TIDMKMR
Kenmare Resources plc ("Kenmare" or "the Company")
11 October 2017
Q3 2017 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 third quarter ending 30
September 2017 ("Q3 2017").
Statement from Michael Carvill, Managing Director:
"Q3 2017 represented another record quarter for Kenmare's ilmenite
production, keeping the Company on track for the highest ever annual
production, which will be within the guidance range. In the product
market, Chinese demand for ilmenite is improving again, following a
slower period in the last couple of months. The zircon market has
performed strongly, with further price increases in H2 2017."
Overview
-- Production of total finished products was 277,800 tonnes in Q3 2017 (Q3
2016: 265,700).
-- Ore mined in Q3 2017 increased 9% to 7,788,000 tonnes, compared to the
equivalent period in the prior year (Q3 2016: 7,160,800 tonnes).
-- Production of Heavy Mineral Concentrate ("HMC") in Q3 2017 declined 16%
to 272,600 tonnes (Q3 2016: 325,100 tonnes), due to guided lower grades
and more challenging mining conditions, which are expected to improve in
Q4 2017.
-- Ilmenite production in Q3 2017 was 257,500 tonnes, up 6% on the prior
year period (Q3 2016: 243,500 tonnes) and on track for record annual
production. Q4 2017 ilmenite production will be closely related to HMC
volumes produced as stockpiles were substantially drawn down in Q3 2017,
in line with expectations.
-- Zircon production in Q3 2017, decreased 8% to 18,100 tonnes (Q3 2016:
19,700 tonnes), due to an increase of intermediate zircon stocks, as
ongoing circuit modifications progressed.
-- Total shipments of finished products in Q3 2017 decreased 26% to 208,400
tonnes (Q3 2016: 280,800 tonnes), in line with previous guidance, due to
planned maintenance of the primary transhipment vessel.
-- China spot ilmenite prices have begun to strengthen, following a weaker
period in recent months, while zircon prices continue to improve
strongly.
Production
Production and shipments from the Moma Mine for Q3 2017 was as follows:
Q3-2017 Q3-2016 Variance Q2-2017 Variance
tonnes tonnes % tonnes %
Excavated Ore * 7,788,000 7,160,800 9% 8,976,000 -13%
Grade* 4.15% 4.81% -14% 4.46% -7%
Production
HMC 272,600 325,100 -16% 359,200 -24%
Ilmenite 257,500 243,500 6% 248,300 4%
Zircon 18,100 19,700 -8% 19,200 -6%
of which primary 12,000 12,300 -2% 12,900 -7%
of which secondary 6,100 7,400 -18% 6,300 -3%
Rutile 2,200 2,500 -12% 2,300 -4%
Shipments 208,400 280,800 -26% 279,600 -25%
* Excavated Ore and grade are prior to any floor losses.
During Q3 2017, Kenmare mined 7,788,000 tonnes of ore at an average
grade of 4.15% and produced 272,600 tonnes of HMC. Finished product
volumes for the period included 257,500 tonnes of ilmenite and 18,100
tonnes of zircon (including 6,100 tonnes of lower grade secondary
zircon).
Ore mined in Q3 2017 was 7,788,000 tonnes, an improvement of 9% versus
Q3 2016 (Q3 2016: 7,160,800 tonnes). The volume of ore mined declined
13% when compared to the previous quarter, due to more challenging
dredge mining conditions. Mining conditions are expected to improve in
Q4 2017, enabling higher tonnages of ore to be processed.
HMC production declined 16% to 272,600 tonnes in Q3 2017 compared with
325,100 tonnes in Q3 2016, principally as a result of the decline in
grade and higher slimes levels affecting recoveries. It is expected that
grades will increase modestly in Q4, increasing HMC production for the
final quarter, when combined with expected higher tonnes mined.
Production of ilmenite was 257,500 tonnes in Q3 2017, a new quarterly
record, up 6% over the prior year period (Q3 2016: 243,500 tonnes).
Production of ilmenite is on track for record annual production, within
the guided range. However, in Q4 2017 ilmenite production will be
closely related to HMC production volumes as HMC and intermediate
stockpiles were substantially drawn down in Q3 2017, as expected.
Zircon production declined 8% to 18,100 tonnes in Q3 2017, compared with
19,700 tonnes in Q3 2016. Of this, primary zircon production declined 2%
to 12,000 tonnes (Q3 2016: 12,300 tonnes). Secondary zircon volumes were
6,100 tonnes, down 18% (Q3 2016: 7,400 tonnes). Production was affected
by a modification to the zircon circuit in Q3 2017, which while
increasing overall recoveries to higher revenue products, has built a
stockpile of intermediate zircon which will be processed following
further circuit upgrades in Q4 2017. Intermediate zircon stockpiles are
expected to persist beyond the year end, reducing zircon production to
the lower half of the guidance range, particularly affecting secondary
zircon volumes.
Shipment volumes in Q3 2017 were 208,400 tonnes, 26% lower than Q3 2016
and 25% lower when compared with Q2 2017 (Q3 2016: 280,800 tonnes, Q2
2017: 279,600 tonnes). As previously guided, Q3 2017 shipments were
negatively impacted by reduced ship loading capacity, as the main
transhipment barge underwent its five-yearly classification renewal in
South Africa. Shipments were further impacted by extended periods of
adverse weather during the quarter. Both transhipment vessels returned
to full service in September, with high loading rates achieved and
expectations of Q4 2017 shipments being the highest of the year. Sales
in Q3 2017 comprised 197,000 tonnes of ilmenite, 9,300 tonnes of zircon
and 2,100 of rutile. Closing stock of finished products at 30 September
2017 was 271,400 tonnes (30 June 2017: 202,500 tonnes), of which 19,200
tonnes were being held for a customer and which have been paid for.
Wet Concentrator Plant B ("WCP B") Upgrade
Following the completion of a Definitive Feasibility Study by Hatch
Engineering, Kenmare is proceeding with a 20% upgrade of WCP B (from
2,000 to 2,400 tonnes per hour). The upgrade will be delivered in phases
through 2018 and is expected to cost up to US$16 million. The additional
capacity will help to offset declining ore grades from the Namalope
orebody in the coming years and is required to maintain average
production of 1 million tonnes per annum of ilmenite until the end of
2019.
Market
Following strong purchasing in H1 2017, sulphate ilmenite offtake in
China softened over the summer months as seasonal pigment demand slowed
and ilmenite inventories were drawn down. The pigment market improved in
September and Chinese domestic ilmenite prices increased with tighter
domestic supply. However, stricter enforcement of environmental
regulations continues to create uncertainty regarding pigment plant
operating rates for a number of producers. Outside of China, Q3 2017
demand for ilmenite was solid as high pigment plant operating rates were
maintained to meet strong market demand.
Zircon market conditions continued to improve in Q3 due to more
favourable supply/demand dynamics, leading to further upward pricing
pressure. This has continued into Q4 with further significant price
increases implemented.
For further information, please contact:
Kenmare Resources plc
Michael Carvill, Managing Director
Tel: +353 1 671 0411
Tony McCluskey, Financial Director
Tel: +353 1 671 0411
Jeremy Dibb, Corporate Development and Investor Relations Manager
Tel: +353 1 671 0411
Mob: + 353 87 943 0367
Murray
Joe Heron / Aimee Beale
Tel: +353 1 498 0300
Mob: +353 87 690 9735
Buchanan
Bobby Morse / Chris Judd
Tel: +44 207 466 5000
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.
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Kenmare Resources via Globenewswire
http://www.kenmareresources.com/
(END) Dow Jones Newswires
October 11, 2017 02:00 ET (06:00 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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