Half-Yearly Financial Report for the six months to 30 June 2024 and interim dividend
14/08/2024 07:00
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Kenmare Resources plc
(“Kenmare” or “the Company” or “the Group”)
14 August 2024
Half-Yearly Financial Report for the six months to 30 June 2024 and interim
dividend
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, today publishes its
Half-Yearly Financial Report for the six month period ended 30 June 2024
(“H1 2024”) and announces its interim dividend for 2024.
Statement from Andrew Webb, Chairman:
“As previously announced, Michael Carvill, Kenmare’s founder, today steps
down as Managing Director after almost four decades. I would like to again
express the Board’s appreciation and thanks to Michael, who leaves the
Company with a robust balance sheet, strong and capable team, a tier one
asset, a market-leading position and a robust balance sheet. Tom Hickey,
Kenmare’s Finance Director, has been appointed to succeed Michael. Tom has
24 years’ experience as a public company director and a strong background in
finance, natural resources and African operations.
Kenmare is on track to achieve 2024 guidance and in H1 we delivered an EBITDA
margin of over 40%. However, reduced shipments impacted our financial
performance. Shipments have strengthened in early H2, supported by strong
visibility of customer orders, high finished product inventories and
seasonally better weather conditions. Consequently, revenue is expected to be
second-half weighted.
With net current assets of almost $200 million at the half year, including
record net cash of $58.9 million, we are well positioned to fund our capital
commitments and shareholder returns.”
H1 2024 overview
Financials and markets
* Revenue from mineral products of $154.5 million in H1 2024, down 33%
year-on-year (“YoY”) due to lower shipments, pricing and product mix
* In H2 2024, shipments are expected to increase and the product mix is
anticipated to reverse, with two zircon shipments delayed from Q2 dispatched
in early Q3
* Despite the lower shipments, at the end of H1 2024 net cash increased to a
record $58.9 million, having paid $34.7 million in dividends and invested
$49.1 million in capital expenditure
* EBITDA of $63.2 million, down 43% YoY due to lower revenues but maintaining
a 41% margin, and profit after tax of $20.9 million, down 69% YoY
* Interim dividend of USc15 per share – full year dividend is expected to be
towards the upper end of the 20-40% of profit after tax payout range
* Cash operating cost of $218 per tonne of finished product, down 5% YoY,
benefitting from increased production volumes
* Cash operating cost per tonne of ilmenite (net of co-products) of $201, up
47% YoY due to a temporary reduction in co-product revenues, partially offset
by a 4% increase in ilmenite production
* Demand for Kenmare’s ilmenite remains robust, with prices in H1 above the
Company’s expectations – good demand and sales visibility for shipments in
H2
* The zircon market remains relatively stable with improving demand in India
and Europe
Corporate and operations
* As previously announced, Michael Carvill is stepping down as Managing
Director and from the Board and he will be succeeded by Tom Hickey, Finance
Director
* Kenmare will now undertake a limited process to identify Tom’s successor
as Chief Financial Officer - further updates will be provided in due course
* Encouraging progress with a reduction in Lost Time Injury Frequency Rate
(“LTIFR”) to 0.09 per 200,000 hours worked for the 12 months to 30 June
2024
* Continued improvement across various key sustainability metrics in H1 2024,
including malaria prevention, reduction in GHG emissions, land rehabilitation,
biodiversity and socio-economic impact
* Kenmare is on track to achieve 2024 guidance across all stated metrics,
including 950,000-1,050,000 tonnes of ilmenite production, with higher
forecast grades supporting production expectations in H2
* 4% increase in Heavy Mineral Concentrate (“HMC”) production to 659,000
tonnes due to higher excavated ore volumes and heavy mineral recoveries
* 4% increase in total finished product production to 490,800 tonnes due
primarily to increased HMC processed
* Total shipments of 477,600 tonnes, down 14% YoY due primarily to poor
weather conditions and additional operational maintenance, limiting shipping
time
* Execution underway for upgrade of Wet Concentrator Plant (“WCP”) A and
transition to Nataka – 54% of capital committed at end of H1 and ~75%
expected by year-end
* Constructive discussions with the Government of Mozambique continued in H1
2024 relating to the renewal of Kenmare’s Implementation Agreement
(“IA”), governing the Industrial Free Zone forming part of the Moma Mine
Additional information in relation to Alternative Performance Measures
(“APMs”) is disclosed in the Glossary.
Analyst and investor conference call and webcast
Kenmare will host a conference call and webcast for analysts, institutional
investors, and media today at 9:00am UK time. Participant dial-in numbers for
the conference call are as follows:
UK +44 20 3481 4247
Ireland +353 1 582 2023
USA +1 (646) 307 1963
Conference ID 191 59 50
The webcast will be available at www.kenmareresources.com and playback of the
webcast will be available at:
www.kenmareresources.com/investors/reports-and-presentations.
Private investor webinar
There will also be a separate webinar for private investors on Thursday, 15
August 2024, at 12:30pm UK time. To access the webinar, please register in
advance by clicking here
(https://www.globenewswire.com/Tracker?data=j_s-fbu6edBQa44ECbub4-7s7uXkX-WvH2OMRvA0kShLs2KUhFyWC-V9MG0qfIgi0HS_kv5-eR9gDRIVtPqcUSUSuPk6piN1qHmB7tEdWv54g-LrKjvkeBDaYvlRbcij-Z2BKgaQZRxFg7mWOaza-Q==).
The Half-Yearly Financial Report for the period ended 30 June 2024 is also
available at www.kenmareresources.com/investors/reports-and-presentations.
For further information, please contact:
Kenmare Resources plc
Jeremy Dibb / Katharine Sutton / Michael Starke
Investor Relations
ir@kenmareresources.com
Tel: +353 1 671 0411
Mob: + 353 87 943 0367 / + 353 87 663 0875
Murray (PR advisor)
Paul O’Kane
pokane@murraygroup.ie
Tel: +353 1 498 0300
Mob: +353 86 609 0221
Richie Oakley
roakley@murraygroup.ie
Tel: +353 1 498 0300
Mob: +353 87 245 1824
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.
INTERIM MANAGEMENT REPORT
Group results
Operational and financial results for H1 2024 were as follows:
H1 2024 H1 2023 % Change
Production (tonnes)
HMC produced 659,000 633,900 4%
HMC processed 651,100 637,600 2%
Finished products production
Ilmenite 444,100 425,500 4%
Primary zircon 21,300 23,000 -7%
Rutile 4,000 3,600 11%
Concentrates (2) 21,400 20,500 4%
Total finished products 490,800 472,600 4%
H1 2024 H1 2023 % Change
Financials
Revenue ($ million) 165.1 242.9 -32%
Freight ($ million) 10.6 13.2 -20%
Mineral Product Revenue ($ million) 154.5 229.7 -33%
Finished products shipped (tonnes) 477,600 556,800 -14%
Average price received per tonne ($/t) 323 413 -22%
Total operating costs ($ million) (3) 132.3 162.6 -19%
Total cash operating costs ($ million) (4) 107.2 108.8 -1%
Cash operating cost per tonne of finished product ($/t) 218 230 -5%
Cash operating cost per tonne of ilmenite (net of co-products) ($/t) 201 137 47%
EBITDA ($ million) (1) 63.2 110.4 -43%
Profit before tax ($ million) 27.7 77.5 -64%
Profit after tax ($ million) 20.9 67.8 -69%
Net cash at period-end 58.9 (5) 42.3 39%
Notes
1. Additional information in relation to APMs is disclosed in the Glossary.
2. Concentrates include secondary zircon and mineral sands concentrate.
3. Total operating costs consist of cost of sales and administration costs as
reported in the income statement. Depreciation and amortisation are included
in the operating costs.
4. Total cash costs consist of total operating costs less freight and non-cash
costs, including inventory movements.
5. Kenmare’s net cash position at period-end was $58.9 million. This
comprises $60.3 million of cash, including $1.7 million of cash held in the
Employee Benefit Trust, minus $1.4 million of leases.
Sustainability
As reported on 3 June 2024, Kenmare was deeply saddened by a fatality at the
Moma Mine on 1 June 2024. An excavator operator employed by one of Kenmare’s
contractors was involved in a fatal incident during the night shift. Police
investigations have found that his death was related to activities outside of
the ordinary course of operations and Kenmare has co-operated fully with the
authorities.
Kenmare’s rolling 12-month LTIFR to 30 June 2024 improved to 0.09 per
200,000 hours worked (30 June 2023: 0.18). One Lost Time Injury (“LTI”)
was recorded during Q2 2024, not including the fatality as it was non-work
related. Prior to this, the Moma team had achieved almost five million hours
worked without an LTI, which is equivalent to eight months’ work. Sustained
leadership focus on safety and standards of work is contributing to a safer
workplace.
The Company continued to deliver improvement across various key sustainability
metrics during the period, including the advancement of projects to reduce the
prevalence of malaria, improve the future productivity of rehabilitated land
for agriculture and reduce carbon emissions. Construction of a new district
hospital, funded by the Kenmare Moma Development Association (KMAD), also
commenced in Q1 2024.
Operations
At the end of H1, Kenmare is on track to achieve its 2024 guidance on all
stated metrics. The Company continues to expect production to increase in H2,
supported by higher forecast ore grades, averaging 4.5% Total Heavy Minerals
(“THM”).
Production in early H2 has been solid, particularly for rutile, which
delivered a new monthly production record in July following the improvement
works undertaken in the Mineral Separation Plant (“MSP) in H1. Shipment
volumes have strengthened and the two zircon shipments delayed from Q2 were
shipped in early Q3 2024. The product transfer conveyor system is operating
reliably, following the additional maintenance work carried out in Q2, and the
system is not a constraint to increased H2 loadouts.
Looking back at H1, HMC production in Q1 2024 was impacted significantly by
seasonal power interruptions due to the southern hemisphere rainy season,
limiting mining operations. As expected, operating conditions improved in Q2
with the onset of the dry season, leading to reduced power interruptions and
consequently, excavated ore tonnes increased by 13% quarter-on-quarter.
Operating conditions in Q3 continue to be favourable.
As a result, HMC production in H1 2024 was 659,000 tonnes, a 4% increase YoY
(H1 2023: 633,900 tonnes). This was the product of a 7% increase in excavated
ore volumes to 19,601,000 tonnes (H1 2023: 18,380,000 tonnes) and higher heavy
minerals recovery, offsetting the 5% decrease in ore grades to 3.97% THM (H1
2023: 4.19% THM), in line with expectations. Stronger heavy mineral recoveries
are due to improvements at all three mining plants during the past year,
including the addition of clean water to spiral separation at WCP A, the
return to better mining conditions at WCP C, and improved sweeping control as
part of the dredging operations at all three plants. Recoveries are expected
to remain strong in H2.
HMC production exceeded HMC processed in H1 2024 due to increased maintenance
work taking place in the MSP during Q1 to improve circuit performance, with
HMC held back from processing until the work was completed. Despite this, HMC
processed was up 2% in H1 2024 YoY, contributing to a 4% increase in
production of finished products.
Production of Kenmare’s primary product, ilmenite, was 444,100 tonnes, up 4%
YoY, due to increased HMC processed and benefitting from greater ilmenite
content in the HMC.
Primary zircon production was 21,300 tonnes in H1 2024, down 7% YoY, due to
challenges in the zircon circuit during Q1 and downtime due to improvement
works. This resulted in lower recoveries and higher than usual quantities of
material being sent to the intermediate stockpiles. Performance improved
significantly in Q2, supported by the drawdown of some intermediate stocks,
however it did not fully offset the weak performance in Q1. Intermediate
stockpiles will be further drawn down in H2, which is expected to benefit
zircon and rutile production for the remainder of the year.
Rutile production was 4,000 tonnes, up 11% YoY, supported by increased HMC
processed; drawdown of intermediate stocks; and higher recoveries as a result
of improvement works completed.
Concentrates production was 21,400 tonnes, up 4% YoY, in line with increased
HMC processed.
Total shipments in H1 2024 were 477,600 tonnes, down 14% YoY, due primarily to
poor weather conditions and operational issues at Kenmare’s shipping
facilities, limiting shipping time. Shipments comprised 458,400 tonnes of
ilmenite, 8,800 tonnes of primary zircon and 10,400 tonnes of concentrates. No
rutile was shipped during the period.
Closing stock of HMC at the end of H1 2024 was 24,600 tonnes, compared to
16,700 tonnes at the end of 2023. This was due to HMC production exceeding HMC
processed during the period. Closing stock of finished products at the end of
H1 2024 was 273,000 tonnes, compared to 259,100 tonnes at the end of 2023,
reflecting production exceeding shipments. Finished product stock is expected
to be drawn down in H2, as shipments are anticipated to be greater than
expanded production. However Kenmare still expects stock levels to remain
higher than usual during H2, before normalising during H1 2025.
Capital projects
WCP A upgrade and transition to Nataka
As announced on 4 July 2024, Kenmare’s Board has approved the final part of
the Definitive Feasibility Study (“DFS”), relating to infrastructure, for
the WCP A upgrade and transition to Nataka. Nataka is the largest ore zone in
Kenmare’s portfolio and WCP A’s transition to this area secures production
from Moma for decades to come.
The total capital costs for the project remain in line with previous
estimates, totalling $341 million. Kenmare plans to fund the WCP A upgrade and
transition from cash flow and existing debt facilities. Further detailed
engineering and scheduling work has deferred $38 million of expected capital
expenditure from 2024 into subsequent years, in line with the evolving mine
plan.
Works for the upgrade are advancing well and at the end of H1, 54% of the
overall project budget has been committed. By year-end, Kenmare expects almost
75% to be committed, with the project being progressively derisked.
The fabrication of the two new dredges is progressing, with work on the first
dredge pontoons now taking place by the project contractor in the Netherlands.
The new surge bin, which forms part of the upfront desliming circuit, has been
successfully trial-assembled in South Africa, and will now be transported to
Moma. The first batch of pontoons and the screens for the surge bin are due to
be shipped to Nacala, the nearest large port to Moma, before the end of
August, in advance of being transported by road to site. The detailed design
of the Tailings Storage Facility (“TSF”) is on track for completion in
mid-Q3 2024 with construction expected to begin in Q4 2024. Early works for
the infrastructure in Nataka are also commencing, following Board approval in
Q2.
WCP B upgrade
Work continued on the DFS for the WCP B upgrade during H1, which is expected
to increase WCP B’s capacity by over 40%. Kenmare has identified workstreams
that have the potential to optimise the DFS and studies are underway.
Although the Company believes this project is highly accretive, the Final
Investment Decision remains deferred while the upgrade and transition of WCP A
is prioritised. Kenmare will provide a further update on the WCP B upgrade in
the Q4 Production Report in January 2025.
Congolone ore zone
Kenmare also progressed the Pre-Feasibility Study for the Congolone ore zone
during H1. Congolone is situated 90 kilometres to the north of the Moma
operations and has Mineral Resources to support 20 years of production,
including approximately 300,000 tonnes of ilmenite production for the first 12
years.
The PFS work has improved Kenmare’s understanding of the project’s Mineral
Resources and its mineral transport and processing requirements. Various
mining methods have also been reviewed.
Kenmare’s project team is focused on executing the upgrade and transition of
WCP A; however, work will continue on the Congolone PFS in tandem, maintaining
it as a future potential growth opportunity.
Renewal of Implementation Agreement
Discussions with the Government of Mozambique continued during the period,
relating to the renewal of Moma’s IA. The IA governs fiscal and other terms
of the Industrial Free Zone, under which Kenmare conducts its processing and
export activities. A number of meetings took place in Maputo and discussions
have been constructive. Government representatives share Kenmare’s objective
of concluding the renewal process before the December 2024 renewal date.
Market update
Demand for Kenmare’s products remained robust in H1 2024, particularly for
ilmenite. Spot prices for ilmenite remained relatively stable throughout H1
and were above the Company’s expectations. However, Kenmare’s average
received price for all products decreased by 22% compared to H1 2023, due
primarily to a 56% decrease in high value zircon shipments year-on-year. The
two zircon shipments delayed from Q2 due to poor weather were shipped in early
Q3 2024, with consequent positive impact on H2 revenues.
Demand from the titanium pigment industry rebounded more strongly than
expected in Q1 2024 and remained solid throughout the first half. Chinese
producers continued to produce at record levels and demand for Kenmare’s
ilmenite was bolstered by increased operating rates among pigment producers in
Europe and the United States. This was driven by stronger underlying demand
and restocking of titanium feedstocks, with producers having held
lower-than-normal inventories in 2023. Concerns surrounding potential duties
on Chinese pigment entering the European Union further supported demand and
prices for European pigment. Demand for titanium feedstocks from the titanium
metal sector also remains very strong.
Global supply of titanium feedstocks remains sufficient to meet demand, with
the main source of new supply continuing to be Chinese producers in African
countries shipping concentrates to China for processing. However, this was
partially offset by the suspension of operations in Sierra Leone and continued
Mineral Resource depletion in Kenya.
After a weak 2023, the zircon market began to show signs of recovery in early
Q1 2024, benefitting from growing demand in India, while demand in Europe also
improved in Q2, particularly from the ceramics industry. Although the market
in China softened in Q2, Kenmare’s product quality means that it continues
to experience healthy demand for its concentrates from Chinese customers. On a
global basis, supply of high-quality zircon products is constrained,
supporting prices in the spot market.
Kenmare’s order book for H2 2024 is largely committed. In the medium term,
Kenmare believes that supply constraints will support the fundamentals for all
of the Company’s products.
Financial review
Kenmare generated mineral product revenue of $154.5 million in H1 2024 and
EBITDA of $63.2 million, resulting in a strong EBITDA margin of 41%. While the
Company remains highly profitable, Kenmare’s H1 financial performance was
impacted by a lower average price received, due to a lower proportion of high
value zircon shipments than normal, and reduced shipment volumes. The Company
expects its average price received to increase in H2, as the primary zircon
shipments delayed from Q2 were shipped in early Q3. Shipment volumes are also
expected to be higher due to seasonally better weather between July and
December. Consequently, revenue is anticipated to be to be materially stronger
in the second half of the year.
Kenmare’s balance sheet remained robust during H1, with net cash increasing
by $38.2 million to $58.9 million (31 December 2023: $20.7 million), after
capital investments ($49.1 million) and $34.7 million of dividend payments.
The Company is pleased to announce a 2024 interim dividend of USc15 per share
(H1 2023: USc17.5 per share) and the full year dividend is expected to be
towards the upper end of the Company’s target payout range of 20–40% of
profit after tax.
Revenue
Mineral product revenue was $154.5 million in H1 2024, down 33% YoY (H1 2023:
$229.7 million), driven by a 22% decrease in the average received price to
$323 per tonne (H1 2023: $413 per tonne) and a 14% decrease in shipment
volumes. The decrease in average price received was due to product mix, with a
substantially lower proportion of zircon shipments in H1 2024 than normal, as
detailed below.
Freight revenue in H1 2024 was $10.6 million, down 20% YoY (H1 2023: $13.2
million), reflecting lower shipments, offset by higher freight costs in the
period.
Ilmenite revenue was $136.5 million in H1 2024, down 24% YoY (H1 2023: $179.2
million), due to a 14% decrease in the average ilmenite price to $298 per
tonne (H1 2023: $347 per tonne) and an 11% decrease in ilmenite shipments.
Primary zircon revenue was $11.9 million, down 64% YoY (H1 2023: $33.1
million), due to a 56% decrease in primary zircon shipments and a 19% decrease
in average zircon price to $1,355 per tonne (H1 2023: $1,670 per tonne). The
primary zircon shipments deferred from Q2 2024 due to poor weather were
shipped in early Q3, which will have a positive impact on H2 2024 revenue.
Operating costs
Total operating costs in H1 2024 were $132.3 million, a 19% decrease compared
to H1 2023 ($162.6 million) due to lower shipment volumes and therefore lower
cost of sales in the period. Total operating costs also benefitted from $3.3
million in insurance proceeds relating to business interruption resulting from
the lightning strike on the power transmission line at the Mine in February
2023.
Total cash operating costs were $107.2 million, down 1% YoY (H1 2023: $108.8
million). Combined with a 4% increase in production of finished products, this
resulted in a 5% decrease in cash operating costs per tonne to $218 (H1 2023:
$230). Cash operating cost per tonne of ilmenite was $201, up 47% YoY (H1
2023: $137), as a result of a 64% reduction in co-product revenues, partially
offset by a 4% increase in ilmenite production.
Finance income and costs
Kenmare recognised finance income of $2.4 million in H1 2024 (H1 2023: $3.6
million), consisting of interest on bank deposits. Finance costs were $7.5
million (H1 2023: $6.3 million), including loan interest of $2.2 million (H1
2023: $4.2 million), amortisation of transaction fees of the 2019 debt
facility of $0.9 million and transaction costs of $2.6 million on the $200
million Revolving Credit Facility (“RCF”) entered into on 4 March 2024.
Factoring and other trade facility fees were $0.5 million in the period (H1
2023: $0.8 million) and unwinding of the mine closure provision amounted to
$0.4 million (H1 2023: $0.3 million). Commitment fees under the debt
facilities were $0.8 million (H1 2023: $0.3 million) and lease interest was
$0.06 million (H1 2023: $0.05 million).
Tax
The tax charge for H1 2024 amounted to $6.8 million (H1 2023: $9.7 million).
Kenmare’s subsidiary, Kenmare Moma Mining (Mauritius) Limited, had taxable
profits of $10.1 million (H1 2023: $16.3 million), resulting in an income tax
charge of $3.5 million (H1 2023: $5.6 million). During the period Kenmare
Resources plc had taxable profits of $42.4 million (H1 2023: $58.6 million),
resulting in an income tax expense of $3.6 million (H1 2023: $4.1 million)
being recognised. $40 million of the taxable income relates to dividend income
received from the subsidiary undertaking, Kenmare Moma Mining (Mauritius)
Limited (H1 2023: $60 million), with the balance relating to trading profits
and deposit income of $4.1 million (H1 2023: $1.4 million).
Cash flows
Net cash from operations in H1 2024 was $125.4 million (H1 2023: $82.2
million), as a result of strong operating cashflow of $63.8 million (H1 2023:
$112.2 million) and a working capital inflow of $71.9 million (H1 2023
outflow: $14.6 million). The working capital inflow of $71.9 million reflects
the unwinding of year-end trade receivables of $87.3 million (H1 2023
increase: $16.2 million).
Investing activities of $49.1 million in H1 2024 (H1 2023: $20.2 million)
represented additions to property, plant and equipment. $48.8 million of debt
repayments (H1 2023: $15.7 million) and $2.6 million of transaction fees on
the new RCF were paid during the period (H1 2023: Nil), as well as payment of
the final 2023 dividend of $34.7 million (2023: $41.1 million). Lease
repayments of $0.05 million (H1 2023: $0.09 million) were also made and
treasury shares of $0.9 million (H1 2023: $3.6 million) were purchased in the
period.
Consequently, Kenmare finished H1 2024 with $60.3 million of cash and cash
equivalents, including $1.7 million of cash held in the Employee Benefit
Trust, representing a decrease of $10.7 million compared to year-end 2023
($71.0 million).
Balance sheet
In H1 2024 there were additions to property, plant and equipment of
$49.1 million (H1 2023: $20.2 million). Additions consisted of $31.1 million
of development expenditure, mainly in relation to the upgrade of WCP A and
$18.0 million of sustaining capital.
Depreciation of $30.5 million was in line with the prior period (H1 2023:
$30.2 million). The mine closure provision asset decreased by $1.8 million in
H1 2024 (H1 2023: increase $0.8 million). This was due to an increase in the
discount rate used to estimate the closure cost provision from 4.0% to 4.5%.
The Group conducted an impairment review of property, plant and equipment at
the period-end and the key assumptions of this review are set out in Note 8 of
the financial statements. No impairment provision is required as a result of
this review.
Inventory at period-end amounted to $113.6 million (31 December 2023: $99.3
million), consisting of intermediate and finished products of $77.2 million
(31 December 2023: $58.4 million), which increased as a result of lower
shipment volumes in the period, and consumables and spares of $36.4 million
(31 December 2023: $40.9 million).
Trade and other receivables amounted to $67.6 million (31 December
2023: $153.7 million). This was comprised of $36.7 million of trade
receivables from the sale of finished products (31 December 2023:
$127.4 million), $24.5 million of supplier prepayments and other
miscellaneous debtors (31 December 2023: $19.8 million), and $6.3 million of
VAT receivable (31 December 2023: $6.4 million). Trade receivables are a
function of shipments made before period-end and credit terms specific to the
relevant customer. There have been no credit impairments or bad debts during
the period. The expected credit loss was reduced by $1.2 million (H1 2023:
decreased $0.6 million).
Cash and cash equivalents decreased by $10.7 million in H1 2024 and at 30
June 2024 amounted to $60.3 million (31 December 2023: $71.0 million).
Lease liabilities amounted to $1.4 million (31 December 2023: $1.5 million) at
period-end.
Tax liabilities amounted to $4.6 million (31 December 2023: $6.9 million) and
trade and other payables amounted to $36.9 million (31 December 2023: $38.6
million).
Debt facilities
On 4 March 2024, the Group entered into a new $200 million RCF with its
existing lenders Absa Bank, Nedbank, Rand Merchant Bank and Standard Bank. The
facility will support Kenmare’s planned capital programme in the coming
years and removes the amortising payments of the previous term loan, whilst
increasing available funding and extending the maturity profile from 2025 to
2029.
At period-end, there was no outstanding debt due (31 December 2023: $47.9
million).
Financial outlook
Kenmare’s strategic priorities are to operate responsibly, deliver
long-life, low-cost production, and to allocate capital efficiently, including
developing accretive growth opportunities. The Group is focused on maintaining
a strong and flexible balance sheet to enable it to deliver all these goals,
particularly to fund its capital investment requirements and shareholder
returns.
Kenmare will continue to manage its operating cost base in a disciplined and
sustainable manner, cognisant of inflationary pressures and other risks that
face its business, in order to minimise unit costs.
Market demand remains encouraging and while product prices were lower in H1
YoY, financial performance is expected to be stronger in H2, driven by
increased shipment volumes and a higher value product mix. The business
continues to be highly cash generative, with cash flows and debt continuing to
support all expected expenditures.
At the end of H1, Kenmare is well capitalised to fund the upgrade and
transition of WCP A to Nataka and to continue delivering shareholder returns.
Interim dividend
Kenmare generated profit after tax of $20.9 million in H1 2024 (H1 2023: $67.8
million). The Board has approved an interim 2024 dividend of USc15 per share
(H1 2023: USc17.5). The Company is targeting a full year dividend towards the
upper end of the 20-40% profit after tax payout range. The financial
statements do not reflect this interim dividend.
The Company will pay the interim dividend on 11 October 2024 to shareholders
of record at the close of business on 20 September 2024. Irish Dividend
Withholding Tax (“DWT”) of 25% must be deducted from dividends paid by the
Company, unless a shareholder is entitled to an exemption and has submitted a
properly completed exemption form to the Company’s Registrar. For assistance
claiming an exemption from DWT or a refund for DWT, please contact Kenmare’s
Investor Relations team.
The dividend timetable is as follows:
Announcement of interim dividend 14 August 2024
Ex-Dividend Date 19 September 2024
Record Date 20 September 2024
Currency election cut-off date 24 September 2024 at 12:00 noon (IST)
Payment Date 11 October 2024
Principal risks and uncertainties
There are a number of potential risks and uncertainties that could have a
material impact on Kenmare’s performance over the remaining six months of
the 2024 financial year and which could cause actual results to differ
materially from expected and historic results.
These principal risks and uncertainties are disclosed in Kenmare’s Annual
Report for the year ended 31 December 2023. A detailed explanation of these
principal risks and uncertainties and how Kenmare seeks to mitigate these
risks, can be found on pages 76 to 85 of the 2023 Annual Report under the
following headings: permitting; licensing and Government agreement risk;
country risk; geotechnical risk; severe weather events; uncertainty over
physical characteristics of orebody; loss of production due to power supply
and transmission interruption; asset damage or loss; health, safety and
environment; material misstatement in the Ore Reserves & Mineral Resource
Table; IT security risk; development project risk; industry cyclicality;
customer and/or market concentration; foreign currency risk; and aggressive
cost inflation.
The Group’s climate risks disclosure is set out on pages 66 to 70 of the
2023 Annual Report. These have not changed in the first half of the year and
outline the Group’s objectives in relation to climate risk. Kenmare has
continued with these objectives in H1 2024 and will provide an update in the
2024 Annual Report.
Related party transactions
There have been no material changes in the related party transactions
affecting the financial position or the performance of the Group in the period
since publication of the 2023 Annual Report, other than those disclosed in
Note 20 to the condensed consolidated financial statements.
Going concern
As stated in Note 1 to the condensed consolidated financial statements, based
on the Group’s forecasts and projections, the Directors are satisfied that
the Group has sufficient resources to continue in operation for the
foreseeable future, a period of not less than 12 months from the date of this
report. Accordingly, they continue to adopt the going concern basis in
preparing the condensed consolidated financial statements.
Events after the Statement of Financial Position Date
Interim dividend
An interim dividend for the period ended 30 June 2024 of USc15 per share was
approved by the Board on 13 August 2024. The dividend payable has not been
included as a liability in these financial statements. The interim dividend is
payable to all shareholders on the Register of Members on 20 September 2024.
There have been no other significant events since 30 June 2024 that would have
a significant impact on the financial statements of the Group.
Forward-looking statements
This report contains certain forward-looking statements. These statements are
made by the Directors in good faith based on the information available to them
up to the time of their approval of this report, and such statements should be
treated with caution due to the inherent uncertainties, including both
economic and business risk factors, underlying any such forward-looking
information.
On behalf of the Board,
Managing Director
Financial Director
Michael Carvill
Tom Hickey
13 August 2024
13 August 2024
Independent Review Report to Kenmare Resources plc (“the Entity”)
Conclusion
We have been engaged by the Entity to review the Entity’s condensed set of
consolidated financial statements in the half-yearly financial report for the
six months ended 30 June 2024 which comprises the condensed consolidated
interim income statement, the condensed consolidated interim statement of
other comprehensive income, the condensed consolidated interim statement of
financial position, the condensed consolidated interim statement of cash
flows, the condensed consolidated interim statement of changes in equity and a
summary of significant accounting policies and other explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of consolidated financial statements in the
half-yearly financial report for the six months ended 30 June 2024 is not
prepared, in all material respects in accordance with International Accounting
Standard 34 Interim Financial Reporting (“IAS 34”) as adopted by the EU
and the Transparency (Directive 2004/109/EC) Regulations 2007 (“Transparency
Directive”), and the Central Bank (Investment Market Conduct) Rules 2019
(“Transparency Rules of the Central Bank of Ireland).
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (Ireland) 2410 Review of Interim Financial Information Performed
by the Independent Auditor of the Entity (“ISRE (Ireland) 2410”) issued
for use in Ireland. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (Ireland) and consequently does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (Ireland) 2410. However, future events or conditions may cause the Entity
to cease to continue as a going concern, and the above conclusions are not a
guarantee that the Entity will continue in operation.
Independent Review Report to Kenmare Resources plc (“the
Entity”)(continued)
Directors’ responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Transparency Directive and
the Transparency Rules of the Central Bank of Ireland.
The directors are responsible for preparing the condensed set of consolidated
financial statements included in the half-yearly financial report in
accordance with IAS 34 as adopted by the EU.
As disclosed in note 1, the annual financial statements of the Entity for the
year ended 31 December 2023 are prepared in accordance with International
Financial Reporting Standards as adopted by the EU.
In preparing the condensed set of consolidated financial statements, the
directors are responsible for assessing the Entity’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either
intend to liquidate the Entity or to cease operations, or have no realistic
alternative but to do so.
Our responsibility
Our responsibility is to express to the Entity a conclusion on the condensed
set of consolidated financial statements in the half-yearly financial report
based on our review.
Our conclusion, including our conclusions relating to going concern, are based
on procedures that are less extensive than audit procedures, as described in
the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Entity in accordance with the terms of our
engagement to assist the Entity in meeting the requirements of the
Transparency Directive and the Transparency Rules of the Central Bank of
Ireland. Our review has been undertaken so that we might state to the Entity
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Entity for our review work, for this
report, or for the conclusions we have reached.
13 August 2024
KPMG
Chartered Accountants
1 Stokes Place
St. Stephen’s Green
Dublin 2
Group condensed consolidated statement of comprehensive income
For the financial period ended 30 June 2024
Notes Unaudited 6 Months 30 June 2024 $’000 Unaudited 6 Months 30 June 2023 $’000
Revenue 2 165,081 242,879
Cost of sales 4 (133,598) (157,200)
Gross profit 31,483 85,679
Administration Expenses 4 1,267 (5,440)
Operating profit 32,750 80,239
Finance income 5 2,409 3,589
Finance costs 5 (7,461) (6,324)
Profit before tax 27,698 77,504
Income tax expense 6 (6,823) (9,727)
Profit for the financial period and total comprehensive income for the financial period 20,875 67,777
Attributable to equity holders 20,875 67,777
$ per share $ per share
Profit per share: Basic 7 0.23 0.71
Profit per share: Diluted 7 0.23 0.70
The accompanying notes form part of these financial statements.
Group condensed consolidated statement of financial position
As at 30 June 2024
Notes Unaudited 30 June 2024 $’000 Audited 31 Dec 2023 $’000
Assets
Non-current assets
Property, plant and equipment 8 952,808 935,848
Right-of-use assets 9 1,231 1,368
954,039 937,216
Current assets
Inventories 10 113,611 99,257
Trade and other receivables 11 67,553 153,650
Cash and cash equivalents 12 60,290 71,048
241,454 323,955
Total assets 1,195,493 1,261,171
Equity
Capital and reserves attributable to the
Company’s equity holders
Called-up share capital 13 97 97
Share premium 545,950 545,950
Other reserves 230,053 229,740
Retained earnings 354,139 367,504
Total equity 1,130,239 1,143,291
Liabilities
Non-current liabilities
Bank loans 14 - 15,502
Lease liabilities 9 1,114 1,256
Provisions 16 21,258 20,877
22,372 37,635
Current liabilities
Bank loans 14 - 32,371
Lease liabilities 9 274 264
Trade and other payables 15 36,931 38,564
Current tax liabilities 17 4,629 6,921
Provisions 16 1,048 2,125
42,882 80,245
Total liabilities 65,254 117,880
Total equity and liabilities 1,195,493 1,261,171
The accompanying notes form part of these financial statements.
On behalf of the Board:
M. CARVILL
Director
13 August 2024
T. HICKEY
Director
13 August 2024
Group condensed consolidated statement of changes in equity
Called-Up Share Capital $’000 Share Premium $’000 Retained Earnings $’000 Other Reserves $’000 Total $’000
Unaudited Balance at 1 January 2024 97 545,950 367,504 229,740 1,143,291
Profit for the financial period - - 20,875 - 20,875
Transactions with owners of the Company
Recognition of share-based payment expense - - - 1,716 1,716
Exercise of share-based payments - - 451 (2,697) (2,246)
Shares acquired by the Kenmare Employee Benefit Trust - - - (908) (908)
Shares distributed by the Kenmare Employee Benefit Trust - - - 2,202 2,202
Dividends paid - - (34,691) - (34,691)
Balance at 30 June 2024 97 545,950 354,139 230,053 1,130,239
Unaudited Balance at 1 January 2023 104 545,950 324,721 232,759 1,103,534
Profit for the financial period - - 67,777 - 67,777
Transactions with owners of the Company
Recognition of share-based payment expense - - - 1,354 1,354
Exercise of share-based payments - - (2,511) (3,274) (5,785)
Shares acquired by the Kenmare Employee Benefit Trust - - - (3,625) (3,625)
Shares distributed by the Kenmare Employee Benefit Trust - - - 3,386 3,386
Dividends - - (41,053) - (41,053)
Balance at 30 June 2023 104 545,950 348,934 230,600 1,125,588
For the financial period ended 30 June 2024
Group condensed consolidated statement of cash flows
For the financial period ended 30 June 2024
Notes Unaudited 30 June 2024 $’000 Unaudited 30 June 2023 $’000
Cash flows from operating activities
Profit for the period after tax 20,875 67,777
Adjustment for:
Foreign exchange movement - 1,018
Share-based payments 19 1,716 1,354
Finance income 5 (2,409) (3,589)
Movement in expected credit losses 18 (1,154) (601)
Finance costs 5 7,461 6,324
Income tax expense 6 6,823 9,727
Depreciation 8/9 30,516 30,150
63,828 112,160
Change in:
Provisions 16 710 819
Inventories 10 (14,354) 10,822
Trade and other receivables 11 87,251 (16,151)
Trade and other payables 15 (1,813) (7,968)
Exercise of share-based payment awards - (2,160)
Cash generated from operating activities 135,622 97,522
Income tax paid (9,115) (13,137)
Interest received 2,409 2,562
Interest paid 14 (2,210) (3,646)
Factoring and other fees 5 (497) (807)
Debt commitments fees paid 5 (849) (294)
Net cash from operating activities 125,360 82,200
Investing activities
Additions to property, plant and equipment 8 (49,101) (20,212)
Net cash used in investing activities (49,101) (20,212)
Financing activities
Dividends paid 13 (34,691) (41,053)
Market purchase of equity under Kenmare Restricted Share Plan (908) (3,625)
Drawdown of debt 14 51,370 -
Repayment of debt 14 (100,156) (15,715)
Transaction costs of debt 14 (2,581) -
Payment of lease liabilities 9 (51) (85)
Net cash used in financing activities (87,017) (60,478)
Net increase/(decrease) in cash and cash equivalents (10,758) 1,510
Cash and cash equivalents at the beginning of the financial year 71,048 108,271
Effect of exchange rate changes on cash and cash equivalents - (962)
Cash and cash equivalents at the end of the period 60,290 108,819
Notes to the group condensed consolidated financial statements
For the financial period ended 30 June 2024
1. Basis of preparation and going concern
Basis of preparation
The annual financial statements of Kenmare Resources plc (‘the Group’) are
prepared in accordance with IFRS as adopted by the European Union. The Group
Condensed Consolidated Financial Statements for the six months ended 30 June
2024 have been prepared in accordance with the Transparency (Directive
2004/109/EC) Regulations 2007, as amended, the Transparency Rules of the
Central Bank of Ireland, Disclosure and Transparency Rule 4.2 of the UK
Financial Conduct Authority’s Disclosure Guidance and Transparency Rules and
IAS 34 ‘Interim Financial Reporting’, as adopted by the European Union.
The financial information presented in this document does not constitute
statutory financial statements. The amounts presented in the half-yearly
financial statements for the six months ended 30 June 2024 and the
corresponding amounts for the six months ended 30 June 2023 have been reviewed
but not audited. The independent review report is on pages 13 and 14.
The financial information for the year ended 31 December 2023, presented
herein, is an abbreviated version of the annual financial statements for the
Group in respect of the year ended 31 December 2023. The Group’s annual
financial statements in respect of the year ended 31 December 2023 have been
filed in the Companies Registration Office and the independent auditor issued
an unqualified audit report thereon. The annual report is available on the
Company’s website at www.kenmareresources.com.
Use of Judgements and Estimates
The preparation of the half-yearly financial statements requires the Directors
to make judgements, estimates and assumptions that affect the application of
policies and reported amounts of certain assets, liabilities, revenues and
expenses together with disclosure of assets and liabilities. Estimates and
underlying assumptions relevant to these financial statements are the same as
those described in the last annual financial statements. At each reporting
date, the Group reviews the carrying amounts of property, plant and equipment
to determine whether there is any indication that those asset have suffered an
impairment loss. A key element to this review is assessing the value in use
and the estimated future cash flows. The assumptions used in the estimating
future cashflows have been updated since the year end and are included in the
Note 8.
Going Concern
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the Group will have adequate resources to continue
in operational existence for the foreseeable future. Based on the Group’s
cash flow forecast, liquidity, solvency position and available finance
facilities, the Directors have a reasonable expectation that the Group has
adequate resources for the foreseeable future and, therefore, they continue to
adopt the going concern basis of accounting in preparing the financial
statements.
Management plans assume that all agreements, licences, concessions and
approvals relating to the Group’s mining and processing activities,
including the Implementation Agreement, are in place or will be renewed over
the 12 month period, from the date of authorisation of these financial
statements. The Group forecast has been prepared by management with best
estimates of production, pricing and cost assumptions over the period. Key
assumptions upon which the Group forecast is based include a mine plan
covering production using the Namalope, Nataka, Pilivili and Mualadi reserves
and resources. Specific resource material is included only where there is a
high degree of confidence in its economic extraction. Production levels for
the purpose of the forecast are approximately 1.1 million tonnes per annum of
ilmenite plus co-products, zircon, concentrates and rutile, over the next
twelve months. Assumptions for product sales prices are based on contract
prices as stipulated in marketing agreements with customers or, where contract
prices are based on market prices or production is not presently contracted,
prices are forecast taking into account independent titanium mineral sands
expertise and management expectations. Operating costs are based on approved
budget costs for 2024, taking into account the current running costs of the
Mine and escalated by 2% per annum thereafter. Capital costs are based on the
capital plans and include escalation at 2% per annum. The 2024 operating costs
and forecast capital costs take into account the current inflationary
environment. The 2% inflation rate used from 2025 to escalate these costs over
the life of mine is an estimated long-term inflation rate based on the
Mine’s overall primary exposure to US Dollar denominated inflation rather
than Mozambican inflation .
Sensitivity analysis is applied to the assumptions above to test the
robustness of the cash flow forecasts for changes in market prices, shipments
and operating and capital cost assumptions. Changes in these assumptions
affect the level of sales and profitability of the Group and the amount of
capital required to deliver the projected production levels. As a result of
this assessment, the Board has a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities as they fall due over
the twelve month period from the date of authorisation of these financial
statements.
Changes in accounting policies
The accounting policies applied in the half-yearly financial statements are
those set out in the annual financial statements for the year ended 31
December 2023.
The following new and revised standards, all of which are effective for
accounting periods beginning on or after 1 January 2024, have been adopted in
the current financial period;
* Classification of Liabilities as Current or Non-current - Amendment to IAS 1
effective 1 January 2024
* Lease Liability in a Sale and Leaseback - (Amendments to IFRS 16) effective
1 January 2024
* Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7) effective 1
January 2024
None of the new and revised standards have a material effect on the Group’s
condensed consolidated financial statements.
2. Revenue
Unaudited 30 June 2024 $’000 Unaudited 30 June 2023 $’000
Revenue derived from the sale of mineral products 154,467 229,668
Revenue derived from freight services 10,614 13,211
Total revenue 165,081 242,879
Revenue by product
The principal categories for disaggregating mineral products revenue are by
product type and by country of the customer’s location. The product types
are ilmenite, zircon, rutile and concentrates. Concentrates includes secondary
zircon and mineral sands concentrates.
During the financial period, the Group sold 477,600 tonnes (H1 2023: 556,800
tonnes) of finished products at a sales value of $154.5 million (H1 2023:
$229.7 million). The Group earned revenue derived from freight services of
$10.6 million (H1 2023: $13.2 million).
Unaudited 30 June 2024 $’000 Unaudited 30 June 2023 $’000
Revenue derived from sales of mineral products by primary product
Ilmenite 136,452 179,228
Zircon 11,867 33,080
Concentrates 6,123 12,214
Rutile 25 5,146
Total revenue from mineral products 154,467 229,668
Revenue derived from freight services 10,614 13,211
Total 165,081 242,879
Revenue by destination
In the following table, revenue is disaggregated by primary geographical
market. The Group allocates revenue from external customers to individual
countries and discloses revenues in each country where revenues represent 10%
or more of the Group’s total revenue. Thereafter, where total disclosed
revenue disaggregated by country constitutes less than 75% of total Group
revenue, additional disclosures are made until at least 75% of the Group’s
disaggregated revenue is disclosed.
Unaudited 30 June 2024 $’000 Unaudited 30 June 2023 $’000
Revenue from external customers
China 70,855 109,166
Europe 24,905 47,035
Asia (excluding China) 46,520 24,169
Rest of the world 12,187 49,298
Total revenue from mineral products 154,467 229,668
Revenue derived from freight 10,614 13,211
Total revenue 165,081 242,879
All revenues are generated by the Moma Titanium Minerals Mine. Sales of the
Group’s mineral products are not seasonal in nature.
3. Segment reporting
Information on the operations of the Moma Titanium Minerals Mine in Mozambique
is reported to the Group’s Executive Committee for the purposes of resource
allocation and assessment of segment performance. Information regarding the
Group’s operating segment is reported below.
Unaudited 30 June 2024 Unaudited 30 June 2023
Corporate Mozambique Total Corporate Mozambique Total
$’000 $’000 $’000 $’000 $’000 $’000
Revenue & Results
Revenue* - 165,081 165,081 - 242,879 242,879
Cost of sales - (133,598) (133,598) - (157,200) (157,200)
Gross profit - 31,483 31,483 - 85,679 85,679
Administrative expenses (2,653) 3,920 1,267 (3,313) (2,127) (5,440)
Segment operating profit/(loss) (2,653) 35,403 32,750 (3,313) 83,552 80,239
Finance income 1,118 1,291 2,409 1,814 1,775 3,589
Finance expenses (22) (7,439) (7,461) (9) (6,315) (6,324)
Profit/(loss) before tax (1,557) 29,255 27,698 (1,508) 79,012 77,504
4Income tax expense (3,646) (3,177) (6,823) (4,144) (5,583) (9,727)
Profit/(loss) for the financial period (5,203) 26,078 20,875 (5,652) 73,429 67,777
Segment Assets & Liabilities
Segment Assets 17,852 1,177,641 1,195,493 66,830 1,179,719 1,246,549
Segment Liabilities (14,139) (51,115) (65,254) (7,030) (113,931) (120,961)
Additions to non-current assets
Segment Additions to non-current assets - 49,101 49,101 - 20,212 20,212
*Revenue excludes inter-segment revenue of $10.9 million earned by the
corporate segment relating to marketing and management services fee income.
Inter-segment revenue is not regularly reviewed by the Executive Committee.
Corporate assets consist of the Company’s and other subsidiary
undertakings’ property, plant and equipment including right-of-use assets,
cash and cash equivalents and prepayments at the reporting date. Corporate
liabilities consist of trade and other payables, lease and current tax
liabilities at the reporting date.
4. Cost and income analysis
Unaudited 30 June 2024 $’000 Unaudited 30 June 2023 $’000
Expenses by function
Cost of sales 133,598 157,200
Administrative expenses (1,267) 5,440
Total 132,331 162,640
4. Cost and income analysis (continued) Expenses by nature can be analysed as follows:
Unaudited 30 June 2024 $’000 Unaudited 30 June 2023 $’000
Expenses by nature
Staff costs 36,122 32,045
Repairs and maintenance 17,925 20,467
Power and fuel 23,807 23,985
Freight 10,614 13,211
Other production and operating costs 32,187 33,224
Movement of mineral products inventory (18,840) 9,558
Depreciation of property, plant and equipment and right-of-use assets 30,516 30,150
Total 132,331 162,640
Included in total operating costs is $3.3 million insurance proceeds in
relation to business interruption as a result of the lightning strike on the
power transmission line at the Mine in February 2023.
Mineral products consist of finished products and heavy mineral concentrate as
detailed in Note 10. Mineral stock movement in the year was an increase of
$18.8 million (H1 2023: $9.6 million decrease). Freight costs of $10.6 million
(H1 2023: $13.2 million) arise from sales to customers on a CIF or CFR basis.
There were no exceptional items within operating profit in H1 2024 (H1 2023:
$nil).
5. Net finance costs
Unaudited 30 June 2024 $’000 Unaudited 30 June 2023 $’000
Finance costs
Interest on bank borrowings (2,210) (4,229)
Transaction costs on debt refinancing (3,493) -
Interest on lease liabilities (56) (46)
Factoring and other trade facility fees (497) (807)
Commitment and other fees (849) (294)
Unwinding of discount on mine closure provision (356) (334)
Foreign exchange loss - (614)
Total Finance Costs (7,461) (6,324)
Finance income
Interest earned on bank deposits 2,409 2,919
5 Net finance costs (continued) Foreign exchange gain - 670
Total Finance Income 2,409 3,589
Net finance costs recognised in profit or loss (5,052) (2,735)
All interest has been expensed in the financial period. The Group has
classified factoring and other trade facility fees in net cashflows from
operating activities in the Consolidated Statement of Cashflows. Transaction
costs relating to the 2019 debt of $0.9 million were recognised in the period
as the debt was extinguished. Transaction costs of $2.6 million were incurred
in relation to a new RCF of $200 million which was entered into on 4 March
2024.
6. Income tax expense
Unaudited 30 June 2024 $’000 Unaudited 30 June 2023 $’000
Corporation tax 6,823 9,727
During the period the KMML Mozambique Branch had taxable profits of $10.1
million (H1 2023: $16.3 million) resulting in an income tax expense of $3.5
million (H1 2023: $5.6 million) being recognised. The income tax rate
applicable to taxable profits of KMML Mozambique Branch is 35% (H1 2023: 35%).
KMML Mozambique Branch has elected, and the fiscal regime applicable to mining
allows for, the option to deduct, as an allowable deduction, depreciation of
exploration and development expense and capital expenditure over the life of
mine. Tax losses may be carried forward for three years. There are no tax
losses carried forward at 30 June 2024.
During the period Kenmare Resources plc had taxable profits of $42.4 million
(H1 2023: $58.6 million) resulting in an income tax expense of $3.6 million
(H1 2023: $4.1 million) being recognised. $40 million (H1 2023: $60 million)
of the taxable income relates to dividend income received from the subsidiary
undertaking with the balance relating to trading profits and deposit income of
$2.4 million (H1 2023: $1.4 million).
7. Earnings per share
The calculation of the basic and diluted earnings per share attributable to
the ordinary equity holders of the Company is based on the following data:
Unaudited 30 June 2024 $’000 Unaudited 30 June 2023 $’000
Profit for the financial period attributable to equity holders of the Company 20,875 67,777
2024 Number of shares 2023 Number of shares
Weighted average number of issued ordinary shares for the purpose of basic earnings per share 89,228,161 94,829,551
Effect of dilutive potential ordinary shares:
Share awards 2,870,528 2,479,902
Weighted average number of ordinary shares for
the purposes of diluted earnings per share 92,098,689 97,309,453
$ per share $ per share
Earnings per share: basic 0.23 0.71
Earnings per share: diluted 0.23 0.70
8. Property, plant and equipment
Plant & Equipment $’000 Development Expenditure $’000 Construction In Progress $’000 Other Assets $’000 Total $’000
Cost
At 1 January 2023 1,035,604 260,051 50,773 77,390 1,423,818
Additions during the financial year - - 69,703 27 69,730
Transfer from construction in progress 20,144 13,095 (40,391) 7,152 -
Disposals (415) - - (9,429) (9,844)
Adjustment to mine closure cost 241 - - - 241
At 31 December 2023 1,055,574 273,146 80,085 75,140 1,483,945
Additions during the financial period 1,839 282 46,980 - 49,101
Transfer from construction in progress 779 - (4,730) 3,951 -
Disposals - - - (105) (105)
Adjustment to mine closure cost (1,762) - - - (1,762)
At 30 June 2024 1,056,430 273,428 122,335 78,986 1,531,179
Accumulated Depreciation
At 1 January 2023 304,318 147,868 - 40,873 493,059
Charge for the financial year 44,928 8,952 - 11,002 64,882
Disposals (415) - - (9,429) (9,844)
At 31 December 2023 348,831 156,820 - 42,446 548,097
Charge for the financial period 22,162 3,386 - 4,831 30,379
Disposals - - - (105) (105)
At 30 June 2024 370,993 160,206 - 47,172 578,371
Carrying Amount
At 30 June 2024 685,437 113,222 122,335 31,814 952,808
At 31 December 2023 706,743 116,326 80,085 32,694 935,848
An adjustment to the mine closure cost of $1.7 million (2023: $0.2 million)
was made during the period as a result of an update in the discount rate as
detailed in Note 16.
At each reporting date, the Group assesses whether there is any indication
that property, plant and equipment may be impaired. The Group considers the
relationship between its market capitalisation and its book value, among other
factors, when reviewing for indicators for impairment. As at 30 June 2024, the
market capitalisation of the Group was below the book value of net assets,
which is considered an indicator of impairment. The Group carried out an
impairment review of property, plant and equipment as at 30 June 2024. As a
result of the review, and given the performance and outlook of the Group, no
impairment provision was recognised in the current period. Given the historic
volatility in mineral product pricing and sensitivity of the forecast to
mineral product pricing, the discount rate and to a lesser extent operating
costs, the impairment loss of $64.8 million, which was recognised in the
consolidated statement of comprehensive income in 2014, was not reversed.
The cash-generating unit for the purpose of impairment testing is the Moma
Titanium Minerals Mine. The basis on which the Mine is assessed is its value
in use. The cash flow forecast employed for the value in use computation is
from a life of mine financial model. The recoverable amount obtained from the
financial model represents the present value of the future discounted pre-tax,
pre-finance cash flows discounted at 12% (31 December 2023: 12%).
Key assumptions include the following:
• The discount rate is based on the Group’s weighted average cost of
capital. This rate is a best estimate of the current market assessment of the
time value of money and the risks specific to the Mine, taking into
consideration country risk, currency risk and price risk. The factors making
up the cost of equity and cost of debt have changed from the prior year
review, however the discount rate has remained unchanged at 12% (31 December
2023: 12%). The Group’s estimation of the country risk premium included in
the discount rate has remained unchanged from the prior year. The Group does
not consider it appropriate to apply the full current country risk premium for
Mozambique to the calculation of the Group’s weighted average cost of
capital as it believes the specific circumstances which have resulted in the
risk premium increase over the past number of years are not relevant to the
specific circumstances of the Moma Mine. Hence, country risk premium
applicable to the calculation of the cost of equity has been adjusted
accordingly. Forecast income tax on intercompany dividends from subsidiary
undertakings is assumed to be exempt from 2025, by way of change to tax
legislation or alternatively group restructuring. Using a discount rate of
12%, the recoverable amount is greater than the carrying amount by $314.0
million (31 December 2023: $374.0 million). The discount rate is a significant
factor in determining the recoverable amount. A 3% increase in the discount
rate to 15% reduces the recoverable amount by $314.0 million to $nil, assuming
all other inputs remain unchanged. The decrease in the recoverable amount from
the year end is a result of decreased cash flows over the life of mine as a
result primarily of increased forecast operating costs.
• The forecast assumes that all agreements, licences, concessions and
approvals relating to the Group’s mining and processing activities including
the Implementation Agreement are in place or will be renewed. The mine plan is
based on the Namalope, Nataka, Pilivili and Mualadi proved and probable
reserves and resources. Specific resource material is included only where
there is a high degree of confidence in its economic extraction. The Mine life
assumption of 40 years has not changed from the year-end review. Average
annual production is approximately 1.2 million tonnes (31 December 2023: 1.3
million tonnes) of ilmenite and co-products zircon, rutile and concentrates
over the life of the Mine. Medium term production over the next three years is
approximately 1.1 million tonnes. This mine plan does not include investment
in additional mining capacity. Certain minimum stocks of final and
intermediate products are assumed to be maintained at period ends.
• Product sales prices are based on contract prices as stipulated in
marketing agreements with customers, or where contracts are based on market
prices or production is not currently contracted, prices are forecast by the
Group taking into account independent titanium mineral sands expertise
provided by TiPMC Solutions and management expectations including general
inflation of 2% per annum. Forecast prices provided by TiPMC Solutions have
been reviewed and found to be consistent with other external sources of
information. Average forecast product sales prices have remained relatively
unchanged over the life of mine from the year-end review. A 8% reduction in
average sales prices over the life of mine reduces the recoverable amount by
$314.0 million to $nil, assuming all other inputs remain unchanged.
• Operating costs are based on approved budget costs for 2024 taking into
account the current running costs of the Mine and estimated forecast inflation
for 2024. From 2025 onwards, operating costs are escalated by 2% per annum as
management expects inflation to normalise and average 2% over the life of mine
period. Average forecast operating costs has increased from the year-end
review as a result of an increased labour costs experienced year to date. A
14% increase in operating costs over the life of mine reduces the recoverable
amount by $314.0 million to $nil, assuming all other inputs remain unchanged.
Whilst the Group has set ambitions to be net zero by 2040, the full financial
impact of the transition plan is still being assessed as the Group considers
how it will work towards meeting this target. The mine financial model
includes the cost of using bio-diesel in its forecast operating costs. The
cost of studies on plant electrification and other sustainable methods of
operating are also included in forecast operating and capital cost. No savings
associated with the Company’s ambition to become net zero have been factored
into the forecast.
• Capital costs are based on a life of mine capital plan including
inflation at 2% per annum from 2025. Average forecast capital costs have
remained relatively unchanged but the scheduling has changed from the year-end
review based on updated sustaining and development capital plans required to
maintain the existing plant over the life of mine. A 44% increase in capital
costs over the life of mine reduces the recoverable amount by $314.0 million
to $nil, assuming all other inputs remain unchanged.
9. Right-of-use assets
Land and Buildings $’000 Total $’000
Cost
At 1 January 2024 2,590 2,590
At 30 June 2024 2,590 2,590
Accumulated Depreciation
At 1 January 2024 1,222 1,222
Depreciation expense 137 137
At 30 June 2024 1,359 1,359
Carrying amount
At 30 June 2024 1,231 1,231
At 31 December 2023 1,368 1,368
The Group has recognised a lease liability of $1.7 million in respect of the
rental of its Irish head office. The lease has a term of 10 years commencing
August 2017 and rental payments are fixed to the end of the lease term. This
lease obligation is denominated in Euros.
The Group has also recognised a lease liability of $0.9 million in respect of
its Mozambican country office in Maputo. The lease has a term to 1 December
2033. This lease obligation is denominated in US Dollars.
At each reporting date, the Company assesses whether there is any indication
that right-of-use assets may be impaired. No impairment indicators were
identified as at 30 June 2024 or 31 December 2023.
The Group has recognised a rental expense of $4.3 million (2023: $10.4
million) in relation to short term leases of machinery and vehicles which have
not been recognised as a right-of-use asset.
Set out below are the carrying amounts of lease liabilities at each reporting
date:
Unaudited 30 June 2024 $’000 Audited 31 Dec 2023 $’000
Current 274 264
Non-Current 1,114 1,256
1,388 1,520
10. Inventories
Unaudited 30 June 2024 $’000 Audited 31 Dec 2023 $’000
Mineral products 77,245 58,405
Consumable spares 36,366 40,852
113,611 99,257
At 30 June 2024, total final product stocks were 273,000 tonnes (31 December
2023: 259,100 tonnes). Closing stock of Heavy Mineral Concentrate was 24,600
tonnes (31 December 2023: 16,700 tonnes).
Net realisable value is determined with reference to forecast prices of
finished products expected to be achieved. There is no guarantee that these
prices will be achieved in the future, particularly in weak product markets.
During the financial period there was a write-down of $nil (31 December 2023:
$nil) to mineral products to value them at net realisable value.
11. Trade and other receivables
Unaudited 30 June 2024 $’000 Audited 31 Dec 2023 $’000
Trade receivables 36,715 127,442
VAT receivable 6,336 6,377
Prepayments 24,502 19,831
67,553 153,650
12. Cash and cash equivalents
Unaudited 30 June 2024 $’000 Audited 31 Dec 2023 $’000
Cash and cash equivalents 60,290 71,048
Cash and cash equivalents comprise cash balances held for the purposes of
meeting short-term cash commitments and investments which are readily
convertible to a known amount of cash and are subject to an insignificant risk
of change in value. Where investments are categorised as cash equivalents, the
related balances have a maturity of three months or less from the date of
investment.
13. Share capital and dividends
Share capital as at 30 June 2024 amounted to $0.1 million (31 December 2023:
$0.1 million).
In May 2024, the Company paid a final 2023 dividend of $34.7 million (2022
final dividend: $41.1 million) representing USc38.54 (2022 final dividend:
USc43.33) per share.
14. Bank loans
Unaudited 30 June 2024 $’000 Audited 31 Dec 2023 $’000
Borrowings - 47,873
The borrowings are repayable as follows:
Less than one year - 33,087
Between two and five years - 15,712
- 48,799
Transaction costs - (926)
Total carrying amount - 47,873
Borrowings
On 4 March 2024, the Group entered into a secured senior debt facility
agreement (“Senior Facility Agreement”) with Absa Bank Limited (acting
through its Corporate and Investment Banking Division) (“Absa”), Nedbank
Limited (acting through its Nedbank Corporate and Investment Banking division)
(“Nedbank”), Rand Merchant Bank and Standard Bank Group (“Standard
Bank”).
The Senior Facility Agreement provides the Group with a $200 million Revolving
Credit Facility. The finance documentation also provides for a Mine Closure
Guarantee Facility (provided by either the existing lenders or other finance
providers) of up to $50 million, with the provider(s) of such a facility
sharing in the common security package.
The Revolving Credit Facility has a maturity date of 4 March 2029. Interest is
at SOFR plus 4.85% per annum.
The security package consists of (a) security over the Group’s bank accounts
(subject to certain exceptions), (b) pledges of the shares of Kenmare Moma
Processing (Mauritius) Limited and Kenmare Moma Mining (Mauritius) Limited
(the “Project Companies”), (c) security over intercompany loans and (d)
Mozambican law security interests over certain rights and agreements with
Mozambican authorities, including over the Implementation Agreement, the
Mineral Licensing Contract and the Mining Licence.
The carrying amount of the secured bank accounts of the Group was $60.3
million as at 30 June 2024 (31 December 2023: $70.9 million). The shares of
the Project Companies and intercompany loans are not included in the
consolidated statement of financial position as they are eliminated on
consolidation. They therefore do not have a carrying amount but, upon
enforcement of the pledges on behalf of the lender group, the shares in the
Project Companies would cease to be owned or controlled by the Group. The
secured rights and agreements do not have a carrying amount. They are,
however, necessary for the Project Companies to operate the Mine in
Mozambique.
In March the Group drew down $51.4 million of the Revolving Credit Facility to
repay the Term Loan of $48.8 million plus interest and fees of $2.6 million.
The debt was subsequently repaid in full in the period.
14. Bank loans (continued)
Reconciliation of movements of debt to cashflows arising from financing activities Unaudited 30 June 2024 $’000 Audited 31 Dec 2023 $’000
Bank Loans
Balance at 1 January 47,873 78,578
Cash movements
RCF drawdown 51,370 -
Loan interest paid – Term Loan (1,050) (7,211)
Loan interest paid - RCF (1,160) -
Principal repaid – Term loan (48,786) (31,429)
Principal repaid – RCF (51,370) -
Non-cash movements
Loan interest accrued – Term Loan 1,050 7,935
Loan interest accrued – RCF 1,160 -
Transaction costs amortised 913 -
Balance at 30 June/31 December - 47,873
Financial Covenants
There were no covenants breached during the period.
15. Trade and other payables
Unaudited 30 June 2024 $’000 Audited 31 Dec 2023 $’000
Trade payables 12,708 6,510
Deferred income 2,280 2,752
Accruals 21,943 29,302
36,931 38,564
16. Provisions
Unaudited 30 June 2024 $’000 Audited 31 Dec 2023 $’000
Mine closure provision 16,134 17,540
Mine rehabilitation provision 6,172 5,462
22,306 23,002
Current 1,048 2,125
Non-current 21,258 20,877
22,306 23,002
Mine Closure Provision $’000 Mine Rehabilitation Provision $’000 Total $’000
At 1 January 2023 16,623 4,121 20,744
Increase in provision during the financial year 241 1,720 1,961
Provision utilised during the financial period - (379) (379)
Unwinding of the discount 676 - 676
At 1 January 2024 17,540 5,462 23,002
Increase/(decrease) in provision during the financial year (1,762) 2,060 298
Provision utilised during the financial period - (1,350) (1,350)
Unwinding of the discount 356 - 356
At 30 June 2024 16,134 6,172 22,306
The mine closure provision represents the Directors’ best estimate of the
Project Companies’ liability for close-down, dismantling and restoration of
the mining and processing site. A corresponding amount equal to the provision
is recognised as part of property, plant and equipment.
The costs are estimated on the basis of a formal closure plan, are subject to
regular review and are estimated based on the net present value of estimated
future costs. Mine closure costs are a normal consequence of mining, and the
majority of close-down and restoration expenditure is incurred at the end of
the life of the Mine. The unwinding of the discount is recognised as a finance
cost and $0.4 million (H1 2023: $0.3 million) has been recognised in the
statement of comprehensive income for the financial period.
The main assumptions used in the calculation of the estimated future costs
include:
• a discount rate of 4.5% (31 December 2023: 4.0%);
• an inflation rate of 2% (31 December 2023: 2%);
• an estimated life of mine of 40 years (31 December 2023: 40 years). It
is assumed that all licences and permits required to operate will be renewed
or extended during the life of mine; and
• an estimated closure cost of $36.8 million (31 December 2023: $36.8
million) and an estimated post-closure monitoring provision of $2.6 million
(31 December 2023: $2.6 million).
The life of mine plan is based on the Namalope, Nataka, Pilivili and Mualadi
reserves and resources. Specific resource material is included only where
there is a high degree of confidence in its economic extraction. The Mine
closure provision has decreased by $1.7 million from 31 December 2023 to
reflect a change in the discount rate from 4% at 31 December 2023 to 4.5% at
30 June 2024.
The discount rate is a significant factor in determining the Mine closure
provision. The Group uses a thirty-year US Treasury yield as this is the
longest period for which yields are quoted. This discount rate is deemed to
provide the best estimate of the current market assessment of risk-free time
value of money. Risks specific to the liability are included in the cost
estimate.
The Mine rehabilitation provision represents the Directors’ best estimate of
the Company’s liability for rehabilitating areas disturbed by mining
activities. Rehabilitation costs are recognised based on the area disturbed
and estimated cost of rehabilitation per hectare which is reviewed regularly
against actual rehabilitation cost per hectare. Actual rehabilitation
expenditure is incurred approximately twelve months after the area has been
disturbed. During the financial period there was a release of $1.4 million
(2023: $0.4 million) to reflect the actual mine rehabilitation costs incurred,
and an addition to the provision of $2.1 million (2023: $1.7 million) for
areas newly disturbed.
17. Current tax liabilities
Unaudited 30 June 2024 $’000 Audited 31 Dec 2023 $’000
Current tax liabilities 4,629 6,921
Further details on the Group’s tax expense are detailed in Note 6.
18. Financial Instruments
Unaudited 30 June 2024 Audited 31 Dec 2023
Carrying amount $’000 Fair value $’000 Carrying amount $’000 Fair value $’000
Financial assets at fair value through profit and loss
Trade receivables (1) - - Level 2 - - Level 2
Financial assets at fair value through OCI
Trade receivables (2) 24,538 24,538 Level 2 110,534 110,534 Level 2
Financial assets not measured at fair value
Trade receivables (3) 12,177 12,177 Level 2 16,908 16,908 Level 2
Cash and cash equivalents 60,290 60,290 Level 2 71,048 71,048 Level 2
97,005 97,005 198,490 198,490
Financial liabilities not measured at fair value
Bank loans - - Level 2 47,873 48,799 Level 2
(1 )Relates to trade receivables which will be discounted
through the Barclay’s bank facility.
(2) Relates to trade receivables which may be factored through
the ABSA facility or discounted through the Barclay’s bank facility.
(3) Relates to trade receivables which will not be discounted
or factored.
The carrying amounts and fair values of financial assets and financial
liabilities including their levels in fair value hierarchy are detailed above.
The table does not include fair value information for other receivables,
prepayments, trade payables and accruals as these are not measured at fair
value as the carrying amount is a reasonable approximation of their fair
value.
Trade receivables or letters of credit where it is not known at initial
recognition if they will be factored are classified as fair value through
other comprehensive income (FVOCI). Trade receivables which will not be
factored and for which balances will be recovered under the sale contract
credit terms are initially measured at fair value and subsequently measured at
amortised cost.
In the case of factored receivables, the Group derecognises the discounted
receivable to which the arrangement applies when payment is received from the
bank as the terms of the arrangement are non-recourse. The payment to the bank
by the Group’s customers are considered non-cash transactions for the
purposes of the consolidated statement of cashflows.
The valuation technique used in measuring Level 2 fair values is discounted
cash flows, which considers the expected receipts or payments discounted using
adjusted market discount rates or where these rates are not available
estimated discount rates.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or a
counterparty to a financial instrument fails to meet its contractual
obligations and arises principally from the Group’s trade receivables from
customers. The carrying amount of financial assets represents the maximum
credit exposure.
The Group’s exposure to credit risk is influenced by the individual
circumstances of each customer. The Group also considers the factors that may
influence the credit risk of its customer base, including the default risk
associated with the industry and country in which customers operate.
Before entering into sales contracts with new customers, the Group uses an
external credit scoring system to assess the potential customer’s credit
quality. The credit quality of customers is reviewed regularly during the year
and where appropriate credit limits or limits to the number of shipments which
can be outstanding at any point are imposed.
The Group’s customers have been transacting with the Group for a significant
number of years, and no customers’ balances have been written off or are
credit impaired at the financial year end. In monitoring customer credit risk,
customers are reviewed individually and the Group has not identified any
factors that would merit reducing exposure to any particular customer. The
Group does not require collateral in respect of trade receivables.
The movement in expected credit losses in respect of trade receivables were
measured at amortised cost or fair value through other comprehensive income
during the period was as follows:
Unaudited 30 June 2024 $’000 Audited 31 Dec 2023 $’000
Opening balance 1,580 1,534
Net remeasurement of loss allowance (1,154) 46
Closing 426 1,580
The decrease in the loss allowance is mainly attributable to the decrease in
trade receivables at the period end. The methodology for the calculation of
expected credit losses is the same as described in the last annual statements.
19. Share-based payments
Kenmare Restricted Share Plan (KRSP)
During the financial period, 885,323 (H1 2023: 864,481) shares were granted to
employees under the 2024 KRSP award. The estimated fair value of the shares
awarded is $3.5 million (H1 2023: $5.0 million). These share awards vest,
subject to continued employment on the third anniversary or, in the case of
Executive Directors and certain other staff, subject to continued employment
and to the Remuneration Committee’s assessment against a discretionary
underpin, on the third anniversary of grant.
During the financial period, the Group recognised a share-based payment
expense of $1.7 million (H1 2023: $1.4 million).
During the period, awards in respect of 414,940 shares were exercised at a
cost of $2.2 million.
20. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note.
On 14 March 2024 the Company entered into a termination agreement with Michael
Carvill pursuant to which he would step down as Managing Director on 14 August
2024. In order to support an orderly transition process, the Company also
entered into a consultancy agreement with Michael Carvill to at least the 31
December 2024. There is a two month notice period under this contract.
Apart from the above and the existing remuneration arrangements there were no
material transactions or balances between the Group and its key management
personnel or members of their close families during the period under review.
21. Events after the statement of financial position date
Interim dividend
An interim dividend for the period ended 30 June 2024 of USc15.0 (H1 2023:
USc17.5) per share was approved by the Board on 13 August 2024. The dividend
payable has not been included as a liability in these financial statements.
The interim dividend is payable to all shareholders on the Register of Members
on 20 September 2024.
There have been no other significant events since 30 June 2024 which would
have a significant impact on the financial statements of the Group.
Mine closure guarantee
The Group entered into a mine closure guarantee facility on 30 July 2024 with
Standard Bank Moçambique SA effective from 1 July 2024 for an amount of $33
million. The mine closure guarantee shares the security package with the
Revolving Credit Facility on a pro rata and pari passu basis.
22. Information
The half-yearly financial report was approved by the Board on 13 August 2024.
Copies are available from the Company’s registered office at 4th Floor,
Styne House, Hatch Street Upper, Dublin 2, D02 DY27, Ireland.
The report is also available on the Company’s website at
www.kenmareresources.com.
STATEMENT OF DIRECTORS RESPONSIBILITIES
For the half year ended 30 June 2024
The Directors are responsible for preparing the half-yearly financial report
in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007
(“Transparency Directive”), the Transparency Rules of the Central Bank of
Ireland and Transparency Rule 4.2 of the Disclosure Guidance and Transparency
Rules of the UK Financial Conduct Authority.
In preparing the condensed set of consolidated financial statements included
within the half-yearly financial report, the Directors are required to:
* prepare and present the condensed set of consolidated financial statements
in accordance with IAS 34 Interim Financial Reporting as adopted by the EU,
the Transparency Directive and the Transparency Rules of the Central Bank of
Ireland;
* ensure the condensed set of consolidated financial statements has adequate
disclosures;
* select and apply appropriate accounting policies;
* make accounting estimates that are reasonable in the circumstances; and
* assess the Entity’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the Entity or to
cease operations, or have no realistic alternative but to do so.
The Directors are responsible for designing, implementing and maintaining such
internal controls as they determine is necessary to enable the preparation of
the condensed set of consolidated financial statements that is free from
material misstatement whether due to fraud or error.
We confirm that to the best of our knowledge:
(1) the condensed set of consolidated financial statements included
within the half-yearly financial report of Kenmare Resources plc for the six
months ended 30 June 2024 (“the interim financial information”) which
comprises the condensed consolidated interim income statement, the condensed
consolidated interim statement of other comprehensive income, the condensed
consolidated interim statement of financial position, the condensed
consolidated interim statement of cash flows, the condensed consolidated
interim statement of changes in equity and the related explanatory notes, have
been presented and prepared in accordance with IAS 34 Interim Financial
Reporting as adopted by the EU, the Transparency Directive and Transparency
Rules of the Central Bank of Ireland.
(1) The interim financial information presented, as required
by the Transparency Directive and Transparency Rule 4.2 of the Disclosure
Guidance and Transparency Rules of the UK Financial Conduct Authority,
includes:
1. an indication of important events that have occurred during the first 6
months of the financial year, and their impact on the condensed set of
consolidated financial statements;
2. a description of the principal risks and uncertainties for the remaining 6
months of the financial year;
3. related parties’ transactions that have taken place in the first 6 months
of the current financial year and that have materially affected the financial
position or the performance of the enterprise during that period; and
4. any changes in the related parties’ transactions described in the last
annual report that could have a material effect on the financial position or
performance of the enterprise in the first 6 months of the current financial
year.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Entity’s website.
Legislation in the Republic of Ireland governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
On behalf of the Board:
M. CARVILL
T. HICKEY
Director
Director
13 August 2024
13 August 2024
Glossary - Alternative Performance Measures
Certain financial measures set out in the half-yearly financial report to 30
June 2024 are not defined under International Financial Reporting Standards
(IFRSs), but represent additional measures used by the Board to assess
performance and for reporting both internally and to shareholders and other
external users. Presentation of these Alternative Performance Measures (APMs)
provides useful supplemental information which, when viewed in conjunction
with the Group’s IFRS financial information, allows for a more meaningful
understanding of the underlying financial and operating performance of the
Group.
These non-IFRS measures should not be considered as an alternative to
financial measures as defined under IFRSs. Descriptions of the APMs included
in this report, as well as their relevance for the Group, are disclosed below.
APM Description Relevance
EBITDA Operating profit/loss before depreciation and amortisation Eliminates the effects of financing, tax and depreciation to allow assessment of the earnings and performance of the Group
EBITDA margin Percentage of EBITDA to Mineral Products Revenue Provides a group margin for the earnings and performance of the Group
Cash operating cost per tonne of finished product produced Total costs less freight and other non-cash costs, including depreciation and inventory movements divided by final product production (tonnes) Eliminates the non-cash impact on costs to identify the actual cash outlay for production and, as production levels increase or decrease, highlights operational performance by providing a comparable cash cost per tonne of product produced over time
Cash operating cost per tonne of ilmenite net of co-products Cash operating costs less zircon, rutile and mineral sands concentrates revenue, divided by ilmenite production (tonnes) Eliminates the non-cash impact on costs to identify the actual cash outlay for production and, as production levels increase or decrease, highlights operational performance by providing a comparable cash cost per tonne of ilmenite produced over time
Net cash/debt Bank loans before transaction costs, loan amendment fees and expenses, plus lease liabilities net of cash and cash equivalents Measures the amount the Group would have to raise through refinancing, asset sale or equity issue if its debt were to fall due immediately, and aids in developing an understanding of the leveraging of the Group
ROCE Return on capital employed ROCE measures how efficiently the Group generates profits from investment in assets
EBITDA
H1 2024 H1 2023 H1 2022 H1 2021 H1 2020
$m $m $m $m $m
Operating profit 32.7 80.2 74.0 56.8 20.6
Depreciation and amortisation 30.5 30.2 30.5 23.5 17.3
EBITDA 63.2 110.4 104.5 80.3 37.9
EBITDA margin
H1 2024 H1 2023 H1 2022 H1 2021 H1 2020
$m $m $m $m $m
EBITDA 63.2 110.4 104.5 80.3 37.9
Mineral Products Revenue 154.5 229.7 182.1 167.8 111.2
EBITDA margin (%) 41% 48% 57% 48% 34%
Cash operating cost per tonne of finished product
H1 2024 H1 2023 H1 2022 H1 2021 H1 2020
$m $m $m $m $m
Cost of sales 133.6 157.2 117.9 100.3 82.7
Administration costs (1.3) 5.4 5.4 19.2 14.2
Total operating costs 132.3 162.6 123.3 119.5 96.9
Freight charges (10.6) (13.2) (15.2) (10.4) (5.6)
Total operating costs less freight 121.7 149.4 108.1 109.1 91.3
Adjustments
Depreciation and amortisation (30.5) (30.2) (30.5) (23.5) (17.3)
Expected credit loss (1.2) 0.6 (0.2) - -
Share-based payments (1.6) (1.4) (3.2) (2.1) (1.0)
Mineral product inventory movements 18.8 (9.6) 27.8 3.8 2.2
Total cash operating costs 107.2 108.8 102.0 87.3 75.2
Final product production tonnes 490,800 472,600 550,700 612,100 410,600
Cash operating cost per tonne of finished product $218 $230 $185 $143 $183
Cash operating cost per tonne of ilmenite
H1 2024 H1 2023 H1 2022 H1 2021 H1 2020
$m $m $m $m $m
Total cash operating costs 107.2 108.8 102.0 87.3 75.2
Less co-products zircon, rutile and mineral sands concentrate revenue (18.0) (50.4) (48.6) (24.0) (31.3)
Total cash costs less co-product revenue 89.2 58.4 53.4 63.3 43.9
Ilmenite product production tonnes 444,100 425,500 499,700 559,000 368,900
Cash operating cost per tonne of ilmenite $201 $137 $107 $113 $119
Net debt/cash
H1 2024 H1 2023 H1 2022 H1 2021 H1 2020
$m $m $m $m $m
Bank debt - (63.4) (93.2) (128.0) (145.2)
Transaction costs - (1.5) (3.0) (4.7) (6.1)
Gross debt - (64.9) (96.2) (132.7) (151.3)
Lease liabilities (143) (1.6) (1.7) (2.8) (3.9)
Cash and cash equivalents 60.3 108.8 30.7 56.5 98.6
Net (debt)/cash 58.9 42.3 (67.2) (79.0) (56.6)
ROCE
H1 2024 H1 2023 H1 2022 H1 2021 H1 2020
$m $m $m $m $m
Operating profit 32.7 80.2 74.0 58.8 19.9
Total Equity and Non-Current Liabilities 1,153 1,180 1,058 1,087 1,085
ROCE % 3% 7% 7% 5% 2%
Glossary – Terms
Term Description
AIFR All injuries frequency rate. Provides the number of injuries at the Mine in the year, per 200,000 hours worked.
AGM Annual general meeting
CIF The seller delivers when the goods pass the ship’s rail in the port of shipment. Seller must pay the cost and freight necessary to bring goods to named port of destination. Risk of loss and damage are the same as CFR. Seller also has to procure marine insurance against buyer’s risk of loss/damage during the carriage. Seller must clear the goods for export. This term can only be used for sea transport.
CFR This term means the seller delivers when the goods pass the ship’s rail in port of shipment. Seller must pay the costs and freight necessary to bring the goods to the named port of destination, but the risks of loss or damage, as well as any additional costs due to events occurring after the time of delivery, are transferred from seller to buyer. Seller must clear goods for export. This term can only be used for sea transport.
The Company or Parent Company Kenmare Resources plc.
DFS Definitive feasibility studies are the most detailed and will determine definitively whether to proceed with the project. A definitive feasibility study will be the basis for capital appropriation, and will provide the budget figures for the project. Detailed feasibility studies require a significant amount of formal engineering work and are accurate to within approximately 10–15%.
EdM Electricidade de Moçambique.
EGM Extraordinary General Meeting
FOB Free on Board means that the seller delivers when the goods pass the ship’s rail at the named port of shipment. This means the buyer has to bear all costs and risks to the goods from that point. The seller must clear the goods for export. This term can only be used for sea transport.
Free Cash Flow Free Cash Flow is the cash generated by the Group in a reporting period before distributions to shareholders.
GHG emissions Scope 1 & 2 Greenhouse Gas emissions. The Group acknowledges the human contribution to climate change and aim to reduce emissions its already low carbon intensity operations.
GISTM Global Industry Standard of Tailings Management
Group or Kenmare Kenmare Resources plc and its subsidiary undertakings.
HMC Heavy mineral concentrate extracted from mineral sands deposits and which include ilmenite, zircon, rutile and other heavy minerals and silica.
Implementation Agreement The agreement for the Moma Heavy Mineral Sands Industrial Free Zone Project between Kenmare Moma Processing Limited (a company incorporated in Jersey whose rights and interests were transferred to KMPL in November 2002), a wholly owned subsidiary of Kenmare, and Mozambique dated 21 January 2002.
KMAD Kenmare Moma Development Association
KMML Mozambique Branch Mozambique branch of Kenmare Moma Mining (Mauritius) Limited (KMML).
KMPL Mozambique Branch Mozambique branch of Kenmare Moma Processing (Mauritius) Limited (KMPL).
KRSP Kenmare Resources plc Restricted Share Plan
Lenders Absa Bank Limited (acting through its Corporate and Investment Banking Division) (“Absa”), The Emerging Africa Infrastructure Fund (part of the Private Infrastructure Development Group (“PIDG”)) (“EAIF”), Nedbank Limited (acting through its Nedbank Corporate and Investment Banking division) (“Nedbank”), Rand Merchant Bank and Standard Bank Group (“Standard Bank”).
LTI Lost time injury. Measures the number of injuries at the mine that result in time lost from work.
LTIFR Lost time injury frequency rate. Measures the number of injuries causing lost time per 200,000 man hours worked on site
Marketing – finished products shipped Finished products shipped to customers during the period. Provides a measure of finished products shipped to customers
Mining – HMC produced Heavy mineral concentrate extracted from mineral sands deposits and which includes ilmenite, zircon, rutile, concentrates and other heavy minerals and silica. Provides a measure of heavy mineral concentrate extracted from the Mine
Moma, Moma Mine, the Mine or Site The Moma Titanium Minerals Mine consisting of a heavy mineral sands mine, processing facilities and associated infrastructure, which is located in the north east coast of Mozambique under licence to the Project Companies.
Mine Closure Guarantee Facility $33 million mine closure guarantee facility between the Group and Standard Bank Moçambique SA effective from 1 July 2024.
MSP Mineral Separation Plant.
Mtpa Million tonnes per annum.
Ordinary Shares Ordinary shares of €0.001 each in the capital of the Company.
PFS A feasibility study is an evaluation of a proposed mining project to determine whether the mineral resource can be mined economically. Pre-feasibility study is used to determine whether to proceed with a detailed feasibility study and to determine areas within the project that require more attention. Pre-feasibility studies are done by factoring known unit costs and by estimating gross dimensions or quantities once conceptual or preliminary engineering and mine design
has been completed.
Processing – finished products produced Finished products produced by the mineral separation process. Provides a measure of finished products produced from the processing plants
Project Companies Kenmare Moma Mining (Mauritius) Limited and Kenmare Moma Processing (Mauritius) Limited, wholly owned subsidiary undertakings of Kenmare Resources plc, which are incorporated in Mauritius.
Revolving Credit Facility $200 million debt facility dated 4 March 2024 between the Lenders and KMML Mozambique Branch and KMPL Mozambique Branch.
Term Loan Facility $110 million debt facility dated 11 December 2019 between the Lenders and KMML Mozambique Branch and KMPL Mozambique Branch.
THM Total heavy minerals in the ore of which ilmenite (typically 82%), rutile (typically 2.0%) and zircon (typically 5.5%) total approximately 90%.
TSF Tailings Storage Facility
UK United Kingdom
WCP Wet Concentrator Plant.
WCP A The original WCP which started production in 2007.
WCP B The second WCP which started production in 2013.
WCP C The third WCP which started production in 2020