Kenmare Resources Plc · LSE:KMR
Kenmare Resources — H1 2023 Earnings Presentation
36 slides from Kenmare Resources's earnings presentation, Aug 15, 2023
Slide 1: H1 2023 Results Presentation
RESPONSIBLY MEETING GLOBAL DEMAND FOR QUALITY-OF-LIFE MINERALS H1 2023 Results Presentation 15 August 2023
Slide 2: Disclaimer
Disclaimer This Presentation (the “Presentation”) has been for any securities of the Company nor shall it or any Company’s management concerning anticipated prepared and issued by Kenmare Resources plc (the part of it form the basis of, or be relied upon in results, certain of which assumptions and
Slide 3: Agenda
Agenda Introduction Michael Carvill, Managing Director Financial review Tom Hickey, Finance Director Operational review Ben Baxter, Chief Operations Officer Market update Cillian Murphy, Marketing Manager Outlook Michael Carvill, Managing Director Questions? Kenmare Resources – H1 2023 Results Prese
Slide 4: The world's largest ilmenite supplier
The world’s largest ilmenite supplier Overview: Kenmare Resources Moma Mine in Mozambique Wet Concentrator Plant B mining at Pilivili 15 years of production with >30 years in Mozambique >100 years of Mineral Resources at current production rate Low environmental impact: >90% of electricity fro
Slide 5: Creating sustainable competitive advantage
Creating sustainable competitive advantage Strategic priorities and H1 2023 performance OPERATE • • Safe and engaged workforce Thriving communities 0.18 LOST TIME INJURY • RESPONSIBLY • Healthy natural environment Trusted business FREQUENCY RATE – AREA OF FOCUS DELIVER LONG LIFE, • >100 years of Min
Slide 6: Positioned to deliver long-term value
Positioned to deliver long-term value Macroeconomic outlook and the impact on Kenmare’s product markets Near-term uncertainty Short-term global outlook remains unpredictable Downstream demand has softened but mineral sands prices have remained resilient Kenmare’s order book for H2 is largely c
Slide 7: Record H1 earnings and interim dividend
Record H1 earnings and interim dividend Operational and financial highlights Other financial highlights Capital projects update Shipments (Mt) Sales price1 ($/t) Net cash Nataka DFS 0.69 486 0.65 429 0.59 413 0.56 366 0.41 0.44 0.42 269 275 282 $42m On track (31.12.2022: $26m) WCP A transition to 1
Slide 8: Financial Review
Financial Review Tom Hickey, Finance Director WCP A morning briefing
Slide 9: Record H1 revenue & profits
Record H1 revenue & profits H1 2023 income statement Revenue (FOB) by product (%) Concentrates, 5% H1 2023 H1 2022 Rutile, 2% Concentrates, 6% Rutile, 3% $ million $ million Zircon Mineral product revenue 229.7 182.1 15% Zircon 18% Freight revenue 13.2 15.2 H1 2023 H1 2022 Total Revenue 242.9 197.3
Slide 10: Pricing remains strong
Pricing remains strong Pricing and shipping review Product price movements ($/t, FOB)1 Stable market conditions continued in H1 2023 $500/t $2,000/t Average & Ilmenite price Average sales prices impacted by the product mix $400/t $1,600/t Zircon price 4% decrease in average price received to $41
Slide 11: Unit costs affected by lower production volumes
Unit costs affected by lower production volumes H1 2023 cash operating costs reconciliation1 Unit H1 2023 H1 2022 7% ($6.8m) increase in total cash operating costs, due primarily to: Cost of sales (excluding freight) $m 144.0 102.7 Higher labour costs ($1m) on due to Administration expenses $m 5
Slide 12: Improved net cash following record dividends
Improved net cash following record dividends Net cash flows H1 2023 cash bridge ($m) $93.3m Strong operating cash flow facilitated all funding requirements including dividends Kenmare Resources – H1 2023 Results Presentation 12
Slide 13: Net cash increased by $16m
Net cash increased by $16m Balance sheet review 30-Jun-2023 31-Dec-2022 Strong balance sheet with $42m of net cash $ million $ million PPE included additions of $20.2m less depreciation Property, plant & equipment 923.3 932.4 ($30.2m) and mine closure adjustments of $0.9m Inventories 73.3 84.1
Slide 14: Interim dividend per share up 59%
Interim dividend per share up 59% Shareholder returns Dividends (USc/share) H1 2023 profit after tax Dividend 60 $67.8m USc17.5/share 50 Interim 40 Final 30 43.3 H1 2023 dividend1 DPS increase YoY $16.6m +59% 20 25.4 10 17.5 5.5 2.7 7.7 2.3 7.3 11.0 0 2019 2020 2021 2022 2023 Kenmare anticipate di
Slide 15: Launching a Tender Offer for up to $30 million
Launching a Tender Offer for up to $30 million Continuing to supplement shareholder returns Share buybacks (US$ millions) Net Cash Balance Shares in issue 100 82.7 $42.3m 94,829,551 80 60 Tender price EGM Date 40 30.0 20 0 422p 8 Sept 2023 2021 2023 Today launched a share buyback of up to 5.6 mill
Slide 16: Operational Review
Operational Review Ben Baxter, Chief Operations Officer WCP B mining at Pilivili
Slide 17: Intense focus on safety
Intense focus on safety Refocus on safety standards Safety stand-downs to build understanding 15 0.50 of risk management and standards 0.40 10 0.27 0.25 No LTIs 0.30 LTIFR 0.18 5 0.09 0.20 0.03 0.10 0 0.00 2019 2020 2021 2022 H1 2023 No of LTI's LTIFR Strong focus on safety performance Increase in
Slide 18: Production below forecasts in H1 2023
Production below forecasts in H1 2023 H1 2023 production review HMC production Ilmenite Mining 633,900t 425,500t HMC production (-14%) principally impacted in H1 by a set of issues: Severe lightning strike -14% -15% H1 2022: 783,300t H1 2022: 499,700t Lower grades experienced as WCP B mined we
Slide 19: Stronger production in early H2 2023
Stronger production in early H2 2023 Mining operating at increased outputs Mining conditions improved in H2 - rates, utilisations, recoveries all Dredge in operation at Moma up on H1: Slimes conditions being controlled at lower levels at WCP A with successful clean water addition to spirals WC
Slide 20: Development & growth projects on-track
Development & growth projects on-track Nataka DFS and WCP B upgrade progressing to plan WCP A to mine in Nataka from end 2025 Fundamental upgrades at WCP A support mining and processing in all WCP A existing and future capacity forecast conditions 6,000 Upgrades in 2025 prior to entering Nataka
Slide 21: Sustainability goals advancing in 2023
Sustainability goals advancing in 2023 Sustainability Strategic Pillars Agroforestry trials Safe and engaged workforce • Gender Diversity - H1 ’23: 15% (H1 ’22: 13%) • Leadership coaching development programme completed. Now focussing on full role delivery Thriving communities • Water & sanitation –
Slide 22: Market update
Market update Cillian Murphy, Marketing Manager Titanium feedstocks
Slide 23: Strong results achieved in H1 2023
Strong results achieved in H1 2023 H1 2023 product prices (FOB $/t) Global ilmenite for beneficiation (Mt TiO2 units) Record 500 average price received ($/t FOB) 2000 Average and ilmenite price ($/t) 400 Zircon price ($/t) 1500 300 1000 200 500 100 0 0 H1-18 H2-18 H1-19 H2-19 H1-20 H2-20 H1-21 H2-21
Slide 24: China leading demand for ilmenite
China leading demand for ilmenite Chinese market overview Global ilmenite for beneficiation (Mt TiO2 units) Record pigment production in China1 Chinese pigment net exports2 2,000 20% 1,000 Total pigment production Pigment net exports 800 1,500 15% (000’s tonnes) (000’ tonnes) 600 1,000 10% 400 200 5
Slide 25: Market outlook for titanium feedstocks and zircon
Market outlook for titanium feedstocks and zircon Subdued market expected in Q3 2023 Titanium feedstocks Titanium feedstocks The titanium feedstocks market is facing pressure in Q3 2023, following relatively stable conditions through H1 2023 Reduced utilisations at major pigment producers’ plant
Slide 26: Outlook
Outlook Michael Carvill, Managing Director Transshipment vessel loading
Slide 27: 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 WCP A capabilities will be transformed with new Higher grades and mined tonnes expected in H2 2023 deslim
Slide 28: Questions?
Questions? WCP A morning briefing
Slide 29: Appendices
Appendices » KENMARE Mining at WCP A
Slide 30: Structural undersupply in the feedstock market
Structural undersupply in the feedstock market Supply/Demand balance (‘000 TiO2 units) 10,000 8,000 6,000 4,000 2018 2019 2020 2021 2022 2023f 2024f 2025f 2026f 2027f Existing Supply Estimated new supply Feedstock demand Demand growth exceeding expected growth in supply 1.5Mt TiO2 units (~3Mt il
Slide 31: Financial robustness
Financial robustness Flexible debt and trade facilities in place 30-Jun-2023 31-Dec-2022 $ million $ million Interest rate Term Term Loan 62.9 78.6 SOFR +5.4% March 2025 Revolving Credit Facility - - SOFR +4.25% December 2023 Total debt 62.91 78.6 Cash 108.8 108.3 Debt facilities summary Term Loan
Slide 32: 2023 production guidance
2023 production guidance 2023 original guidance provided on 18 January 2023, updated on 13 July 2023 Production 2023 Guidance H1 2023 Actual 2022 Actual Ilmenite tonnes 980,000-1,040,000 425,500 1,088,300 Primary zircon tonnes 51,000-57,000 23,000 58,400 Rutile tonnes 8,000-9,000 3,600 8,900 Concent
Slide 33: H1 2023 unit costs reflect lower production volumes
H1 2023 unit costs reflect lower production volumes Production and unit cost profile 1,600kt $250/t 1,400kt 42.8 $225/t $200/t 1,200kt Cost per tonne ($/t) $175/t Production (kt) 1,000kt $150/t 800kt $125/t 600kt $100/t $75/t 400kt $50/t 200kt $25/t 0kt $0/t FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 H
Slide 34: Total cash operating costs
Total cash operating costs Total cash operating costs breakdown Logistics Logistics & Travel Electricity Electricity Other & Travel Other 10% 5% 12% 6% 13% 11% Fuel Fuel 7% 12% H1 2023 H1 2022 Prod O/H US$108.8m US$102.0m 17% Labour Labour 24% Prod O/H 18% 24% R&M R&M 22% 19% 6% increase due primari
Slide 35: Follow Kenmare on social media
Follow Kenmare on social media Facebook, Twitter and LinkedIn Kenmare has profiles on Facebook, Twitter and LinkedIn, which feature regular updates on our corporate social responsibility initiatives, operational and development milestones, news flow and more Click the name of the social network
Slide 36: Contact Us
Contact Us Jeremy Dibb / Michael Starke +353 1 671 0411 ir@kenmareresources.com Jetty at sunset Follow Us