Slide 1: Kenmare Resources plc – 2013 Half Yearly Results Trading Update
Kenmare Resources plc Moma Titanium Minerals Mine 2013 Half Yearly Results Trading Update
Slide 2: Disclaimer
Disclaimer This Confidential Presentation (the “Presentation”) has been prepared and issued by Kenmare Resources plc (the “Company” or “Kenmare”). While this Presentation has been prepared in good faith, the Company and its respective officers, employees, agents and representatives expressly discla
Slide 3: Kenmare – World Class Asset
Kenmare – World Class Asset Moma Titanium Minerals Mine in Mozambique One of the world’s largest known titanium minerals1 deposits; 100+ years mine life Phase I capacity is approx: - 800 ktpa ilmenite, 50 ktpa zircon, 14 ktpa rutile Phase II increases capacity to approx: -1.2 mtpa ilmenite, 75 k
Slide 4: Low Cost Production – Competitive Advantage
Low Cost Production – Competitive Advantage Export Processing Mining 4
Slide 5: Dredge Mining & Wet Concentrator Plant
Dredge Mining & Wet Concentrator Plant 5
Slide 6: Mineral Separation Plant
Mineral Separation Plant 6
Slide 7: Export Facilities
Export Facilities 7
Slide 8: Moma Mine – Resource Base Map
Moma Mine – Resource Base Map 100+ year life at Phase II expanded production level1 Current mine area WCP A to 2024 WCP B to 2020 Namalope dredge path plan Dredge Path Dredge Path WCP B WCP A 1. Based on mining reserves and resources under licence. 8
Slide 9: H1 2013 Highlights
H1 2013 Highlights Phase II expansion facilities operational and ramping up production Revenues US$79.3 million (H1 2012: US$109.1 million) EBITDA US$18.8 million (H1 2012: US$55.5 million) Operating profit of US$6.9 million (H1 2012: US$47.0 million) Net loss US$10.2 million (H1 2012: net
Slide 10: Production Monthly January – July 2013
Production Monthly January – July 2013 HMC Production 120 100 80 60 40 20 0 Jan Feb Mar Apr May Jun Jul WCP B WCP A Ilmenite Production Zircon Production 90 5 80 4 70 60 3 50 40 2 30 20 1 10 - 0 Jan Feb Mar Apr May Jun Jul Jan Feb Mar Apr May Jun Jul Ilmenite Secondary Zircon Zircon 10
Slide 11: Power Reliability
Power Reliability Electrical Supply Stability SVCs at Mocuba and Alto Molocue – now commissioned, improved stability Voltage Stabilisation Equipment (Dip Doctor) – complete and operational Improved Network Voltage Support Installation of network capacitors at Nampula, Moma and Alto Molocue – n
Slide 12: Health & Safety
Health & Safety 12 Month Rolling Lost Time Injury Frequency Rate 0.50 0.40 0.30 0.20 0.10 - Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Kenmare LTIFR 0.43 Compares favourably with South African mineral sands peers 12
Slide 13: Kenmare Moma Development Association
Kenmare Moma Development Association Five-Year Plan being Implemented Support from First Class Partners: WWF, FMO, Clusa, Mozmed & MIGA Community Projects: Health Projects: Health Clinic at Moma in operation, Malaria Eradication Income Generation: Savings & Credit, Horticulture, Poultry,
Slide 14: Phase II Expansion
Phase II Expansion 14
Slide 15: Phase II Expansion – Mining
Phase II Expansion – Mining Existing Wet Concentrator Plant A (WCP A) Upgrade of WCP A increased spiral feed capacity from 3,000 to 3,500 tph Enhanced HMC production design 2,000 tph of 2,000 tph of >2,000 tph of New Wet Concentrator Plant B (WCP B) mineral sands ore mineral sands ore mineral
Slide 16: Phase II Expansion – Processing
Phase II Expansion – Processing Mineral Separation Plant (MSP) Expanded capacity from 135 tph to Enhanced processing plant design 225 tph 225 tph of heavy minerals concentrate (HMC) feed New Wet High Intensity Magnetic Separation (WHIMS) circuit New Wet High Intensity Magnet More efficient u
Slide 17: Phase II Expansion – Ramp-up
Phase II Expansion – Ramp-up Dredge & WCP B WHIMS Auxiliary Ilmenite Plant Product Storage 17
Slide 18: Moma Mine – Processing
Moma Mine – Processing Extended Storage New Storage New Whims New Aux Ilmenite Existing MSP New Belt filter 18
Slide 19: Industry Overview
Industry Overview 19
Slide 20: Demand For TiO2 Feedstock Is Primarily Driven By Pigment Consumption
Demand For TiO2 Feedstock Is Primarily Driven By Pigment Consumption Description End uses Ilmenite and rutile are naturally occurring minerals Titanium feedstocks are used predominantly to produce containing TiO2 titanium dioxide pigment that is favoured for its brilliant Ilmenite contains bet
Slide 21: Demand For Zircon Is Primarily Driven By The Ceramics Industry
Demand For Zircon Is Primarily Driven By The Ceramics Industry Description End uses Zircon is a zirconium silicate mineral produced as a co-product of In the ceramics industry for the production of opacifier and frit titanium minerals mining compounds for decorative wall and floor tiles and sani
Slide 22: China - Key Source Of Growth In Pigment Demand
China - Key Source Of Growth In Pigment Historical Pigment Demand ForDemand 20 Years Growth Global Pigment Demand (1991 - 2011) ('000 tonnes) 6,000 3.0% CAGR 5,000 4,000 3,000 2,000 17.0% CAGR 1,000 0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 China WORLD 22
Slide 23: Future Pigment Demand Expected To Grow At Above Historical Growth Rate
Future Pigment Demand Expected To Grow At Above Historical Growth Rate Global Pigment Demand 1991- 2020 ('000 tonnes) 8,000 7,000 6,000 5,000 4,000 Growth 2011 to 2020 3,000 Historical 3.0% CAGR from 1991 to 2011 UPSIDE CASE 3.9% CAGR 2,000 BASE CASE 3.1% CAGR DOWNSIDE CASE 2.8% CAGR 1,000 - 1991 19
Slide 24: Pigment Demand Growth Drivers
Pigment Demand Growth Drivers Pigment Consumption Intensity of TiO2 in 20121 Demand growth drivers in developing economies: 60 Pigment intensity of use at early stage of Canada growth curve USA Japan W. Europe 50 Increasing per capita GDP Urbanisation trends GDP US$ '000 per capita 40 Per
Slide 25: Titanium Feedstock Supply Constraints
Titanium Feedstock Supply Constraints Strong demand recovery post GFC from H2 2009 until mid-2011 led to tight supply conditions Global market share TiO2 feedstock producers 20121 Curtailment of production and destocking by pigment industry since H2 2011 has alleviated short term feedstock marke
Slide 26: TiO2 Feedstock Market Outlook
TiO2 Feedstock Market Outlook Strong upward pigment pricing pressure in 2010/11 led to overstocking by end customers ahead of price increases – demand slowed by end 2011 Pigment producers were slow to moderate production – high pigment inventory build by mid-2012 led to curtailment in production
Slide 27: Zircon Market Outlook
Zircon Market Outlook Prices bottomed at end of Q1 2013 following sharp correction during the previous 8 months Improving demand outlook is evident in most regions New price level is encouraging greater use of zircon – some reversal of substitution is evident in ceramics sector Stable to mod
Slide 28: Financials
Financials 28
Slide 29: 2013 Half Yearly Income Statement Review
2013 Half Yearly Income Statement Review 2013 2012 US$m US$m Revenue 79.3 109.1 Sales down 27% on 2012 CoS & Opex (72.4) (62.1) Costs up 17% on 2012 Operating profit 6.9 47.0 Net finance costs (17.5) (13.9) $3.5m paid & balance accrued Foreign exchange gain 1.4 5.7 On Euro debt Loss before tax (9.2)
Slide 30: 2013 H1 Cash Operating Costs Review
2013 H1 Cash Operating Costs Review US$m US$m Cost of Sales 62.2 Other operating costs 10.2 72.4 Freight (CIF charged to customers) (1.6) Total costs less freight 70.8 Non-cash costs: Depreciation 12.0 Share-based payments 1.6 (13.6) 57.2 Inventory Movements: Increase in Finished Product Cost 9.4 Ad
Slide 31: 2012 – 2013 H1 EBITDA Bridge (US$ millions)
2012 – 2013 H1 EBITDA Bridge (US$ millions) 60.0 50.0 9.3 40.0 20.6 30.0 55.5 4.3 20.0 4.1 6.8 8.5 10.0 18.9 0.0 EBITDA US$18.9m (2012 H1: US$55.5m) 21% decrease in average product prices and 9% decrease in sales volumes WCP A pond elevation costs in January and February 2013 2013 wage negot
Slide 32: H1 2013 Cash Operating Costs
H1 2013 Cash Operating Costs Labour Repairs & 31% Maintenance 21% Power and fuel 12% Production Overheads 13% Distribution costs 6% Other 17% 32
Slide 33: Balance Sheet Review at 30 June 2013
Balance Sheet Review at 30 June 2013 30/6/2013 31/12/2012 Comment on 2013 & movement US$m US$m Property, plant & equipment 962.9 887.5 Expansion investment & mine closure adjust Deferred tax asset 1.2 2.2 Reduced by tax charge Inventories 34.2 22.4 Increase in product stocks & spares Trade & other r
Slide 34: Group Debt
Group Debt Group Debt at 30 June 2013: US$358.5m (2012: US$324.4m) Lenders: Project - Absa, KfW, FMO, EIB, EAIF & AfDB; KR plc - Absa/Barclays. Guarantors: ECIC (of Absa), MIGA & Hermes (of KfW). Average interest rate at June 2013 was 8.7%. Senior project loans: US$93.4m, floating @ LIBOR
Slide 35: Key Company Highlights
Key Company Highlights Long life ore body producing high quality products Low cost mining, efficient materials handling, well-established producer 50% expansion in commissioning, with vast majority of capex spent Significant share of global feedstock supply of titanium minerals Important asset for M
Slide 36: Kenmare Resources plc
Kenmare Resources plc Chatham House , Chatham Street Dublin 2, Ireland www.kenmareresources.com 36