Q1 2019 Production Report

Kenmare Resources plc (“Kenmare” or “the Company”)

11 April 2019

Q1 2019 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 31 March 2019 (“Q1 2019”).

Overview

• Continued strong safety performance with lost time injury frequency rate (“LTIFR”) of 0.08 per 200,000 man-hours worked (Q1 2018: 0.38) – Kenmare’s lowest ever level
• 15% increase in Heavy Mineral Concentrate ("HMC") production to 358,700 tonnes (Q1 2018: 311,000 tonnes)
• 13% increase in ilmenite production to 238,100 tonnes (Q1 2018: 211,000 tonnes)
• 7% increase in primary zircon production to 12,100 tonnes (Q1 2018: 11,300 tonnes)
• 80% increase in concentrates production to 10,100 tonnes (Q1 2018: 5,600 tonnes), benefitting from the introduction of the mineral sands concentrate product
• 34% decrease in total shipments of finished products to 176,500 tonnes (Q1 2018: 267,200 tonnes) as a result of adverse weather conditions, including Cyclone Idai, and unscheduled maintenance work – 2019 total shipment volumes are not expected to be affected
• Definitive Feasibility Study (“DFS”) for Wet Concentrator Plant (“WCP”) B move to Pilivili is progressing well and on track for completion before the end of H1 2019
• Improved demand for ilmenite in Q1 2019 and market expected to tighten further during the remainder of the year
• Zircon market remained stable in Q1 2019, with strong long-term fundamentals

Statement from Michael Carvill, Managing Director:

“Production in Q1 2019 was robust, benefitting from increased contribution from WCP B following the upgrade work in 2018. Shipments were lower than anticipated due to poor sea conditions and unplanned maintenance work. However we are confident that 2019 total sales volumes will not be impacted.

Titanium feedstock markets strengthened in Q1 2019 and we expect ilmenite prices to continue to rise in Q2 2019, driven by increasing Chinese demand.

We are deeply saddened by the devastating effect of Cyclone Idai on the people of central Mozambique and commend our employees’ collective initiative to support the relief effort.”

Production

Production from the Moma Mine in Q1 2019 was as follows:

	Q1 2019	Q1 2018	Variance	Q4 2018	Variance
	tonnes	tonnes	%	tonnes	%
Excavated ore1	9,292,000	7,805,600	19%	9,335,000	-
Grade1	4.07%	4.51%	(10%)	4.58%	(11%)
Production
HMC	358,700	311,000	15%	402,000	(11%)
Ilmenite	238,100	211,000	13%	275,000	(13%)
Primary zircon	12,100	11,300	7%	15,200	(20%)
Rutile	2,100	2,100	-	2,400	(13%)
Concentrates2	10,100	5,600	80%	11,500	(13%)
Shipments	176,500	267,200	(34%)	286,300	(38%)

1. Excavated ore and grade prior to any floor losses.
2. Concentrates include secondary zircon and mineral sands concentrate.

During Q1 2019 Kenmare continued its strong safety performance, with a LTIFR of 0.08 per 200,000 man-hours worked, the Company’s lowest ever level. One lost time injury was recorded during the period and Kenmare continues to focus on improving its safety culture.

Kenmare delivered a 15% increase in HMC production to 358,700 tonnes (Q1 2018: 311,000 tonnes). Despite a 10% decrease in ore grades, which averaged 4.07% (Q1 2018: 4.51%), production benefitted from a higher volume of ore mined. This included an increased contribution from WCP B following the 20% capacity upgrade in 2018, improved utilisation at WCP B due to Projecto Oitenta, which is focused on increasing mine utilisation from 70% to 80%, and additional dry mining. In line with 2019 guidance, ore grades are expected to be lower for the remainder of the year.

Ilmenite production increased by 13% to 238,100 tonnes during the period (Q1 2018: 211,000 tonnes), primarily as a result of higher HMC availability.

Primary zircon production also benefitted from higher HMC availability in Q1 2019, increasing by 7% to 12,100 tonnes (Q1 2018: 11,300 tonnes).

Rutile production remained flat at 2,100 tonnes (Q1 2018: 2,100 tonnes).

Concentrates production was 10,100 tonnes during Q1 2019 (Q1 2018: 5,600 tonnes). Q1 2019 represented the first full quarter of mineral sands concentrate production following the successful commissioning of this product stream in Q4 2018. The first shipment is expected to leave Moma in Q2 2019.

Although Kenmare’s Q1 2019 production exceeded Q1 2018, it was weaker than in Q4 2018. This was primarily because Q4 2018 was an exceptionally strong quarter, including a record month of production in December 2018, and ilmenite circuit maintenance was scheduled during Q1 2019. At the end of the first quarter, Kenmare remains on track to achieve its 2019 guidance on all stated metrics.

Kenmare shipped 176,500 tonnes of finished products during the period (Q1 2018: 267,200 tonnes), which was comprised of 163,100 tonnes of ilmenite, 9,300 tonnes of primary zircon, 800 tonnes of rutile and 3,300 tonnes of concentrates. This represented a 34% decrease compared to Q1 2018 as a result of adverse weather conditions, including the previously announced suspension of shipments for seven days due to the impact of Cyclone Idai, and unscheduled maintenance work required on the product dispatch conveyor in March 2019. This resulted in an increased closing stock of finished products of 286,500 tonnes at the end of Q1 2019, compared with 200,000 tonnes at the start of the year. Management is confident that total shipping volumes in 2019 will not be affected.

Closing stock of HMC at the end of Q1 2019 was 36,600 tonnes, compared with 19,600 tonnes at the start of the year. This increase was due primarily to planned maintenance work being undertaken during the quarter on the Mineral Separation Plant, reducing HMC processing capacity.

Capital projects update

Kenmare previously announced three development projects that together have the objective of increasing ilmenite production to 1.2 million tonnes (plus co-products) per annum on a sustainable basis from 2021. By the end of 2018 the first development project, the 20% expansion of WCP B, was commissioned, on time and at a cost of more than 25% below what was budgeted. Production from WCP B has already increased as a result of this expanded capacity.

The second development project, the construction of WCP C, is well underway, with commissioning scheduled for Q4 2019. Fabrication of the dredge pontoons at the shipbuilders has now been completed and the construction of the WCP is on track. The starter pond and construction site for WCP C are progressing in line with the project delivery timeline.

The DFS for the third development project, the relocation of WCP B to the high grade Pilivili ore zone, is progressing well. Kenmare is continuing to optimise the mine plan for WCP B and the DFS is expected to be finalised later in H1 2019. The move of WCP B is scheduled to be completed during H2 2020.

Market

Kenmare saw stronger demand for ilmenite products in Q1 2019, compared to Q1 2018.

In China, whilst destocking and seasonal weakness was evident in the pigment industry, demand for imported ilmenite was robust. Chinese pigment production remained stable and feedstock imports from other countries continued to decrease, due to the ongoing suspension of mining in India, delayed renewal of Vietnam’s export quota and reducing production from other African countries. This reduction in imports is starting to be reflected in ilmenite spot prices in China.

The ilmenite market is expected to tighten further in Q2 2019 as the northern hemisphere painting season commences. The second half of 2019 is also expected to be strong as pigment destocking comes to an end and ilmenite inventories continue to decrease.

After a period of strong growth, market conditions for zircon stabilised during Q4 2018 and remained steady in Q1 2019. The zircon concentrates market in China softened slightly in Q1 due to an increase in supply. Kenmare expects the zircon market to be stable in 2019, with long-term positive market fundamentals.

For further information, please contact:

Kenmare Resources plc
Michael Carvill, Managing Director
Tel: [phone]

Tony McCluskey, Financial Director
Tel: [phone]

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

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

Buchanan
Bobby Morse / Chris Judd
Tel: [phone]

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.