slide 11: Cost Efficiency Initiatives
Cost Efficiency Initiatives Finished products up 45% and HMC up 26% in H1 2014 on H1 2013, but adjusted cash operating costs up by 25%. Cost efficiencies realised in the following areas: Labour: Reduced numbers of short-term contracts, catering cost reductions and lower recruitment costs Eng
Slide 12: H1 2014 Cash Operating Costs
H1 2014 Cash Operating Costs Other Logistics & Travel Other Logistics & Travel 9% 8% Production 11% 8% Distribution Distribution Overheads Costs Production Costs 13% 6% Overheads 5% 10% Fuel H1 6% 2013 Fuel Labour H1 Power payroll 6% Labour 8% 2014 31% payroll 32% Repairs & Maintenance Power 21% 9%
Slide 13: Half Yearly 2012 – 2014 Capex
Half Yearly 2012 – 2014 Capex Sustaining capex Expansion capex 160 120 US#039; millions 80 40 0 H2 2012 H1 2013 H2 2013 H1 2014 Long period of investment completed in 2013 and Phase II expansion brought into production Sustaining capex tightly controlled in H1 2014, tracking below forecast 13
Slide 14: Balance Sheet Review at June 2014
Balance Sheet Review at 30 June 2014 30/6/2014 31/12/2013 Comment on 2014 & movement US$m US$m Property, plant & equipment 952.1 967.1 US$5.1m capital additions Deferred tax asset 0.4 0.1 Additional deterred tax asset Inventories 53.2 44.2 Increased finished product stock quantities Trade & other re
Slide 15: Group Debt
Group Debt Group Debt at 30 June 2014: US$349.6m (2013: US$355.2m) Average project interest rate at June 2014 was 9.2% Senior: US$81.2m, floating @ LIBOR + 3.5% to 5.3%, fixed @ 5.45% to 7.45%. Subordinated: US$258.3m, floating @ LIBOR + 6% to 9%, fixed @ 11%. A further 2% margin will accrue
Slide 16: Group Lenders at June 2014
Group Lenders at 30 June 2014 Loan Balance Maturity US$m Senior Project Loans AFDB 21.1 2018 Absa (ECIC) 23.9 2015 EAIF 2.6 2018 EIB 10.7 2018 FMO 8.6 2016 KfW IPEX-Bank (Hermes) 6.6 2015 KfW IPEX-Bank (MIGA) 7.7 2018 81.2 Subordinated Project Loans EIB 158.8 2019 EAIF 53.0 2019 FMO 46.5 2019 258.3
Slide 17: Market Overview
3 Market Overview 17
Slide 18: Pigment Market Review H1 2014
Pigment Market Review H1 2014 Global pigment demand continued to increase in H1 2014 vs H1 2013, despite a long harsh US winter Pigment producers have reported a draw down of inventories to more seasonal levels As demand has eroded inventories, operating levels for pigment producers are increa
Slide 19: Domestic Chinese Pigment Prices
Domestic Chinese Pigment Prices 15,000 14,500 14,000 Yuan/t 13,500 13,000 12,500 12,000 Sep-13 Dec-13 Mar-14 Jun-14 TiO2 Pigment Price (Guangdond Ex-factory price Yuan/t) Domestic Chinese Pigment prices are showing some improvement from the end of Q1 2014 19
Slide 20: TiO2 Feedstock Market Review H1 2014
TiO2 Feedstock Market Review H1 2014 Low pigment plant operating rates and the need to draw down feedstock inventories led to weak feedstock offtake in H1 2014 Global consumption of ilmenite improved in H1 2014 However, this was overshadowed by an overhang of ilmenite inventories and increased
Slide 21: Chinese Titanium Ore Imports From Vietnam
Chinese Titanium Ore Imports From Vietnam 250 500 TiO2 Blended Price CFR (US$/t) 200 400 Volume (kt) 150 300 100 200 50 100 0 0 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Import t Roll 6m import t Price US$/t Price reduction has driven a rapid fall off in production in Vietnam Source: Customs Data 21
Slide 22: Zircon Market Review H1 2014
Zircon Market Review H1 2014 Zircon demand conditions remained stable throughout H1 Gradual demand recovery is underway in China, the US and parts of South America Recovery in the principal European zircon consuming countries of Spain and Italy remains slower Prices declined modestly in H1 b
Slide 23: Product Revenue/t -v- Kenmare Share Price
Product Revenue/t -v- Kenmare Share Price Quarterly Revenue per Tonne Shipped (1) KMR Daily Closing Share Price Kenmare share price performance is closely linked to pricing of final products (1) Q1 2014 price reduction reflective of low zircon sales 23
Slide 24: Operations
4 Operations 24
Slide 25: Production continues to increase
Production continues to increase Ilmenite Production 000t Zircon Production 000t 500 25 400 20 300 15 200 10 100 5 0 0 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 Cur
Slide 26: Health & Safety and Environmental Performance
Health & Safety and Environmental Performance Health and Safety Safety of employees is top priority for management LTIFR of 0.97 at 30 June 2014 Kenmare striving for zero harm at Moma In Q2 2014 there was a 64% reduction in total injuries from Q2 2013 July is the second consecutive month w
Slide 27: Mozambique
Mozambique Key highlights Stable political environment – supportive government with which Kenmare has a favorable fiscal arrangement Diversified economy with extensive agricultural and natural resources as well as hydroelectric potential and tourism sector Growth is underpinned by robust inves
Slide 28: Kenmare Resources – Long Life, Low Cost
Kenmare Resources – Long Life, Low Cost Moma – A low cost, long life asset A world leading producer of titanium minerals 8% of global titanium feedstock supply Life of mine over 100+ years Low cost dredge-mineable mine with port facilities on site Established producer US$1bn+ invested into
Slide 29: Appendix
(a) Appendix 29
Slide 30: Kenmare Resources at a Glance
Kenmare Resources at a Glance 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 Primary: London Sto
Slide 31: Operations Review
Operations Review The Moma Mine Operating Characteristics Kenmare's expanded operating capacity is 1.2mtpa of >4mt have been shipped to date ilmenite, plus co-products zircon & rutile Coastal location; no overland transport Mining performed by three dredges floating in two artificial Surfa
Slide 32: Mozambique Overview
Mozambique Overview Quick facts (2013) Capital Maputo Government type Presidential Democratic Republic S&P (B / Stable) Moma Ratings Fitch (B+ / Positive) Mine Nominal GDP US$15.3bn Total Debt / GDP 46.7% Net FDIs / GDP 10.0% GDP Growth 6.6% Population 24 million International natural resources Key
Slide 33: KMAD - Community Relations
KMAD - Community Relations 2013 – 2015 Strategic Plan Agreed Current Projects Health post started operating in March 2013 & ambulance allocated for community service Nataka school completed & 2 new schools under construction Water supply to the Natuco vegetable project finalised 2 new commun
Slide 34: Reserves & Resources
Reserves & Resources Reserves & resources table as at 31 December 2013 % % % Ore % % Rutile THM Ilmenite Rutile Zircon Ore Reserve Zone Category Ilmenite Ilmenite Zircon (Mt) THM* in ore (Mt) (Mt) (Mt) (Mt) in THM in ore in ore Reserves Namalope Proved 241 4.3 82 3.5 0.077 0.25 10 8.4 0.18 0.60 Nama