Interim Management Statement

Kenmare Resources plc ("Kenmare" or "the Company") Interim Management Statement (LSE/ISE: KMR) 28 April 2010 Kenmare Resources plc, issues the following Interim Management Statement for the period 1 January 2010 to 28 April 2010, in accordance with reporting requirements of the EU Transparency Directive. At an Extraordinary General Meeting on 29 March, 2010 Kenmare's shareholders approved a funding to raise US$270 million of new equity by way of a firm placing for 50% of the shares to be issued and a placing and open offer for the rest.  I am delighted at the level of support for this offer. In particular, I am pleased that the open offer of new shares was taken up at a level of 73%, indicating very strong support for the Company from the existing shareholders, to whom I extend a sincere thank you. The completion of this fund-raising represents a transformational change for Kenmare. It allows the rapid implementation of our expansion plans for Moma, giving Kenmare first mover advantage, as well as significantly reducing our net debt. The forecast cashflows resulting from the expansion will allow a rapid payment of our expensive subordinated debt. The fund-raising has also allowed us to amend certain debt covenants to the significant benefit of all the stakeholders of Kenmare. Our decision to move ahead with the funding now was based on two factors. First, the fact that the ramp-up of the existing facilities, while not complete, is progressing well; commencing the expansion now will entail construction work at site beginning in early 2011, giving our operations team opportunity to bed in the improvements that are currently underway. Second, the market for titanium feedstocks is showing signs of tightening and is predicted to display a material supply deficit by the time the expansion is completed. The Expansion Study, completed in January 2010, concluded that a 50% increase in production of final products could be achieved with a capital expenditure of approximately US$200 million. It is expected that the expanded facility will be at full design level of 1.2 million tonnes of ilmenite plus 80,000 tonnes of zircon and 22,000 tonnes of rutile by the end of 2012. An important characteristic of the design is that the project can be implemented with minimal disruption to the existing operation. On the mining side, the plan involves the construction of a new dredge pond with a third dredge and Wet Concentrator Plant (WCP), as well as a small upgrade to the existing dredges and WCP. The new dredge pond will be constructed separate from and without interfering with the existing mining operations. At the Mineral Separation Plant (MSP) we will construct a new Wet High Intensity Magnetic Separation (WHIMS) plant. This plant will be in a new building which can be constructed without interfering with existing operations. The WHIMS plant will separate non-magnetic minerals (zircon and rutile) from the Heavy Mineral Concentrate (HMC) in a wet state. At present, all the MSP feed is dried; the non-magnetic minerals are then separated from the magnetic minerals and presented to the non-magnetic circuit. As the front end of the non-magnetic circuit is a wet circuit, the non-magnetic material must be rewetted for subsequent processing. The WHIMS plant will therefore remove the costly initial drying process and improve the overall efficiency of the MSP as well as boosting production. An auxiliary ilmenite plant will also be constructed in a separate building. This will take a portion of the flow from the WHIMS plant and produce an ilmenite product directly to the storage shed. The remainder of the flow from the WHIMS plant will go to the existing MSP and will use the existing machinery for processing. Further design and definition work is underway at the expansion project office in Johannesburg. We expect to complete construction of the project by the end of 2011 and have allowed 2012 as a ramp-up period. Unlike the original development of Moma, this project will be managed using an EPCM Contractor and not be contracted out as a lump sum turnkey contract which previously limited the Company's ability to deal directly with the manufacturers of the equipment installed. Hence our project team will have greater control over the project outcomes. This, along with our much deeper understanding of how the mining and processing equipment work in context of the Moma orebody, will ensure that any misspecification of equipment, which did arise in the first phase of Moma, will not be repeated. In the first quarter 2010, we produced 150,965 tonnes of ilmenite and 8,001 tonnes of zircon. Zircon production is particularly encouraging with a 48% increase from the fourth quarter 2009 while ilmenite production has increased by 5%. Very little rutile has been produced to date as we have concentrated on the ilmenite and zircon circuits. However, even at full capacity rutile is expected to contribute only 5% of total revenues. Kenmare is continuing to implement performance improvement projects to improve recoveries and quality of the final products. The remaining projects are the installation of an ilmenite scavenger circuit and the replacement of electrodes with more effective electrodes on high tension roll separators in the zircon circuit. Both of these projects will be completed during the second quarter of this year. The market for our products ilmenite, zircon and rutile fell precipitously in both volume and price during the global recession of 2009. The first half of 2009 particularly was characterised by a reduction in end use demand coupled with a steep inventory destocking cycle. Volumes started to recover in the third quarter, but it was early 2010 before we saw significant strengthening in price. This strengthening has continued and most industry commentators are predicting a deficit of supply compared with forecast demand. The Company reported a loss of US$30.4 million for 2009. This loss was anticipated by the Group and reflects the current ramp-up curve in which Moma is operating, leading to lower production than design capacity. This was compounded by low revenue per tonne being realised due to market conditions. Production and market conditions have improved in 2010. The period from 2009 to date has been transformational for Kenmare. At the start of 2009, production at Moma was at less than half design capacity, most of the world's economies were in recession, we were about to embark on a significant re-engineering of Moma through the Performance Improvement Project (PIP), we were negotiating a deferral of senior debt capital repayments with our lenders, and we had just made significant operational management changes at the Mine and at the corporate level. In early 2010, the world's major economies are coming out of recession and supply constraints in the market for our products, which were apparent in late 2008, are re-emerging; the original PIP has been implemented with very positive results and a few remaining projects identified during the course of the year are in train for completion in the near future; a difficult negotiation with the EPC Contractor, which could have ended in years of litigation, has been successfully concluded on favourable terms for the Company; a set of lender technical completion tests, which held extremely negative consequences had they not been passed, have been deferred, completion performance conditions under the loan agreements have been greatly eased and the consequences of failing have been changed from default of our Project loan agreements to simply a temporary increase in interest rate until they are passed; and finally Kenmare has raised US$270 million to fund a 50% expansion. This funding addresses any market concern about Kenmare's high gearing level generated through the financing of the project. Kenmare is a very different Company than a year ago. Given the huge progress that has been made, I feel this Company, which I became Chairman of in 1986 when it had no employees, no bank account, no projects, and no money, is now an established player in the mining industry with excellent prospects for the future. I have now arrived at the age where a quieter life beckons, so I have decided to retire from the position of Chairman. I am passing on the baton of a Company that has adequate funds, good management, an excellent world class long life deposit, and a rapidly improving market. The Board has asked me to remain involved through a non-voting emeritus position and I am glad to do so. I have asked the nomination committee to initiate a search for a new Chairman and anticipate that the Company will be in a position to make an appointment later this year. I have greatly enjoyed my involvement with Kenmare. I have a great feeling of pride in what we have achieved so far and look forward to the next chapters with anticipation. I would like to thank my fellow Directors, who have questioned deeply, made astute suggestions, and always supported collective decisions. I would also like to thank the staff at the Mine and in the offices in Dublin and Maputo; they have all shouldered heavy loads to build a magnificent mine and a very fine business. For more information: Kenmare Resources plc Michael Carvill, Managing Director Tel: +353 1 6710411 Mob: + 353 87 674 0110 Tony McCluskey, Financial Director Tel: +353 1 6710411 Mob: + 353 87 674 0346 Murray Consultants Jim Milton/Joe Heron Tel: +353 1 498 0300 Mob: + 353 87 690 9735 Conduit PR Ltd Leesa Peters/Charlie Geller Tel: +44 207 429 6600 Mob: +44 781 215 9885 www.kenmareresources.com < http://www.kenmareresources.com/> [HUG#1409197]
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