TIDMKMR
Kenmare Resources plc
("Kenmare" or "the Company" or "the Group")
26 April 2023
Capital Markets Day
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 today hosting a Capital Markets Day.
Statement from Michael Carvill, Managing Director:
"Over 70% of Moma's mineral resources are located at the Nataka
ore zone and we are excited to be outlining our plans for this
world-class asset. Wet Concentrator Plant (WCP) A will commence its
move to Nataka in 2025, and also undergo a fundamental upgrade of
existing equipment.
Mining capacity has been specified at 110% of requirements in
the hardest parts of the ore zone, delivered through the
replacement of both existing dredges and the integration of
hydromining with the new dredges. An upfront desliming circuit on
the Wet Concentrator Plant and the introduction of a Tailings
Storage Facility will reset the operational capabilities at WCP A
to deliver consistently at design capacity for decades to come.
Capital expenditure for WCP A is estimated to be $247 million
over the period 2023-25 and is expected to maintain low operating
costs, retaining Kenmare's first quartile industry position.
Separately, we have identified an opportunity to accelerate the
upgrade of WCP B, previously anticipated in 2027, at an estimated
cost of $41 million. This would enable us to maintain production of
1.2 million tonnes of ilmenite per annum as WCP A mines the
transition between Namalope and Nataka, delivering a compelling
payback of approximately two years.
Kenmare enters this investment phase in a strong financial
position and following a period of steadily improving financial
performance and shareholder returns. We are comfortable with the
current absolute level of dividends for the medium term and are
revising the payout range to between 20% and 40% of Profits After
Tax".
Overview
-- WCP A to complete mining in Namalope in 2025 with an 18-month
transition to Nataka
-- Estimated capital expenditures of $247 million over 2023-25,
including $37 million in contingencies
-- Key capital investments include the replacement of two
existing dredges at WCP A, installation of a desliming circuit and
introduction of a Tailings Storage Facility (TSF)
-- Studies underway to assess potential upgrade of WCP B
capacity from 2,400 tonnes per hour ("tph") to 3,400 tph at an
estimated capital cost of $41 million
-- Dividend policy revised to a payout ratio of 20% to 40% of
underlying Profit After Tax
Capital Markets Day
A presentation for analysts and investors will be held today at
10:00am. A copy of the presentation will be available on the
Company's website, and a replay of the event will be available
shortly afterwards. No new material information or trading update,
other than that contained in this announcement, will be provided at
the event.
Capital Projects
The transition of WCP A to Nataka is expected to commence in
2025. Over an 18-month period, WCP A will mine its way to the
Nataka ore zone. Following this, WCP A will continue to mine in
Nataka for the remainder of its economic life, which is estimated
to exceed 20 years.
Capital expenditure for the transition of WCP A to Nataka is
estimated at $247 million, including a $37 million contingency.
This capital is expected to be phased over a three year period from
2023 to 2025, with the majority of the expenditure incurred in 2024
and 2025. A significant proportion of the expenditure covers the
cost of replacing WCP A's two existing dredges, the addition of a
desliming circuit and the implementation of a TSF. During 2026 and
2027, a further $23 million of capital expenditure will be required
for additional pumping infrastructure along with up to $25 million
on power infrastructure upgrades, the latter subject to ongoing
studies.
Kenmare has also identified an opportunity to upgrade WCP B
utilising one of the redundant dredges from WCP A and increasing
the processing capacity of the wet concentrator plant. This would
increase the capacity of WCP B from 2,400 tph to 3,400 tph and
provide sufficient Heavy Mineral Concentrate (HMC) to maintain
production at 1.2 million tonnes per annum ilmenite as WCP A is
transitioning to Nataka from 2025. Based on prefeasibility studies,
the capital cost is estimated at $41 million, incurred in 2025 and
2026. A decision to progress to Definitive Feasibility Study is
expected imminently.
The Company plans to fund capital expenditure requirements from
existing resources and operating cash flows whilst maintaining
conservative gearing levels. Separately, Kenmare in conjunction
with its lenders is investigating the refinancing of existing bank
facilities.
Dividend policy
In 2018, Kenmare announced its maiden dividend policy with a
payout ratio of at least 20% of Profit After Tax. Since then, the
Company has made cumulative returns to shareholders of $186 million
through both normal dividends and a share buyback in 2021. This
included dividend payouts of 25% of Profit After Tax in both 2021
and 2022.
Based on Kenmare's current and anticipated financial performance
and strong balance sheet position, the Company believes that
dividend payments should be sustainable at or about their current
absolute level. Consequently, to ensure that the Company can have
the flexibility to adapt to market conditions Kenmare intends to
evolve its dividend policy towards a payout range of 20% to 40% of
underlying Profit After Tax. Special dividends and further share
buybacks may also be considered, subject to market conditions,
balance sheet position and capital requirements.
Prior to 2022, Kenmare primarily utilised a combination of
trading profits and reserves arising from intra group capital
reconstruction to create distributable reserves. Looking forward,
the principal source of distributable reserves will be via
intragroup dividends from trading subsidiaries. Based on the
current structure of the Group, these dividends are likely to
attract a charge to Irish tax based on the difference between the
effective rate in Mozambique and the relevant Irish rate of 25%.
The Group is actively investigating options to mitigate this
exposure, which may include a restructure of the Kenmare Group.
Further updates will be provided in due course.
For further information, please contact:
Kenmare Resources plc
Jeremy Dibb / Michael Starke
Investor Relations
ir@kenmareresources.com
https://www.globenewswire.com/Tracker?data=Jonlez9qZwdvmCZRTSX0EpjCeSS8fEV8GR8XXZArAbCq17sB6U2vSucXft-BZg_Mj0EIysmka6zBNF-2Rx91QvaLoKpHSccWQSG5pLraZA2Lhj721Pcs-co4q4kvG5sBvNwWzRPp_S4YXYzjD-nhMvwiriKoMPX3iaZMrOHQNHzjsdrXrZfzmV_vyq46MAS8yNjGW2EcxJ91hbh2mG7_8whk3nIgArjj0SwlbWwcDOAU5TMSaxrx1ndEoztn4MS9_4uofvcRygRDPguFvVqZ9w==
Tel: +353 1 671 0411
Mob: +353 87 943 036
Murray (PR advisor)
Paul O'Kane
pokane@murraygroup.ie
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 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.
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
April 26, 2023 02:00 ET (06:00 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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