Strategic objectives

Kenmare operates the Moma Mine, located on the north east coast of Mozambique. The Moma Mine contains reserves of heavy minerals that include the economic titanium minerals, ilmenite and rutile, which are used as feedstocks to produce titanium dioxide pigment, as well as the relatively high-value zirconium silicate mineral, zircon.

Titanium dioxide pigment is used in paints, paper and plastic production. The primary applications for zircon are in the manufacture of opacifiers for ceramic tile production and for refractory products used in the steel and foundry industries.

Kenmare is a well-established major global supplier of titanium mineral sand products, with a customer base operating in over fifteen countries. The output from the Mine consists of several grades of the titanium dioxide (TiO 2) minerals, ilmenite and rutile, as well as the zirconium mineral, zircon. Kenmare’s products are key raw materials that are processed into intermediate products and ultimately consumed in everyday “quality-of-life” products such as paints, plastics and ceramic tiles.

View our strategy.

Strategic objectives, priorities and performance

Kenmare's vision is to be a leading ilmenite producer positioned in the first quartile of the industry revenue to cost curve. We will deliver this vision through the Group’s strategy, which is focused on the three pillars of growth, margin expansion and shareholder returns. Our strategy is supported by our ongoing commitment to be a responsible corporate citizen.

Growth

Priorities

  • Our strategy is to deliver higher HMC (and therefore final product) volumes through:
    1. higher productivity;
    2. expanded mining capacity - WCP B upgrade in 2018, development of WCP C in 2019; and
    3. accessing higher grade ore - relocating WCP B to Pilivili in 2020.

Performance

  • 2019 was a record year for excavated ore tonnes (36.8 million tonnes).
  • Following the 20% capacity upgrade in 2018, WCP B achieved average production of 2,160 tonnes per hour (tph) in 2019. The WCP B upgrade was completed on time and over 35% below the original budget.
  • The development of WCP C progressed during 2019 and commissioning of the dredge began in November 2019.
  • A Definitive Feasibility Study (DFS) was completed for the relocation of WCP B to Pilivili and approved by the Board. Project execution is underway.

Outlook

  • First HMC production was delivered from WCP C in February 2020. The project is expected to be delivered on budget.
  • The relocation of WCP B to Pilivili is scheduled to take place in Q3 2020, with commissioning expected in Q4 2020.
  • From 2021, following the relocation, Kenmare’s production is expected to be 1.2 Mtpa of ilmenite.

Margin Expansion

Priorities

  • Optimising the performance of existing assets is crucial to maximising margin. Kenmare’s strategy has three points of focus:
  1. increasing throughput – through dry mining and dredge automation;
  2. raising utilisation – by improving mine planning processes to increase plant operating time; and
  3. increasing revenue capture – through higher recoveries and additional product streams.

Performance

  • The first shipment of mineral sands concentrate was despatched from Moma in Q2 2019, following successful commissioning of the product stream in Q4 2018.
  • The first dredge automation project was commissioned at WCP B in Q2 2019.
  • Mine utilisation rates continued to improve in 2019 through Projecto Oitenta, in line with Kenmare’s objective of increasing utilisation to 80%.

Outlook

  • Following the relocation of WCP B, Kenmare’s cash operating costs per tonne are expected to decrease to US$125–135 per tonne (in 2020 real terms).
  • This will position the Group within the first quartile of the industry margin curve and provide protection against commodity price cycles.

Shareholder Returns

Priorities

  • Paying a dividend is an essential part of Kenmare’s strategy to deliver shareholder value.
  • Maintaining a prudent level of cash and cash equivalents is a strategic priority.
  • A cash buffer helps to insulate the business from unexpected shocks. Higher cash balances are likely to be maintained until capital development projects are completed.

Performance

  • Kenmare declared its maiden dividend of USc2.66 in August 2019 and it was paid in October 2019.
  • It was an interim dividend and in line with the Company’s dividend policy of paying 20% of profit after tax as shareholder returns.
  • At year end 2019, the Group had net cash of US$13.7 million, including cash and cash equivalents of US$81.1 million.

Outlook

  • Final dividend of USc5.52 per share expected to be paid in May 2020.
  • This results in a 2019 full year dividend of USc8.18 per share.
  • Expected higher shareholder returns from 2021, following the completion of development projects.
  • Potential for special dividends or share buybacks.