Chairman's Statement
14 April 2008
Dear Shareholder,
Since my last Chairman’s statement, Kenmare’s wholly owned Moma Titanium Minerals Mine has become a significant exporter from Mozambique. Six customer vessels have been loaded by our transhipment vessel, the Bronagh J, and departed for destinations in Europe, America and Asia. Ilmenite contained in these shipments has already been consumed by our customers to make pigment.
This has been achieved despite considerable problems with certain equipment supplied under the construction contract, which has had to be replaced under warranty. In particular, a set of vibrating screens that are an essential component of the Mineral Separation Plant (MSP), started to show signs of deterioration and the feed rate through the plant had to be reduced. Pending supply of new, larger and more robust screens under warranty by the contractor, temporary repairs were required for this equipment and consequently the plant throughput was lower than anticipated. The new screens have now been installed, allowing the mine to get back onto its ramp-up curve.
A cyclone, the first in over twenty years in the area, passed over Moma in early March. Due to excellent planning by site management there were no casualties or injuries. We were able to get production going from the MSP within a couple of days. In the mining pond, there was some damage to the Wet Concentrator Plant (WCP) and to the rubber hose connections between the WCP and the mining dredges. As a result, mining was interrupted for four weeks and has now resumed. In the interim, the MSP has continued to operate with feed drawn from stockpiled heavy mineral concentrate.
With the installation of the new screens, and various other remedial work which has been carried out under warranty, we believe that the Company is well set to achieve its targeted production rate, albeit somewhat later than was originally envisaged. We now expect that the ramp-up will continue through 2008, with full production rate being achieved in the last quarter.
The Company has continued to plan for the expansion to 1.2 million tonnes of ilmenite product plus associated co-products per annum. This new capacity is targeted to be available by the end of 2009.
The market for titanium feedstocks is favourable and is in a supply-constrained position. This is putting strong upward pressure on global feedstock prices, particularly for ilmenite, and has pushed up the price of imported ilmenite to China by around 50% since the start of 2008. Despite a 5% reduction in consumption in the United States during 2007, the global demand for TiO2 feedstocks grew by 3.6%, led by strong growth in Europe and Asia, particularly China. A similar growth rate is expected in 2008. In addition, the supply side may be further restricted by energy shortages in South Africa, where a large proportion of the world’s titanium feedstocks originate. The zircon market has seen a slight easing of prices over the last year, due principally to artisanal production from Indonesia. This production is viewed as coming from short-term resources which have already started to reduce. End use demand for zircon remains robust. Hence the market outlook for all our production is very positive and the Company stands to benefit from both price upside as well as the expanded production on volumes.
Kenmare is committed to reducing the negative impacts associated with the Moma Mine and enhancing those which are positive. The Kenmare Moma Development Association, a not-for-profit organisation, works to implement this objective through the execution of a variety of capacity building, infrastructural and sociocultural projects. These projects include a savings and credit programme, various horticultural projects, egg production initiatives, school construction, a HIV/AIDS awareness programme and support to local sports development. Funding for these programmes continues to grow and Kenmare is grateful to all who have contributed to the development of these projects, including the time and resources provided by mine personnel to assist with the school construction and other initiatives.
The financial results for 2007 show a loss of US$9.6 million. This loss arises primarily from foreign exchange losses on Euro-denominated debt and Kenmare’s corporate operating costs, net of interest earned. Costs associated with construction and commissioning the mine, net of revenues earned during 2007, have been capitalised. Assets totalling US$266.9 million were transferred from Construction in Progress to Property, Plant and Equipment during the year on the takeover of these assets from the contractor. Senior and subordinated loans drawn at the year end amounted to US$325.8 million, US$119.3 million of which comprised of Euro-denominated loans.
The last six months has demonstrated that the Moma Mine will work well. The mine has demonstrated its ability to dredge, concentrate, separate and export product whilst maintaining an excellent safety record. While we have experienced some cost increases caused mainly by salary and fuel costs, we are very confident that Moma will achieve its targeted production rates in 2008 and attain its predicted low cost position in the industry.
Charles Carvill
Chairman
This release incorporates Kenmare’s Interim Management Statement relating to the period from 1 January 2008 to 14 April 2008.
Download a PDF Version of 2007 Annual Report 
For further information:
Kenmare Resources plc
Michael Carvill
Managing Director
Tel: +353 1 671 0411
Mobile: +353 87 674 0110
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