Kenmare Resources delivers a resilient performance in HY25

Kenmare Resources plc is one of the world's largest producers of titanium minerals. Listed on the London Stock Exchange and Euronext Dublin, Kenmare is capitalised at £290m.

Kenmare operates the Moma Titanium Minerals Mine in Mozambique. Moma's production accounts for approximately 6% of global titanium feedstocks and the Company supplies to customers operating in more than 15 countries. With an 18 year production history, Kenmare produces raw materials that are ultimately consumed in everyday quality-of life items such as paints, plastics and ceramic tiles. The Company established a dividend policy in 2018 and since 2019, it has returned over $300 million to shareholders through dividends and share buy-backs.

Half Year results to 30 June 2025 were published on 20 August and we were delighted to have Tom Hickey, Managing Director, James McCullough, CFO, ad Ben Baxter, COO, report on performance in the first 6 months of the year and talk about prospects for the second half of 2025. A recording of the webinar is available here.

The half year was characterised by stable operational performance and a strong safety record, but softer market conditions, the ongoing capital programme for the relocation of WCP A to Nataka, and negotiations with the Mozambican Government over the renewal of the Implementation Agreement (IA). The period also included the termination of a potential takeover approach from Oryx Global Partners and former MD Michael Carvill.

Signing a new Implementation Agreement, is a focus for the management team. First signed in 2002, the IA provides the fiscal terms for Kenmare’s processing and export activities in Mozambique and Its renewal fell due in December 2024. While Kenmare has the right to renew on existing terms, management understands that a better deal for Mozambique is the right approach. The latest offer involves royalties rising to 2.5% and then increasing further to 3.5% over the 20 year period. Most aspects of the agreement have been approved, but the royalty rate remains under negotiation.

In terms of financial performance, revenues were modestly higher at $168m, supported by a higher percentage of zircon in the product mix, despite single-digit price declines across ilmenite and zircon. EBITDA came in at $47m (margin 30%), lower year-on-year due to higher operating and one-off costs. Total costs rose 16% YoY, comprised of a 6% increase in direct operating costs plus additional items such as takeover-related expenses and higher accrued royalties. Capex spend was $115m including $95m on the WCP A project. The total cost of the move remains at $341m although $11m of the spend has been pushed several years to 2031-2032. Overall net debt rose from $25m to $85m, reflecting increased capex and dividends. An interim dividend of 10c was declared. There was also a non- cash impairment charge of ~$100m, reflecting softer price outlook and IA-related costs.

On the operations front, there were no Lost Time Injuries in the half. A milestone of 7 million hours worked without a Lost Time Injury was passed in early July, a world class performance. The Lost Time Injury Frequency Rate (LTIFR) has now fallen to 0.03 per 200k hours worked. HMC production rose 2% to 670,600 tons, ilmenite rose 1% to 449,900 tonnes, zircon rose 28% to 27,200 tonnes and rutile production rose 20% to 4,800 tonnes. Concentrates fell 9%. Shipments were strong in Q1 but weaker in Q2 due to weather and vessel maintenance. A third (rented) transshipment vessel is being evaluated and this will supplement shipments in the second half. Production guidance for FY was maintained.The new Selective Mining Operation is performing in line with expectations. The new low-capex unit achieved its 300 tph run rate, producing 12kt HMC in H1 and the expected annual output is 50kt. A second, larger unit (1,000 tph) costing $15m is due to be commissioned in H1 2026. The WCP A upgrade and transition to Nataka project remains on budget at $341m, with 60% already spent. Two new dredges are on site at Moma and a new feed preparation unit is close to completing construction, with commissioning to begin in Q3 2025. They are expected to be fully ramped up by the end of 2025, with WCP A producing at its upgraded nameplate capacity. The Kenmare website, www.kenmareresources.com , has some great videos of new dredges being landed on the beach at Moma.

Looking at the overall market, the chloride pigment and titanium metal markets remain structurally attractive. Chinese pigment production continues to expand and EU anti-Chinese dumping tariffs support demand for Western producers’ pigment. Kenmare’s products are tariff-exempt as critical minerals. However increased small-scale concentrates production in Africa has added to overall supply which has put some pressure on prices.  Both Ilmenite and zircon prices declined slightly in H1. Prices are expected to stay soft in H2 but Kenmare believes the medium-term fundamentals for its products remain strong.

Overall production and cost guidance for 2025 was maintained and capex, whilst re-phased, is unchanged in total. Net debt is expected to peak in late 2025/H1 2026 before deleveraging as capex spend falls. The Company is committed to returning capital to shareholders though both dividends and share buy-backs where appropriate and c.15% of stock has been repurchased in recent years.

So in conclusion, despite softer markets, Kenmare delivered a solid operational performance in H1 2025. Safety was exemplary, zircon production hit record highs, and the transformational WCP A project is advancing and derisking well. The balance sheet remains resilient, dividends continue, and long-term fundamentals are robust. The next 6–12 months will be pivotal, with the WCP A upgrade and IA renewal both expected to be completed, underpinning Kenmare’s ability to deliver strong returns long into the future.

A recording of the webinar is available here.