KMR Kenmare Resources Plc

RNS Number:8027I
Kenmare Resources PLC
10 April 2000

PART ONE
                      KENMARE RESOURCES PLC ("Kenmare")                       
       Chairman's Statement & Results for Year Ended 31 December, 1999        


CHAIRMAN'S STATEMENT
Since our Annual Report last year, Kenmare has completed a Pre-Feasibility
Study (PFS) on the Moma Titanium Minerals Project, which has confirmed the
commerciality of the project and revealed strong economic returns. We have
bought the Wet Concentrator Plant from BHP's Beenup mine. A pilot plant
programme at the Moma deposit has been successfully completed and we have
commenced the Definitive Feasibility Study (DFS), which is due to be finished
this year. Two new directors have been appointed to the Board of Kenmare and
funds have been raised which have allowed us pursue this aggressive
development strategy. 

Our ability to achieve so much has been based, to a large extent, on the
legacy of groundwork performed by BHP. As many of the sub-studies had been
performed, this allowed us to move immediately into a PFS, prepared by Minproc
Ltd of Australia. Minproc was chosen as PFS contractor because of its
successful track record in this type of specialised mining. It was responsible
for the development of the successful TiWest titanium mine in Western
Australia. 

The results of the PFS are positive. It reveals a project internal rate of
return of 27% and a geared rate of return to equity of over 40%. The net
present value of the project, (i.e. its value counting both the costs to build
and run the project and the income from sales) is calculated to be US$213
million. Operating costs will run at approximately 25% of revenues at full
output. 

Our analysis of the titanium feedstock market suggests that there will be an
under-supply by 2003 and new projects need to be developed. We are working to
take advantage of this market window. This implies that the mine has to be
built, operating, and exporting product by that time. Our objective is
completion during 2002. Our task in achieving this has been greatly eased by
the purchase from BHP of the Wet Concentrator Plant from the Beenup mine. A
mineral sands operation normally consists of a mining dredge, a wet
concentrator plant, a dry separation plant and associated infrastructure. The
purchase of our Wet Concentrator Plant "off the shelf" enables us to reduce
the development period and results in a significant reduction in the total
capital required for the project. 

Following the completion of the PFS, the next stage in project development is
a Definitive Feasibility Study (DFS) which establishes the costs and revenues
with more precision. This is based on pilot plant size samples and more
definitive engineering design. Pilot plant work was completed by Kenmare in
early March 2000, with bulk samples of heavy mineral concentrate being
immediately shipped to Australia for testwork. The DFS also includes an
exhaustive environmental impact assessment and, in this case, marine studies
for the jetty location. Minproc has again been chosen as the contractor for
the DFS, which is due to be completed this year. 

Our objectives over the next few months are to vigorously pursue the marketing
of the products from the mine and the completion of the DFS. These will be
followed by financing discussions early in 2001. As I mentioned earlier, the
NPV of the project was calculated in the PFS to be over US$200 million. Hence
we feel that there are several alternative ways of obtaining the finance to
develop the project which do not require Kenmare's shareholders to shoulder a
major burden.


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