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 Resources plc 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 (TiO2) 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 strategy is to create long-term shareholder value through the production and marketing of products derived from our extensive mineral resources, while maintaining a structured and disciplined approach to capital management. This is underlined by our commitment to being 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, construction of WCP C; and
    3. accessing higher grade ore - moving WCP B to Pilivili in 2020.

Performance

  • 2018 was a year of record shipments of all finished products.
  • The upgrade of WCP B was commissioned and it is expected to be delivered at a cost more than 25% under the original budget. It is anticipated to add an additional 130,000 tonnes of HMC production per annum.
  • A Definitive Feasibility Study (DFS) was completed for the development of WCP C in Namalope and the project was approved by the Board.
  • A Pre-Feasibility Study (PFS) was completed for the move of WCP B to Pilivili.

Outlook

  • The construction of WCP C is expected to be commissioned in 2019. It is anticipated to add an additional 150,000 tonnes of HMC production per annum.
  • The WCP B move to Pilivili is scheduled to be completed in H2 2020. Following the move, Kenmare’s production is expected to be 1.2 Mtpa of ilmenite from 2021.

Margin Expansion

Priorities

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

Performance

  • Increased dry mining capacity at WCP B.
  • Higher recoveries, particularly for zircon, at the Mineral Separation Plant (MSP).
  • The first production of a mineral sands concentrate product (containing monazite, zircon and rutile) - this project was completed on time and below budget.

Outlook

  • The first dredge automation project is underway at WCP B and commissioning is expected in H1 2019.
  • Mine utilisation rates are expected to increase further in 2019, in line with Kenmare’s objective of increasing utilisation to 80%.
  • Zircon recoveries are expected to increase further in 2019 to 81%.

Shareholder Returns

Priorities

  • Establishing 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 and higher cash balances are likely to be maintained until capital development projects are completed.

Performance

  • In December 2018 shareholders approved a capital reduction process, a key step in facilitating future dividend payments.
  • At year end 2018, net cash was US$13.5 million, up from a net debt position of US$34.1 million at year end 2017.
  • At year end 2018, cash and cash equivalents increased by 41% to US$97.0 million, up from US$68.8 million at year end 2017.

Outlook

  • Maiden dividend of USc2.66 announced, following H1 2019 Results, in line with Kenmare’s dividend policy.
  • Expected higher capital returns from 2021, following the completion of development projects.
  • Potential for special dividends or shareholder buybacks.