Slide 1: 2017 Results Presentation
2017 Results Presentation 14th March 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: Agenda
Agenda • Introduction – Michael Carvill, Managing Director • Financial Review – Tony McCluskey, Finance Director • Operational Review – Ben Baxter, Chief Operations Officer • Marketing – Michael Carvill, Managing Director • Outlook – Michael Carvill, Managing Director • Q&A Kenmare Resources plc 201
Slide 4: Continued growth & operational development
Continued growth & operational development • Production of ilmenite ↑ 11% Record Annual • Revenue ↑ 47% Production & Sales • Cash costs per tonne ↓ 3% • Creating a series of low capital intensity Mine Optimisation development options Progress • 20% expansion of Wet Concentrator Plant B on track for
Slide 5: Operating overview
Operating overview Annual Production (000’s tonnes) 1,200 80 • 2017 production in line with guidance given January 1,000 2017 60 800 Ilmenite Zircon 600 40 • US$54.6m improvement in EBITDA – driven by large increase in revenue as a result of a significant uplift 400 20 in pricing 200 0 0 • 2017 prod
Slide 6: 2017 Financial Results
2017 Financial Results
Slide 7: Significantly improved 2017 financial performance
Significantly improved 2017 financial performance Revenue Sales price (US$/t)(1) Cash costs(2) 47% 47% 3% 2017: US$208m 2017: US$196/t (FOB) 2017:US$132/t 2016: US$142m 2016: US$133/t (FOB) 2016: US$136/t EBITDA Profit After Tax Net Debt US$54.4m US$34m US$11m 2017: US$59.6m 2017: US$19m 31/12/17: U
Slide 8: 2017 Income Statement review
2017 Income Statement review Revenues increased 47% due to a 2017 2016 combination of higher volumes (+2%) and US$ million US$ million prices (+47 %) and increased freight costs (- Revenue 208.3 141.5 2%) Cost of sales & Other Operating Costs (180.7) (166.9) Operating profit/(loss) Unit cash cos
Slide 9: 2017 revenue review
2017 revenue review Volume/Mix Movement (000’s tonnes) 1,200 8% 75 1% 1,000 60 Zircon & Rutile 800 45 Ilmenite 600 30 • Sales volumes increased by 2% to 1,040,400 400 tonnes, a new record 200 11% 15 0 0 • Total revenue up 47% to US$208.3m 2016 2017 2016 2017 2016 2017 Ilmenite Zircon Rutile • Ilmeni
Slide 10: 2017 achieved pricing
2017 achieved pricing Annual Pricing Movement (FOB)1 2 $200 $1,000 $150 $750 • 2017 average price per tonnes shipped (FOB) up Ilmenite Zircon 47% to US$196 from US$133 in 2016 $100 $500 $50 $250 • Annual price increases for all products $0 $0 • Ilmenite prices up 52% 2016 2017 Ilmenite Price Primary
Slide 11: 2017 cash operating costs reconciliation
2017 cash operating costs reconciliation 2017 2016 US$ million US$ million Cost of Sales 156.6 144.0 Other Operating Costs 24.1 22.8 Freight (CIF charged to customers) (5.5) (5.4) • Analysis reconciles Income Total costs less freight 175.2 161.4 Statement to cash operating cost to run business Depre
Slide 12: Cash operating costs
Cash operating costs $220 1,200 Cash operating cost per tonne (US$/t) $200 1,000 Volume (000’s tonnes) $180 800 $160 600 $140 400 $120 200 $100 0 2012 2013 2014 2015 2016 2017 Final Product Production (kt) Ongoing Cash Operating Cost per Tonne (US$/t) • In line with guidance • Cash operating cost pe
Slide 13: EBITDA bridge 2016 - 2017
EBITDA bridge 2016 - 2017 80 62.9 1.7 59.6 60 (12.5) US$ millions 40 20 5.3 2.2 0 2016 Sales Sales Sales Costs & 2017 EBITDA Volume Price Mix inventory EBITDA change EBITDA benefitted significantly from higher achieved prices Also favourable contribution from increased volumes and improved sales
Slide 14: Capital costs
Capital costs • 2017 sustaining capital US$25.9m (2016: US$6.7m): • including US$5m carry-over given low 2016 sustaining capital spend • heavy mobile equipment replacement programme reduced hire costs • 2017 development capital US$2.6m: • Upgrade WCP B capacity by 20% - in progress • Feasibility stu
Slide 15: Balance Sheet review
Balance Sheet review 31-Dec-2017 31-Dec-2016 US$ million US$ million • Mineral inventories were US$31m and Property, plant & equipment 793.6 793.9 expected to reduce, subject to market Inventories 52.7 47.8 conditions Trade & other receivables 25.4 23.8 • Consumable spares were US$22m, reflecting De
Slide 16: Net debt reductions
Net debt reductions -40 -20 60.3 US$ millions 0 28.1 20 15.5 40 34.1 6.0 44.8 60 Net debt Dec-16 Operating cashflow Property, Plant & Working capital Interest payment Net debt Dec-17 Equiptment changes • Operating cashflow of US$60.3 million in 2017 • Working capital increase of US$15.5 million, com
Slide 17: Operations
Operations
Slide 18: Sustainable operating practices
Sustainable operating practices Safety Lost Time Injury Frequency Rate • Retained NOSA 5 star status 0.6 • 2017: 9 x LTI’s, LTIFR 0.39 • Focus on behaviours to improve performance 0.5 0.4 Environmental 0.3 • No significant environmental incidents Malaria 0.2 0.1 • Prevention improved 11% in 2017 0.0
Slide 19: Production profile
Production profile Ilmenite Production (000’s tonnes) Zircon Production (000’s tonnes) 1,200 80 70 1,000 60 800 50 600 40 30 400 20 200 10 0 0 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 2017 guidance met Record levels of production (and shipments) for all products 2017 productio
Slide 20: 2018 Mine & Mineral Separation Plant 2018 outlook
2018 Mine & Mineral Separation Plant 2018 outlook Mine Mineral Separation Plant • Production will be impacted by: • Strategy: Maximise HMC feed and recoveries to maximise final product production • Higher slimes, low HMC stock and slightly lower grades in 2018 • Focus for product recoveries • Implem
Slide 21: Guidance
Guidance 2017 2018 Production Guidance* Production Ilmenite kt 998,200 900,000-1,000,000 Zircon kt 74,000 65,000-72,000 of which primary kt 48,600 42,000-46,000 of which secondary kt 25,400 23,000-25,000 Rutile kt 9,100 7,000-8,000 Costs Total cash operating costs US$m 142 133-147 Cash costs per ton
Slide 22: 100+ year life of mine
100+ year life of mine Mineral Reserves & Resources Moma is not one orebody Zone Sand (Mt) % THM* Differing ore zones: Congolone 284 3.3 • Grades Marrua 54 4.1 Mpitini 287 3.6 • Size Mualadi 327 3.2 • Mineral assemblage Namalope 487 3.5 Nataka 6,206 2.8 Orebody knowledge has improved to understand:
Slide 23: Short term development opportunities
Short term development opportunities 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 • 20% capacity addition, increasing production from 2,000tph to 2,400tph
Slide 24: Medium & long term development options
Medium & long term development options End 2020: WCP B completes mining at Namalope • 2017 pre-feasibility studies considered the development of a new WCP C or moving WCP B to Pilivili • Relocating WCP B to Pilivili delivers higher grades in comparison to existing Nataka mine plan • Provides suffici
Slide 25: Marketing
Marketing
Slide 26: TiO2 feedstock review and outlook
TiO2 feedstock review and outlook Pigment • Solid global pigment demand growth in 2017 in all regional markets, except China • China domestic demand softened in H2 2017, driven by environmental restrictions and destocking downstream • The chloride pigment sector in China is growing and requires good
Slide 27: Chinese ilmenite market
Chinese ilmenite market Domestic Ilmenite Production1 Titanium Ore Imports2 5 4 3 millions of tonnes millions of tonnes 4 2 3 1 2 0 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 • Domestic Chinese ilmenite production has remained steady in recent years, with further capacity additions unlikely •
Slide 28: Chinese titanium ore import market
Chinese titanium ore import market China Monthly Titanium Ore Imports1 Chinese Titanium Ore Port Inventories 500 500 thousands of tonnes thousands of tonnes 400 400 300 300 200 100 200 0 100 2015-01 2015-07 2016-01 2016-07 2017-01 2017-07 2015-02 2015-05 2015-08 2015-11 2016-02 2016-05 2016-08 2016-
Slide 29: Zircon market
Zircon market Chinese Zircon Import Price (US$/t)1 Chinese Zircon Import Volumes2 3,000 1.2 2,500 1.0 millions of tonnes 2,000 0.8 1,500 0.6 1,000 0.4 500 0.2 0 0.0 2012 2013 2014 2015 2016 2017 01-2000 12-2001 12-2003 12-2005 12-2007 12-2009 12-2011 12-2013 12-2015 12-2017 Imports Averge Monthly Im
Slide 30: Outlook
Outlook
Slide 31: Summary of development opportunities
Summary of development opportunities Maximising processing efficiency • Improves the higher value product mix for zircon and rutile • Increases recovery of minerals – new monazite revenue stream Strategic goal to increase ilmenite production in a capitally efficient manner • Low capital intensity br
Slide 32: Building on our strategy
Building on our strategy Strategy 2017 2018 Growth Low capital intensity growth to Pilivili Pre-Feasibility Studies Continuing studies for further fully utilise existing installed brownfield mining expansion facilities. Namalope supplementary mining studies Optimisation Focus on margin exp
Slide 33: Appendices
Appendices
Slide 34: 2017 Cash Operating Costs
2017 Cash Operating Costs Distribution Logistics & Logistics & Distribution Costs Travel Travel Costs Other 5% Other 10% 9% 5% 9% 9% Production Production Overheads Overheads 12% 14% Labour Fuel 2017 Labour 2016 payroll 6% payroll Fuel 26% 26% 8% Power 9% Power 8% Repairs & Repairs & Maintenance Mai
Slide 35: Adjusted Cash Operating Costs
Adjusted Cash Operating Costs 2017 2016 Change YoY US$M US$M US$M % Logistics & Travel 13,971 11,615 2,356 20% Distribution Costs 6,337 6,095 242 4% Labour payroll 36,171 34,405 1,766 5% Repairs & Maintenance 31,719 28,315 3,404 12% Power 13,361 11,086 2,275 21% Fuel 8,690 10,892 -2,202 -20% Product
Slide 36: Group Lenders at 31 December 2017
Group Lenders at 31 December 2017 Loan principal Loan interest Loan balance US$ 000 US$ 000 US$ 000 Senior Loans AfDB 4,273 79 4,352 Absa 14,651 304 14,955 EAIF 495 9 504 EIB 1,550 29 1,579 FMO 1,637 30 1,667 KfW IPEX-Bank (Hermes) 1,298 24 1,322 KfW IPEX-Bank (MIGA) 1,497 28 1,525 Total Senior Loan
Slide 37: Debt repayment profile excluding cash sweep
Debt repayment profile excluding cash sweep 25 20 US$ millions 15 10 5 0 Aug-16 Aug-17 Aug-18 Aug-19 Aug-20 Aug-21 Feb-17 Feb-18 Feb-19 Feb-20 Feb-21 Feb-22 First principal repayment made at the beginning of February 2018 All debt USD denominated Kenmare Resources plc 2017 — Results Presentation