Slide 1: H1 2017 Results Presentation
H1 2017 Results Presentation Tuesday, 22 August 2017 Michael Carvill, Managing Director Deirdre Corcoran, Financial Controller & Company Secretary Jeremy Dibb, Corporate Development & Investor Relations
Slide 2: Disclaimer
Disclaimer This Presentation (the “Presentation”) has opinions on which it is based, or any other judgments may or may not prove to be been prepared and issued by Kenmare written or oral information made available correct and there can be no assurance that Resources plc (the “Company” or in connecti
Slide 3: H1 2017 Highlights
H1 2017 Highlights Production Cash costs EBITDA Ilmenite US$30m US$131/t >1,000,000t ↑US$41m ↓14% YoY last 12m YoY Net debt Ilmenite prices Zircon prices ↓to ↑61% YoY ↑6% YoY US$39m + H2 contract + improving increases On track to achieve full year guidance 3
Slide 4: Operating Overview
Operating Overview Annual Production (000t) EBITDA (US$m) 1200 120 40 1000 100 Guidance range 800 80 20 H2 600 H2 60 400 40 0 H1 H1 200 20 0 0 ‐20 2012 2013 2014 2015 2016 2017* H1 H2 H1 H2 H1 H2 H1 Ilmenite (LHS) Zircon (RHS) 2014 2015 2016 2017 Production benefitting from increased utilisation (
Slide 5: 2017 Guidance
2017 Guidance 2017 Guidance* Production Ilmenite kt 950,000‐1,050,000 Zircon kt 72,000‐83,000 of which primary kt 47,000‐52,500 of which secondary kt 25,000‐30,500 Rutile kt 9,000‐10,000 Costs Total cash operating costs US$m 130‐144 Cash costs per tonne of finished US$/t 120‐132 product H1 2017 pr
Slide 6: 2017 H1 Financial Results
2017 H1 Financial Results
Slide 7: H1 2017 Financial Results Summary
H1 2017 Financial Results Summary Production (1) Revenue Cash costs (2) ↑26% ↑82% ↓14% H1 17: 546,900t H1 17: US$102m H1 17: US$131/t H1 16: 434,400t H1 16: US$56m H1 16: US$153/t EBITDA Net Profit Net Debt ↑US$41m ↑US$56m ↓US$6m H1 17: US$30m H1 17: US$9m 30/06/17:US$39m H1 16: (US$11m) H1 16: (US$
Slide 8: H1 2017 Income Statement Review
H1 2017 Income Statement Review H1 2017 H1 2016 US$m US$m Comment Revenue 102.4 56.2 +82% (volumes +21%, average prices +50%) Cost of Sales & Other Opex (87.4) (81.1) +8% on increased sales volumes (depreciation $14.8m) Operating profit/(loss) 15.0 (24.9) $39.9m improvement Net finance costs (3.4) (
Slide 9: H1 2017 Revenue Review
H1 2017 Revenue Review Shipments (000’s tonnes) Price (US$/tonne) 1 2 600 $200 $1,000 $175 500 $150 $750 $125 400 $100 $500 $75 300 $50 $250 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 Ilmenite Primary Zircon Secondary Zircon Ilmenite (LHS) Primary Zircon (RHS)
Slide 10: Cash Operating Costs
Cash Operating Costs H1 2017 H1 2016 US$m US$m Cost of Sales 73.4 68.0 Other Operating Costs (1) 14.0 13.1 Freight (CIF charged to customers) (2.9) (2.4) Total 84.5 78.7 Depreciation (14.8) (14.2) Share‐based payments (0.4) (0.1) Finished product movements 2.1 2.2 Adjusted cash operating costs 71.4
Slide 11: Sustainable Cost Reductions
Sustainable Cost Reductions 220 1,250 200 180 1,000 Tonnes US$/t 160 140 750 120 100 500 2013 2014 2015 2016 2017* Final Product Production (RHS) Unit cash costs (LHS) H1 2017 Cash Operating Cost US$131/t, 14% reduction on H1 2016 FX headwinds in H1 2017 – strengthening Rand & Metical Phased r
Slide 12: Net Debt Reductions
Net Debt Reductions 50 40 30 US$m 20 10 0 Net debt Dec‐ Operating PPE Inventories Debtors Creditors Interest Net debt June‐ 16 cashflow payment 17 Operating cashflow of US$30.1 million in H1 2017 Working capital increase of US$10.5 million Inventories fluctuate with shipments from period to pe
Slide 13: Balance Sheet Review at 30 June 2017
Balance Sheet Review at 30 June 2017 30‐Jun‐17 31‐Dec‐16 Comment US$m US$m Property, plant & equipment 790.0 793.9 US$9.5m additions + US$1.5m closure cost adj ‐ US$14.8m depreciation Inventories 52.5 47.8 Final mineral products US$32.7m, consumables US$19.8m Trade & other receivables 28.5 23.8 Rece
Slide 14: Capital Expenditure
Capital Expenditure Sustaining capital expected to average US$20m annually in medium term 2016 sustaining capital constrained at US$6.7m 2017 sustaining capital expected to be approx. US$25m: including US$5m carry‐over from low 2016 sustaining capital purchase of mobile equipment replaceme
Slide 15: Principal Debt Repayments
Principal Debt Repayments US$m Repayment holiday finishes in February 2018 Scheduled repayments exclude partial cash sweep from February 2018 All debt now USD denominated 15
Slide 16: Outlook
Outlook
Slide 17: Mine development strategy
Mine development strategy Wet Concentrator Plant B upgrade From 2,000 to 2,400tph Definitive Feasibility Study expected Q3 2017 Wet Concentrator Plant C Located in higher grade Pilivilli zone Pre‐Feasibility Study progressing well Assessing options which may significantly reduce (or de
Slide 18: Market Overview
Market Overview Kenmare Supply/Demand Forecast 10,000 '000 TiO2 units 8,000 6,000 4,000 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Potential New Supply Demand Existing Supply Solid demand growth from end use pigment sector in H1 2017 Strong H1 price growth for ilmenite, further
Slide 19: Summary
Summary
Slide 20: Company Strategy
Company Strategy Structured and disciplined approach to capital management ST Short Term MT Medium Term Maintain robust balance sheet and Optimise mining capacity for market generate free cash flow conditions Increase utilisation rates and revenue capture Deliver shareholder returns Contin
Slide 21: Appendices
Appendices
Slide 22: H1 2017 Cash Operating Costs
H1 2017 Cash Operating Costs Logistics & Travel Other Other 9% Logistics & Travel 9% 12% Distribution Costs 10% Production 5% Overheads Distribution Costs 13% 5% Production Overheads 13% H1 H1 Labour payroll Fuel 8% 25% 2017 Labour payroll 25% Fuel 12% 2016 Power 11% Power 8% Repairs & Maintenance R
Slide 23: 2017 Revenue Review – H1
2017 Revenue Review – H1 Volume/Mix Movement Pricing Movement (FOB)1 2 600 $200 $1,000 +62% $180 $900 +46% Primary Zircon +61% Shipments (000's tonne's) 500 $160 $800 +19% Price Primary Zircon (US$/t) $140 $700 Ilmenite (US$/t) 400 +5% $120 $600 300 $100 $500 Ilmenite $80 Price $400 200 $60 $300 100
Slide 24: Group Lenders at 30 June 2017
Group Lenders at 30 June 2017 Loan principal Loan interest Loan balance US$ 000 US$ 000 US$ 000 Senior Loans AfDB 4,273 80 4,353 Absa 14,651 292 14,943 EAIF 494 9 503 EIB 1,550 29 1,579 FMO 1,637 31 1,668 KfW IPEX‐Bank (Hermes) 1,298 24 1,322 KfW IPEX‐Bank (MIGA) 1,497 28 1,525 Total Senior Loans 25
Slide 25: Adjusted Cash Operating Costs
Adjusted Cash Operating Costs H1 2017 H1 2016 Change YoY US$’000 US$’000 US$’000 % Logistics & Travel 7,124 5,972 1,152 19% Distribution Costs 3,055 3,220 ‐165 ‐5% Labour payroll 17,165 16,628 537 3% Repairs & Maintenance 14,668 13,590 1,078 8% Power 7,200 6,106 1,094 18% Fuel 3,962 4,717 ‐755 ‐16%
Slide 26: Operations schematic
Operations schematic Wet @ Concentrator a) 4} Dune ; aire see Heavy Mineral Rehabilitation Benecntvake Magnetic Separation Wet High Intensity Gravity _ i | rs ] Magnetic Separation Separation Rutile Zircon Ilmenite Conveyor Transhipment — Electrostatic + Jetty Vessel , Separation A Th Market ; Custo
Slide 27: Map of license areas
Map of license areas The map shows J exploration licences i GK Nampula and mining concessions ; Province . held by Kenmare: ! Nampula 20km Mogincual Nametil e Mozambique i Maputo