RNS Number:7276L
Kenmare Resources PLC
29 April 2005
Kenmare Resources plc ("Kenmare" or "the Company")
Kenmare Preliminary Results
For the year ended 31st December 2004
Chairman's Statement
Dear Shareholder,
With the construction of the Moma Titanium Minerals project now well advanced
and on schedule, the key task for the company is the successful management of
this construction process.
With Moma, as with most major projects, approximately 30% of the development
programme is required for detailed design, planning and the procurement of major
components. We are 30% through the contractual period and most of the design and
procurement has been completed. The temporary accommodation village has been
built, while the hard standing for the dry plant, the road for the conveyor, the
construction pond, the powerline, the 20km access road, the airstrip, and the
quarry and stone crushing for aggregate are well underway. The largest
components of the plants we purchased from BHP in Australia are about to be
shipped from Bunbury in Western Australia and are due to arrive at Moma at the
end of May.
In the meantime, Kenmare has been making organisational changes to allow us
control and manage this major mining project. Dr. Chris Gilchrist has been
appointed as Chief Operations Officer of the company. His previous career has
been spent working on the operations side in de Beers and Anglo American, with
his last job being General Manager of Cleveland Potash. Chris will ensure that
implementation proceeds smoothly and that Kenmare is ready to take up the baton
when the project is handed to us by the contractor in mid 2006. He has been
drawing up a management and personnel plan and the hiring of production staff
will commence shortly with the pace picking up towards the end of the year.
Marketing has been going extremely well with the establishment of heads of
agreement with major consumers for the supply of sulphate grade ilmenite. These
agreements are in the process of being converted into full legal contracts. The
general market for the supply of ilmenite has picked up considerably and we
believe that our average revenue per tonne will be in excess of the numbers used
in our financing documents. The markets for zircon and rutile are also very
strong. It is expected that by the time Moma commences operations, its present
level of production capacity will be fully sold.
Kenmare has bought a new exploration drill which is presently being shipped to
site with the view to performing detailed infill drilling on the first years of
the mine path. It will also be used to investigate more fully the resource
potential beyond the immediate mining area.
The development of the Moma mine will have a profound affect on the local
environment and social structure. We have a duty to ensure that this affect is
positive. As such, we have registered the Moma Development Association as a
non-profit organisation with the aim of enhancing the capacity of the local
people to gain benefit from the presence of a major mine in their vicinity, and
also to ensure that the mine management maximises the inclusion of local people
in its plans. In conjunction with a Danish aid organisation, ADPP, the Moma
Development Association has commenced a major AIDS awareness programme in the
local community and is consulting with local people and Government agencies
about further initiatives.
During 2004 Kenmare made a profit of US$36,555, largely arising from interest
received net of operating expenses. In December 2004 the initial disbursement of
Moma project debt, approximately US$55 million, took place.
The financing of Moma, which we understand to be the biggest structured finance
package ever put together by a non-major mining company, has received two
awards. The Mining Journal awarded Moma its International Mining Finance Award
and Project Finance Magazine awarded Moma the African Mining Deal of the year
award.
It is very exciting that the long years of hard work to get the Moma project to
mine development phase have yielded such a positive result. I am looking forward
to the opening ceremony next year and further to the first shipment of mineral
into a positive market environment.
Charles Carvill
Chairman
For more information:
Kenmare Resources plc
Michael Carvill, Managing Director
Tel: + 353 1 671 0411
Mob: + 353 87 674 0110
Conduit PR Ltd
Leesa Peters/Pam Spooner
Tel: +44 (0) 207 618 8708
Mob: + 44 (0) 781 215 9885
Murray Consultants Ltd
Elizabeth Headon
Tel: + 353 1 498 0300
Mob: +353 87 989 7234
www.kenmareresources.com
PRELIMINARY UNAUDITED RESULTS
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31st DECEMBER 2004
2004 2003
US$ US$
Turnover - -
Operating Expenses (575,070) (42,877)
Operating Loss (575,070) (42,877)
Interest Receivable 611,625 163,428
Profit On Ordinary Activities Before Taxation 36,555 120,551
Taxation - -
Profit On Ordinary Activities After Taxation 36,555 120,551
Opening Balance - Profit and Loss Account
(deficit) (21,891,727) (22,012,278)
Closing Balance - Profit and Loss Account
(deficit) (21,855,172) (21,891,727)
Earnings per share: Basic 0.01c 0.05c
Earnings per share: Diluted 0.01c 0.04c
All gains and losses have been included in the amounts shown above and arose
from continuing operations.
PRELIMINARY UNAUDITED RESULTS
CONSOLIDATED BALANCE SHEET
AS AT 31st DECEMBER 2004
2004 2003
US$ US$
FIXED ASSETS
Deferred Development Expenditure 61,504,060 27,431,163
Construction in Progress 32,368,691 -
Tangible Assets 41,614,070 41,622,440
135,486,821 69,053,603
CURRENT ASSETS
Debtors 1,557,260 90,322
Cash at Bank and In Hand 92,851,383 4,574,490
94,408,643 4,664,812
CREDITORS:
Amounts falling due within one year (8,157,922) (3,224,907)
NET CURRENT ASSETS 86,250,721 1,439,905
TOTAL ASSETS LESS CURRENT LIABILITIES 221,737,542 70,493,508
CREDITORS - Amounts falling due after one year:
Long term loans (1,568,202) (1,730,161)
Bank Loans (54,974,135) -
(56,542,337) (1,730,161)
165,195,205 68,763,347
CAPITAL AND RESERVES
Called Up Share Capital - (Equity & Non-Equity) 52,923,239 26,269,539
Share Premium Account 99,589,865 29,848,262
Profit and Loss Account - (Deficit) (21,855,172) (21,891,727)
Other Reserve 33,783,082 33,783,082
Capital Conversion Reserve Fund 754,191 754,191
Shareholders' Funds 165,195,205 68,763,347
PRELIMINARY UNAUDITED RESULTS
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31st DECEMBER 2004
2004 2003
US$ US$
Net cash inflow/(outflow) from operating activities 3,009,000 (1,092,221)
Returns on Investments & Servicing of Finance
Interest received 611,624 163,428
Net cash inflow from Returns on Investment &
Servicing of Finance 611,624 163,428
Capital expenditure & financial investment
Addition of Deferred Development Expenditure (34,072,897) (8,812,854)
Addition of Construction in Progress (32,368,691) -
Net cash outflow from capital expenditure &
financial investment (66,441,588) (8,812,854)
Net cash outflow before use of liquid resources &
financing (62,820,964) (9,741,647)
Financing
Issue of Ordinary Share Capital 105,644,318 6,513,083
Cost of share issues (9,249,015) (544,706)
Finance Lease - (2,254)
Bank Loans due beyond one year 54,974,135 -
Debt due within one year (109,622) 11,005
Debt due beyond a year (161,959) 298,258
Net cash inflow from financing 151,097,857 6,275,386
Increase/(Decrease) in cash 88,276,893 (3,466,261)
NOTES TO THE PRELIMINARY RESULTS
Note 1 Basis of Accounting
The preliminary results have been prepared in US Dollar under the historical
cost convention, as modified by the revaluation of certain fixed assets, and in
accordance with the accounting policies set out on page 23 of the 2003 Annual
Report and Accounts.
Note 2 Basis of Preparation
The financial information presented above does not constitute statutory accounts
within the meaning of the Companies Acts, 1963 to 2003. An audit report has not
yet been issued on the accounts for the year ended 31st December 2004, nor have
they been delivered to the Registrar of Companies. The comparative financial
information for the year ended 31st December 2003 has been derived from the
statutory accounts for the year. Those statutory accounts, upon which the
auditors have issued an unqualified opinion, have been filed with the Registrar
of Companies.
Note 3 Earnings and fully diluted earnings per share
The calculation of the earnings and fully diluted earnings per share is based on
the profit after taxation of US$36,555 (2003:US$120,551) and the weighted
average number of shares in issue during 2004 of 443,783,213 (2003 - 270,684,123
shares).
The calculation of fully diluted earnings per share is based on the profit for
the period after taxation as for basic earnings per share. The number of shares
is adjusted to show the potential dilution if share options and share warrants
are converted into ordinary shares. The weighted average number of shares in
issue is increased to 544,841,005.
Note 4 Deferred Development Expenditure
The recovery of deferred development expenditure is dependent upon the
successful development of the Moma Titanium Minerals Project, which in turn is
dependent on the continued availability of adequate funding for the project. The
Directors are satisfied that deferred expenditure is worth not less than cost
less any amounts written off and that the exploration projects have the
potential to achieve mine production and positive cash flows.
Note 5 Construction in Progress
Construction in Progress represents expenditure under a fixed price contract for
the engineering, procurement, building, commissioning and transfer of facilities
at the Moma Titanium Minerals Mine in Mozambique. The recovery of construction
in progress is dependent upon the successful development of the Moma Titanium
Minerals Project, which in turn is dependent on the continued availability of
adequate funding for the project.
Note 6 Tangible Assets
Tangible Assets are stated at cost or valuation less accumulated depreciation.
GRD Minproc Limited, an independent Australian engineering group, has appraised
the Mining and Processing Plant on a depreciated replacement cost basis of
valuation as at 30 June 2000. An inspection of the Mining and Processing Plant
was carried out by GRD Minproc Limited in March 2002 concluding that no material
alteration to the plants had taken place. Confirmation of the existence of the
Processing and Mining Plant at the year end has been provided by C.R. Cox &
Associates (Australia), a firm of marine consultants and surveyors.
The recovery of the plant valuation is dependent upon the successful development
of the Moma Titanium Minerals Project, which in turn is dependent on the
continued availability of adequate funding for the project. The historical cost
net book value of these assets at 31 December 2004 is US$11,473,067. The surplus
arising on revaluation amounts to US$30,141,002.
Note 7 Reconciliation of movements in Shareholders' Funds
2004 2003
US$ US$
Profit for the year 36,555 120,551
Issue of Shares - at par 26,653,700 1,713,011
Share premium, net of costs 69,741,603 4,255,366
Net change in Shareholders' funds 96,431,858 6,088,928
Opening Shareholders' funds 68,763,347 62,674,419
Closing Shareholders' funds 165,195,205 68,763,347
Note 8 Reconciliation of Operating Loss to Net Cash flow from Operating
Activities
2004 2003
US$ US$
Operating (Loss) (575,070) (42,877)
Depreciation 8,370 8,370
(Increase)/Decrease in Debtors (1,466,938) 5,151
Increase in creditors 5,042,638 1,763,135
(Decrease) in Provision for Liabilities & Charges - (2,826,000)
Net Cash Flow from Operating Activities 3,009,000 (1,092,221)
Note 9 Analysis of Net Debt
At 1 Jan 2004 Cash Flow At 31 Dec 2004
US$ US$ US$
Cash at Bank and in hand 4,574,490 88,276,893 92,851,383
Bank Loans due after 1 year - (54,974,135) (54,974,135)
Debt due after 1 year (1,730,161) 161,959 -1,568,202
Debt due within 1 year (109,622) 109,622 -
2,734,707 33,574,339 36,309,046
Note 10 Reconciliation of Net Cash flow to Movement in Net Debt
2004 2003
US$ US$
Increase/(Decrease) in cash during the year 88,276,893 (3,466,261)
(Inflow) from movements in debt (54,702,554) (309,263)
Movement in net cash in the year 33,574,339 (3,775,524)
Net cash at start of year 2,734,707 6,510,231
Net cash at end of year 36,309,046 2,734,707
Note 11 2004 Annual Report and Accounts
The Annual Report and Accounts will be posted to shareholders in due course.
29 April, 2005
This information is provided by RNS
The company news service from the London Stock Exchange
END
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