Last checked at 4 Jun 2019 07:00
Results of DFS for Relocation of Wet Concentrator Plant B to Pilivili
Kenmare Resources plc (“Kenmare” or “the Company”)
4 June 2019
Results of DFS for Relocation of Wet Concentrator Plant B to Pilivili
Kenmare Resources plc (LSE:KMR, ISE:KMR), one of the leading global producers of titanium minerals and zircon, is pleased to announce the results of the Definitive Feasibility Study (“DFS”) for the relocation of its Wet Concentrator Plant (“WCP”) B to the Pilivili ore zone at its Moma Titanium Minerals Mine (the “Mine” or “Moma”) in northern Mozambique.
Overview
The project has been approved by the Board, following the completion of the DFSThe DFS confirms the technical and economic feasibility of relocating WCP B to Pilivili, following the completion of the existing mining path at Namalope in Q3 2020The move of WCP B is the last of three internal growth projects required to increase production to 1.2 million tonnes per annum (“Mtpa”) of ilmenite (plus co-products of zircon and rutile)Pilivili is the highest grade ore zone in Moma’s portfolio and is expected to contribute an additional 130,000 tonnes per annum of heavy mineral concentrate (“HMC”) productionWCP B will be relocated by specialist contractors on a purpose-built road from Namalope to PiliviliThe key additional infrastructure required to commence production from Pilivili includes a HMC pumping system and power infrastructure, in addition to a 23 kilometre (“km”) purpose-built roadThe total capital cost estimate for the relocation is US$106 million, including US$15 million contingency, which Kenmare expects to fund from its balance sheet and internally generated cash flowApproval was received for the Environmental, Social and Health Impact Assessment (“ESHIA”) for Pilivili in May 2019The relocation and re-establishment of WCP B is expected to commence in Q3 2020 for a period of up to 12 weeks – the commissioning of WCP B at Pilivili is anticipated in Q4 2020Statement from Michael Carvill, Managing Director:
“The results of the DFS confirm our plans for relocating WCP B to Pilivili. Kenmare is on track to deliver a 20% increase in production at Moma on a sustainable basis from 2021 and the move of WCP B to Pilivili will be the final step in achieving this goal. Earlier this month we received the first of two environmental permits required for the relocation and we expect to receive the second in Q3 2019, with the construction of the purpose-built road commencing immediately thereafter. I look forward to providing further updates on our progress with this growth project during the coming 18 months.”
To view Kenmare’s latest investor presentation, which includes the results of the DFS, please visit: https://www.kenmareresources.com/investors/reports-and-presentations
An animation outlining the various stages of the move of WCP B from Namalope to Pilivili is available at: https://www.kenmareresources.com/media/video-library
Context for relocation of WCP B
Kenmare previously announced three development projects that together have the objective of increasing production to 1.2 Mtpa of ilmenite (plus co-products) on a sustainable basis from 2021. The first development project, the 20% capacity expansion of WCP B, was commissioned by the end of 2018, on time and at a cost of more than 25% below budget. The second development project, the construction of WCP C, is well underway, with commissioning scheduled for Q4 2019. The third project is the relocation of WCP B to Pilivili, which is planned to be completed by the end of 2020. This final project targets increased total production by accessing higher grade ore in the Pilivili ore zone.
WCP B began mining the Namalope ore zone in 2013 and it is expected to complete the current mine path in Q3 2020. All ore zones within the Moma portfolio were considered for the relocation of WCP B but Pilivili was selected due to the favourable combination of higher grades, strong co-product credits and free flowing sand with low slimes, enabling ease of mining and processing. Additionally, Pilivili is located 23 km from Namalope and the existing Mineral Separation Plant (“MSP”), allowing for ease of HMC transportation by pipeline.
The Pilivili ore zone has the highest grades within Moma’s portfolio, with Mineral Reserves of 220 million tonnes averaging 4.4% Total Heavy Mineral (“THM”). The life of mine average grade mined by WCP B at Pilivili is expected to be 4.6% THM and in the first four years of production the average grade mined is expected to be 5.3% THM. Due to these higher grades, production from Pilivili is expected to increase overall HMC production by an average of 130,000 tonnes per annum, contributing to a total of 1.2 Mtpa of ilmenite production (plus co-products) from 2021. Additionally, Pilivili’s Mineral Reserves have higher zircon and rutile co-product credits than Namalope (with 0.25% zircon and 0.08% rutile in ore), which are expected to contribute to lower cash operating costs per tonne of ilmenite.
As a result of the relocation, Kenmare expects production from WCP B to be suspended for up to 12 weeks, from the completion of mining at Namalope to the start of commissioning at Pilivili. Additional mining areas have been identified for WCP B at Namalope to ensure that production is maintained, in the event of delays to the project execution schedule.
Pilivili has a mine life of eight years, after which WCP B will mine its way to the adjacent ore zones of Mualadi and Nataka. Consequently, Kenmare believes that the relocation of WCP B from Namalope to Pilivili will be the only move of this kind that is necessary during WCP B’s economic life.
The DFS was completed by Hatch Africa (Pty) Ltd, a specialist EPCM consulting firm with strong experience in mineral sands, and overseen by Kenmare’s project development team. It included an independent peer review process.
Transportation of WCP B
A number of different methods of relocating WCP B to Pilivili were considered, including disassembly/reassembly and alternate transportation options for the assembled plant by road and/or sea. Moving the assembled plant by road has the lowest risk profile, and accordingly Kenmare will appoint a specialist heavy lifting and transport contractor to relocate WCP B and its dredge by road.
The contractor will use self-propelled modular transporters (“SPMTs”) to transport WCP B out of its mining pond at Namalope, along a purpose-built road, including a causeway estuary crossing into the new mining pond at Pilivili. This is the same method that was used to transport the recently completed WCP C dredge in the Netherlands.
A video showing WCP C being transported on SPMTs and launched into water for the first time is available at: https://www.kenmareresources.com/media/video-library
Capital and operating costs
The total capital cost estimate for the relocation of WCP B to Pilivili is US$106 million, including US$15 million contingency. Kenmare intends to fund the total capital cost from its balance sheet and internally generated cash flow.
The most significant infrastructure requirement for the relocation of WCP B is the construction of the purpose-built road for the transportation of WCP B and its dredge. The road will be 23 km in length and 66 metres wide, and construction is expected to take approximately eight months from Q3 2019. HMC produced at Pilivili will be transported to the MSP using a 16 km overland pipeline and positive displacement pumping system. Electrical power at Pilivili will be provided by a new 16 km 110 kV power line adjacent to the purpose-built road, supported by a static synchronous compensator to improve reliability.
Additional annual operating costs of up to US$5 million are expected for the WCP B operation at Pilivili, primarily due to the increased cost of transporting HMC from Pilivili to the MSP. However these overall increased operating costs are expected to be more than off-set by the additional production due to the higher grades at Pilivili, which will lead to a decrease in unit operating costs. Kenmare is targeting cash operating costs per tonne of US$120-130 (in 2018 real terms) from 2021.
Permitting
Kenmare received approval of the ESHIA for Pilivili from the Ministry of Land, Environment and Rural Development in Mozambique in May 2019, in line with the project delivery timeline. The Company expects the ESHIA for the purpose-built road to be approved in Q3 2019.
For further information, please contact:
Kenmare Resources plcMichael Carvill, Managing DirectorTel: +353 1 671 0411
Tony McCluskey, Financial DirectorTel: +353 1 671 0411
Jeremy Dibb, Corporate Development and Investor Relations ManagerTel: +353 1 671 0411Mob: + 353 87 943 0367
MurrayJoe Heron Tel: +353 1 498 0300Mob: +353 87 690 9735
Buchanan Bobby Morse / Chris JuddTel: +44 207 466 5000
About Kenmare Resources
Kenmare Resources plc is one of the world’s largest producers of mineral sands products. Listed on the London Stock Exchange and the Euronext Dublin, Kenmare operates the Moma Titanium Minerals Mine in Mozambique. Moma’s production accounts for approximately 7% of global titanium feedstocks and the Company supplies to customers operating in more than 15 countries. Kenmare produces raw materials that are ultimately consumed in everyday “quality-of life” items such as paints, plastics and ceramic tiles.
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.