Proposed Capital Reduction and Notice of Extraordinary General Meeting

6 Nov 2018 07:00

Proposed Capital Reduction and Notice of Extraordinary General Meeting

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

6 November 2018

Proposed Capital Reduction andNotice of Extraordinary General Meeting

Kenmare Resources plc (“Kenmare” or the “Company”) announces that it will later today post a circular (the "Circular") to shareholders of the Company (“Shareholders”) detailing a proposed capital reduction of the Company's share premium account (the "Capital Reduction") and convene a general meeting of the Company (the "General Meeting"), the purpose of which is to enable shareholders to approve the Capital Reduction.

The General Meeting will be held at Conrad Dublin, Earlsfort Terrace, Dublin 2, D02 V562 on Wednesday, 5 December 2018 at 12.30 p.m.

Background to and reasons for the proposed capital reduction

Following a period of continued growth and operational development, Kenmare announced on 16 October 2018 a dividend policy to return a minimum of 20% of profit after tax on an annual basis to Shareholders as part of our objective to create and deliver shareholder value. This policy is subject to prevailing product market conditions and ensuring that the Company retains a prudent level of cash to fund debt and capital requirements.

In light of the capital required for development projects, the Company expects (subject to Shareholder and High Court approval of the Capital Reduction) to pay modest dividends during the next two years, starting with an interim dividend based on H1 2019 results, payable in H2 2019. Following completion of these development projects, the Company expects to be in a position to make higher capital returns from 2021.

As we stated in our October announcement, the Company, in order to be in a position to pay any dividend, must first eliminate its historic losses by reduction of its capital. The Company carries an accumulated deficit on its balance sheet (US$185,252,950 at 30 June 2018) reflecting accumulated losses on its activities since its incorporation. Under Irish company law, the Company is precluded from paying dividends, or (subject to certain exceptions) redeeming or repurchasing its shares, while it carries an accumulated deficit. A reduction of the Company’s capital to eliminate historic losses requires the approval of Shareholders and the consent of the High Court.

Accordingly, the Board proposes the Capital Reduction to eliminate that deficit and to provide the Company with the flexibility to pay dividends, or to redeem or repurchase its shares, in the future and in line with its dividend policy.

The Capital Reduction will not, of itself, create distributable reserves that would allow the Company to pay a dividend (or redeem or repurchase its shares). However, it would put the Company in a position to pay a dividend (or redeem or repurchase its shares) in circumstances where distributable reserves are created in future financial years and the Board determines that such reserves, when assessed alongside the ongoing financial performance of the Company and the interests of the Company generally at such time, are of such an amount as to justify payment of a dividend or other distribution.

If approved by Shareholders, and subsequently confirmed by the High Court of Ireland, the Capital Reduction will result in the partial cancellation of the Company’s share premium account and will eliminate the deficit on the Company's profit and loss account as at 30 June 2018.

The Circular (including the notice of EGM) will be shortly available on the Company's website, www.kenmareresources.com.

Copies of the Circular (including the notice of EGM) have been submitted to Euronext Dublin and the National Storage Mechanism from where it may also be obtained.

Capitalised terms used but not otherwise defined in this announcement will have the same meanings given to them within the Circular.

For further information, please contact:

Kenmare Resources plcMichael Carvill, Managing Director Tel: +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

Murray Joe Heron / Aimee Beale Tel: +353 1 498 0300 Mob: +353 87 690 9735

Buchanan Bobby Morse / Chris JuddTel: +44 207 466 5000

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.