Q1 2024 Production Report
11/04/2024 07:00
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Kenmare Resources plc
(“Kenmare” or “the Company” or “the Group”)
11 April 2024
Q1 2024 Production Report
Kenmare Resources plc (LSE:KMR, ISE:KMR), one of the leading global producers
of titanium minerals and zircon, which operates the Moma Titanium Minerals
Mine (the "Mine" or "Moma") in northern Mozambique, is pleased to provide a
trading update for the quarter ending 31 March 2024 (“Q1 2024”).
Statement from Michael Carvill, Managing Director:
“Our team at the Moma Mine has now worked for over six months without
incurring a Lost Time Injury and I would like to congratulate all of our
employees for this exceptional achievement.
Production in Q1 was in line with our expectations and consistent with
guidance. We anticipate production will strengthen through the rest of the
year, due to a stronger grade profile and typically fewer seasonal power
interruptions.
The markets for our products were encouraging in Q1, with stronger than
expected demand, particularly for ilmenite. This was driven by recovering
titanium pigment demand and the continued growth of the titanium metal
market.”
Overview
* Improved Lost Time Injury Frequency Rate (“LTIFR”) of 0.09 per 200,000
hours worked on a 12-month rolling basis (Q1 2023: 0.15) and zero Lost Time
Injuries (“LTIs”) in Q1 2024
* Heavy Mineral Concentrate (“HMC”) production in Q1 2024 of 316,400
tonnes, in line with Q1 2023 (315,000 tonnes)
* Ilmenite production of 205,500 tonnes, in line with Q1 2023 (204,300 tonnes)
* Reduced production of other finished products due to significant maintenance
work underway in the Mineral Separation Plant (“MSP”), including primary
zircon production of 8,300 tonnes (Q1 2023: 11,400 tonnes), rutile production
of 1,500 tonnes (Q1 2023: 1,700 tonnes), and concentrates production of 9,600
tonnes (Q1 2023: 10,100 tonnes)
* Total shipments of 242,900 tonnes in Q1 2024, down 11% on Q1 2023 (271,700
tonnes), excluding approximately 34,000 tonnes that were loaded in Q1 but
shipped in Q2
* Encouraging product market conditions in Q1 2024, with higher than expected
demand, and Kenmare has a strong order book for Q2
* As announced on 15 March 2024, Managing Director Michael Carvill will step
down from his executive role and Board position later this year – a process
to appoint his successor is underway
* Kenmare is on track to achieve its 2024 guidance, with production still
expected to be weighted towards the second half of the year
Operations update
Operational results from the Moma Mine in Q1 2024 were as follows:
Q1 2024 Q1 2023 Variance Q4 2023 Variance
tonnes tonnes % tonnes %
Excavated ore (1) 9,215,000 9,258,000 0% 9,348,000 -1%
Grade (1) 4.15% 4.13% 0% 4.83% -14%
Production
HMC production 316,400 315,000 0% 399,800 -21%
HMC processed 307,800 314,800 -2% 399,800 -23%
Ilmenite 205,500 204,300 1% 269,600 -24%
Primary zircon 8,300 11,400 -27% 14,000 -41%
Rutile 1,500 1,700 -12% 2,100 -29%
Concentrates (2) 9,600 10,100 -5% 10,500 -9%
Shipments 242,900 271,700 -11% 324,900 -25%
1. Excavated ore and grade prior to any floor losses.
2. Concentrates include secondary zircon and mineral sands concentrate.
In late February 2024, Kenmare passed three million hours worked without an
LTI. No LTIs were incurred in Q4 2023 or Q1 2024 and the Company’s rolling
12-month LTIFR improved to 0.09 per 200,000 hours worked (31 March 2023:
0.15).
HMC production in Q1 2024 was 316,400 tonnes, in line with Q1 2023 (315,000
tonnes), due to seasonal power interruptions as a result of the southern
hemisphere rainy season. The cumulative impact of the power interruptions in
Q1 2024 was greater than the downtime caused by the severe lightning strike in
February 2023 and materially exceeded the average impact on operations
experienced during the first quarter of the past five years. Production of
HMC, and consequently all finished products, was lower in Q1 2024 than in the
previous quarter due primarily to expected lower ore grades.
HMC processed in Q1 2024 was 307,800 tonnes, a 2% decrease compared to Q1 2023
(314,800 tonnes). HMC processed was 3% lower (8,600 tonnes) than HMC produced
in Q1 due to significant maintenance work taking place in the MSP. The aim of
this work was to address underperformance in various circuits, so HMC was held
back from processing until the work was completed. Another contributing factor
to the lower HMC processed was the reliability of one of the four engines in
the Rotary Uninterruptible Power Supply (“RUPS”). All four engines were
working for over 60% of the quarter, however for the periods without the
fourth engine, the RUPS’ ability to mitigate power interruptions was
reduced. An investigation is underway to determine the repair time for the
fourth engine.
Ilmenite production in Q1 2024 was 205,500 tonnes, in line with Q1 2023
(204,300 tonnes). Ilmenite production benefitted from the processing of
intermediate stockpiles, offsetting the slight reduction in HMC processed.
Intermediate stockpiles are comprised of partially processed materials in the
MSP that have not yet been fully separated into one of Kenmare’s four
product streams. The Company draws on this material to optimise the separation
process in the MSP.
Primary zircon production was 8,300 tonnes in Q1 2024, a 27% decrease on Q1
2023 (11,400 tonnes), due to challenges in the zircon circuit. This resulted
in lower recoveries and higher than usual quantities of material being sent to
the intermediate stockpiles, which will be processed in the coming quarters.
Rutile production was 1,500 tonnes, a 12% decrease (Q1 2023: 1,700 tonnes),
and concentrates production was 9,600 tonnes, a 5% decrease (Q1 2023: 10,100
tonnes). These product streams were impacted by the same challenges in the
MSP. Concentrates production benefitted from lower recoveries in primary
zircon and rutile production.
At the end of Q1, Kenmare is on track to achieve its 2024 guidance on all
stated metrics. Production is forecast to strengthen from Q2 onwards due to
improved power stability in the dry season and higher expected grades in H2.
Shipments were 242,900 tonnes in Q1 2024, down 11% compared to Q1 2023
(271,700 tonnes). However, an additional 34,000 tonnes that were loaded in
March are not included as the shipments were not completed until early April,
so these tonnes will be reflected in the Q2 shipment volumes. If these
additional tonnes are taken into consideration, Q1 2024 shipments are in line
with Q1 2023. Shipments were comprised solely of ilmenite during the quarter.
Closing stock of HMC at the end of Q1 2024 was 25,300 tonnes, compared with
16,700 tonnes at year-end 2023. This stock build was due to the difference
between HMC produced and HMC processed in the quarter, as a result of
maintenance work in the MSP. Closing stock of finished products at the end of
Q1 2024 was 241,800 tonnes (Q4 2023: 259,100 tonnes), including the 34,000
tonnes of shipments that completed in early April.
Capital projects
Preparations continue for the upgrade of Wet Concentrator Plant (“WCP”) A
ahead of its transition to the large Nataka ore zone. WCP A will complete its
current mine path in Namalope in late 2025 and then mine its way to Nataka,
where it will operate for the remainder of its economic life. Nataka
represents over 70% of Moma’s Mineral Resources and transitioning WCP A to
this ore zone is key to securing production from Moma for decades to come.
The upgrade of WCP A consists of three key elements and their status is as
follows:
1) Replacing existing two dredges with new, higher capacity
dredges – new dredges ordered in September 2023 and fabrication commenced in
Q1 2024
2) Installing upfront desliming circuit to more effectively
manage slimes at Nataka – fabrication of desliming circuit commenced in
early Q1 2024
3) Introduction of a Tailings Storage Facility (“TSF”) to
replace complex paddock system – detailed design of TSF is underway and
community engagement is in progress
The Definitive Feasibility Study for the additional infrastructure for WCP
A’s transition to Nataka remains on track to be completed in Q2 2024. Work
is also continuing on the Pre-Feasibility Study for Congolone, a potential
future growth opportunity for Kenmare, and this is also scheduled for
completion in Q2.
Market update
The market for Kenmare’s products was robust in Q1 2024, with stronger than
expected demand, particularly for the Company’s ilmenite products. Spot
prices for ilmenite have been stable since early Q4 2023, however average
received prices were lower in Q1 compared to the previous quarter. This was
due to lower contracted prices reflecting the softer market conditions in H2
2023.
Demand from the titanium pigment industry rebounded more strongly than
expected in Q1 2024. Pigment producers ramped up production in response to an
improving sales outlook, most notably in Europe and North America, and
ilmenite inventories are at low levels. Demand for titanium feedstocks from
the titanium metal sector remains strong.
Supply of titanium feedstocks remains at a high level but production
disruptions due to the suspension of some operations in Mozambique and Sierra
Leone are causing uncertainty in the market.
The zircon market has shown some positive signs of recovery following the
Lunar New Year. Supply of high-quality products is constrained, leading to
stronger prices in the spot market. This has been supported by growing demand
in India, however demand in Europe remains relatively weak.
Kenmare has a strong order book for Q2 2024 and expects to continue to draw
down product inventories to meet this demand.
Corporate update
As announced on 15 March 2024, Managing Director Michael Carvill will step
down from his executive role and Board position later this year. Subject to
re-appointment at the Company’s Annual General Meeting on 10 May 2024, it is
expected that Michael will remain on the Board and in his executive role until
the Company’s Interim Results in August. Following this, and to support an
orderly transition process, Michael will continue to be available to the
Company in a consultancy capacity until at least the end of 2024.
Kenmare’s Nomination Committee has commenced a process to appoint
Michael’s successor and will consider both internal and external candidates.
The result of this process will be announced in due course.
For further information, please contact:
Kenmare Resources plc
Jeremy Dibb / Katharine Sutton / Michael Starke
Investor Relations
ir@kenmareresouces.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
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