Kenmare Resources : Kenmare Resources : Trading Update

            Kenmare Resources : Kenmare Resources : Trading Update

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

30 January, 2013

                                Trading Update


  o2012 production: 772,300 tonnes HMC; 574,400 tonnes ilmenite and 46,900
    tonnes zircon
  o680,800 tonnes of finished products shipped in 2012
  o40% increase in revenue to US$234.5 million (unaudited) in 2012 from
    US$167.5 million in 2011
  oGlobal titanium feedstock inventories are depleting and demand outlook
  oExpansion commissioning underway

Kenmare  Resources  plc  provides  the   following  update  with  respect   to 
production, market conditions, and commissioning of the expansion at the  Moma 

Total production of  Heavy Mineral  Concentrate ("HMC") for  2012 was  772,300 
tonnes. Finished  product  volumes  for  the year  were:  574,500  tonnes  of 
ilmenite and 46,900 tonnes of zircon  (including 20,000 tonnes of a  secondary 
zircon product). 680,800 tonnes  of finished products  were shipped in  2012, 
compared with 730,400 tonnes in  2011. These shipments generated revenues  of 
US$234.5 million (unaudited), an increase of 40% from US$167.5 million  during 

Mining operations produced 157,000  tonnes of HMC  during the fourth  quarter, 
compared with 229,100 tonnes  in the third  quarter. Kenmare's market  update 
dated   28   November   2012    highlighted   the   likelihood   of    reduced 
quarter-over-quarter production  due to  a combination  of electricity  supply 
disruptions and geotechnical challenges  associated with elevating the  dredge 
pond from  the Namalope  Flats zone  to a  dunal plateau.  Once on  the  dunal 
plateau, Wet Concentrator Plant A ("WCP A") will operate there for the next 12
years until it moves to the Nataka ore zone. Supplemental dry mining improved
delivery  of  ore  to  the  WCP  A,  but  electrical  supply  volatility   and 
geotechnical challenges were such that  production was reduced. In the  fourth 
quarter, the  Mineral  Separation Plant  ("MSP")  produced 123,600  tonnes  of 
ilmenite and 10,600  tonnes of  zircon, which  represents a  reduction in  MSP 
output from  the  previous quarter  due  to  lower tonnes  of  available  HMC. 
Shipments of finished products in the  fourth quarter were 204,000 tonnes,  up 
from 155,300  tonnes shipped  in the  third quarter,  representing the  second 
highest quarter on record since operations commenced.

The transition to the dunal plateau will be substantially completed by the end
of the first  quarter 2013. Kenmare  has been working  with Electricidade  de 
Moçambique ("EdM") to improve the stability  of the electricity supply and  is 
presently  completely  refurbishing  a  Static  Var  Compensator  (a   voltage 
stabilisation system) on the  national electrical grid  at EdM's Alto  Molocue 
substation. Kenmare is also installing capacitor banks at Alto Molocue and at
the provincial capital, Nampula. These measures will better insulate the mine
from power disruptions  occurring on different  transmission lines within  the 
national grid  system. In  addition  to these  steps, Kenmare  is  installing 
another voltage stabilisation system at  the mine site substation, which  will 
reduce the  effect  of  power  surges  or dips  that  get  through  the  other 
protection devices on EdM's transmission system.

Half-yearly production and shipments during 2012 are summarised as follows:

                                      H2       H1
                                   tonnes   tonnes
Heavy Mineral Concentrate (HMC)   386,100  386,200
Ilmenite                          297,700  276,700
Zircon                            23,300* 23,600**
Shipments                         359,300  321,500

* Includes 8,400 tonnes secondary zircon product
** Includes 11,100 tonnes secondary zircon product

Kenmare  is  committed  to  a  safe  and  healthy  work  environment  for  all 
personnel. The health and safety  record for the operation remains  positive, 
with the  current lost  time injury  frequency rate  at 0.33,  compared to  an 
industry average of  0.39. This  is indicative of  the continuous  collective 
effort of all employees in  the strong promotion of  health and safety at  all 
levels of the Mine organisation.

Kenmare has commenced  the commissioning  phase of  its 50%  expansion of  the 
facilities at  Moma. Facilities  include a  new Wet  High Intensity  Magnetic 
Separation ("WHIMS")  Plant, a  new Auxiliary  Ilmenite Plant,  a  brownfields 
enhancement of the existing non-magnetic circuits in the MSP, a new dredge and
a new Wet Concentrator Plant ("WCP B") located in a second dredge pond. Early
stage commissioning is  underway in  the Auxiliary Ilmenite  Plant, the  WHIMS 
Plant and the dredge. Final preparations are underway for the floating of the
WCP B and dredge. Installation of remaining piping will continue concurrently
with various commissioning stages culminating in hot commissioning at the  end 
of the first  quarter. The production  ramp-up will follow,  leading to  full 
production later this year.

2012 was a year  of contrasting halves for  the titanium feedstock  industry. 
During the first  half, demand  for titanium  feedstocks was  very strong  and 
prices grew steadily. However, as the  painting season in the second  quarter 
was weaker than expected, pigment producers felt the impact of holding  excess 
finished  goods  inventories.  This  was  addressed  with  a  curtailment   of 
production by most  pigment producers  that commenced mid-year,  which led  to 
reduced demand for  feedstocks from  the pigment producers  and some  downward 
pricing pressure.  High grade  feedstocks in  the second  half of  2012  were 
impacted more  acutely  as  pigment producers  re-configured  their  feedstock 
blends to utilise a  higher percentage of lower  cost feedstocks such as  slag 
and ilmenite. Despite overall weaker feedstock demand from pigment producers,
demand for ilmenite was more resilient than feedstocks in general, and Kenmare
was able to sell more than it produced in 2012 at significantly higher  prices 
than in 2011. Year-end inventories were drawn down to low levels as a result.

The titanium  feedstock  inventory destocking  process  is still  underway  as 
pigment producers  continue to  deplete inventories  to more  normal  levels. 
However, underlying demand, which is  closely correlated to world GDP  growth, 
is expected to improve as global economic conditions strengthen during  2013. 
Given improvements in the real  estate market and automotive manufacturing  in 
the United States and the stabilisation of economic activity in China, Kenmare
expects stronger market conditions to emerge with an improving pricing outlook
for feedstocks during the course of this year.

Global zircon market conditions were challenging during 2012. Consumption  was 
weak due to significantly reduced  demand primarily from the ceramics  sector. 
This was driven  by the slowdown  in construction activity  in China and  weak 
economic conditions  in Europe.  Additionally, zircon  consumers started  2012 
with high inventory levels on  the expectation of continued supply  shortages. 
However, faced with slower demand for their products, zircon consumers took  a 
cautious approach to buying as 2012 progressed. Prices held up well  initially 
but reduced sharply during the fourth quarter. Whilst this trend has continued
into 2013, there are  some tentative indications that  prices may be close  to 

Kenmare, with its relatively small production volume, was able to sell all  of 
its zircon  during  2012 at  the  prevailing  market price.  With  a  stronger 
economic  outlook  expected  in  China  during  2013  and  completion  of  the 
de-stocking cycle in  Europe, zircon demand  growth is expected  to resume  in 
2013. The readjustment of  market prices that has  taken place should help  to 
reverse the downward trend in consumption seen over the past 12 to 15 months.

The increase in revenue to US$234.5 million (unaudited) in 2012 from  US$167.5 
million in  2011  was  principally  a result  of  increased  ilmenite  prices. 
Compared with the  previous year,  average ilmenite prices  realised were  98% 
higher in 2012 and were  up 17% in the second  half of 2012 compared with  the 
first half of the year. Average  prices for primary zircon products  increased 
in 2012 by 9%  compared with 2011, but  dropped by 32% in  the second half  of 
2012 compared  with the  first half  year. Product  volumes shipped  in  2012 
declined by 7% compared with  2011, resulting from reduced production  levels. 
There has been some increase in  operating costs, particularly in the  second 
half of 2012  as the mine  pond was making  the complex transition  up to  the 
dunal plateau, and cost control remains a key priority for management.

As the expansion completes, Kenmare is engaging with the remaining contractors
in order to manage the close-out of the contracts and related costs. Given the
extension of  the  time  required  to complete  the  expansion  as  previously 
advised, and the attendant impact on costs, Kenmare has successfully concluded
an agreement  with  its  lending  banks to  extend  the  period  during  which 
operating cashflow  generated  by  the Moma  Mine  can  be used  to  fund  the 
expansion costs from  15 December 2012  to 30 June  2013. This agreement  also 
provides Kenmare the flexibility  to raise up to  US$40 million of  additional 
debt. Loan payments will  continue to be made  in accordance with  obligations 
under the finance documents.  At 31 December 2012,  the net debt position  was 
US$279 million.

For further information, please contact:

Kenmare Resources plc.
Michael Carvill, Managing
Tel: +353 1 671

Mob: + 353 87 674

Tony McCluskey, Financial Director
Tel: +353 1 671 0411
Mob: + 353 87 674 0346

Virginia Skroski, Investor Relations Manager
Tel: +353 1 671
Mob: + 353 87 739

Tel: +353 1 498
Mob: +353 87 690

Tavistock Communications
Jos Simson / Mike Bartlett
Tel: +44 207 920 3150
Mob: +44 7753 949 108


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Source: Kenmare Resources via Thomson Reuters ONE
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