Q3 2024 Production Report
17/10/2024 07:01
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Kenmare Resources plc
(“Kenmare” or “the Company” or “the Group”)
17 October 2024
Q3 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 30 September 2024 (“Q3 2024”).
Statement from Tom Hickey, Managing Director:
“I am delighted to report my first quarterly production update as Managing
Director. I visited Moma in September for the first time since taking on the
role and it was encouraging to see the significant progress being made on the
Wet Concentrator Plant A upgrade. It was also exciting to discuss the
near-term commissioning of a small-scale dredge-mining and concentrating
operation to support production in 2025 and beyond. Additionally, we made the
first trial shipment of a new concentrates product during the quarter.
Production strengthened in Q3 compared to Q2, as expected, due to higher
excavated ore volumes, and Kenmare is on track to achieve its 2024 guidance on
all metrics. Shipments also improved significantly, with over 300,000 tonnes
of products shipped, and this is expected to drive stronger financial
performance in H2 versus H1.
Market conditions for all of our products continue to be robust, with the
healthy demand we experienced in Q3 extending into Q4. Our order book is
largely committed for the remainder of the year.”
Q3 2024 overview
* Lost Time Injury Frequency Rate (“LTIFR”) of 0.06 per 200,000 hours
worked for the 12 months to 30 September 2024 (30 September 2023: 0.21)
* Kenmare is on track to achieve 2024 guidance across all stated metrics
* Heavy Mineral Concentrate (“HMC”) production of 355,400 tonnes in Q3
2024, down 14% year-on-year (“YoY”), primarily due to lower ore grades, in
line with expectations
* Ilmenite production of 257,400 tonnes in Q3 2024, down 12% YoY, due to
reduced HMC processed
* Primary zircon production of 14,600 tonnes, up 4% YoY, due to improved
recoveries and the processing of intermediate stocks
* Total shipments of finished products of 302,700 tonnes, up 85% YoY due to
the timing of shipments in Q3 2023, and up 29% on Q2 2024 due to improved
weather conditions
* The project to upgrade Wet Concentrator Plant (“WCP”) A in preparation
for Nataka mining remains on budget. Twenty pontoons have arrived at site,
allowing the commencement of the construction phase of the project
* Commissioning of a new small-scale dredge-mining and concentrating operation
expected to commence in late Q4 2024, with a capital cost of less than $6
million
* Strong global pigment production supporting demand for Kenmare’s products
* Kenmare has continued to engage constructively with the Government of
Mozambique regarding the Implementation Agreement renewal in December 2024
* As previously announced, Tom Hickey was appointed as Managing Director on 15
August 2024, succeeding Michael Carvill
* A process is underway to identify Tom’s successor as Chief Financial
Officer and an update is expected to be provided during Q4 2024
Operations update
Production from the Moma Mine in Q3 2024 was as follows:
Q3 2024 Q3 2023 Q3 2023 Q2 2024 Q2 2024
tonnes tonnes % variance tonnes % variance
Excavated ore (1) 11,089,000 10,822,000 2% 10,386,000 7%
Grade (1) 3.80% 4.32% -12% 3.84% -1%
Production
HMC production 355,400 414,600 -14% 342,600 4%
HMC processed 356,000 412,900 -14% 343,200 4%
Ilmenite 257,400 291,200 -12% 238,600 8%
Primary zircon 14,600 14,100 4% 13,000 12%
Rutile 2,900 2,700 7% 2,500 16%
Concentrates (2) 13,500 14,700 -8% 11,700 15%
Shipments 302,700 163,400 85% 234,700 29%
1. Excavated ore tonnage and grade prior to any floor losses.
2. Concentrates include secondary zircon, mineral sands concentrate and a new
trial concentrates product.
Kenmare’s rolling 12-month LTIFR to 30 September 2024 was 0.06 per 200,000
hours worked (30 September 2023: 0.21) and one Lost Time Injury was recorded
during Q3 2024.
HMC production was 355,400 tonnes in Q3 2024, a 14% decrease YoY, due
primarily to a 12% decrease in ore grades. Slower mining rates from the WCP A
dredges, due to higher slimes and a descending mine floor, were partially
offset by increased dry mining. However, the slower dredging advance delayed
higher grades, which are now being mined in early Q4.
Ilmenite production was 257,400 tonnes, down 12% YoY due to reduced HMC
processed, partially offset by improved recoveries in the Mineral Separation
Plant and processing of intermediate stocks. Primary zircon production was up
4% YoY to 14,600 tonnes, also benefitting from higher recoveries and drawdown
of intermediate stocks. Rutile production was up 7% YoY to 2,900 tonnes,
supported by improved recoveries, delivering record quarterly rutile
production. Concentrates production was 13,500 tonnes, down 8% YoY, offset by
the production of a new concentrates product on a trial basis in Q3 2024.
Total shipments in Q3 2024 were 302,700 tonnes, including two zircon shipments
that were delayed from Q2 and shipped in early Q3. Shipments were up 85% YoY,
due to the timing of shipments in Q3 2023, when two large ilmenite shipments
were completed after period end and attributed to Q4 2023. Shipments increased
by 29% on Q2 2024 due to improved weather conditions. Shipments in Q3 2024
comprised 269,200 tonnes of ilmenite, 12,500 tonnes of primary zircon, 3,700
tonnes of rutile and 17,300 tonnes of concentrates.
Shipments of concentrates included 3,100 tonnes of a new concentrate product
that was sold on a trial basis to customers in Q3. Kenmare expects to ship
this product on a commercial basis and incorporate in annual guidance from
January 2025.
Closing stock of HMC at the end of Q3 2024 was 24,000 tonnes, compared to
24,600 tonnes at the end of Q2 2024. Closing stock of finished products at the
end of Q3 2024 was 259,200 tonnes, compared to 273,000 tonnes at the end of Q2
2024, reflecting improved shipments exceeding production in Q3. Kenmare
continues to expect stock levels to remain higher than usual in Q4, due to
strong production and high levels of finished product stock at the end of H1,
before normalising during H1 2025.
Capital projects update
WCP A upgrade
The project remains on budget, with upgrade works continuing to advance,
thereby progressively derisking the project. At the end of Q3, 68% of the
project budget has been committed and approximately 75% is expected by
year-end.
The fabrication of the two new dredges continues to progress with the project
contractor in the Netherlands. Twenty out of 42 of the pontoons for the new
WCP module, incorporating the upfront desliming circuit, screens and surge
bin, have arrived at Moma and construction has commenced. The detailed design
of the Tailings Storage Facility (“TSF”) was completed in Q3 2024, with
construction incorporating Global Industry Standard on Tailings Management
(GISTM) standards expected to begin in Q4 2024. Construction of the
infrastructure in Nataka to support the TSF is underway.
Selective Mining Operation (“SMO”)
The introduction of a new small-scale dredge-mining and concentrating
operation, or SMO, will enable mining in peripheral areas of Mineral Resources
in the Pilivili high dunes and Namalope Flats at the Mine. These areas are low
in slimes, high in grade and not accessible by the larger WCPs or existing dry
mining operations that are limited by groundwater levels, which prevent the
extraction of ore below the water table.
The SMO will consist of two small cutter-suction dredges, a slurry bin unit,
screening equipment, and a 300 tonnes per hour concentrator spiral plant. This
represents 60% of the capacity of WCP C, which is currently the smallest of
Kenmare’s three mining operations. The first SMO module is en-route to Moma
by sea and is expected to arrive in Q4 2024. The first dredge and half of the
spiral circuit capacity are expected to be commissioned by year-end and the
remainder in early 2025.
Due to the free-flowing nature of the ore to be mined and the simple, modular
design of the operation, the capital expenditure for both units is anticipated
to be less than $6 million in total. This is a small investment that is
expected to add HMC production with a very low capital intensity. It is a new
approach to mining at Moma and may present further opportunities, depending on
the success of the first module.
The introduction of the SMO supports Kenmare’s ability to deliver ilmenite
production in 2025 that is broadly in line with 2023 and 2024 levels, despite
the planned downtime for WCP A required to facilitate the replacement of the
dredges and the upgrade of the plant. The SMO is expected to produce
approximately 50,000 tonnes of HMC per annum, enabling exploitation of
resources that would otherwise not be mined.
Corporate update
As previously announced, Tom Hickey was appointed as Managing Director on 15
August 2024. Tom succeeds Michael Carvill, who stepped down from the Board and
his executive role after 38 years.
A process is underway to appoint Tom’s successor as Chief Financial Officer.
The Company expects to provide an update on the results of the process during
Q4 2024.
During the period, Kenmare has continued to engage constructively with
Government of Mozambique representatives in relation to the renewal of
Moma’s Implementation Agreement (“IA”). The IA governs fiscal and other
terms of the Industrial Free Zone, under which Kenmare conducts its mining,
beneficiating and export activities and does not govern or impact day-to-day
mining operations. On 9 October 2024 Mozambique held elections and electoral
authorities have until 24 October to announce the final results. Kenmare
believes that Government representatives share its objective of concluding the
renewal process before the 21 December renewal date, without the need for
recourse to the dispute resolution procedures provided for in the agreement.
Market update
Kenmare continued to experience encouraging demand for all products in Q3
2024. While ilmenite prices were stable during Q3, the Company's average price
received increased on the prior quarter, as expected. The product mix
benefitted from two high-value zircon shipments which left Moma in July 2024,
having been delayed from Q2. Strong demand for Kenmare’s products has
extended into Q4, with the Company’s order book largely committed into 2025
In Q3 demand for Kenmare’s ilmenite benefitted from both strong Chinese
pigment production and increased production rates in other regions. Pigment
production in China remained resilient in Q3, despite soft domestic demand and
the impact of the anti-dumping regulations from the European Union (“EU”)
and the Commonwealth of Independent States. Although exports to the EU from
China have decreased, there has been an uptick in exports to some Asian
markets. Western producers reported increased pigment sales in Q2, viewing the
regulatory constraints on Chinese exports as an opportunity.
Strengthening global demand for titanium feedstocks in Q3 was matched by
increased supply, enabling the market to remain balanced. The main contributor
to this supply growth was from Mozambique, with a new project ramping up
production and shipments this year while increased HMC production from new
projects in Australia also contributed.
Kenmare received a marginally higher average price for its zircon products in
Q3 compared to Q2, supported by the constrained supply of high-quality zircon
products. Demand from the ceramics sector weakened during the quarter due to
the downturn in China’s real estate market and this is expected to impact
zircon prices in Q4, however the Company believes that due to supply
constraints in the medium and long-term, the fundamentals for its zircon
products remain strong.
For further information, please contact:
Kenmare Resources plc
Jeremy Dibb / Katharine Sutton
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
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