29th Apr 2005 12:34
Kenmare Resources PLC29 April 2005 Kenmare Resources plc ("Kenmare" or "the Company") Kenmare Preliminary Results For the year ended 31st December 2004 Chairman's Statement Dear Shareholder, With the construction of the Moma Titanium Minerals project now well advancedand on schedule, the key task for the company is the successful management ofthis construction process. With Moma, as with most major projects, approximately 30% of the developmentprogramme is required for detailed design, planning and the procurement of majorcomponents. We are 30% through the contractual period and most of the design andprocurement has been completed. The temporary accommodation village has beenbuilt, while the hard standing for the dry plant, the road for the conveyor, theconstruction pond, the powerline, the 20km access road, the airstrip, and thequarry and stone crushing for aggregate are well underway. The largestcomponents of the plants we purchased from BHP in Australia are about to beshipped from Bunbury in Western Australia and are due to arrive at Moma at theend of May. In the meantime, Kenmare has been making organisational changes to allow uscontrol and manage this major mining project. Dr. Chris Gilchrist has beenappointed as Chief Operations Officer of the company. His previous career hasbeen spent working on the operations side in de Beers and Anglo American, withhis last job being General Manager of Cleveland Potash. Chris will ensure thatimplementation proceeds smoothly and that Kenmare is ready to take up the batonwhen the project is handed to us by the contractor in mid 2006. He has beendrawing up a management and personnel plan and the hiring of production staffwill commence shortly with the pace picking up towards the end of the year. Marketing has been going extremely well with the establishment of heads ofagreement with major consumers for the supply of sulphate grade ilmenite. Theseagreements are in the process of being converted into full legal contracts. Thegeneral market for the supply of ilmenite has picked up considerably and webelieve that our average revenue per tonne will be in excess of the numbers usedin our financing documents. The markets for zircon and rutile are also verystrong. It is expected that by the time Moma commences operations, its presentlevel of production capacity will be fully sold. Kenmare has bought a new exploration drill which is presently being shipped tosite with the view to performing detailed infill drilling on the first years ofthe mine path. It will also be used to investigate more fully the resourcepotential beyond the immediate mining area. The development of the Moma mine will have a profound affect on the localenvironment and social structure. We have a duty to ensure that this affect ispositive. As such, we have registered the Moma Development Association as anon-profit organisation with the aim of enhancing the capacity of the localpeople to gain benefit from the presence of a major mine in their vicinity, andalso to ensure that the mine management maximises the inclusion of local peoplein its plans. In conjunction with a Danish aid organisation, ADPP, the MomaDevelopment Association has commenced a major AIDS awareness programme in thelocal community and is consulting with local people and Government agenciesabout further initiatives. During 2004 Kenmare made a profit of US$36,555, largely arising from interestreceived net of operating expenses. In December 2004 the initial disbursement ofMoma project debt, approximately US$55 million, took place. The financing of Moma, which we understand to be the biggest structured financepackage ever put together by a non-major mining company, has received twoawards. The Mining Journal awarded Moma its International Mining Finance Awardand Project Finance Magazine awarded Moma the African Mining Deal of the yearaward. It is very exciting that the long years of hard work to get the Moma project tomine development phase have yielded such a positive result. I am looking forwardto the opening ceremony next year and further to the first shipment of mineralinto a positive market environment. Charles Carvill Chairman For more information: Kenmare Resources plc Michael Carvill, Managing Director Tel: + 353 1 671 0411 Mob: + 353 87 674 0110 Conduit PR Ltd Leesa Peters/Pam Spooner Tel: +44 (0) 207 618 8708 Mob: + 44 (0) 781 215 9885 Murray Consultants Ltd Elizabeth Headon Tel: + 353 1 498 0300 Mob: +353 87 989 7234 www.kenmareresources.com PRELIMINARY UNAUDITED RESULTS CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st DECEMBER 2004 2004 2003 US$ US$ Turnover - - Operating Expenses (575,070) (42,877) Operating Loss (575,070) (42,877) Interest Receivable 611,625 163,428 Profit On Ordinary Activities Before Taxation 36,555 120,551 Taxation - - Profit On Ordinary Activities After Taxation 36,555 120,551 Opening Balance - Profit and Loss Account(deficit) (21,891,727) (22,012,278) Closing Balance - Profit and Loss Account(deficit) (21,855,172) (21,891,727) Earnings per share: Basic 0.01c 0.05cEarnings per share: Diluted 0.01c 0.04c All gains and losses have been included in the amounts shown above and arosefrom continuing operations. PRELIMINARY UNAUDITED RESULTS CONSOLIDATED BALANCE SHEET AS AT 31st DECEMBER 2004 2004 2003 US$ US$ FIXED ASSETSDeferred Development Expenditure 61,504,060 27,431,163Construction in Progress 32,368,691 -Tangible Assets 41,614,070 41,622,440 135,486,821 69,053,603 CURRENT ASSETSDebtors 1,557,260 90,322Cash at Bank and In Hand 92,851,383 4,574,490 94,408,643 4,664,812CREDITORS:Amounts falling due within one year (8,157,922) (3,224,907) NET CURRENT ASSETS 86,250,721 1,439,905 TOTAL ASSETS LESS CURRENT LIABILITIES 221,737,542 70,493,508 CREDITORS - Amounts falling due after one year:Long term loans (1,568,202) (1,730,161)Bank Loans (54,974,135) - (56,542,337) (1,730,161) 165,195,205 68,763,347 CAPITAL AND RESERVESCalled Up Share Capital - (Equity & Non-Equity) 52,923,239 26,269,539Share Premium Account 99,589,865 29,848,262Profit and Loss Account - (Deficit) (21,855,172) (21,891,727)Other Reserve 33,783,082 33,783,082Capital Conversion Reserve Fund 754,191 754,191Shareholders' Funds 165,195,205 68,763,347 PRELIMINARY UNAUDITED RESULTS CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31st DECEMBER 2004 2004 2003 US$ US$ Net cash inflow/(outflow) from operating activities 3,009,000 (1,092,221) Returns on Investments & Servicing of FinanceInterest received 611,624 163,428 Net cash inflow from Returns on Investment &Servicing of Finance 611,624 163,428 Capital expenditure & financial investmentAddition of Deferred Development Expenditure (34,072,897) (8,812,854)Addition of Construction in Progress (32,368,691) - Net cash outflow from capital expenditure &financial investment (66,441,588) (8,812,854) Net cash outflow before use of liquid resources &financing (62,820,964) (9,741,647) FinancingIssue of Ordinary Share Capital 105,644,318 6,513,083Cost of share issues (9,249,015) (544,706)Finance Lease - (2,254)Bank Loans due beyond one year 54,974,135 -Debt due within one year (109,622) 11,005Debt due beyond a year (161,959) 298,258Net cash inflow from financing 151,097,857 6,275,386 Increase/(Decrease) in cash 88,276,893 (3,466,261) NOTES TO THE PRELIMINARY RESULTS Note 1 Basis of Accounting The preliminary results have been prepared in US Dollar under the historicalcost convention, as modified by the revaluation of certain fixed assets, and inaccordance with the accounting policies set out on page 23 of the 2003 AnnualReport and Accounts. Note 2 Basis of Preparation The financial information presented above does not constitute statutory accountswithin the meaning of the Companies Acts, 1963 to 2003. An audit report has notyet been issued on the accounts for the year ended 31st December 2004, nor havethey been delivered to the Registrar of Companies. The comparative financialinformation for the year ended 31st December 2003 has been derived from thestatutory accounts for the year. Those statutory accounts, upon which theauditors have issued an unqualified opinion, have been filed with the Registrarof Companies. Note 3 Earnings and fully diluted earnings per share The calculation of the earnings and fully diluted earnings per share is based onthe profit after taxation of US$36,555 (2003:US$120,551) and the weightedaverage number of shares in issue during 2004 of 443,783,213 (2003 - 270,684,123shares). The calculation of fully diluted earnings per share is based on the profit forthe period after taxation as for basic earnings per share. The number of sharesis adjusted to show the potential dilution if share options and share warrantsare converted into ordinary shares. The weighted average number of shares inissue is increased to 544,841,005. Note 4 Deferred Development Expenditure The recovery of deferred development expenditure is dependent upon thesuccessful development of the Moma Titanium Minerals Project, which in turn isdependent on the continued availability of adequate funding for the project. TheDirectors are satisfied that deferred expenditure is worth not less than costless any amounts written off and that the exploration projects have thepotential to achieve mine production and positive cash flows. Note 5 Construction in Progress Construction in Progress represents expenditure under a fixed price contract forthe engineering, procurement, building, commissioning and transfer of facilitiesat the Moma Titanium Minerals Mine in Mozambique. The recovery of constructionin progress is dependent upon the successful development of the Moma TitaniumMinerals Project, which in turn is dependent on the continued availability ofadequate funding for the project. Note 6 Tangible Assets Tangible Assets are stated at cost or valuation less accumulated depreciation.GRD Minproc Limited, an independent Australian engineering group, has appraisedthe Mining and Processing Plant on a depreciated replacement cost basis ofvaluation as at 30 June 2000. An inspection of the Mining and Processing Plantwas carried out by GRD Minproc Limited in March 2002 concluding that no materialalteration to the plants had taken place. Confirmation of the existence of theProcessing and Mining Plant at the year end has been provided by C.R. Cox &Associates (Australia), a firm of marine consultants and surveyors. The recovery of the plant valuation is dependent upon the successful developmentof the Moma Titanium Minerals Project, which in turn is dependent on thecontinued availability of adequate funding for the project. The historical costnet book value of these assets at 31 December 2004 is US$11,473,067. The surplusarising on revaluation amounts to US$30,141,002. Note 7 Reconciliation of movements in Shareholders' Funds 2004 2003 US$ US$ Profit for the year 36,555 120,551Issue of Shares - at par 26,653,700 1,713,011Share premium, net of costs 69,741,603 4,255,366 Net change in Shareholders' funds 96,431,858 6,088,928Opening Shareholders' funds 68,763,347 62,674,419Closing Shareholders' funds 165,195,205 68,763,347 Note 8 Reconciliation of Operating Loss to Net Cash flow from OperatingActivities 2004 2003 US$ US$ Operating (Loss) (575,070) (42,877)Depreciation 8,370 8,370(Increase)/Decrease in Debtors (1,466,938) 5,151Increase in creditors 5,042,638 1,763,135(Decrease) in Provision for Liabilities & Charges - (2,826,000)Net Cash Flow from Operating Activities 3,009,000 (1,092,221) Note 9 Analysis of Net Debt At 1 Jan 2004 Cash Flow At 31 Dec 2004 US$ US$ US$ Cash at Bank and in hand 4,574,490 88,276,893 92,851,383Bank Loans due after 1 year - (54,974,135) (54,974,135)Debt due after 1 year (1,730,161) 161,959 -1,568,202Debt due within 1 year (109,622) 109,622 - 2,734,707 33,574,339 36,309,046 Note 10 Reconciliation of Net Cash flow to Movement in Net Debt 2004 2003 US$ US$ Increase/(Decrease) in cash during the year 88,276,893 (3,466,261)(Inflow) from movements in debt (54,702,554) (309,263) Movement in net cash in the year 33,574,339 (3,775,524)Net cash at start of year 2,734,707 6,510,231Net cash at end of year 36,309,046 2,734,707 Note 11 2004 Annual Report and Accounts The Annual Report and Accounts will be posted to shareholders in due course. 29 April, 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Kenmare Resources