Slide 1: H1 2019 Results Presentation
H1 2019 Results Presentation 20 August 2019
Slide 2: Disclaimer
Disclaimer This Presentation (the “Presentation”) has been or oral information made available in connection estimates and projections made. These prepared and issued by Kenmare Resources plc with the Company. assumptions and judgments may or may not (the “Company” or “Kenmare”). While this prove to
Slide 3: Agenda
Agenda Introduction Michael Carvill, Managing Director Financial review Tony McCluskey, Finance Director Operational review Ben Baxter, Chief Operations Officer Market update Michael Carvill, Managing Director Outlook Michael Carvill, Managing Director Q&A Kenmare Resources – H1 2019 Results Present
Slide 4: On track to achieve 2019 guidance on all metrics
On track to achieve 2019 guidance on all metrics H1 2019 operating and financial highlights Increased production of all finished products in H1 2019 compared to H1 2018 On track to meet guidance, with higher production expected in H2 2019 First shipment of mineral sands concentrate despatched
Slide 5: Development projects progressing well
Development projects progressing well H1 2019 development highlights WCP B upgrade (2018) WCP C development (2019) WCP B move (2020) 20% capacity upgrade of WCP B Construction of WCP C and dredge Project execution commenced complete and delivering to progressing in line with project following DFS co
Slide 6: Financial review
Financial review Tony McCluskey, Finance Director
Slide 7: Robust financial performance
Robust financial performance Maiden interim dividend to be paid in October 2019 Revenue Sales price (FOB) 1,2 Total cash costs3 Net ilmenite unit cost US$122.7m US$239/t US$152/t US$78/t -12% +7% 0% -11% H1 2018: US$140.1m H1 2018: US$223/t H1 2018: US$151/t H1 2018: US$88/t US$145/t 2018 EBITDA Pro
Slide 8: Positive market momentum
Positive market momentum H1 2019 shipping and product price (FOB) review Higher received prices for all products Ilmenite price movement (US$/t, FOB)1 7% increase in average sales price (FOB) to US$239/t in H1 $200 2019 (H1 2018: US$223/t) $150 4% decrease in ilmenite prices compared to H1 2018,
Slide 9: Profitability expected to increase in H2 2019
Profitability expected to increase in H2 2019 H1 2019 Income Statement review Revenue by product (%) H1 2019 H1 2018 100% 1% 3% 5% 7% US$ million US$ million 80% 20% 25% Revenue 122.7 140.1 60% Freight costs (7.3) (8.8) 40% 73% 65% Revenue (FOB) 115.4 131.3 20% 0% Cost of sales & other operating cos
Slide 10: Continued reduction in net ilmenite unit cost
Continued reduction in net ilmenite unit cost H1 2019 cash operating costs reconciliation Unit H1 2019 H1 2018 Total cash operating cost of US$152/t, in line with H1 2018 Cost of sales US$m 79.6 92.5 11% decrease in total cash operating cost of Other operating costs excluding freight US$m 9.8 6.
Slide 11: Targeting further unit cost reductions by 2021
Targeting further unit cost reductions by 2021 Production and cash operating cost per tonne profile 1,400 240 1,200 200 Finished product production 1,000 160 (US$/tonne) Unit costs 800 120 600 (kt) 80 400 200 40 0 - 2013 2014 2015 2016 2017 2018 2019 2021 Production Production Guidance All-Product U
Slide 12: Stronger EBITDA expected in H2 2019
Stronger EBITDA expected in H2 2019 EBITDA bridge H1 2018 to H1 2019 60 -3.5 40 14.0 US$ millions -25.1 5.7 48.2 3.5 20 42.8 0 H1 2018 EBITDA Sales Volume Sales Price Sales Mix Stock Costs H1 2019 EBITDA Movements EBITDA in H1 2019 was impacted by a US$25.1m decrease in sales volumes compared to H
Slide 13: Robust balance sheet
Robust balance sheet Balance sheet review 30-Jun-2019 31-Dec-2018 US$ million US$ million Balance sheet beginning to reflect development Property, plant & equipment 823.2 806.0 projects gaining momentum - additions of US$24.8m Inventories 58.6 53.9 to property, plant and equipment primarily relate
Slide 14: US$3.5m net cash at period-end
US$3.5m net cash at period-end Net cash bridge 31 Dec 2018 to 30 June 2019 60 -20.4 40 US$ millions 42.5 20 -29.7 13.5 -2.3 3.5 0 Net cash Dec-18 Operating cashflow Property, Plant & Working capital Interest payment Net cash Jun-19 Equipment changes H1 2019 capital spend of US$20.4m (property, pla
Slide 15: Maiden dividend declared
Maiden dividend declared Shareholder returns Maiden dividend H1 2019 profit after tax Final dividend Interim dividend Board has declared an interim dividend of USc2.66/share1 Dividend distribution of US$2.9m US$21.9m Dividend policy Commitment to deliver shareholder value Total dividend distri
Slide 16: Operational review
Operational review Ben Baxter, Chief Operations Officer
Slide 17: Sustainable operating practices
Sustainable operating practices Safety Lost Time Injury Frequency Rate LTIFR of 0.12 per 200k man hours worked to 30 June 2019 – 0.6 continued strong safety performance Rate per 200,000 man- Strong improvement due to increased focus on risk hours worked 0.4 assessment and personal accountability
Slide 18: Stronger HMC production expected in H2
Stronger HMC production expected in H2 Half-yearly excavated ore volumes (000’s tonnes) Expected grades (% Total Heavy Mineral) 20 5% 15 4% Millions 3% 10 2% 5 1% 0 0% H1 H2 H1 H2 H1 H2 H1 H2 H1 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 2015 2016 2017 2018 2019 2019 2020 2021 2022 2023 2024 Record excav
Slide 19: Increased production of all finished products
Increased production of all finished products H1 2019 vs H1 2018 2% <1% 7% 82% 458,200t 23,100t 4,400t 19,500t Ilmenite Primary zircon Rutile Concentrates production production production production On track to achieve 2019 guidance1 for production of all finished products 2% increase in ilmenit
Slide 20: Progressing development projects
Progressing development projects 2018 2019 2020 WCP B WCP C WCP B UPGRADE DEVELOPMENT MOVE Stage Stage Stage • Completed and delivering • Execution underway in • DFS completed and to scope line with project timeline execution underway Capital cost Capital cost Capital cost • <US$10 million • <US$45
Slide 21: Execution underway of WCP C development
Execution underway of WCP C development On track for commissioning to commence in Q4 2019 Smaller scale, high grade production Watch the Julia dredge’s launch WCP C has a target capacity of 500 tph and it is expected to add 150kt per annum of HMC to Moma’s production profile Targeting a high gra
Slide 22: Execution underway of WCP B move
Execution underway of WCP B move Expected to deliver 130kt/annum average additional HMC Pilivili ore zone Watch an animation of the WCP B move Highest grade ore zone in Moma’s portfolio – Mineral Reserves of 4.4% Total Heavy Mineral (THM) Other favourable characteristics including free flowing s
Slide 23: WCP B move capital and operating costs
WCP B move capital and operating costs US$106m total capital cost Road construction and transportation Total capital cost of WCP B and US$106m total capital cost includes US$15m Contingency dredge contingency Operating costs 15 22 Additional annual operating costs of up to US$5m expected for WCP
Slide 24: Market update
Market update Michael Carvill, Managing Director
Slide 25: Global TiO2 feedstock inventories are low
Global TiO2 feedstock inventories are low Forecast supply/demand market balance 10,000 TiO2 units (kt) 8,000 6,000 4,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Existing Supply Increased Moma Supply Potential New Supply Total Feedstock Demand Source: Company Strong
Slide 26: Chinese supply deficit
Chinese supply deficit Reduced availability of imported titanium ores Chinese titanium ore imports Chinese titanium ore port inventories 400 750 300 500 (kt) (kt) 200 250 100 0 0 Jul Jul Nov Jan Jan May Nov May Sep Mar Sep Mar Jul Jul Jan Jan Nov May Sep Mar Nov May Sep Mar 2017 2018 2019 2017 2018
Slide 27: Positive outlook for all products
Positive outlook for all products H1 2019 markets update Ilmenite Market conditions were stable in Q1 2019 and strengthened in Q2 2019, driving higher average received prices in H1 2019 compared to H1 2018 Pigment demand is expected to increase in H2 2019 as inventory depletion has ceased, despi
Slide 28: Outlook
Outlook Michael Carvill, Managing Director
Slide 29: Well-positioned to achieve FY 2019 guidance
Well-positioned to achieve FY 2019 guidance Key guidance metrics 458,200t Ilmenite H1 production On track 0 465,000t 930,000t half of mid-point guidance mid-point 23,100t Primary zircon H1 On track production 0 24,125t 48,250t half of mid-point guidance mid-point US$152/t Cash cost per tonne of fini
Slide 30: Conclusion: Building on our strategy
Conclusion: Building on our strategy Strategy H1 2019 H2 2019 Growth Low capital intensity growth to fully WCP B delivering 20% increase in Commissioning of WCP C expected to utilise existing installed facilities throughput following upgrade works commence in Q4 2019 DFS for WCP B move to Pi
Slide 31: Appendices
Appendices
Slide 32: Mineral sands: essential to modern life
Mineral sands: essential to modern life Two core product streams of minerals sands World GDP vs TiO2 pigment consumption Titanium feedstocks (ilmenite and rutile) TiO2 pigment imparts whiteness and opacity in the manufacture of 6 450 Global GDP Index Millions tonnes paints, plastics and paper 300
Slide 33: 95% Mozambican employees
95% Mozambican employees 1,400 direct employees at year-end 2018 Increasing localisation of Kenmare employees 6% increase in the size of Kenmare’s workforce in 100 Mozambique compared to 2017 due to in-sourcing of works and increased requirement for dry mining operators % Mozambican 95 Kenmare i
Slide 34: Kenmare Moma Development Association (KMAD)
Kenmare Moma Development Association (KMAD) Established in 2004, KMAD is a not-for-profit organisation with the objective of implementing development programmes in Kenmare’s host communities. Examples of initiatives KMAD supported in 2018: Economic Development and Livelihoods Funding provided for
Slide 35: 2019 guidance (provided January 2019)
2019 guidance (provided 10 January 2019) Production Unit 2019 Guidance 2018 Actual Ilmenite tonnes 900,000-960,000 958,500 Primary zircon tonnes 44,500-52,000 48,400 Rutile tonnes 8,100-9,500 8,200 Concentrates1 tonnes 33,500-43,500 28,200 Costs Unit 2019 Guidance 2018 Actual Total cash operating co
Slide 36: H1 2019 cash operating cost breakdown
H1 2019 cash operating cost breakdown Logistics & Logistics & Travel Other Other Travel 8% 14% 9% 7% Labour payroll Labour payroll 25% Distribution 26% Costs Distribution 4% Costs 3% H1 2019 Production H1 2018 Production Overheads Overheads 13% 12% Repairs & Maintenance Repairs & Fuel Maintenance Fu
Slide 37: H1 2019 adjusted cash operating costs
H1 2019 adjusted cash operating costs H1 2019 H1 2018 Change YoY US$M US$M US$M % Labour payroll 18.8 19.4 (0.6) -3% Repairs & Maintenance 15.7 16.1 (0.4) -2% Power 8.2 8.2 0.0 0% Fuel 5.6 5.2 0.4 8% Production Overheads 9.5 9.4 0.1 1% Distribution Costs 2.6 3.2 (0.6) -19% Logistics & Travel 5.7 6.0
Slide 38: Five year capital cost guidance
Five year capital cost guidance Development Capital (US$m) 2019 2020 2021 2022 2023 Development Studies 3 2 1 1 1 WCP C at Namalope 39 1 0 0 0 MSP Improvements 3 3 0 0 0 WCP B to Pilivili 25 81 0 0 0 Total 70 87 1 1 1 Sustaining capital 2019: guidance of US$23m Expected US$20-25m from 2020-2025
Slide 39: Follow Kenmare on social media
Follow Kenmare on social media Kenmare has gone social 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 to visi
Slide 40: Contact Us
Contact Us Jeremy Dibb IR & Corporate Development +353 1 671 0411 ir@kenmareresources.com Follow Us