TIDMKMR
Kenmare Resources plc ("Kenmare" or "the Company" or "the Group")
16 October 2019
Q3 2019 Production Report
Kenmare Resources plc (LSE:KMR, ISE:KMR), one of the leading global
producers of titanium minerals and zircon, which operates the Moma
Titanium Minerals Mine (the "Mine" or "Moma") in northern Mozambique, is
pleased to provide a trading update for the third quarter ending 30
September 2019 ("Q3 2019").
Statement from Michael Carvill, Managing Director:
"Production and operating costs continued to track well against our
guidance in the third quarter and we remain in line on both metrics.
With the dredge and major components of the Wet Concentrator Plant for
the WCP C development now on site, our growth projects to deliver 1.2
million tonnes per annum of ilmenite continue to advance. We are on
track to commence commissioning of WCP C later this year.
The ilmenite market remained tight in Q3 2019, with strong demand for
ilmenite suitable for upgrading to slag driving higher prices, despite
softer pigment market conditions. We have secured higher prices for
ilmenite spot shipments in Q4 2019. Although the zircon market has
experienced some weakness in 2019, we believe the fundamentals for all
of our products remain positive due to emerging supply constraints.
We are delighted to be paying our maiden dividend on 25 October 2019,
delivering on our strategy to provide shareholder returns, in addition
to growth and margin expansion."
Q3 2019 overview
-- Lost time injury frequency rate ("LTIFR") of 0.20 per 200,000 man-hours
worked for the 12-months to 30 September 2019 (30 September 2018: 0.29)
-- 9% increase in Heavy Mineral Concentrate ("HMC") production to 304,100
tonnes compared to Q3 2018, as a result of a 10% increase in tonnes of
excavated ore
-- Ore grades in line with Q3 2018 at 3.63% (Q3 2018: 3.62%), but
representing an increase of 18% compared to Q2 2019 at 3.07%, as expected
-- Ilmenite production of 230,800 tonnes, in line with Q3 2018 (233,900
tonnes)
-- 27% increase in primary zircon production to 12,900 tonnes (Q3 2018:
10,200 tonnes) and 26% increase in rutile production to 2,100 tonnes (Q3
2018: 1,700 tonnes) mainly due to spillage retreatment during Q3 2019
-- 78% increase in concentrates production to 10,700 tonnes (Q3 2018: 6,000
tonnes), benefitting from the introduction of a mineral sands concentrate
product
-- 3% decrease in total shipments of finished products to 192,900 tonnes (Q3
2018: 198,900 tonnes) - 2019 total shipment volumes are expected to be in
excess of 1 million tonnes (2018: 1,074,400 tonnes)
-- The Wet Concentrator Plant ("WCP") C development project remains on track
to commence commissioning in Q4 2019
-- Ilmenite market conditions remained tight in Q3 2019, with higher prices
achieved than in Q2 2019 and further spot price increases agreed with
customers for Q4 2019
-- Zircon prices weakened in Q3 2019 due to slower global growth concerns,
however long-term fundamentals remain strong due to supply constraints,
despite short-term oversupply
Production
Production from the Moma Mine in Q3 2019 was as follows:
Q3 2019 Q3 2018 Q2 2019
----------------- --------- --------- ---------- --------- ----------
tonnes tonnes % variance tonnes % variance
----------------- --------- --------- ---------- --------- ----------
Excavated ore(1) 9,219,500 8,411,000 10% 9,907,000 -7%
----------------- --------- --------- ---------- --------- ----------
Grade(1) 3.63% 3.62% 0% 3.07% 18%
----------------- --------- --------- ---------- --------- ----------
Production
----------------- --------- --------- ---------- --------- ----------
HMC production 304,100 279,900 9% 274,700 11%
----------------- --------- --------- ---------- --------- ----------
HMC consumption 318,800 313,100 2% 285,600 12%
----------------- --------- --------- ---------- --------- ----------
Ilmenite 230,800 233,900 -1% 220,100 5%
----------------- --------- --------- ---------- --------- ----------
Primary zircon 12,900 10,200 26% 11,000 18%
----------------- --------- --------- ---------- --------- ----------
Rutile 2,100 1,700 24% 2,200 -5%
----------------- --------- --------- ---------- --------- ----------
Concentrates(2) 10,700 6,000 78% 9,400 14%
----------------- --------- --------- ---------- --------- ----------
Shipments 192,900 198,900 -3% 307,000 -37%
----------------- --------- --------- ---------- --------- ----------
1. Excavated ore and grade prior to any floor losses.
2. Concentrates include secondary zircon and mineral sands concentrate.
Kenmare recorded a LTIFR of 0.20 per 200,000 man-hours worked for the 12
months to 30 September 2019, due to two lost time injuries in Q3 2019
(30 September 2018: 0.29). After a strong safety performance in the
first half of the year, with a LTIFR of 0.12 for the 12 months to 30
June 2019, the Company has increased its focus on risk assessment and
personal accountability.
At the end of the third quarter, Kenmare remains on track to achieve its
2019 production and cost guidance.
During Q3 2019, Kenmare mined 9.2 million tonnes of ore at an average
grade of 3.63%, producing 304,100 tonnes of HMC. This represents a 9%
increase compared to Q3 2018 (279,900 tonnes), benefitting from the 20%
capacity increase at WCP B, which was commissioned in Q4 2018, the WCP B
dredge automation project and continued utilisation improvements.
However, as anticipated in the mine plan, excavated ore decreased by 7%
compared to Q2 2019 primarily as a result of more challenging mining
conditions.
Ore grades in Q3 2019 were in line with Q3 2018 (3.62%) but increased by
18% compared to Q2 2019 (3.07%). As previously stated, Q2 2019 was
expected to be the lowest grade quarter of the year and consequently
stronger ore grades were mined in Q3 2019, in line with the mine plan.
Ilmenite production in Q3 2019 was in line with Q3 2018 (233,900 tonnes)
at 230,800 tonnes. Ilmenite production remained flat as increased HMC
consumption in Q3 2019 was offset by higher processed volumes of
intermediate magnetic concentrate in Q3 2018 (and Q2 2019).
Kenmare delivered stronger production of all other products in Q3 2019
compared to the corresponding quarter in 2018. The Company recorded a
26% increase in primary zircon production to 12,900 tonnes (Q3 2018:
10,200 tonnes) and a 24% increase in rutile production to 2,100 tonnes
(Q3 2018: 1,700 tonnes), as a result of stable operating conditions and
spillage retreatment in Q3 2019.
Concentrates production increased by 78% in Q3 2019 to 10,700 tonnes,
benefitting from the introduction of a mineral sands concentrate product
in Q4 2018.
Kenmare shipped 192,900 tonnes of finished products during the period
(Q3 2018: 198,900 tonnes), which comprised 174,000 tonnes of ilmenite,
8,500 tonnes of primary zircon, 3,800 tonnes of rutile and 6,600 tonnes
of concentrates.
Shipments in Q3 2019 were lower than expected due to poor weather
conditions impacting loading rates. In late Q3 2019 approximately 35,000
tonnes of a larger shipment were loaded onto a customer vessel and will
be reported with shipments in Q4 2019. If the 35,000 tonnes had been
recorded in Q3, the Company's shipments for the period would have
increased by 15% compared to Q3 2018. The Company expects shipments to
increase significantly in Q4 2019, due to strong customer demand and
seasonally improved weather conditions. Total shipments of finished
products for the full year 2019 are expected to be in excess of 1
million tonnes (2018: 1,074,400 tonnes).
Closing stock of HMC at the end of Q3 2019 was 10,900 tonnes, compared
with 25,600 tonnes at the end of Q2 2019. Closing stock of finished
products at the end of Q3 2019 was 286,400 tonnes (Q2 2019: 222,800
tonnes).
Capital projects update
Kenmare previously announced three development projects that together
have the objective of increasing ilmenite production to 1.2 million
tonnes (plus co-products) per annum on a sustainable basis from 2021.
The first development project, a 20% expansion of WCP B, was
commissioned in late 2018.
During Q3 2019 project execution for the second development project, the
construction of WCP C, continued to advance on time and within budget.
The dredge was commissioned at the shipbuilder's yard in the Netherlands
and shipped to Nacala in Mozambique, which is the closest major port to
the Moma Mine. The dredge arrived in Nacala on 1 October 2019 and is in
the process of being transported by road to the Moma Mine. Parts of the
wet concentrator plant, which is being fabricated in South Africa, are
also arriving at the mine. The project remains on track to commence
commissioning in Q4 2019.
Project execution is also underway for the third development project,
the relocation of WCP B to the high grade Pilivili ore zone. The
contract for civil engineering work, including the construction of the
purpose-built road and other key contracts, was awarded during Q3 2019.
Kenmare expected the environmental, social and health impact assessment
("ESHIA") for the road to be approved during Q3 2019 but the timing was
impacted by administrative delays. The ESHIA approval is now expected
during Q4 2019, however work has commenced on the purpose-built road
within the existing Namalope and Pilivili licence areas. The relocation
of WCP B is scheduled to be completed in Q3 2020, with commissioning in
Q4 2020.
Market update
Demand for pigment, the main consumer of titanium feedstocks, remains
subdued due to global economic uncertainties affecting purchasing
behaviour in key regions. However, market conditions for titanium
feedstocks were tight in Q3 2019 as a result of constrained titanium
feedstock supply. The Company believes that demand for products of a
comparable quality to Kenmare's ilmenite exceeds the available supply.
As a result, higher prices were achieved in Q3 2019 compared to Q2 2019
and further spot price increases have been agreed with customers for Q4
2019.
The increase in demand for Kenmare's ilmenite is being driven by
purchases for upgrading into high grade feedstocks, for which Chinese
domestic ilmenite is unsuitable. Coupled with this, supply remains
constrained from historically large ilmenite producers, such as India
and Vietnam. These supply constraints have been partially offset by
increased domestic ilmenite production in China, supported by strong
iron ore and vanadium prices.
The zircon market weakened in Q3 2019, primarily due to slower global
growth and disruption to downstream industries in China. This resulted
in some price softening in Q3 2019, primarily in the Chinese market.
Kenmare expects global zircon supply constraints to emerge as existing
mines deplete and production reduces in the coming years, which should
aid pricing levels in the medium term.
Kenmare believes that the long-term fundamentals for all of the
Company's products remain strong.
For further information, please contact:
Kenmare Resources plc
Jeremy Dibb / Katharine Sutton
Investor Relations
https://www.globenewswire.com/Tracker?data=WcquUHAatN2yikoN9ZamABKovf0r5bzFtG3jEqlKAd8fY-VwJrzyl1S3ZlHJlxcxdFyzFVgPQYe0T_1P6n2ymBcyzAOQWFCmbO-ZTwVEvFU=
ir@kenmareresources.com
Tel: +353 1 671 0411
Mob: + 353 87 943 0367 / + 353 87 663 0875
Murray (PR advisor)
Joe Heron
Tel: +353 1 498 0300
Mob: +353 87 690 9735
About Kenmare Resources
Kenmare Resources plc is one of the world's largest producers of mineral
sands products. Listed on the London Stock Exchange and the Euronext
Dublin, Kenmare operates the Moma Titanium Minerals Mine in Mozambique.
Moma's production accounts for approximately 7% of global titanium
feedstocks and the Company supplies to customers operating in more than
15 countries. Kenmare produces raw materials that are ultimately
consumed in everyday "quality-of life" items such as paints, plastics
and ceramic tiles.
Forward Looking Statements
This announcement contains some forward-looking statements that
represent Kenmare's expectations for its business, based on current
expectations about future events, which by their nature involve risks
and uncertainties. Kenmare believes that its expectations and
assumptions with respect to these forward-looking statements are
reasonable. However, because they involve risk and uncertainty, which
are in some cases beyond Kenmare's control. Actual results or
performance may differ materially from those expressed or implied by
such forward-looking information.
(END) Dow Jones Newswires
October 16, 2019 02:00 ET (06:00 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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