Kenmare Resources plc : Q2 2014 Production Report

Kenmare Resources plc ("Kenmare" or "the Company")

8 July 2014                                                                                                                                                      

Q2 2014 Production Report

Overview

• Record production of ilmenite and primary zircon was achieved for Q2 2014 and for June
• Ilmenite production in H1 increased 47% to 445,600 tonnes (H1 2013: 302,600 tonnes)
• Zircon production in H1 increased 12% to 21,400 tonnes (H1 2013: 19,100 tonnes)
• Total shipments of finished products in H1 increased 36% to 399,000 tonnes  (H1 2013: 294,100 tonnes)
• Installation of the backup diesel-powered generating plant in July
• Continued strategic focus to increase production whilst identifying and realising operational efficiencies to reduce unit costs

Statement from Michael Carvill, Managing Director: 
"Kenmare continued to deliver increased production and remains on track to achieving name plate capacity on a sustainable basis. Though product prices remain subdued, we are focusing on the elements within our control to reduce unit costs and conserve cash in this subdued market environment. Unit cost reduction will be driven by further production increases in the second half of the year and complemented by the operational efficiencies we are targeting to reduce costs. We will provide a further update on these initiatives with our half-yearly results in August."

Production

Production from the Moma Mine for Q2 2014 and H1 2014 was as follows:

	Q2-2014	Q1-2014	Variance	H1-2014	H1-2013	Variance
	tonnes	tonnes	%	tonnes	tonnes	%
Excavated Ore *	8,746,100	7,543,000	16%	16,289,100	9,984,300	63%
Grade*	4.40%	4.21%	5%	4.31%	5.68%	-24%
Production
HMC	317,200	287,000	11%	604,200	480,000	26%
Ilmenite	234,800	210,800	11%	445,600	302,600	47%
Zircon	12,600	8,800	43%	21,400	19,100	12%
of which primary	10,600	7,700	38%	18,300	11,700	56%
of which secondary	2,000	1,100	82%	3,100	7,400	-58%
Rutile	1,700	1,100	55%	2,800	1,900	47%
Shipments	205,100	193,900	6%	399,000	294,100	36%

             
* Excavated Ore and grade are prior to any floor losses.

In June, 84,200 tonnes of ilmenite were produced. Production in April and May was impacted by scheduled upgrades to the non-magnetic circuits in the mineral separation plant ("MSP") designed to deliver increased zircon and rutile recoveries. This work was successful, with total zircon production increasing to 5,400 tonnes in June. Throughput rates in all plants have shown their ability to operate at designed levels and therefore our primary focus is on increasing utilisation rates to achieve steady-state production targets.

Sales of total finished products were up 36% to 399,000 tonnes in H1 2014 compared to 294,100 tonnes in H1 2013. Sales in H1 2014 comprised 382,200 tonnes of ilmenite, 15,500 tonnes of zircon and 1,300 of rutile. Closing stock of finished products at 30 June 2014 was 177,900 tonnes.

Power

As expected, power stability has improved in recent months due to an improvement in seasonal weather conditions and the implementation of a load management plan by Electricidade de Moçambique ("EdM").

A 7.5MW diesel-powered electric generating plant, supplied by Aggreko, is now in Mozambique and expected to be installed over the course of this month. Following installation and testing, the plant will be on standby to protect against any unanticipated failure of the transmission system until required.

The plant is expected to operate continuously during the Southern Hemisphere summer months of December, January and February to supply stable power to the MSP when power supplied by EdM is most unstable.

Market

A slower than expected recovery in the global pigment market continues to drag on market prices for titanium feedstocks. Market conditions are improving in developed economies, particularly in the United States and Europe, but weakness in the Chinese market has led to softer ilmenite prices. More positively, the pigment industry, the principal consumer of titanium feedstocks, has gradually reduced its finished goods inventory which had become too large in 2012. 

Zircon market demand conditions were stable in the quarter albeit with some modest downward pricing pressure compared to Q1 levels. Offtake support from our customers remains strong and we continue to sell all our zircon.

The Company's half-yearly results in respect of the six months ended 30 June 2014 will be issued on 27 August 2014.

For further information, please contact:

Kenmare Resources plc
Michael Carvill, Managing Director                                    
Tel: [phone]                                                             
Mob: + 353 87 674 0110                                                      

Tony McCluskey, Financial Director
Tel: [phone]                                                             
Mob: + 353 87 674 0346

Jeremy Dibb, Corporate Development and Investor Relations Manager
Tel: [phone]
Mob: + 353 87 943 0367

Murray Consultants                                                              
Joe Heron                                                                                 
Tel: [phone]                                                             
Mob: [phone]                                                       

Buchanan
Bobby Morse / Louise Mason / Gordon Poole
Tel: [phone]

The Directors of Kenmare accept responsibility for the information contained in this announcement. To the best of their knowledge and belief (having taken all reasonable care to ensure that such is the case), the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise. The distribution of this announcement in jurisdictions outside Ireland or the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

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Source: Kenmare Resources via Globenewswire

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