Slide 1: H1 2018 Results Presentation
H1 2018 Results Presentation 20th August 2018
Slide 2: Disclaimer
Disclaimer This Presentation (the “Presentation”) has which it is based, or any other written or oral estimates and projections made. These been prepared and issued by Kenmare information made available in connection assumptions and judgments may or may not Resources plc (the “Company” or with the C
Slide 3: H1 2018 - Continued growth & operational development
H1 2018 - Continued growth & operational development • Revenue US$140m ↑ 37% Results • EBITDA US$47.5m ↑ 59% • Profit US$26.4m ↑ 181% • Progressing with capitally efficient development projects Mine Optimisation • Wet Concentrator Plant B (WCP B) upgrade is Progress in commissioning and progressing
Slide 4: Operating overview
H1 2018 - Operating overview Guidance Annual Production (000’s tonnes) range 1,200 80 • FY 2018 production expected to be in line with 900 60 guidance Ilmnenite (kt) Zircon (kt) H2 H2 600 40 • FY 2018 production weighted to H2, due to lower available mining capacity in H1 300 H1 H1 20 0 0 • Higher c
Slide 5: Progressing capitally efficient development projects
Progressing capitally efficient development projects Additional mining capacity required to sustain production levels at around 1Mt ilmenite per annum, to offset declining grades as the Namalope zone progresses toward end of mine life: • WCP B Upgrade - Estimated DFS cost: <US$16 million • 20% capac
Slide 6: H1 2018 Financial Results
H1 2018 Financial Results
Slide 7: Significantly improved H1 2018 financial performance
Significantly improved H1 2018 financial performance Revenue Sales price(1) Cash costs(2) 37% 20% 16% H1 2018: US$140m H1 2018: US$223/t (FOB) H1 2018:US$152/t H1 2017: US$102m H1 2017: US$186/t (FOB) H1 2017: US$131/t EBITDA Profit After Tax Net Debt 59% 181% US$24.8m H1 2018: US$47.5m H1 2018: US$
Slide 8: Freight costs
Freight costs • Shipments on CIF/CFR basis, rather than FOB, requires Half-yearly freight costs (US$m) freight to be factored into the sales price 10 • Freight affects revenues and costs equally 8.8 8.8 8 • Freight costs in H1 2018 increased to US$8.8m (H1 2017: US$2.9m) reflecting: 6 • Kenmare’s de
Slide 9: Income Statement review
H1 2018 Income Statement review • Revenues increased 37% due to a H1 2018 H1 2017 combination of higher volumes (+10%) and US$ million US$ million prices (FOB) (+20%) Revenue 140.1 102.4 • CoS and OOC up in H1 2018, primarily due Cost of sales & Other Operating Costs (108.6) (87.4) to increased sale
Slide 10: Revenue review
H1 2018 revenue review • Total revenue up 37% on H1 2017 to US$140.1m H1 2018 production/sales (000’s tonnes) • Sales volumes up 10% to 589,200 tonnes - a new record 750 75 • 2018 sales volumes weighted to H1 2018 as strong ilmenite demand led to a drawdown of 600 60 finished product inventories by
Slide 11: Achieved pricing
H1 2018 achieved pricing Half-yearly Pricing Movement US$/t (FOB)1 • H1 2018 average FOB prices for all products shipped up 20% to US$223/t from $200 $1,500 US$186/t in H1 2017 $175 $1,250 • Annual price increases for all products $150 $1,000 $125 Ilmenite Zircon • Ilmenite prices up 11% vs H1 2017
Slide 12: Cash operating costs reconciliation
H1 2018 cash operating costs reconciliation Analysis reconciles Income Statement to cash operating cost to run business. H1 2018 H1 2017 US$ million US$ million Cost of Sales 92.5 73.4 • Higher adjusted cash operating costs in H1 2018, principally payroll Other Operating Costs 16.1 14.0 (increased r
Slide 13: Cash operating costs
Cash operating costs $220 1,200 Cash operating cost per tonne US$/t Guidance $200 1,000 Volume (kt tonnes) $180 800 H2 $160 600 $140 400 $120 H1 200 Guidance $100 ‐ 2012 2013 2014 2015 2016 2017 2018 Final Product Production (kt) Ongoing Cash Operating Cost per Tonne (US$/t) • Strong trend of reduci
Slide 14: EBITDA bridge H1 2017 – H1 2018
EBITDA bridge H1 2017 – H1 2018 80 2.7 60 US$ millions 11.0 3.1 24.3 40 10.2 20 47.5 29.8 0 H1 2017 Sales Sales Sales Mineral Costs H1 2018 EBITDA Volume Price Mix products stock EBITDA movements • EBITDA benefitted significantly from higher achieved prices and increased sales volumes • Graph is sho
Slide 15: Capital costs
Capital costs • Sustaining capital • H1 2018 sustaining capital US$8.0m (2017:US$9.0m) • Full year guidance US$22m maintained • Main areas of spend on dry mining A & B upgrade and heavy mobile equipment • Development capital • H1 2018 development capital US$5.4m (2017:US$0.5m) • Previous full year g
Slide 16: Balance Sheet review
Balance Sheet review • Mineral inventories (↓US$8.9m) of US$22.0m 30-Jun-2018 31-Dec-2017 US$ million US$ million (Dec-17: US$30.9m), reflecting drawdown of Property, plant & equipment 789.6 793.6 stock in H1 2018 Inventories 44.5 52.7 • Trade & other receivables (↑ US$14.2m) up as Trade & other rec
Slide 17: Net debt reductions
H1 2018 net debt reductions ‐40 ‐20 ‐11.8 0 48.4 ‐8.7 ‐3.1 9.3 20 34.1 40 60 Net debt Dec‐17 Operating cashflow Property, Plant & Working capital Interest payment Net debt Jun‐18 Equipment changes • Net debt reduced by US$24.8 million in H1 2018 • Working capital increase of US$8.7 million principal
Slide 18: Outlook
Outlook
Slide 19: TiO2 feedstock review
TiO2 feedstock review Titanium Feedstocks • Average received ilmenite prices (FOB) increased ~11% from H1 2017 to H1 2018 • Strong demand for ilmenite in H1 2018, leading to a draw down of Kenmare’s inventories • Chloride pigment sector in China is growing and requires good quality ilmenite to benef
Slide 20: Building on our strategy
Building on our strategy Strategy 2017 H1 2018 Pilivili Pre-Feasibility Studies WCP B project commissioning Growth Continuing studies for further brownfield mining development Low capital intensity growth to fully utilise existing installed WCP C Dredge Mining Project DFS facilities. compl
Slide 21: Appendices
Appendices
Slide 22: 2018 guidance (provided January 2018)
2018 guidance (provided 11 January 2018) 2017 Actuals 2018 Guidance Production Ilmenite tonnes 998,200 900,000-1,000,000 Zircon tonnes 74,000 65,000-72,000 of which primary tonnes 48,600 42,000-46,000 of which secondary tonnes 25,400 23,000-25,000 Rutile tonnes 9,100 7,000-8,000 Costs Total cash ope
Slide 23: Adjusted Cash Operating Costs
Adjusted Cash Operating Costs H1 2018 H1 2017 Change YoY US$M US$M US$M % Labour payroll 19.4 17.2 2.2 13% Repairs & Maintenance 16.1 14.7 1.4 10% Power 8.1 7.0 1.1 16% Fuel 5.2 4.2 1.0 24% Production Overheads 9.3 9.1 0.2 2% Distribution Costs 3.2 3.1 0.1 3% Logistics & Travel 6.0 7.1 (1.1) -15% Ot
Slide 24: Cash Operating Costs
H1 2018 Cash Operating Costs Distribution Costs Distribution Logistics & Other 4% Logistics & Costs Travel Other 10% 8% 13% Travel 4% 10% Production Overheads Production 12% Overheads 13% Labour Fuel H1 2018 Labour H1 2017 payroll 7% payroll Fuel 24% 26% 6% Power Power 11% 10% Repairs & Repairs & Ma
Slide 25: Group Lenders at June 2018
Group Lenders at 30 June 2018 Lender Currency Loan balance AfDB US$000’s 3,544 Absa US$000’s 12,183 EAIF US$000’s 17,169 EIB US$000’s 43,739 FMO US$000’s 14,325 KfW IPEX-Bank (Hermes) US$000’s 1,076 KfW IPEX-Bank (MIGA) US$000’s 1,242 Total Group Loans US$000’s 93,278 • US$9.5m principal and US$3.2m
Slide 26: Debt repayment profile excluding cash sweep
Debt repayment profile excluding cash sweep 25 20 US$ millions 15 10 5 0 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19 Aug-19 Feb-20 Aug-20 Feb-21 Aug-21 Feb-22 • First principal repayment made at the beginning of February 2018 • All debt USD denominated Kenmare Resources plc — H1 2018 Results Presentat