Kenmare Resources Q1 2017 Production Update
13 April 2017 - 4:00PM
UK Regulatory
TIDMKMR
Kenmare Resources plc ("Kenmare" or "the Company")
13 April 2017
Q1 2017 Production Update
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
2017.
Statement from Michael Carvill, Managing Director:
"Kenmare has delivered solid production in Q1, particularly for the main
revenue generating products of ilmenite and primary zircon, in what has
traditionally been a lower producing quarter. Q1 cash generation at the
Mine has continued the trend of quarter on quarter improvement, since
bottoming in Q2 2016. The Company remains on track in its strategy of
maximising cash generation through increasing production and reducing
cash costs in what remains a strong market for our products."
Overview
-- Heavy Mineral Concentrate ("HMC") production increased by 29% to 353,500
tonnes (Q1 2016: 274,800 tonnes)
-- Ilmenite production increased by 39% to 256,500 tonnes (Q1 2016: 185,000
tonnes)
-- Zircon production increased by 59% to 18,500 tonnes (Q1 2016: 11,600
tonnes)
-- Total shipments of finished products were up 93% to 256,100 tonnes (Q1
2016: 132,700 tonnes)
-- Q1 production supports guidance of 950,000-1,050,000 tonnes of ilmenite
in 2017 (plus associated by-products), up 5-16% on 2016 production
-- Demand for ilmenite remained strong in Q1, resulting in further price
increases
Production
Production from the Moma Mine in Q1 2017 was as follows:
Q1-2017 Q1-2016 Variance Q4-2016 Variance
tonnes tonnes % tonnes %
Excavated Ore * 8,407,000 7,061,000 19% 8,510,000 -1%
Grade* 4.86% 4.32% 13% 5.95% -18%
Production
HMC 353,500 274,800 29% 474,300 -25%
Ilmenite 256,500 185,000 39% 256,900 0%
Zircon 18,500 11,600 59% 20,000 -8%
of which primary 12,800 8,300 54% 13,400 -4%
of which secondary 5,700 3,300 73% 6,700 -15%
Rutile 2,200 1,100 100% 2,300 -4%
Shipments 256,100 132,700 93% 301,800 -15%
* Excavated Ore and grade prior to any floor losses.
In Q1 2017, Kenmare mined 8.4 million tonnes of ore, up 19% on Q1 2016,
at an average grade of 4.86%, producing 353,500 tonnes of HMC, a 29%
increase on Q1 2016. Finished product volumes for the period included
256,500 tonnes of ilmenite, up 39%, and 18,500 tonnes of zircon
(including 5,700 tonnes of a lower grade secondary zircon product), up
59%.
HMC production rose by 29% to 353,500 tonnes (Q1 2016: 274,800 tonnes),
benefitting from increased utilisation levels and supplemental mining.
However, HMC production declined in comparison with Q4 2016, in line
with previously guided lower grade expectations for 2017.
Ilmenite production increased by 39% to 256,500 tonnes (Q1 2016: 185,000
tonnes), maintaining the record production levels achieved in Q4 2016.
Total zircon production includes a 54% increase in primary zircon
production to 12,800 tonnes (Q1 2016: 8,300 tonnes). Secondary zircon
volumes increased by 73% to 5,700 tonnes (Q1 2016: 3,300 tonnes) as
recoveries from waste streams increased. Project work has continued with
the aim of increasing the proportion of primary zircon production to
further enhance revenues. This led to an increase in intermediate
stockpiles during the period which we expect to normalise through the
year.
The Moma Mine has continued to benefit from increased stability and
reliability of electricity supplied by Electricidade de Moçambique
("EdM") in Q1 2017. In addition, the supplementary diesel-powered
generators were utilised to protect power stability against inclement
weather through the rainy season.
During Q1 2017 Kenmare shipped 256,100 tonnes of finished products,
comprised of 245,000 tonnes of ilmenite, 10,100 tonnes of zircon
(including 3,300 tonnes of secondary grade zircon) and 1,000 tonnes of
rutile.
Closing stock of HMC at the end of Q1 2017 was 22,100 tonnes, compared
with 66,500 tonnes at the start of the year. Closing stock of
intermediate magnetic concentrate at the end of the period was 70,500
tonnes. Closing stock of finished products at the end of Q1 2017 was
212,200 tonnes, of which 60,000 tonnes were being held for a customer
and which have been paid for.
Market
Demand for ilmenite was strong in Q1 2017, due to solid offtake in the
Chinese spot market for pigment and slag production. Demand for imported
ore also benefitted from some disruption in Chinese domestic ilmenite
production, due to stricter enforcement of environmental regulations.
This was despite an increase in ilmenite by-product volumes in H2 2016
due to higher iron ore prices. Output from Southern India has also
reduced in recent months due to a mining ban imposed by the authorities,
subject to a pending court case. Ilmenite prices have increased strongly
in the past 12 months and are expected to incentivise the restart of
some supply to meet additional demand, which may lead to a moderation of
future price increases as the market reaches greater equilibrium.
Market conditions for zircon are improving, industry inventories have
reduced and modest price increases have been achieved.
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 / Aimee Beale
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.
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Kenmare Resources via Globenewswire
http://www.kenmareresources.com/
(END) Dow Jones Newswires
April 13, 2017 02:00 ET (06:00 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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