Q3 2023 Production Report
Kenmare Resources plc (“Kenmare”
or “the Company” or “the Group”)
12 October 2023
Q3 2023 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 2023 (“Q3 2023”).
Statement from Michael Carvill, Managing
Director:
“Production strengthened in Q3 as expected,
putting Kenmare firmly on track to achieve revised 2023 guidance.
Ilmenite production was up 32% quarter-on-quarter, as operations
were consistently stable, and this robust production is expected to
continue in Q4.
Following strong product pricing in H1 2023,
weaker global economic activity impacted the markets for Kenmare’s
products in Q3, although demand for our high-quality ilmenite
remains resilient. Shipments were impacted by the loading of two
vessels completing after quarter-end, meaning they will be
attributed to Q4.
We completed a share buy-back of $30 million
during the quarter, representing 5.9% of our share capital, as part
of our policy to supplement shareholder returns when resources
permit.”
Q3 2023 overview
- Lost Time Injury Frequency Rate
(“LTIFR”) of 0.21 per 200,000 hours worked for the 12 months to 30
September 2023 (30 September 2022: 0.03)
- Heavy Mineral Concentrate (“HMC”)
production of 414,600 tonnes in Q3 2023, a 7% decrease compared to
Q3 2022 (443,900 tonnes), driven by lower ore grades, but up 30% on
Q2 2023
- Ilmenite production of 291,200
tonnes in Q3 2023, a 4% decrease compared to Q3 2022 (304,700
tonnes) due to lower HMC processed, but up 32% on Q2 2023
- Primary zircon production of 14,100
tonnes, an 18% decrease compared to Q3 2022 (17,300 tonnes), due to
lower HMC processed and a build of intermediate stockpiles, but up
22% on Q2 2023
- Total shipments of finished
products of 163,400 tonnes, a 43% decrease compared to Q3 2022
(285,600 tonnes) as two large ilmenite shipments completed after
quarter-end – these will be recorded as Q4 2023 shipments
- Kenmare remains on track to achieve
revised 2023 production guidance
- The Definitive Feasibility Study
(“DFS”) for the upgrade and relocation of Wet Concentrator Plant
(“WCP”) A is expected in H1 2024, with orders already placed for
the replacement dredges given their long lead times
- Weaker global economic activity led
to lower average prices achieved for ilmenite in Q3 2023, although
demand remains strong for Kenmare’s high quality products
- Contracted zircon prices remained
largely stable although reduced global construction activity is
impacting ceramics demand, with zircon spot prices coming under
increasing pressure
Operations update
Production from the Moma Mine in Q3 2023 was as
follows:
|
Q3 2023 |
Q3 2022 |
Q3 2022 |
Q2 2023 |
Q2 2023 |
tonnes |
tonnes |
% variance |
tonnes |
% variance |
Excavated ore1 |
10,822,000 |
10,424,000 |
4% |
9,606,000 |
13% |
Grade1 |
4.32% |
4.95% |
-13% |
4.03% |
7% |
Production |
|
|
|
|
|
HMC production |
414,600 |
443,900 |
-7% |
318,900 |
30% |
HMC processed |
412,900 |
440,500 |
-6% |
322,900 |
28% |
Ilmenite |
291,200 |
304,700 |
-4% |
221,300 |
32% |
Primary zircon |
14,100 |
17,300 |
-18% |
11,600 |
22% |
Rutile |
2,700 |
2,600 |
4% |
1,900 |
42% |
Concentrates2 |
14,700 |
13,000 |
13% |
10,400 |
41% |
Shipments |
163,400 |
285,600 |
-43% |
285,100 |
-43% |
1. Excavated ore
tonnage and grade prior to any floor
losses.2. Concentrates
include secondary zircon and mineral sands concentrate.
Kenmare’s rolling 12-month LTIFR to 30 September
2023 was 0.21 per 200,000 hours worked (Q3 2022: 0.03), with two
lost time injuries recorded during Q3 2023. Kenmare is committed to
ensuring the health and safety of its employees and contractors
across its operations. The Company continues to focus on the
training and development of its employees and contractors to be
proactive and consistent in the identification, assessment,
management and mitigation of potential health and safety risks.
HMC production was 414,600 tonnes in Q3 2023,
representing a 7% decrease compared to Q3 2022 (443,900 tonnes).
This was a product of a 13% decrease in ore grades to 4.32% (Q3
2022: 4.95%) partially offset by a 4% increase in excavated ore
volumes to 10.8 million tonnes (Q3 2022: 10.4 million tonnes). HMC
recoveries improved at all Wet Concentrator Plants. The
introduction of clean water to spiral separation at WCP A has had a
meaningful impact and WCP C is now mining ore after the tailings
crossing.
Ilmenite production was 291,200 tonnes, the
strongest quarterly production of the year to date. However, it
represented a 4% decrease compared to Q3 2022 (304,700 tonnes) due
to the reduction in HMC processed.
Primary zircon production was 14,100 tonnes in
Q3 2023, an 18% decrease compared to Q3 2022 (17,300 tonnes).
Recoveries were impacted in Q3 2023 by power reliability issues
leading to increased stock spillage. The Rotary Uninterruptible
Power Supply (“RUPS”) is now back in service following
implementation of design corrections and it will help protect
against grid power instability. Lower utilisation of the circuit
caused a build-up of intermediate feedstocks, which are expected to
be largely drawn down in Q4 2023.
Rutile production was 2,700 tonnes, up 4% on the
prior year and 42% on the prior quarter (Q3 2022: 2,600 tonnes, Q2
2023: 1,900 tonnes). This reflects increased rutile feed grade in
HMC and improved recoveries as a result of separation equipment
upgrades.
Concentrates production was 14,700 tonnes, up
13% on Q3 2022 (13,000 tonnes), benefitting from increased feed
availability and debottlenecking of the circuit, which facilitated
increased throughputs.
Total shipments in Q3 2023 were 163,400 tonnes,
a 43% decrease compared to Q3 2022 (285,600 tonnes), largely due to
two ilmenite shipments being completed after quarter-end and
falling into Q4 2023. Shipments comprised 143,200 tonnes of
ilmenite, 9,200 tonnes of primary zircon, and 11,000 tonnes of
concentrates.
Closing stock of HMC at the end of Q3 2023 was
16,700 tonnes, compared to 15,000 tonnes at the end of Q2 2023.
Closing stock of finished products at the end of Q3 2023 was
288,400 tonnes, compared to 129,000 tonnes at the end of Q2 2023,
reflecting shipments carried into Q4 2023.
Capital projects update
The DFS for the WCP A upgrade and transition to
Nataka is scheduled for completion in H1 2024. Studies have been
completed for the replacement dredges, which are long lead time
items, and an order has been placed, thereby providing price
certainty on the construction costs for this important element of
the project. The construction, transportation and installation
costs of the dredges are now expected to be approximately 15%
higher than the Pre-Feasibility Study estimate.
Market update
Demand for titanium feedstocks and zircon
softened in Q3, reflecting weaker global economic activity, and
consequently Kenmare achieved lower average prices compared to the
previous quarter. Despite the current headwinds, the Company
believes the medium- and long-term fundamentals for all of its
products remain strong.
Pigment production in China, one of Kenmare’s
key markets, continues at high levels supported by new capacity.
Pigment exports from China are at record levels and competing
aggressively in the global market, with major producers outside of
China lowering utilisations and closing selected plants in
response.
Feedstock supply has remained flat during the
year. Ilmenite concentrates entering China remain the largest
source of new supply offsetting supply disruptions at several large
operations outside China, which are continuing in Q4 2023. This is
coupled with major producers reducing their supply to the market,
reflecting the weaker demand.
Demand for high-quality ilmenite has been more
resilient than other titanium feedstocks, benefiting from the
strong pigment production in China and the thriving titanium metal
market, supporting relatively stable demand for Kenmare’s ilmenite
products.
Kenmare expects to achieve higher sales volumes
in Q4 2023, as the loading of some vessels at the end of Q3 was
completed after quarter-end so these will be recorded in Q4. Some
other shipments were also delayed by customers from Q3 into Q4.
Demand for zircon is following a similar trend
to ilmenite. Subdued global construction activity is impacting
demand for ceramics and this is flowing through to the zircon
market. Contracted prices have remained relatively stable, although
spot prices have come under increasing pressure.
Kenmare expects to achieve strong zircon sales
in Q4 2023, with contracts in place for most of its volume.
For further information, please contact:
Kenmare Resources plcJeremy Dibb / Michael
StarkeInvestor Relationsir@kenmareresouces.comTel: +353 1 671
0411Mob: +353 87 943 0367
Murray (PR advisor)Paul
O’Kanepokane@murraygroup.ieTel: +353 1 498 0300Mob: +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.
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