Kenmare Resources Q1 2019 Production Report
April 11 2019 - 2:00AM
UK Regulatory
TIDMIRSH
Kenmare Resources plc ("Kenmare" or "the Company")
11 April 2019
Q1 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 quarter ending 31 March 2019
("Q1 2019").
Overview
-- Continued strong safety performance with lost time injury frequency rate
("LTIFR") of 0.08 per 200,000 man-hours worked (Q1 2018: 0.38) --
Kenmare's lowest ever level
-- 15% increase in Heavy Mineral Concentrate ("HMC") production to 358,700
tonnes (Q1 2018: 311,000 tonnes)
-- 13% increase in ilmenite production to 238,100 tonnes (Q1 2018: 211,000
tonnes)
-- 7% increase in primary zircon production to 12,100 tonnes (Q1 2018:
11,300 tonnes)
-- 80% increase in concentrates production to 10,100 tonnes (Q1 2018: 5,600
tonnes), benefitting from the introduction of the mineral sands
concentrate product
-- 34% decrease in total shipments of finished products to 176,500 tonnes
(Q1 2018: 267,200 tonnes) as a result of adverse weather conditions,
including Cyclone Idai, and unscheduled maintenance work -- 2019 total
shipment volumes are not expected to be affected
-- Definitive Feasibility Study ("DFS") for Wet Concentrator Plant ("WCP") B
move to Pilivili is progressing well and on track for completion before
the end of H1 2019
-- Improved demand for ilmenite in Q1 2019 and market expected to tighten
further during the remainder of the year
-- Zircon market remained stable in Q1 2019, with strong long-term
fundamentals
Statement from Michael Carvill, Managing Director:
"Production in Q1 2019 was robust, benefitting from increased
contribution from WCP B following the upgrade work in 2018. Shipments
were lower than anticipated due to poor sea conditions and unplanned
maintenance work. However we are confident that 2019 total sales volumes
will not be impacted.
Titanium feedstock markets strengthened in Q1 2019 and we expect
ilmenite prices to continue to rise in Q2 2019, driven by increasing
Chinese demand.
We are deeply saddened by the devastating effect of Cyclone Idai on the
people of central Mozambique and commend our employees' collective
initiative to support the relief effort."
Production
Production from the Moma Mine in Q1 2019 was as follows:
Q1 2019 Q1 2018 Variance Q4 2018 Variance
----------------- --------- --------- -------- --------- --------
tonnes tonnes % tonnes %
----------------- --------- --------- -------- --------- --------
Excavated ore(1) 9,292,000 7,805,600 19% 9,335,000 -
----------------- --------- --------- -------- --------- --------
Grade(1) 4.07% 4.51% (10%) 4.58% (11%)
----------------- --------- --------- -------- --------- --------
Production
----------------- --------- --------- -------- --------- --------
HMC 358,700 311,000 15% 402,000 (11%)
----------------- --------- --------- -------- --------- --------
Ilmenite 238,100 211,000 13% 275,000 (13%)
----------------- --------- --------- -------- --------- --------
Primary zircon 12,100 11,300 7% 15,200 (20%)
----------------- --------- --------- -------- --------- --------
Rutile 2,100 2,100 - 2,400 (13%)
----------------- --------- --------- -------- --------- --------
Concentrates(2) 10,100 5,600 80% 11,500 (13%)
----------------- --------- --------- -------- --------- --------
Shipments 176,500 267,200 (34%) 286,300 (38%)
----------------- --------- --------- -------- --------- --------
1. Excavated ore and grade prior to any floor losses.
2. Concentrates include secondary zircon and mineral sands concentrate.
During Q1 2019 Kenmare continued its strong safety performance, with a
LTIFR of 0.08 per 200,000 man-hours worked, the Company's lowest ever
level. One lost time injury was recorded during the period and Kenmare
continues to focus on improving its safety culture.
Kenmare delivered a 15% increase in HMC production to 358,700 tonnes (Q1
2018: 311,000 tonnes). Despite a 10% decrease in ore grades, which
averaged 4.07% (Q1 2018: 4.51%), production benefitted from a higher
volume of ore mined. This included an increased contribution from WCP B
following the 20% capacity upgrade in 2018, improved utilisation at WCP
B due to Projecto Oitenta, which is focused on increasing mine
utilisation from 70% to 80%, and additional dry mining. In line with
2019 guidance, ore grades are expected to be lower for the remainder of
the year.
Ilmenite production increased by 13% to 238,100 tonnes during the period
(Q1 2018: 211,000 tonnes), primarily as a result of higher HMC
availability.
Primary zircon production also benefitted from higher HMC availability
in Q1 2019, increasing by 7% to 12,100 tonnes (Q1 2018: 11,300 tonnes).
Rutile production remained flat at 2,100 tonnes (Q1 2018: 2,100 tonnes).
Concentrates production was 10,100 tonnes during Q1 2019 (Q1 2018: 5,600
tonnes). Q1 2019 represented the first full quarter of mineral sands
concentrate production following the successful commissioning of this
product stream in Q4 2018. The first shipment is expected to leave Moma
in Q2 2019.
Although Kenmare's Q1 2019 production exceeded Q1 2018, it was weaker
than in Q4 2018. This was primarily because Q4 2018 was an exceptionally
strong quarter, including a record month of production in December 2018,
and ilmenite circuit maintenance was scheduled during Q1 2019. At the
end of the first quarter, Kenmare remains on track to achieve its 2019
guidance on all stated metrics.
Kenmare shipped 176,500 tonnes of finished products during the period
(Q1 2018: 267,200 tonnes), which was comprised of 163,100 tonnes of
ilmenite, 9,300 tonnes of primary zircon, 800 tonnes of rutile and 3,300
tonnes of concentrates. This represented a 34% decrease compared to Q1
2018 as a result of adverse weather conditions, including the previously
announced suspension of shipments for seven days due to the impact of
Cyclone Idai, and unscheduled maintenance work required on the product
dispatch conveyor in March 2019. This resulted in an increased closing
stock of finished products of 286,500 tonnes at the end of Q1 2019,
compared with 200,000 tonnes at the start of the year. Management is
confident that total shipping volumes in 2019 will not be affected.
Closing stock of HMC at the end of Q1 2019 was 36,600 tonnes, compared
with 19,600 tonnes at the start of the year. This increase was due
primarily to planned maintenance work being undertaken during the
quarter on the Mineral Separation Plant, reducing HMC processing
capacity.
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. By
the end of 2018 the first development project, the 20% expansion of WCP
B, was commissioned, on time and at a cost of more than 25% below what
was budgeted. Production from WCP B has already increased as a result of
this expanded capacity.
The second development project, the construction of WCP C, is well
underway, with commissioning scheduled for Q4 2019. Fabrication of the
dredge pontoons at the shipbuilders has now been completed and the
construction of the WCP is on track. The starter pond and construction
site for WCP C are progressing in line with the project delivery
timeline.
The DFS for the third development project, the relocation of WCP B to
the high grade Pilivili ore zone, is progressing well. Kenmare is
continuing to optimise the mine plan for WCP B and the DFS is expected
to be finalised later in H1 2019. The move of WCP B is scheduled to be
completed during H2 2020.
Market
Kenmare saw stronger demand for ilmenite products in Q1 2019, compared
to Q1 2018.
In China, whilst destocking and seasonal weakness was evident in the
pigment industry, demand for imported ilmenite was robust. Chinese
pigment production remained stable and feedstock imports from other
countries continued to decrease, due to the ongoing suspension of mining
in India, delayed renewal of Vietnam's export quota and reducing
production from other African countries. This reduction in imports is
starting to be reflected in ilmenite spot prices in China.
The ilmenite market is expected to tighten further in Q2 2019 as the
northern hemisphere painting season commences. The second half of 2019
is also expected to be strong as pigment destocking comes to an end and
ilmenite inventories continue to decrease.
After a period of strong growth, market conditions for zircon stabilised
during Q4 2018 and remained steady in Q1 2019. The zircon concentrates
market in China softened slightly in Q1 due to an increase in supply.
Kenmare expects the zircon market to be stable in 2019, with long-term
positive market fundamentals.
For further information, please contact:
Kenmare Resources plc
Michael Carvill, Managing Director
Tel: +353 1 671 0411
Tony McCluskey, Financial Director
Tel: +353 1 671 0411
Jeremy Dibb, Corporate Development and Investor Relations Manager
Tel: +353 1 671 0411
Mob: + 353 87 943 0367
Murray
Joe Heron
Tel: +353 1 498 0300
Mob: +353 87 690 9735
Buchanan
Bobby Morse / Chris Judd
Tel: +44 207 466 5000
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
April 11, 2019 02:00 ET (06:00 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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