Kenmare Resources

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Kenmare Resources plc
Public
Traded asLSEKMR, ISEQJEV
IndustryMining
Founded1985
HeadquartersDublin, Republic of Ireland
Key people
Steve McTiernan, Chairman
Michael Carvill, Managing Director
Tony McCluskey, Finance Director
RevenueIncrease $208.3 million (2017)[1]
Increase $(51.6) million (2017)[1]
Increase $(19.4) million (2017)[1]
Total assetsIncrease $944.7.4 million (2017)[1]
Number of employees
1,324 [1]
Websitewww.kenmareresources.com
Previous logo

Kenmare Resources plc is a mining company based in the Republic of Ireland. It is listed on the Irish Stock Exchange and the London Stock Exchange. Kenmare owns and operates the Moma mine. Moma is the world’s largest titanium mineral deposit, located 160km from the city of Nampula in Mozambique, Africa. [2]

History[edit]

The company was founded by Charles and Michael Carvill in 1986 to exploit mineral wealth in Mozambique.[3]

The Company acquired the licence for the Congolone heavy mineral sands deposit in 1987. In 1994, the Company began production of graphite at the licence. In 1996, BHP became licence partner. Over the coming years, BHP would begin appraising the Namalope, Pillivi and Mualadi deposits, which would ultimately become the main focus of the mining project. BHP pulled out of the mine in 1999 and by 2001 Kenmare had acquired the exclusive rights to the deposit. Work began constructing the mine in 2003. Production began in 2007 and commercial production commenced in 2009.[4]

A tailings dam from mineral processing failed on 8 October 2010, destroying a nearby native village and leaving one 4 year old child missing; mining resumed the following month after some 300 homes had been rebuilt.[5]

Operations[edit]

The Company's principal asset is the Moma mineral sands mine, formally known as the Moma Titanium Minerals Mine, located in Moma, Nampula Province, Mozambique. It has been in production since late 2007.[6] The mine produces 7% of the world’s ilmenite, the main source of titanium metal and titanium dioxide, used as a white pigment in paint. It also produces 4% of the world’s zircon, a source of zirconium metal.[6]

The Moma mine also produces zircon, the primary application for zircon is in the manufacture of opacifiers for ceramics.[7]

The mine is estimated to have a mine life of up to 150 years. The total proved and probable ore reserves under the Namalope, Pilivili, and Nataka mining concession are estimated as at 31 December 2017 at 1,742 million tonnes, grading 2.8% ilmenite, 0.19% zircon and 0.061% rutile, containing 48 million tonnes of ilmenite, 3.2 million tonnes of zircon and 1.06 million tonnes of rutile. The total ore resource (excluding reserves) held by the Group under a combination of exploration licences and mining concessions is estimated as at 31 December 2017 at 6.3 billion tonnes, grading 2.4% ilmenite, 0.16% zircon and 0.052% rutile, containing 149 million tonnes of ilmenite, 10 million tonnes of zircon and 3.3 million tonnes of rutile.[1]

Products[edit]

Products & Markets The Moma mine produces three main products, Ilmenite, Zircon and Rutile. It is also currently developing plans to produce Monazite.

Ilmenite is a common accessory mineral in igneous rocks, sediments, and sedimentary rocks in many parts of the world. Apollo astronauts found abundant ilmenite in lunar rocks and the lunar regolith. Ilmenite is a black iron-titanium oxide with a chemical composition of FeTiO3. Ilmenite is the primary ore of titanium, a metal needed to make a variety of high-performance alloys. Most of the ilmenite mined worldwide is used to manufacture titanium dioxide, TiO2, an important pigment, whiting, and polishing abrasive. [8] Ilmenite is the main source of titanium dioxide, which is used in paints, fabrics, plastics, paper, sunscreen, food and cosmetics. Kenmare produces 7% of the world’s ilmenite.

Zircon is a zirconium silicate mineral with a chemical composition of ZrSiO4. It is common throughout the world as a minor constituent of igneous, metamorphic, and sedimentary rocks Zircon is present in most soils and clastic sediments. Zircon-rich sediments are mined and the recovered zircon is used to produce zirconium metal and zirconium dioxide. These are used in a wide variety of manufactured products and industrial processes. [9] Zircon is mainly consumed as an opacifier, and has been known to be used in the decorative ceramics industry.

Rutile is a titanium oxide mineral that is most commonly found in granites, pegmatites, and metamorphic rocks. It is also found in sands derived from the weathering of these rocks. Rutile also forms as slender crystals within quartz and micas. It is a common mineral in the alluvial sands that are dredged for magnetite and ilmenite. Rutile is used as a coating on welding rods. It is also used as an ore of titanium, a metal used where light weight and high strength are needed. Some rutile is used in the production of pigments for paints.[10]

Monazite is a rare phosphate mineral with a chemical composition of (Ce,La,Nd,Th)(PO4,SiO4). It usually occurs in small isolated grains, as an accessory mineral in igneous and metamorphic rocks such as granite, pegmatite, schist, and gneiss. These grains are resistant to weathering and become concentrated in soils and sediments downslope from the host rock. When in high enough concentrations, they are mined for their rare earth and thorium content.[11] Monazite is an important source of thorium, cerium, and other rare elements. Often mined as a byproduct from heavy mineral deposits. Kenmare does not yet produce Monazite, however, the company announced its intention to begin production in the future.

Markets[edit]

Kenmare’s products are raw materials for the production of many consumer products. The market for ilmenite, zircon and rutile is a substantial one and is heavily linked to the performance of the global economy. Kenmare’s sales profile is geographically diverse with 18% sold into the United States, 25% into Europe and 57% into Asia, principally China .

Expansion Plans[edit]

Against the backdrop of a bottleneck in global supply and a very favourable market, the decision was taken in 2011 to undertake a major expansion of the mine. The goal of the expansion was to raise production to 1m tonnes. As the project was being developed, the market cycle turned. By 2016 the mine had fallen into financial crisis due to a worldwide drop in mineral prices, flooding in northern Mozambique, and power outages in the Moma District region.[6] Prices for titanium fell by about a third between 2012 and 2015,[7] and floods that caused power outages impacted the company's production.[8]

The mine briefly suspended operations in June 2015 in the face of industrial action by employees unhappy about the company's cost-cutting measures. Successful negotiation between the union, the company and the Ministry of Labour had resulted in agreement on somewhat less drastic measures involving fewer layoffs than originally announced. The industrial action was not organized by the union.[12] Operations resumed in early July.[13]

By 2016 the mine had fallen into financial crisis due to a worldwide drop in mineral prices, flooding in northern Mozambique, and power outages in the Moma District region.[14] Prices for titanium fell by about a third between 2012 and 2015,[15] and floods that caused power outages impacted the company's production.[16]

Iluka Attempted Takeover[edit]

In June 2014, following media speculation in Australia, both Iluka and Kenmare Resources announced that the former Company had many an approach to Kenmare, based on a paper transaction, regarding a possible takeover. No formal offer was made, although a number of prices were put forward. [17] The process carried on over an extended period, during which Iluka returned with a lower offer . The Iluka approaches failed to attract support from Kenmare’s largest shareholder and Iluka ultimately ended the process in December 2015. [18]

Oman Investment and Restructuring[edit]

As Iluka were announcing their decision to withdraw from takeover talks, Kenmare management announced that the Oman Sovereign Wealth Fund had indicated an interest in investing $100m, based on an overall restructuring arrangement being accepted by shareholders.[19] The deal which would ultimately be agreed, saw the Omani’s invest $100m of an overall $275 refinancing of the company. Lenders to the Company agreed to substantially reduce debt.[20] Existing shareholders also experienced a write down as new shares were issued. The overall impact of the restructuring was to leave the company with a substantially strengthened Balance Sheet, placing the Company on a firm financial footing.

Return to Profit and Announcement of Dividend[edit]

Since the completion of the Mine expansion, production and shipments have risen to record levels. Production in 2017 was just short of 1m tonnes.[21] Kenmare reported a return to profit in 2017. Full year profits after tax of $19.4m were reported by the Company.[22] On October 16th 2018, Kenmare announced their first dividend policy. They indicated dividend payments would commence in 2019. [23]

Further Infrastructure Development[edit]

In their interim results in August 2018, Kenmare announced a number of projects which had either been approved or were under active consideration. The goal of these projects is to increase long term production to 1.2m tonnes of ilmenite and associated products. These include the upgrade of an existing Wet Concentrator Plant, development of a new Wet Concentrator Plant and a project to recover Monazite from existing operations.[24]



References[edit]

  1. ^ a b c d e f [hhttps://www.kenmareresources.com/application/files/4915/3149/3088/Annual_Report_and_Accounts_2017_Kenmare_Resources_plc.pdf]
  2. ^ [1]
  3. ^ Chairman's Statement
  4. ^ https://www.kenmareresources.com/about-us/history
  5. ^ Questor share tip: Mozambique incident upsets Kenmare Resources Daily Telegraph, 12 October 2010
  6. ^ a b Kenmare Resources' £180m fundraising for expansion to exploit anticipated tightness in titanium Proactive Investors, 17 March 2010
  7. ^ "Operations". kenmareresources.com. Kenmare Resources. Retrieved 18 May 2017.
  8. ^ https://geology.com/minerals/ilmenite.shtml
  9. ^ https://geology.com/minerals/zircon.shtml
  10. ^ https://geology.com/minerals/rutile.shtml
  11. ^ https://geology.com/minerals/rutile.shtml
  12. ^ "Moma ops halted amid strike". Mining Weekly. June 24, 2015. Retrieved June 5, 2016.
  13. ^ MEGAN VAN WYNGAARDT. "Operations resume at Kenmare's Moma mine". Mining Weekly. Retrieved June 5, 2016.
  14. ^ "Kenmare em crise financeira" [Kenmare In Financial Crisis]. O País (in Portuguese). Maputo, Mozambique: S-Imprensa. 2016-02-05. Retrieved 2016-02-07.
  15. ^ Charlie Taylor (24 June 2014). "Production suspended at Kenmare's Moma mine". Irish Times. Retrieved June 5, 2016.
  16. ^ MEGAN VAN WYNGAARDT (April 30, 2015). "Floods, power outages curb Moma output". Mining Weekly. Retrieved June 5, 2016.
  17. ^ https://www.ft.com/content/296fe72a-fd27-11e3-bc93-00144feab7de
  18. ^ https://www.irishtimes.com/business/energy-and-resources/kenmare-considers-new-iluka-bid-after-posting-90-7m-net-loss-1.2195692
  19. ^ https://www.irishtimes.com/business/energy-and-resources/kenmare-finalises-multimillion-balance-sheet-restructuring-1.2705894
  20. ^ https://ir.euroinvestor.com/Solutions/Kenmare2018tf/3908/newsArticle.aspx?storyid=13419220
  21. ^ https://www.irishtimes.com/business/energy-and-resources/kenmare-resources-returns-to-profit-as-production-hits-record-1.3426662
  22. ^ https://www.irishtimes.com/business/energy-and-resources/kenmare-resources-returns-to-profit-as-production-hits-record-1.3426662
  23. ^ https://www.irishtimes.com/business/energy-and-resources/kenmare-announces-maiden-dividend-for-shareholders-1.3665157
  24. ^ Kenmare Resources Interim Results Statement 2018: https://www.kenmareresources.com/investors/reports-and-presentations

External links[edit]