TIDMKMR
Kenmare Resources plc
("Kenmare" or the "Company")
13 October 2022
Q3 2022 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 quarter
ending 30 September 2022 ("Q3 2022").
Statement from Michael Carvill, Managing Director:
"Ilmenite production increased 25% in Q3 compared to Q2,
returning to an annualised run rate of 1.2 million tonnes per annum
and benefitting from higher mining rates and ore grades. Shipments
increased 48%, following the return of our largest transshipment
vessel from scheduled maintenance, and we expect Q4 to be our best
quarter of the year for both shipments and production.
Pricing for our products increased again in Q3 and our order
book for Q4 is largely committed. However, pigment demand weakened
through the quarter, affected by Chinese and European market
conditions. We expect demand for titanium feedstocks to moderate in
2023, but we believe the fundamentals of our product markets remain
robust.
Unfortunately, we had a Lost Time Injury (LTI) in late
September. Prior to this we had almost 12 million LTI-free hours
worked at the Moma Mine, which is a testament to the commitment of
the team on site to achieving an industry-leading safety
performance."
Q3 2022 overview
-- Lost Time Injury Frequency rate ("LTIFR") of 0.03 per 200,000 hours
worked for the 12 months to 30 September 2022 (30 September 2021: 0.08),
with one Lost Time Injury ("LTI") recorded during the quarter
-- Heavy Mineral Concentrate ("HMC") production of 443,900 tonnes in Q3
2022, a 7% increase compared to Q3 2021 (413,400 tonnes), due to a 3%
increase in excavated ore volumes and a 2% increase in ore grades
-- Ilmenite production of 304,700 tonnes, a 3% decrease compared to the
record production in Q3 2021 (314,400 tonnes), but up 25% on Q2 2022
(242,900 tonnes)
-- Primary zircon production of 17,300 tonnes, a 10% increase compared to Q3
2021 (15,700 tonnes), benefitting from increased HMC processed and
improved recoveries
-- Production of all finished products is anticipated to be at or around the
bottom of Kenmare's 2022 guidance ranges. Total cash operating cost
guidance is expected to be at the top of the guidance range principally
due to inflationary pressures
-- Total shipments of finished products of 285,600 tonnes, an 11% decrease
compared to Q3 2021 (322,600 tonnes), due to reduced shipping capacity as
a result of the Bronagh J transshipment vessel being in dry dock until
late August and poor weather conditions
-- Higher ilmenite prices achieved in Q3 2022 and contracts in place for the
majority of Q4 sales, despite weaker demand for titanium pigment from
China and Europe
-- Demand for Kenmare's zircon products remained strong in Q3 and this is
continuing in Q4, supported by supply constraints, although the global
zircon market is showing signs of weakness, particularly in China
Operations update
Operational results for the Moma Mine in Q3 2022 were as
follows:
Q3 2022 Q3 2021 Q3 2021 Q2 2022 Q2 2022
----------------- ---------- ---------- ---------- ---------- ----------
tonnes tonnes % variance tonnes % variance
----------------- ---------- ---------- ---------- ---------- ----------
Excavated ore(1) 10,424,000 10,084,000 3% 10,070,000 4%
----------------- ---------- ---------- ---------- ---------- ----------
Grade(1) 4.95% 4.83% 2% 4.23% 17%
----------------- ---------- ---------- ---------- ---------- ----------
Production
----------------- ---------- ---------- ---------- ---------- ----------
HMC production 443,900 413,400 7% 353,600 26%
----------------- ---------- ---------- ---------- ---------- ----------
HMC processed 440,500 426,800 3% 367,300 20%
----------------- ---------- ---------- ---------- ---------- ----------
Ilmenite 304,700 314,400 -3% 242,900 25%
----------------- ---------- ---------- ---------- ---------- ----------
Primary zircon 17,300 15,700 10% 13,600 27%
----------------- ---------- ---------- ---------- ---------- ----------
Rutile 2,600 2,700 -4% 2,100 24%
----------------- ---------- ---------- ---------- ---------- ----------
Concentrates(2) 13,000 11,900 9% 9,800 33%
----------------- ---------- ---------- ---------- ---------- ----------
Shipments 285,600 322,600 -11% 192,800 48%
----------------- ---------- ---------- ---------- ---------- ----------
1. Excavated ore and grade prior to any floor losses.
2. Concentrates include secondary zircon and mineral sands concentrate.
Kenmare's rolling LTIFR for the 12 months to 30 September 2022
was 0.03 per 200,000 hours worked (30 September 2021: 0.08), with
one LTI recorded in Q3 2022. The previous LTI was on 6 January 2021
and as such, Kenmare had achieved over 11.8 million LTI-free hours
worked to late September.
HMC production was 443,900 tonnes in Q3 2022, a 7% increase
compared to Q3 2021 (413,400 tonnes), due primarily to a 3%
increase in excavated ore volumes to 10.4 million tonnes (Q3 2021:
10.1 million tonnes), driven by a strong performance at Wet
Concentrator Plant ("WCP") B. Mitigation measures to reduce the
impact of high slimes also benefitted production in Q3. HMC
production increased by 26% compared to Q2 2022 (353,600
tonnes).
Ore grades increased by 2% in Q3 2022 to 4.95% compared to Q3
2021 (4.83%) and by 17% compared to Q2 2022 (4.23%), supported by
improved performance from WCP B in the Pilivili ore zone.
Ilmenite production in Q3 2022 was 304,700 tonnes, returning to
an annualised run rate of 1.2 million tonnes per annum. It
decreased by 3% compared to Q3 2021 (314,400 tonnes) but
represented a 25% improvement on Q2 2022. There was some magnetic
intermediate stock build-up during Q3, reflecting the difference
between HMC processed and ilmenite produced.
Primary zircon production was 17,300 tonnes in Q3 2022, up 10%
compared to Q3 2021 (15,700 tonnes), benefitting from increased HMC
processed and improved recoveries. However, rutile production was
2,600 tonnes, down 4% on Q3 2021 (2,700 tonnes) due to lower
recoveries and stock build-up. Concentrates production was 13,000
tonnes, up 9% on Q3 2021 (11,900 tonnes), driven by robust mineral
sands concentrate production.
As a result of the stronger production in Q3 2022, following
weaker than anticipated production in H1, Kenmare expects
production of finished products to be at or around the bottom of
its 2022 guidance ranges. Operating costs are expected to be at the
top of Kenmare's 2022 guidance range, principally due to
inflationary pressures, and unit costs will be a function of the
lower production volumes and higher operating costs.
As previously announced, one of Kenmare's two transshipment
vessels, the Bronagh J, left site in early May 2022 for its
five-yearly dry dock maintenance work, reducing significantly
Kenmare's shipping capacity in Q2 and Q3 2022. The Bronagh J
returned to site on 25 August and shipping volumes increased
significantly in September. Typically, Q4 is the strongest quarter
of the year for shipments due to seasonally favourable weather
conditions; and, with both vessels now in operation, finished
product inventories are expected to return to normal levels during
H1 2023.
Total shipments in Q3 2022 were 285,600 tonnes, an 11% decrease
compared to Q3 2021 (322,600 tonnes), due to reduced shipping
capacity and poor weather conditions. Shipments comprised 246,900
tonnes of ilmenite, 18,400 tonnes of primary zircon, 5,300 tonnes
of rutile and 14,900 tonnes of concentrates. Shipments also
increased by 48% compared to Q2 2022.
Closing stock of HMC at the end of Q3 2022 was 12,700 tonnes,
compared to 9,200 tonnes at the end of Q2 2022. Closing stock of
finished products at the end of Q3 2022 was 267,000 tonnes,
compared to 214,900 tonnes at the end of Q2 2022, reflecting the
lower shipping capacity and the poor weather conditions limiting
loading.
Capital projects update
Work is continuing on the Pre-Feasibility Study ("PFS") for the
Nataka ore zone, where WCP A is expected to commence mining in
2025. The PFS is expected to be completed in late 2022 and a market
update will be provided in Q1 2023. The Environmental Impact
Assessment is progressing well, with the first round of public
consultation completed.
As part of the PFS, WCP A is expected to have a desliming
circuit installed to more efficiently mine the Nataka ore zone.
Some elements of the PFS are significantly advanced; so work
towards the Definitive Feasibility Study ("DFS") has commenced in
those areas, including on the desliming circuit. Results for this
part of the DFS are expected in Q1 2023 and, on an accelerated
timeline, the installation of the desliming circuit at WCP A could
occur in 2024.
Market update
Kenmare achieved a stronger sales performance in Q3 2022,
supported by increased shipment volumes and higher prices for its
ilmenite and zircon products. Q3 represented the eighth consecutive
quarter of ilmenite price increases. Kenmare also shipped more
higher value products in the third quarter than in Q1 and Q2
2022.
Despite Kenmare's stronger sales performance, global demand for
titanium pigment was lower in Q3 resulting in a moderation in
pigment production. The Chinese pigment market was the first to
soften, as COVID-19 lockdowns and a slower property market dampened
demand, and this trend continued throughout Q3. European demand for
pigment also decreased during the quarter, driven by a lower
outlook for economic growth and high energy costs. Notwithstanding
this, Kenmare continued to see resilient demand from its existing
customers, benefitting from strong demand from the ilmenite
beneficiation market. Growing titanium metal production in China
also continues to support import demand for titanium
feedstocks.
The supply of titanium feedstocks has continued to increase,
primarily from Chinese producers in Mozambique and producers in the
USA. However, a weaker iron ore market in China has resulted in
lower production of ilmenite as a by-product from producers in
China, which is helping to balance the market.
A weaker pigment market is likely to impact demand for ilmenite
in Q4. However, Kenmare has contracts in place for the majority of
its expected sales in the quarter, with pricing continuing to be
strong as high-quality ilmenite remains in short supply.
Although demand for Kenmare's zircon products remains robust,
the zircon market has been exhibiting similar dynamics to the
pigment market. Demand in China is weak and European ceramics
producers have been impacted by higher energy costs. Prices in the
spot market in China moved significantly above prices in the rest
of the world but have declined in recent weeks, and this will
result in lower prices for Kenmare's concentrates products sold to
China. However, zircon supply remains constrained and prices
outside of China are stable, which benefits Kenmare as the majority
of its primary zircon is sold in Europe.
For further information, please contact:
Kenmare Resources plc
Jeremy Dibb / Katharine Sutton
Investor Relations
ir@kenmareresources.com
https://www.globenewswire.com/Tracker?data=eD45WCMf1DBWuBnLoASPafilMaQQFwYJ2Eq_ZWXXPueuexQQMgp0g650-lRt3x-DDY7TItQ5acchROwyfJMjo8QGkhGJ9FLlyJYl-TTY1sD4X7JaBYAPTNvtngslytqRDnP8eCIe-l4YjF-6MQbO_1pMDrzVSDGEpwIrdVqJlwCN9sAIfKqbg8gmtqSAF19xnGnYF2Yw9IdpsiyaF4EdT20K9-VWBCjiGSX_4QEx3YilZ8LBZLTYCD5PLuQLwUX3s5Q3R76jVT40DvRbPdmnFbuKFhmaNJPW_Sve3In7BtGook68sCaqGI-s_-fbb6WTOoBxjDWoTDdN_A4HTWZwfW1h4Ux_B8z6W1DvzykZ4hEGKw3nRgZSKnWkaUrPMfqFuL5Vkuul9Fhpk4eI_yetIn7KNAPsY1Wzfvj2fiMLd2Rk88Hc47wXDRHbItMGvLUj3-1SVNSQeQKyU4iKwqrF20yKnZBIXpJjviEfvq5D225K3CY7oa9hPYOdOw1a_E_H
Tel: +353 1 671 0411
Mob: +353 87 943 0367 / +353 87 663 0875
Murray (PR advisor)
Paul O'Kane
pokane@murraygroup.ie
https://www.globenewswire.com/Tracker?data=LvtTv7p2MRGBvOETQm2_2qWl7OLA4iGjkj1TygOeMTJrCkb9Hd6RnnirQH_jXG-c-gaxXicecUlKYk0zYHVdDnItOWwX99tHKN-T_UsCH6Y=
Tel: +353 1 498 0300
Mob: +353 86 609 0221
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 8% 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.
All monetary amounts refer to United States dollars unless
otherwise indicated.
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 13, 2022 02:00 ET (06:00 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.
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