Kenmare Resources Q2 & H1 2017 Production Report
12 July 2017 - 4:00PM
UK Regulatory
TIDMKMR
Kenmare Resources plc ("Kenmare" or "the Company")
12 July 2017
Q2 & H1 2017 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 and half year ending
30 June 2017.
Statement from Michael Carvill, Managing Director:
"Kenmare has delivered strong production in H1 2017, with all production
metrics up substantially over the prior year's equivalent, supporting
guidance for 2017. Good progress is being made to increase the
production of primary zircon and the average quality of these products.
These improvements drive increased margins for the business, which is
also benefitting from substantially higher average received prices in
comparison to 2016."
Overview
-- Heavy Mineral Concentrate ("HMC") production increased by 8% to 359,200
tonnes (Q2 2016: 331,300 tonnes)
-- Ilmenite production increased by 14% to 248,300 tonnes (Q2 2016: 217,900
tonnes)
-- Primary zircon production increased by 18% to 12,900 tonnes (Q2 2016:
10,900 tonnes)
-- Total shipments of finished products were down 10% to 279,600 tonnes, due
to normal variations in shipping schedules (Q2 2016: 309,000 tonnes)
-- Ilmenite and zircon prices increased in Q2 2017
Production
Production from the Moma Mine in Q2 & H1 2017 was as follows:
Q2-2017 Q2-2016 Q1-2017 H1-2017 H1-2016
Tonnes % Change % Change Tonnes % Change
Excavated Ore * 8,976,000 22% 7% 17,383,000 20%
Grade* 4.46% -9% -8% 4.66% 1%
Production
HMC 359,200 8% 2% 712,700 18%
Ilmenite 248,300 14% -3% 504,800 25%
Zircon 19,200 14% 4% 37,700 32%
of which primary 12,900 18% 1% 25,700 33%
of which secondary 6,300 5% 11% 12,000 30%
Rutile 2,300 21% 5% 4,400 47%
Shipments 279,600 -10% 9% 535,700 21%
* Excavated Ore and grade prior to any floor losses.
In Q2 2017, Kenmare mined 8,976,000 tonnes of ore at an average grade of
4.46% and produced 359,200 tonnes of HMC. Finished product volumes for
the period included 248,300 tonnes of ilmenite and 19,200 tonnes of
zircon (including 6,300 tonnes of a lower grade secondary zircon
product).
The tonnage of ore excavated was up 7% in comparison to Q1 2017, as
mining reliability continued to improve and supplementary mining helped
to sustain throughputs. As expected, grades reduced by 8% in Q2 2017
compared with Q1 2017, while HMC production rose 2%. Grades are forecast
to be lower in H2 2017, though HMC production volumes are expected to be
broadly maintained as improvements in operating times and supplementary
mining operations will compensate for the grade decline.
Ilmenite production for the quarter was 248,300 tonnes, down 3% on Q1
2017, as a result of increased circuit maintenance and campaigns to
retreat spillage stockpiles, but up 14% compared to Q2 2016, reflecting
the operating time improvements seen over the past year.
Zircon production for the period increased 14% to 19,200 tonnes, with
primary production increasing 18% and secondary production increasing 5%
in comparison to Q2 2016. Increased outputs of higher grade primary
products are a result of improving recoveries, with further increases
expected in H2 2017.
Kenmare shipped 279,600 tonnes of finished products in Q2 2017,
comprising 250,000 tonnes of ilmenite, 26,600 tonnes of zircon
(including 9,400 tonnes of secondary grade zircon) and 3,000 tonnes of
rutile. The decline versus the 309,000 tonnes in Q2 2016 was due to
normal shipping schedule variations. Shipping capacity will be reduced
in Q3 2017, as one of the Company's two transhipment barges is currently
undergoing maintenance required every five years to comply with marine
classification regulations. The vessel is expected to return to service
in Q3, with no impact on shipping volumes for the year.
Closing stock of HMC at the end of Q2 2017 was 59,300 tonnes, compared
with 22,100 tonnes at the beginning of the quarter. Closing stock of
intermediate magnetic concentrate at the end of the period was 61,500
tonnes. Closing stock of finished products at the end of Q2 2017 was
202,500 tonnes, of which 49,300 tonnes were being held for a customer
and which have been paid for.
Market
Following a solid Q1 2017, Kenmare's ilmenite sales volumes were
maintained in Q2 2017 at an increased average price per tonne. Kenmare
has agreed further price increases for contracted volumes in H2 2017 in
comparison to H1 2017, though there has been a recent drop in domestic
Chinese spot prices.
Increased pigment production volumes and rising ilmenite prices have led
some pigment producers to increase feedstock inventories, to offset
further prices increases and ensure supply. Higher ilmenite prices have
also incentivised additional supply, as noted in Kenmare's Q1 2017
Production Update. This is partially attributable to stockpiles of low
quality ilmenite and concentrates entering the market, which are not
expected to be a source of long term supply. These factors, in
combination with seasonally weaker Chinese pigment demand have resulted
in weaker Chinese offtake of ilmenite in recent weeks, as customers take
a more cautious approach to buying.
The outlook for zircon continues to improve as supply constraints become
more evident and demand continues to recover. Kenmare has successfully
implemented price increases for Q3 2017 zircon shipments in line with
the general movement in the market, following more modest increases
achieved in H1 2017.
The Company's half-yearly results in respect of the six months ended 30
June 2017 will be issued on 22 August 2017.
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
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
July 12, 2017 02:00 ET (06:00 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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