Announcements - 30th April 2003

2002 Preliminary Results Chairman's Statement

Dear Shareholder,

Since the publication of the 2001 Annual Report and Accounts, we have been working on the development of a funding package for the Moma Titanium Minerals Project and the appointment of a contractor to build it. We have also signed three off-take agreements and continue to work on penetrating the titanium minerals market. Project Construction Contract

In September 2002, Kenmare initiated an Invitation to Bid process for the contract to build the project. Responses were received from three groups at the end of November. In consultation with the Lender Group, it was decided in December that Fluor Corporation would be awarded the contract to perform a delineation phase. During this time they would perform further definition work, go out to subcontractors, and reach a definitive cost number for the construction, commissioning and hand over of the mine. The definition work, due to be complete on 31 March, has taken longer than expected. Fluor has since requested an additional two months in order to complete this phase.

Presently subcontractor packages are being put together, potential subcontractors are being interviewed and the packages are being distributed for competitive tender. Any tendering situation has a degree of inherent uncertainty until complete, but our interviews suggest that there is a strong interest in the work from subcontractors.

Moma Project Implementation Director

Kenmare appointed Frank Murray as Moma Project Implementation Director in August 2002. Frank has worked in project implementation for many years and has completed several successful projects. His latest major implementation position was the Project Implementation Director for the Collahuasi Copper Project in Chile. This is a Joint Venture between Anglo American and Falconbridge and, when first built, was the largest greenfield mine development ever. Frank has a small team of people supplied principally from Aker Kvaerner, our Client Engineering firm, who work with him in Fluor's office in Johannesburg to liaise with Fluor and ensure their activities are focused. As we move into the construction phase, the size of this team will be increased.

Marketing

As a precondition to first project loan disbursement, we need to have arranged advance sales of product covering a significant portion of the annual revenues from the mine. This process started with the signing of a major ilmenite contract in May 2002. Since the last Annual Report we have added two zircon contracts covering 100% of the zircon output and a rutile contract covering approximately 40% of the rutile output. A further off-take contract is under negotiation, which will add a significant additional tranche of ilmenite and rutile sales.

Power Supply Agreement

A Power Supply Agreement with the Mozambican State-owned utility, Electricidade de Moçambique, was signed in January covering the provision of low cost, hydro-electrically generated power to the project from the commencement of production. The Agreement, covering a 20 year period, sets out the terms and conditions for the provision of this power and ensures that the project will pay a highly competitive tariff for the power supplied.

Environmental Licence Awarded

The Environmental Licence for the project, which includes the licence over the power transmission line, was issued on 19 March 2003. Licence approval by the Department of the Environment in Mozambique comes after an extensive review process and consultation with the public and stakeholders, whose input was incorporated into the final recommendations. An Environmental Impact Assessment and Environmental Management Plan for the project have been prepared to World Bank Standards and Kenmare is working closely with the Government of Mozambique and the local communities at the project area to ensure the development of the Moma mine will meet these high environmental standards. A temporary water use licence has been granted; this will be converted into a long-term licence.

Project Financing

Certain members of the Lender Group are constrained by their charters to lend only to African entities. The project companies, which were party to the regulatory agreements with the Government of Mozambique, are based in Jersey. Hence, we have incorporated new companies to facilitate lender requirements and transfer the agreements to them. Mauritius was chosen as a base as it was judged to have the most appropriate legal framework for financing in Africa. The Council of Ministers of Mozambique approved the transfer of the Implementation Agreement on 11 March 2003. This document defines the rights and obligations of the Industrial Free Zone in which the project's mineral processing operates. The transfer of the Mineral Licensing Agreement has also been completed.

The Lender Group appointed an independent engineering company, SRK Engineering, who have performed a due diligence process on the engineering work and costing previously performed on the project. Their final report issued in January states that the project is well engineered, will produce the volume of products predicted and should have a capital cost close to the number anticipated. The Lender Group also appointed an independent industry expert firm, IBMA Inc., to report on Moma's strategic position in the industry and on the likelihood that we will sell our product at the predicted prices. IBMA concluded that Moma would have the lowest operating cost of any potential entrant to the industry and lower operating costs than any existing producers with the exception of Richards Bay Minerals. Their report shows that there would be a deficit of supply of our products and that our price expectations were realistic.

After several major plenary sessions and a site visit by the whole Lender Group, substantial agreement on the terms of a project financing package have been achieved between Kenmare and its advisors (N. M. Rothschild & Sons Ltd. and lawyers Sullivan & Cromwell) and the Lender Group and its advisors. A term sheet has been negotiated and is being considered by each of the lending institutions. Satisfactory outcomes of the marketing and contractor processes are now the key factors in moving the funding process to closure.

Kenmare accounts for the year ended 31 December 2002 show a profit of US$968,520 arising mainly from foreign exchange gains and deposit interest income.

Chairman

Charles Carvill

Chairman

30 April 2003

Download PDF Version of 2002 Preliminary Results Chairman's Statement

For further information:

Michael Carvill
Managing Director
+353-1-671 0411
+353-87-674 0110

Murray Consultants
Tom Byrne
+353-1-498 0339

Binns & Co PR Ltd
Paul McManus
+44-207-7869600
+44-7980-541893

Judith Parry
+44-113-2421171