Responsibly meeting
global demand for
quality-of-life mineral s
ANN UAL REPORT AN D ACCOUNTS 2021
KENMARE RESOURCES PLC IS ONE OF THE WORLD’S
LEADING PRODUCERS OF MINERAL SANDS PRODUCTS
LEADING PRODUCERS OF MINERAL SANDS PRODUCTS
Who we are
Kenmare is an established mining company that operates
the Moma Titanium Minerals Mine, located on the north east
coast of Mozambique. Our products are key raw materials
ultimately consumed in quality-of-life items such as paints,
plastics, and ceramic tiles. Listed on the London Stock
Exchange and Euronext Dublin, we have been in production
for 14 years and have a long-term commitment to being a
responsible corporate citizen.
What we do
We are ramping up production of ilmenite, our primary
product, to 1.2 million tonnes per annum on a sustainable
basis. At this production rate, the Moma Mine has over 100
years of Mineral Resources. We are focused on maximising
value and creating opportunities from the Moma Mine for
the benefit of employees, host communities, and customers,
as well as our shareholders.
How we do it
Kenmare mines titanium-rich sands at its dredge mining
and dry mining operations. Of this ore, only 3–5% is removed
and transported for separation at our plant into our four
final products: ilmenite, zircon, rutile, and mineral sands
concentrate. We then load these products onto ocean-going
third-party vessels at our dedicated port facility. After mining,
we rehabilitate the land, progressively returning it to local
farmers. We are proud of our low environmental impact, with
over 90% of our electricity requirements generated from
renewable sources.
For more information visit:
www.kenmareresources.com
@KenmareRes
Kenmare Resources Plc
@KenmareResourcesplc
HIGHLIGHTS
LO ST TIME INJURY
FR EQUENCY RATE
CARBON IN TENSI TY
(SCOPES 1 &2)
0.03
PER 200K HOURS WORKED
(DOWN 88% )
0.057
TONNE CO 2 / TO NNE PRODUCT
(DOW N 20%)
PRODUCTION
O F FINISHED
PRODUCTS
SHIPMENTS
OF FINISHED
PRODUCTS
1,228,500
TON NES
(UP 46%)
1,285,300
TONNES
(UP 51%)
REVENUE
$455.9m
(UP 87%)
EBITDA
$216.1m
(UP 182%)
SHARE
BUY-BACK
$81.6m
DIVIDEND
PER SHARE
USc32.7
(UP 227%)
CONTENTS
Business overview
Highlights
Kenmare Resources at a glance
2021 year in review
Our products
Strategic report
Chairman’s statement
Managing Director’s statement
Our business
Our business model
Stakeholder engagement
Our strategy
Key performance indicators
Our operations
Operating model
Operating review
Mineral Reserves and Resources
Market report
Financial review
Sustainability
Principal risks and uncertainties
Governance
Governance at a glance
Board of Directors
Executive Committee
Corporate governance report
Nomination Committee report
Sustainability Committee report
Audit & Risk Committee report
Remuneration Committee report
Annual report on remuneration
Remuneration policy report
Directors’ report
Group financial statements
Independent auditor’s report
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Company financial statements
Parent company statement of financial position
Parent company statement of changes in equity
Notes to the parent company financial statements
Other information
Shareholder profile
Glossary – alternative performance measures
Glossary – terms
General information
01
02
04
06
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20
22
26
28
30
34
38
44
50
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172
180
181
183
IBC
RESPONSIBLY MEETING
GLOBAL DEMAND FOR
QUALITY-
OF-LIFE
MINERALS
2021 SU STAI NA BI LITY REPORT
31024
8 April 2022 3:12 pm
V1
Read our
Sustainability
Report 2021
RESPONSIBLY MEETING
GLOBAL DEMAND FOR
QUALITY-
OF-LIFE
MINERALS
2021 CLIMATE STRATEGY R EPORT
Read our
Climate Strategy
Report 2021
01
Kenmare Resources plc Annual Report and Accounts 2021BUSINESS OVERVIEW MEETING
in the world.
Our Moma Mine is one of the largest titanium minerals deposits
Moma began production in 2007 and since then it has produced more than
nine million tonnes of finished products. We are targeting ilmenite production
of 1.2 million tonnes per annum (Mtpa), plus co-products, on a sustainable
basis, with sufficient Mineral Resources to produce at this rate for more than
100 years. This provides opportunities to grow as the market requires.
See page 26 to read more about our operations
1.1 2 Mt
ILMEN IT E PRODUC TION
48%
INCR EASE IN ILME NIT E
PRODUCT ION IN 2021
IN 2021
8%
SHARE
KENMARE’S MARKET
149 Mt
ILMEN IT E MINER AL
RESOURCES
KENMARE RESOURCES AT A GLANCE
RESPONSIBLY
Sustainability is central to every
aspect of how we operate,
whether it is the safety and health
of our employees, our impact on
the environment, or how we relate
to our host communities.
In 2021 we achieved our lowest ever Lost
Time Injury Frequency Rate (LTIFR),
we published our first Sustainability
Report and we invested $2.3 million
into community initiatives through the
Kenmare Moma Development Association
(KMAD).
See page 50 to read more about
sustainability at Kenmare
88%
REDU CTION IN LTI FR
IN 2021
97%
MOZAM BICAN
EM PLOYE ES
>9 0%
ELEC TRICIT Y DERI VED
FROM RENEWA BLE
SOURCES
02
Kenmare Resources plc
Annual Report and Accounts 2021
DEMAND
Demand for our products has historically
grown with world GDP.
As the global economy grows and continues to
urbanize, demand for our quality-of-life minerals has
steadily increased.
This trend is expected to continue as some of the
world's most populus countries, such as China and
India, have significantly lower consumption rates per
capita than North America or Europe.
See page 38 to read more about our marketplace
51%
INCREASE IN
SHIP MEN TS IN 2021
28%
INCREASE IN AVERAG E
ILMENITE PRICE
RECEIVED IN 202 1
MEETING
Our Moma Mine is one of the largest titanium minerals deposits
in the world.
Moma began production in 2007 and since then it has produced more than
nine million tonnes of finished products. We are targeting ilmenite production
of 1.2 million tonnes per annum (Mtpa), plus co-products, on a sustainable
basis, with sufficient Mineral Resources to produce at this rate for more than
100 years. This provides opportunities to grow as the market requires.
See page 26 to read more about our operations
1 .1 2 Mt
IL ME NIT E PRODUCTION
IN 2021
48%
INC REASE IN I LMENITE
PRODU CTION IN 2021
8%
KENMARE’S MARKET
SHARE
149 Mt
ILM ENI TE MINERAL
RES OURCES
BUSINESS OVERVIEW
QUALITY-OF-LIFE MINERALS
Kenmare's products are key
raw materials used in the
production of quality-of-life
items such as paints, paper,
plastics and ceramic tiles,
which are essential to everyday
modern life.
We produce three key minerals;
ilmenite, rutile and zircon. Ilmenite
is our primary product, usually
accounting for more than 70% of
revenues.
See page 6 to read more about
our products
15 Mt
GLOBAL TITANIUM
FEEDSTO CK PRODUCTION
PER ANN UM
$4.5 bn
TITAN IUM FEEDSTOCK
INDUSTRY REVEN UES
PER ANN UM
Annual Report and Accounts 2021 03
Kenmare Resources plc
Rotary Uninterruptible
Power Supply (RUPS)
Following a successful feasibility study, Kenmare approved
the installation of a RUPS in early 2021. The RUPS is expected
to improve power stability at the Mineral Separation Plant and
decrease our carbon emissions by reducing our reliance on
diesel generators. It began commissioning in Q1 2022.
$18 m ESTIMATED
CAPITAL CO ST
FEBRUARY
MARCH
2021
Construction of Pilivili health centre
Following Wet Concentrator Plant (WCP) B’s relocation
to Pilivili, the Kenmare Moma Development Association
(KMAD) expanded its reach to support five new
communities in the Pilivili area. One of the first major
projects to commence was the construction of the Pilivili
health centre in Q1 2021.
5 PI LIVIL I COMMU NI TIES
SUP PORTED BY KMAD
04 Kenmare Resources plc
Annual Report and Accounts 2021
COVID-19 vaccination
programme
In order to protect our people,
in July 2021 we began offering
vaccines against COVID-19 to our
employees and contractors. By
year-end, 96% of our workforce
had received two doses. We also
donated 12,000 vaccines for local
communities.
96%
DO UB LE VACCINAT ED
EMP LOYEES
BUSINESS OVERVIEW
Share buy-back
In December 2021 Kenmare completed a share buy-back, repurchasing
13.5% of our issued share capital and returning $81.6 million to eligible
shareholders. This was in addition to dividends paid through 2021,
taking cash returned to shareholders to ~$100 million in the year.
$81.6m
CASH RETURN ED
THROUG H B UY-BACK
2022
Record quarter of production
Q3 2021 represented the first quarter of
ilmenite production at nameplate capacity
of 1.2 million tonnes per annum, plus
co-products. In 2022 Kenmare is focused on
achieving this run rate on a sustainable basis.
314,400 t
Q3 ILMENITE
PRODUCTIO N
Kenmare Resources plc
Annual Report and Accounts 2021
05
Nataka Pre-Feasibility
Study (PFS) underway
By mid-2021, work was underway
on the PFS for WCP A’s move
to the Nataka ore zone in 2025.
WCP A is expected to dredge a
corridor to Nataka, unlike WCP B
which was relocated by road.
32 Mt
NATAKA ILMENITE
RESERVE S
JULY
AUGUST
SEPTEMBER
DECEMBER
OUR PRODUCTS
Products containing
titanium feedstocks
and zircon are found
in every room of
the home.
WHAT WE PRODUCE
Kenmare has two core product streams: titanium
feedstocks (ilmenite and rutile) and zircon, which is
a zirconium mineral. Ilmenite is our primary product,
representing more than 70% of revenues. We also
produce a small quantity of monazite (a mineral
containing rare-earth elements) as part of a mixture
of products in a concentrate.
Titanium and zirconium minerals are known for
imparting the qualities of whiteness and opacity in
the products they are consumed in. These products
can be found in many areas of everyday life.
COSMETICS &
ANTIPERSPIRANTS
PAPER
INKS
PAINTS AND
COATINGS
GLAZES AND
ENAMELS
>90%
OF PAINT REQUIRES TITANIUM
FEEDSTO CK S
~3.5%
FIVE YEAR GROWTH IN THIS
MARK ET
TITANIUM FEEDSTOCKS
The production of titanium dioxide pigment accounts for
approximately 90% of the demand for titanium feedstocks,
like ilmenite and rutile, with smaller quantities used to produce
titanium metal and welding electrode fluxes.
Titanium feedstock production is a $4.5 billion per annum
industry and the TiO2 pigment industry has annual revenues of
over $15 billion.
KEN MARE PROD UCTION
IN 2021
% OF KENMARE’S
REVEN UE IN 202 1
1.13 Mt
80%
06 Kenmare Resources plc
Annual Report and Accounts 2021
COSMETICS TOOTHPASTE
PHARMACEUTICALS
>20 k
NEW COSMETIC S L AUNCHED B ETWEEN 2014 AN D
2018 CON TAINING TITAN IUM F EEDSTO CK S 1
BUSINESS OVERVIEW
PLASTICS AND
RUBBER
CATALYTIC
CONVERTERS
ALL
CATALYTIC
CONVERTERS
REQUIRE ZIRCO N
2%
FIVE YEAR GROWTH
IN CHEMICALS
SECTO R 2
HOW OUR PRODUCTS ARE HAVING A
SUSTAINABLE IMPACT ON THE AVERAGE
FAMILY HOME
See page 40 to read how
our products are allowing
for more sustainable paint
production
See page 43 to read about how
our products are integral to
electric car production and
other sustainable end-user
products
KEN MARE PRO DUCTION
IN 2021
% OF KENMARE’S
REVEN UE IN 2021
56.3 kt
15%
Kenmare Resources plc
Annual Report and Accounts 2021
07
COATED FABRICS
AND TEXTILES
CERAMIC
TILES
FOODS
ZIRCON
Zircon sand is an important feedstock to a wide range
of industries, of which the ceramics sector is the largest
consumer, due to zircon’s brilliant whiteness. Zircon is
also used in refractory, foundry and chemical applications,
which are essential to modern manufacturing.
The zircon sand supply sector represents an approximately
$1.7 billion per annum industry, with Europe and Asia being
the largest markets.
1
Source: Titanium Dioxide Manufacturers Association
2 Catalytic converters are included in the chemicals sector
STR ATEGIC
REPORT
10 Chairman’s statement
12 Managing Director’s statement
14 Our business
16 Our business model
18 Stakeholder engagement
20 Our strategy
22 Key performance indicators
26 Our operations
28 Operating model
30 Operating review
34 Mineral Reserves and Resources
38 Market report
44 Financial review
50 Sustainability
64 Principal risks and uncertainties
Ken mare set a n ew company record
for safety in 2021 and achieved one
year without a Lost Ti me Injury on
6 January 2022, representing more
than six milli on hours worked.
HIGI NO JAMI SSE
GENERAL MA NAGER, MOMA MINE
CHAIRMAN’S STATEMENT
Increased shareholder
returns during an
outstanding year
STEVEN MCTIERNAN
CHA I RMA N
DEAR SHAREHOLDERS,
2021 was the first full year of operations at the high grade
Pilivili ore zone, in addition to our original Namalope area.
Significant increases in production and shipments were
achieved, while our product markets exhibited strong
demand throughout the year. As a result, revenue increased
by 87% to $455.9 million, and profit after tax by 669%
to $128.5 million, vindicating our strategy of investing in
additional production capacity in anticipation of a tight
market.
As we began 2021, while we had largely completed the
last of our three growth projects, operational effectiveness
continued to be impacted by COVID-19. Our vaccination,
testing, and quarantine protocols mitigated the worst
effects of the virus, however, and we also achieved a truly
outstanding safety performance. Nevertheless, we remain
vigilant as the pandemic continues to evolve. The health
and safety of our colleagues and host communities remain
our highest priorities.
Shareholder returns
Kenmare committed to increase shareholder returns after
the completion of the major capital projects executed during
2018–2020. Accordingly, we have recommended a dividend
payout of 25% of profit after tax for 2021, higher than the
20% minimum policy. Subject to shareholder approval, our
2021 full year dividend will be USc32.71, an increase of 227%
compared to 2020.
Despite robust operational and financial performance, our
share price during 2021 did not fully reflect Kenmare’s
intrinsic value, and the Board concluded that a share
buy-back was therefore a prudent use of capital. A share
buy-back was completed in December 2021, returning $81.6
million to eligible shareholders while reducing the number of
shares in issue by 13.5%.
I am pleased that Kenmare has been able to return almost
$100 million in aggregate to shareholders during 2021,
through dividends and the share buy-back, whilst also
maintaining a robust balance sheet.
At the 2022 Annual General Meeting (AGM) Kenmare will
ask shareholders to approve resolutions to implement an
Odd-lot Offer at some point during the next 18 months. This
will enable the Company to purchase, at a 5% premium, the
shares held by eligible certificated shareholders who hold
fewer than 200 shares in the Company. This will help small
shareholders who would otherwise have difficulty selling
their holdings due to disproportionate trading costs. Further
details of the Odd-lot Offer scheme are included in the
Notice of AGM.
Outlook and strategy
In 2021 we benefitted from strong product markets for all
our products and this positive momentum has continued
into 2022. Our increased production has been well absorbed
by our markets and demand for Kenmare ilmenite remains
strong. However, the tragic conflict in Ukraine has created
significant uncertainties in global trade routes and the wider
economy. It is too soon to speculate on the overall effects on
our business, but Ukraine is a significant supplier of titanium
feedstocks, while lower global growth could reduce demand
for our products.
In 2025, Wet Concentrator Plant (WCP) A will move to the
Nataka ore zone. Field tests of mining methods and planning
studies are making good progress and a Pre-Feasibility Study
for the move is expected to be completed later in 2022. This
will include details of the mining method, relocation, provision
of water and power, an HMC pumping system, and plans for
tailings disposal.
Our overall strategy is to operate responsibly to deliver long-
life low-cost production, allocating capital efficiently, including
USc32.7
2021 FULL Y EAR
DIVIDEND
227%
DIVIDEND IN CREASE
IN 2021
2 nd
SUSTAIN AB IL ITY
REPORT PUB LISHED
10 Kenmare Resources plc
Annual Report and Accounts 2021
towards developing accretive growth opportunities. The
Kenmare team is committed to achieving these strategic goals,
while also becoming a first quartile producer on the industry
revenue to cost curve. Achievement of these long-term
strategic goals will support further increases in free cash flow
and higher dividends, as well as improving resilience in case of
potential cyclical commodity market downturns.
Sustainability
Kenmare has always placed sustainability at the heart
of its business practices, working responsibly to achieve
ambitious environment, social, and governance goals. In
2021, we published our inaugural Sustainability Report,
which set out guiding principles, together with some
examples of our approach to responsible environmental
management, and constructive community and other
stakeholder relations. We have now published our second
Sustainability Report, including commentary on our
performance against public sustainability targets for the
first time.
The Board has ratified an inaugural Climate Policy and
we have published our first Climate Strategy Report,
aligned with the recommendations of the Task Force
on Climate-related Financial Disclosures (TCFD).
During 2021 we launched a Portuguese version of our
corporate website to ensure all information is easily
accessible for Mozambicans. For the second consecutive
year, we were pleased to be named as the most transparent
extractive industry company in Mozambique by the Centre
for Public Integrity’s Extractive Industry Transparency Index.
Board development
In 2021, an external performance evaluation of the Board
and all of its Committees was conducted by Board
Excellence, in accordance with the provisions of the 2018
UK Corporate Governance Code. I am pleased to report that
the evaluation concluded that Kenmare’s Board operates
efficiently, “with a deep commitment to do the right thing
and excel on behalf of shareholders, employees and
stakeholders.” A summary of outcomes and actions from the
evaluation is available on page 86.
A number of important changes in the composition of the
Board took place during the year, and further changes
will occur in 2022 when I plan to retire, after nine years on
Kenmare’s Board, almost eight of them as Chairman.
Gabriel Smith, Tim Keating, and Peter Bacchus stepped
down and I would like to thank them sincerely for their
important contributions to Kenmare’s success in recent
years. Graham Martin has assumed the role of Senior
Independent Director following Peter’s departure.
In March 2021, we were pleased to welcome Sameer
Oundhakar to replace Tim as the representative Director
of our largest shareholder, African Acquisition S.à.r.l.,
an investment vehicle owned by the Oman Investment
Authority.
In October 2021, we announced that Mette Dobel had
agreed to join the Board as an independent Non-Executive
Director effective 1 January 2022. Her significant leadership
experience both as a senior executive and director of
FLSmidth A/S, at the cutting edge of mining technology and
automation, will be invaluable as we strive to achieve further
operational efficiencies and build a positive social and
environmental legacy.
STRATEGIC REPORT
“Kenmare returned almost
$100 million to shareholders
in 2021, through dividends
and the share buy-back.”
STEVE N MCTIE RNA N
CH AIRMAN
In December 2021, Andrew Webb joined the Board as an
independent Non-Executive Director and Chair Designate.
Andrew brings extensive natural resources and financial
advisory experience, having previously served as a
Managing Director at Rothschild & Co in the Global Advisory
team, where he worked for 25 years. Andrew will become
Chairman after the AGM, and I am confident that he and the
rest of the Board will take Kenmare to even higher levels of
achievement in future years.
Read more about
our strategy in
action on page 20
Read more about
changes to our
Board on page 82
After these changes, the composition of the Board will
provide a strong and diverse mix of talents, skills and
experience, well suited to the business and challenges
ahead, while achieving our gender diversity target with
female Directors representing one third of the Board.
Acknowledgements
I would like to end my final statement as Chairman by
thanking all of Kenmare’s key stakeholders for their
support and commitment to the Company and the Board,
not only during the unprecedented challenges we have
all experienced during the past two years of COVID-19
disruption, but also throughout my nine-year tenure. I look
back on the Company’s achievements with a sense of pride
and I am pleased to be leaving Kenmare in the strongest
position in its history.
It has been a privilege to work with my fellow Board
members, and particularly Michael Carvill who founded the
company and has led it selflessly and courageously for more
than 20 years. Kenmare has an outstanding management
team and a remarkable workforce. I feel privileged to have
worked with such a talented group and I will follow the
Company’s continued progress with keen interest.
With capacity to deliver 1.2 million tonnes per annum (Mtpa)
of ilmenite on a sustainable basis, buoyant product markets,
and a first class team, I am confident that Kenmare will
continue to generate value for all stakeholders in 2022 and
beyond.
STEVE N MCTI ER NAN
C HAI RMA N
Kenmare Resources plc
Annual Report and Accounts 2021
11
MANAGING DIRECTOR’S STATEMENT
A record year
across our business
MI CHAEL CARVILL
MA NAGI NG DIRECTO R
DEAR SHAREHOLDERS,
Kenmare delivered a record year for safety, production,
and shipments in 2021. The Company demonstrated its
resilience and agility, protecting our employees and host
communities against a second year of heightened risk due
to COVID-19. I would like to thank all our team for their hard
work and dedication, particularly during H1 2021 when we
faced huge challenges as a result of the virus.
Our record operational performance in 2021 was supported
by strong market conditions for all our products. We
increased production of ilmenite, our main product, by
almost 50% compared to 2020 and this was well received by
the product market, with quarter-on-quarter price increases.
This enabled us to generate EBITDA of $216.1 million, up
182% on 2020, and gave us the confidence to return almost
$100 million to shareholders during the year, increasing our
2021 dividend payout to 25% of profit after tax, above the
20% minimum policy, and completing a share buy-back of
13.5% of our issued share capital.
We are targeting production of 1.2 million tonnes per annum
(Mtpa) of ilmenite, plus co-products, on a sustainable
basis and reduced unit costs. We remain focused on
delivering strong free cash flow and shareholder returns,
while continuing to raise the standards to which we hold
ourselves in terms of environment, social, and governance
performance. We believe we are achieving our purpose
of "responsibly meeting global demand for quality-of-life
minerals."
Safety
It is testimony to our strong safety culture that Kenmare
reported its best ever safety performance in 2021. This
achievement is particularly significant given the additional
pressure put on our mining operations by COVID-19, which
had the potential to increase safety risks.
We delivered our lowest ever Lost Time Injury Frequency
Rate of 0.03 per 200,000 hours worked for the 12 months
to 31 December 2021, which also represented more than
six million hours worked without a Lost Time Injury (LTI)
and an 88% reduction compared to 2020. Our Total
Recordable Injury Frequency Rate (TRIFR) relative to the
2020 International Council on Mining and Metals TRIFR
was in the top quintile. On 6 January 2022 we achieved one
year without a LTI and we are working hard to maintain this
record performance. We also retained our five-star NOSA
safety accreditation for the sixth consecutive year.
Sustainability
Our commitment to working responsibly is enshrined
in Kenmare’s purpose and we are particularly focused
on protecting our employees and our host communities
in Mozambique. In mid-2021 we began vaccinating our
workforce against COVID-19 and by the end of the year,
96% had been double vaccinated. We also donated 12,000
vaccines to local communities.
Through the Kenmare Moma Development Association
(KMAD), we completed the construction of a new health
centre for the communities living near our Pilivili operations
and constructed seven school blocks in the Namalope and
Pilivili areas. By the end of the year, over 1,000 farmers were
registered in our Conservation Agriculture programme
to improve crop yields and 75 small businesses were
benefitting from KMAD support.
We recognise the role and responsibility all businesses must
take in reducing global greenhouse gas emissions and as
such, in December 2021, the Board approved Kenmare’s
Climate Policy. We have published our first Climate Strategy
Report, which follows recommendations made by the Task
Force on Climate-related Financial Disclosure (TCFD). We
have an ambition of becoming Net Zero (Scope 1 and 2)
88%
96%
48%
IM PROVEMENT IN
SA FETY PERFORM AN CE
OF EMP LOYEES
DO UB LE VACCINAT ED
INCREAS E IN
ILMENITE PROD UCTION
Read more about
commitment to
sustainability
on page 50
Read more about
market-leading
position on
page 38
12
Kenmare Resources plc
Annual Report and Accounts 2021
STRATEGIC REPORT
by 2040, with a short-term carbon emissions reduction
target of 12% by 2024, contingent on receiving a reliable
power supply from the Mozambican state power provider,
Electricidade de Moçambique.
In early 2021 we approved the development of a Rotary
Uninterruptible Power Supply (RUPS). It is expected
to deliver increased power stability for the Mineral
Separation Plant, an important risk mitigation measure,
and is anticipated to be the main contributor towards our
reduced emissions through lower diesel consumption. At
an estimated cost of $18 million, the RUPS is a Net Present
Value positive project, using conservative assumptions, and
commissioning commenced in Q1 2022.
We also continued to invest in our people. The Moma
workforce received 21,100 hours of training during the
year as we believe that providing continuous development
opportunities is key to attracting and retaining the best
people and maintaining our strong safety culture. At the
end of 2021, we had 1,551 employees at the Moma Mine
and over 97% of them were Mozambican, with 70% from
the local district or province. 12.5% of our Moma employees
were women, compared with 10.6% in 2020, reflecting our
successful initiatives to encourage women to join and
remain in our workforce.
Operational performance
2021 was a record year for production and the first time we
have produced more than one million tonnes of ilmenite.
Total production of finished products was up 46% compared
to 2020, driven by the higher ore grades mined in Pilivili
by Wet Concentrator Plant B following its relocation in Q3
2020. We achieved Moma’s nameplate capacity of 1.2 Mtpa
ilmenite production in Q3 2021, which set a new quarterly
production record, and demonstrated our ability to produce
at our targeted rate. We are now focused on achieving this
run rate on a consistent basis. 2021 was also a record year
for shipments, which were up 51% compared to 2020.
We achieved this compelling performance despite the
impact of COVID-19 on our operations, particularly in
H1 2021. Ilmenite production was below the midpoint of
guidance due to the challenges of operating with a reduced
workforce, including senior management, and power supply
disruptions in Q4. Operating costs per tonne were 3% above
the top end of our guidance range due mainly to additional
costs associated with repairs and maintenance, Heavy
Mineral Concentrate haulage, and COVID-19 management.
In 2022, we will look to progress towards becoming a first
quartile producer on the industry revenue to cost curve.
Product market
Kenmare is the world’s largest supplier of ilmenite and
the Moma Mine is one of the largest titanium minerals
deposits globally. The titanium feedstocks we produce are
principally used to make pigment, which is essential for
imparting whiteness and opacity in the production of paints,
paper, plastic, and a range of other items we use in our
everyday lives.
2021 was a strong year for all of Kenmare’s product markets,
with increased volumes sold at a 21% higher average price than
in 2020. Robust demand for titanium feedstocks, like ilmenite,
was driven primarily by global pigment production reaching a
record high and the titanium metal market improving.
“Kenmare demonstrated
its resilience and agility,
protecting our employees and
host communities against a
second year of heightened
risk due to COVID-19.”
MI CHAE L CA RVILL
MANAG ING DI RECTOR
Following softer demand in 2020, the market for zircon, our main co-product,
stabilised in Q1 2021 and then saw price increases throughout the remainder of
2021. The positive pricing momentum for all our products has continued into
2022, with global inventories remaining low.
Outlook
Although the pandemic continued to create huge challenges in 2021, I believe we
have built a stronger business. The past two years have shown us what we are all
capable of, particularly when we pull together and look out for each other. I would
like to thank all our stakeholders, particularly those in Mozambique, for their
invaluable support.
I would also like to thank Steven McTiernan for his outstanding contribution to
Kenmare. He led the Company as Chairman during a period of significant change,
providing constructive challenge, wise counsel, and strong support. I look forward
to working with Andrew Webb and ensuring we continue to deliver positive
returns and create value for all our stakeholders.
As we look to the months and years ahead, we know we have a lot of hard work
ahead of us to live up to our strategy of operating responsibly, delivering long-life,
low-cost production, and allocating capital efficiently, including developing accretive
growth opportunities. However, we can be proud that our operations are safe and
performing well, our balance sheet is strong, our product markets are tight, and our
employees have proven they can succeed even in the most difficult conditions.
MI CHAE L CA RVIL L
MA NAG I NG DI REC TOR
TASK FORCE ON CLIMATE-RELATED FINANCIAL
DISCLOSURES (TCFD)
In 2021, we documented Kenmare's approach to climate-risk governance
and supplemented our existing risk management approach with an
in-depth analysis of our climate-related risks and opportunities. This
analysis involved testing the resilience of our overall strategy and
operations against alternative temperature-warming scenarios. We also
updated our climate strategy, which resulted in the development of a
new Climate Policy and ambition to become Net Zero by 2040 (Scope
1 & 2). Our Climate Strategy Report sets out our full TCFD disclosures,
providing additional context and a better understanding of Kenmare's
overall strategic response to climate change.
Kenmare Resources plc
Annual Report and Accounts 2021
13
88%
IMP ROVEMENT IN
SAFETY PERFO RMAN CE
96 %
OF EMPLOYEES
48%
INC REASE IN
DO UB LE VACCINATED
ILM ENI TE PRO DUCTION
OUR BUSINESS
We are focused on creating value for all stakeholders through our
purpose of “Responsibly meeting global demand for quality-of-life
minerals." This purpose is best served through the alignment of
our culture, values, and strategy. Our actions are informed by our
guiding principles: We Care, We Grow, We Excel.
CULTURE
Kenmare aims to foster a purpose-led, high-performance, inclusive culture.
Our values of Integrity, Commitment, Accountability, Respect, and Excellence
(ICARE) guide our behaviour, shape our culture, and are fundamental to
ensuring we create the maximum benefits for all of our stakeholders.
Read more about
our stakeholders
on page 14 and 15
14
Kenmare Resources plc
Annual Report and Accounts 2021
POSITIONED IN THE FIRST QUARTILE
What it means
Being in the first quartile of the industry margin curve
means that a company generates more revenue per dollar
of costs incurred than 75% of its competitors.
The benefits
Companies who operate in the first quartile will generate
higher cash margins than the majority of the industry.
This provides a stronger opportunity to continue to invest
through the commodity cycle, while supporting returns to
shareholders.
STRATEGIC REPORT
WE CARE FOR:
•
•
•
The safety, health, security and well-being of our
employees, the environment, communities and other
stakeholders.
Our host communities by forming partnerships;
sharing and participating in the preservation of their
environment, traditions and values.
Company assets by providing suitable security and risk
management systems and striving for best practice in
the operation and maintenance of company assets.
VISION
To be a leading titanium
minerals producer positioned in
THE FIRST QUARTILE
of the industry revenue
to cost curve
OUR PURPOSE
Responsibly meeting
global demand for
quality-of-life minerals
STRATEGY
Operate
responsibly
Deliver long life,
low-cost production
Allocate capital
efficiently
VALUES
Integrity
Commitment
Accountability
Respect
Excellence
WE GROW OUR:
•
Business through exploration, production expansion
projects, and expanding existing and new markets.
•
Employees by providing attractive work
opportunities, treating them fairly and providing
opportunities for personal growth to match
their interests and capabilities.
• Host communities by forming partnerships to develop
and promote economic and social well-being.
WE EXCEL BY:
•
Optimising operations, increasing productivity and
lowering costs through the continuous improvement of
processes, procedures and skills.
• Achieving control and standardisation through planning
and developing systems and processes of work.
• Striving for best practice in all areas of operations,
customer service and corporate citizenship.
Kenmare Resources plc
Annual Report and Accounts 2021
15
OUR BUSINESS MODEL
INPUTS
OUR UNIQUE AND SUSTAINABLE MODEL
Read more about
our sustainability targets
on page 50
Operate
responsibly
Our
strategic
priorities
Read more about
our strategy on page 20
Deliver long life,
low-cost production
Allocate capital
efficiently
Read more about
our guiding principles
on page 14
Our business model is underpinned by our values and our guiding principles
Integrity
Commitment
Accountability
Respect
Excellence
MARKET
FUNDAMENTALS
Global demand
Read about the uses for our
products on page 6
Competition
Read about the expected
supply on page 40
Commodity prices
See the positive trend in prices
on page 40
OUR INTEGRATED
APPROACH
Responsible approach
Read about our approach to
sustainability on page 50
Good corporate governance
Read about our corporate
governance from page 74
Stakeholder engagement
Read about our key stakeholder
groups on page 18
ASSETS
Our employees
Read about our safe and engaged
workforce on page 52
Large Mineral Resource
Read about our 6.3 billion tonnes
of Mineral Resources on page 34
High grade opportunities
Read about the Nataka Pre-
Feasibility Study on page 32
Significant financial resources
Read about the strength of our
financial position on page 44
Renewable electricity source
Over 90% of our electricity comes
from hydropower, see page 56
16
Kenmare Resources plc
Annual Report and Accounts 2021
Deliver long life,
low-cost production
e
t
a
r
o
p
r
o
c
h
g
i
h
d
l
o
h
p
U
s
d
r
a
d
n
a
t
s
e
c
n
a
n
r
e
v
o
g
Promote a culture of health
M aintain a m arket-leading
and safety
THIS
ENABLES
US TO
h
g
u
h r o
h
R
u
e
c
d
s t s t
t
w
o
n it c
n g r o
e u
c ti o
u
position
d
p r o
I m p r o v e o p e r a t i o n a l e f f i c i e n c y
Build strong relationships
with our stakeholders
Reduce our
environmental impact
a
i
n c
a
g
m
I
n
v
e
s
t
i
n
o
u
r
f
u
t
u
r
e
R
e
t
u
r
n
R
e
t
h
r
o
u
c
a
p
i
t
a
l
t
o
h t
h
s
h fl
o
e c
y
w
p
cle
o
siti
v
e
s
h
a
r
e
h
o
l
d
e
r
s
STRATEGIC REPORT
VALUE GENERATED FOR OUR STAKEHOLDERS
1.28 M
TON NES O F PRODUCT
SO LD IN 2021
1 year
WITHOUT AN LTI
~$100 m
CASH RETURN ED
TO SHAREHOL DERS
IN 2021
$2.3 m
INVESTED IN
KMAD CO MMUN ITY
INITIATIVES IN 2021
198
HECTARES OF L AND
REHABILITATED
IN 2021
Customers
We are the world’s largest supplier of
ilmenite and we believe our products
are of the lowest carbon-intensity in the
industry. Kenmare benefits from over
90% of our electricity requirements
being sourced from a renewable
hydroelectric source. We are aiming to
further reduce our total CO2 emissions
by 12% by 2024 and have an ambition to
be Net Zero by 2040 .
Employees
Our employees are our most important
asset and the objective of our safety
culture is to ensure that we provide a safe
working environment. On 6 January 2022
we set a new company record of one year
without a Lost Time Injury (LTI). We also
achieved our lowest ever Lost Time Injury
Frequency Rate of 0.03 in 2021, an 88%
reduction compared to 2020.
Shareholders
In December 2021 Kenmare completed
a share buy-back to return $81.6 million
to eligible shareholders by repurchasing
13.5% of Kenmare’s issued share capital.
Combined with the two dividend
payments, we returned $98 million to
shareholders during the year. In March
2022, Kenmare proposed a 2021 final
dividend of USc25.4 per share, up 230%
on the 2020 final dividend.
Local community
Kenmare aims to be a catalyst for
positive social and economic change
in the Moma Mine’s host communities.
In 2021 $2.3 million was invested to
support the improvement of livelihoods,
healthcare services and education
provision through KMAD, including
completing the construction of a new
health centre in Pilivili.
Environment
Kenmare is committed to responsible
environmental stewardship and efficient
use of natural resources. We are proud of
our low environmental impact, including
employing progressive rehabilitation
practices, with 198 hectares of land
rehabilitated and 42,255 native trees
planted in 2021.
Read more about our positive environmental stewardship on page 56
Kenmare Resources plc
Annual Report and Accounts 2021
17
STAKEHOLDER ENGAGEMENT
Kenmare aims to
be a respected
and respectful
corporate
citizen and for
our operations
to run without
interruption.
To achieve this, we require an
understanding of the political, social,
environmental, and economic context
of our operations and how our presence
and activities impact neighbouring
communities.
Responsibility for stakeholder
engagement is embedded across the
business, from the Board to the Executive
Committee and site leadership teams, to
our community liaison teams, to KMAD,
and our contractors. Everyone who
interacts with Kenmare’s employees,
investors, lending banks, national or
local government, suppliers and host
communities is responsible for ensuring
that we not only understand the context
and impacts of our operations, but also
the benefits that can arise from our
activities.
18
Kenmare Resources plc
Annual Report and Accounts 2021
EMPLOYEES AND UNIONS
COMMUNITIES
GOVERNMENT AND
REGULATORS
SHAREHOLDERS
SUPPLIERS, CONTRACTORS
AND CUSTOMERS
At Kenmare we believe that our
employees are the cornerstone of our
business and that a partnership approach
is vital to achieving business objectives.
We provide competitive remuneration
and invest in professional and personal
development, while providing a safe and
healthy working environment.
•
•
•
•
•
•
•
Facilitate quarterly union meetings
Undertake quarterly performance
and feedback meetings with
employees
Undertake bi-monthly departmental
"focal points" meetings
Engage union representatives
constructively on collective
bargaining issues
Support networking forums
such as the Kenmare Women in
Mining Forum
Operate an independent
whistleblowing service
Publish company newsletters, host
town hall meetings and undertake
staff engagement surveys
•
Training and development
opportunities
•
Remuneration
• Working conditions
•
Labour rights
• Human rights
• Health and safety
•
•
•
•
Updating Health & Safety Policy
Increased investment in employee
development, including a new
leadership training programme
Employee engagement survey
Publication of Modern Slavery
Statement in 2021
F
O
E
C
N
A
T
R
O
P
M
I
I
G
N
G
A
G
N
E
E
W
W
O
H
D
N
A
E
G
A
G
N
E
E
W
S
Y
A
W
T
N
E
M
E
G
A
G
N
E
R
O
T
I
N
O
M
T
N
A
C
I
F
I
N
G
I
S
D
E
S
I
A
R
S
C
I
P
O
T
&
E
S
N
O
P
S
E
R
S
’
E
R
A
M
N
E
K
N
E
K
A
T
S
N
O
I
T
C
A
Kenmare values our relationship with our
host communities highly. Our stakeholder
engagement plan is updated annually and
reflects the changing dynamics in the
relationship between the Mine and our
host communities.
•
•
• Host formal bi-monthly and informal
ad hoc community meetings to
understand and discuss our host
communities’ concerns and priorities
Support community radio stations to
inform the community of Kenmare’s
and KMAD’s activities
Conduct Environmental, Social
and Health Impact Assessments
to identify potential positive and
negative impacts of the Mine’s
activities
Operate grievance mechanisms to
address community concerns and
maintain a grievance register
KMAD hosts three meetings annually
and publishes a quarterly newsletter
•
•
•
•
•
•
•
•
•
•
•
•
Respect for local values and traditions
Socio-economic development
Employment and procurement
opportunities
Land rehabilitation
Community well-being
Progressive land rehabilitation
strategy to return land to community
in a timely manner
$2.3 million spent on KMAD projects
Donations of 12,000 COVID-19
vaccines to communities
Establishment of new three-year
strategic plan
Independent social baseline survey
undertaken to understand impact
of the Mine on its host communities
over time
Kenmare complies with laws and regulations
Our shareholders are Kenmare’s owners
We believe in building stable, long-term
applicable to it and we are focused on
ensuring Mozambique shares in the
and their continued support is critical to the
relationships based on mutually beneficial
business. They provide the capital to develop
terms with our suppliers, contractors,
benefits of the Moma Mine. Our proactive
and expand our operations responsibly and
dialogue with national, district and provincial
sustainably and consequently, we need to
Government ensures they are well-informed
ensure we continue to deliver a compelling
of our activities.
investor proposition and meet our debt
repayment schedule.
customers and financial service providers. It
is integral to business success that we work
in collaboration with the whole value chain,
as we strive for compliance with our ethical,
environmental and safety standards.
•
Direct engagement with local, provincial
Attend investor conferences
Direct communication
• Host webinars and group presentations
Contractual relationships
Organise one-on-one meetings and
• Host site visits, workshops, meetings
and training
Operate an independent
whistleblowing service
and national government authorities
regarding mining rights, environmental
issues and permitting
Provide monthly, quarterly and annual
reports to the Ministry of Mineral
Resources and Energy
Provide annual report to the Ministry for
Land and Environment
Provide quarterly report to the District
Authorities
Provide Portuguese summary of
Kenmare’s Annual Report to all
Government departments
roadshows
• Host site visits
Participate in interviews with the
investment press
Direct dialogue at the Annual General
Meeting
Produce corporate materials including
announcements, company website,
Annual Report and social media profiles
Compliance with applicable laws and
Operating and financial performance
• Working conditions
Growth strategy
Capital expenditure projects
Product markets
Labour rights
• Human rights
• Health and safety
Environmental, social and governance
Security
(ESG) performance
regulations
Employment opportunities and
labour rights
• Health and safety
Environmental stewardship
Licences and permitting
Taxation and royalties
the Company website
Donations of medical equipment to
support the regional health service
Publication of a Portuguese version of
Increased dividend payout target
Supplier Code of Conduct
Supply chain compliance programme
relating to 2021
New Climate Policy approved by
the Board
Inaugural Climate Strategy Report
published in 2022
Share buy-back programme, completed
in December 2021
Second Sustainability Report published
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Kenmare aims to
be a respected
and respectful
corporate
citizen and for
our operations
to run without
interruption.
To achieve this, we require an
understanding of the political, social,
environmental, and economic context
of our operations and how our presence
and activities impact neighbouring
communities.
Responsibility for stakeholder
engagement is embedded across the
business, from the Board to the Executive
Committee and site leadership teams, to
our community liaison teams, to KMAD,
and our contractors. Everyone who
interacts with Kenmare’s employees,
investors, lending banks, national or
local government, suppliers and host
communities is responsible for ensuring
that we not only understand the context
and impacts of our operations, but also
the benefits that can arise from our
activities.
F
O
E
C
N
A
T
R
O
P
M
I
G
N
I
G
A
G
N
E
E
W
W
O
H
D
N
A
E
G
A
G
N
E
E
W
S
Y
A
W
T
N
E
M
E
G
A
G
N
E
R
O
T
I
N
O
M
T
N
A
C
I
F
I
N
G
I
S
D
E
S
I
A
R
S
C
I
P
O
T
&
E
S
N
O
P
S
E
R
S
’
E
R
A
M
N
E
K
N
E
K
A
T
S
N
O
I
T
C
A
•
•
•
•
•
•
•
•
•
•
•
•
•
•
At Kenmare we believe that our
employees are the cornerstone of our
Kenmare values our relationship with our
host communities highly. Our stakeholder
business and that a partnership approach
engagement plan is updated annually and
is vital to achieving business objectives.
We provide competitive remuneration
and invest in professional and personal
development, while providing a safe and
healthy working environment.
reflects the changing dynamics in the
relationship between the Mine and our
host communities.
Facilitate quarterly union meetings
• Host formal bi-monthly and informal
Training and development
Respect for local values and traditions
Undertake quarterly performance
and feedback meetings with
employees
Undertake bi-monthly departmental
"focal points" meetings
Engage union representatives
constructively on collective
bargaining issues
Support networking forums
such as the Kenmare Women in
Mining Forum
Operate an independent
whistleblowing service
Publish company newsletters, host
town hall meetings and undertake
staff engagement surveys
opportunities
Remuneration
• Working conditions
Labour rights
• Human rights
• Health and safety
Updating Health & Safety Policy
Increased investment in employee
development, including a new
leadership training programme
Employee engagement survey
Publication of Modern Slavery
Statement in 2021
•
•
•
•
•
•
•
•
•
•
•
•
•
•
ad hoc community meetings to
understand and discuss our host
communities’ concerns and priorities
Support community radio stations to
inform the community of Kenmare’s
and KMAD’s activities
Conduct Environmental, Social
and Health Impact Assessments
to identify potential positive and
negative impacts of the Mine’s
activities
Operate grievance mechanisms to
address community concerns and
maintain a grievance register
KMAD hosts three meetings annually
and publishes a quarterly newsletter
Socio-economic development
Employment and procurement
opportunities
Land rehabilitation
Community well-being
Progressive land rehabilitation
strategy to return land to community
in a timely manner
$2.3 million spent on KMAD projects
Donations of 12,000 COVID-19
vaccines to communities
Establishment of new three-year
strategic plan
Independent social baseline survey
undertaken to understand impact
of the Mine on its host communities
over time
EMPLOYEES AND UNIONS
COMMUNITIES
GOVERNMENT AND
REGULATORS
SHAREHOLDERS
SUPPLIERS, CONTRACTORS
AND CUSTOMERS
STRATEGIC REPORT
Kenmare complies with laws and regulations
applicable to it and we are focused on
ensuring Mozambique shares in the
benefits of the Moma Mine. Our proactive
dialogue with national, district and provincial
Government ensures they are well-informed
of our activities.
•
•
•
•
•
Direct engagement with local, provincial
and national government authorities
regarding mining rights, environmental
issues and permitting
Provide monthly, quarterly and annual
reports to the Ministry of Mineral
Resources and Energy
Provide annual report to the Ministry for
Land and Environment
Provide quarterly report to the District
Authorities
Provide Portuguese summary of
Kenmare’s Annual Report to all
Government departments
•
•
Compliance with applicable laws and
regulations
Employment opportunities and
labour rights
• Health and safety
•
•
•
Environmental stewardship
Licences and permitting
Taxation and royalties
•
•
Publication of a Portuguese version of
the Company website
Donations of medical equipment to
support the regional health service
•
•
•
•
•
•
•
•
•
•
•
•
Our shareholders are Kenmare’s owners
and their continued support is critical to the
business. They provide the capital to develop
and expand our operations responsibly and
sustainably and consequently, we need to
ensure we continue to deliver a compelling
investor proposition and meet our debt
repayment schedule.
We believe in building stable, long-term
relationships based on mutually beneficial
terms with our suppliers, contractors,
customers and financial service providers. It
is integral to business success that we work
in collaboration with the whole value chain,
as we strive for compliance with our ethical,
environmental and safety standards.
Direct communication
Contractual relationships
•
•
• Host site visits, workshops, meetings
•
and training
Operate an independent
whistleblowing service
Attend investor conferences
•
• Host webinars and group presentations
Organise one-on-one meetings and
•
roadshows
• Host site visits
•
Participate in interviews with the
investment press
Direct dialogue at the Annual General
Meeting
Produce corporate materials including
announcements, company website,
Annual Report and social media profiles
Operating and financial performance
Growth strategy
Capital expenditure projects
Product markets
Environmental, social and governance
(ESG) performance
• Working conditions
•
Labour rights
• Human rights
• Health and safety
•
Security
•
•
Supplier Code of Conduct
Supply chain compliance programme
Increased dividend payout target
relating to 2021
New Climate Policy approved by
the Board
Inaugural Climate Strategy Report
published in 2022
Share buy-back programme, completed
in December 2021
Second Sustainability Report published
Kenmare Resources plc
Annual Report and Accounts 2021
19
OUR STRATEGY
Our vision is to be
a leading titanium
minerals producer
positioned in
the first quartile
of the industry
revenue to cost
curve.
We will deliver this vision through
Kenmare’s strategy. Following the
completion of our three growth projects
in 2020, we have updated our strategy to
better reflect Kenmare’s strategic goals,
including our commitment to being a
responsible corporate citizen.
20 Kenmare Resources plc
Annual Report and Accounts 2021
STRATEGIC PILLARS
PRIORITIES
PERFORMANCE
OUTLOOK
Operate responsibly
Kenmare believes in "doing the right thing"
and this is central to all aspects of how
we do business. We have a long-standing
commitment to sustainability and are focused
on continually improving our environment,
social, and governance performance. Our
sustainability strategy, comprised of four
strategic goals, ensures we maximise value and
create opportunities from the Moma Mine for
the benefit of all stakeholders.
Deliver long life, low-cost
production
Moma is one of the largest titanium minerals
deposits in the world. With 6.3 billion tonnes of
Mineral Resources, there is significant potential
for further value accretive growth.
Following the completion of our three growth
projects, we now have the mining and
processing capacity to deliver 1.2 million tonnes
per annum (Mtpa) of ilmenite production on
a sustainable basis and are targeting a first
quartile operating position on the industry
revenue to cost curve.
Allocate capital efficiently
We constantly assess the best ways to deploy
the capital generated from our activities to
ensure it creates value for our stakeholders.
A strong balance sheet provides the platform
to fund our capital requirements, while we
established our dividend policy in 2018 to
provide returns to our shareholders. We also
work hard to uncover, assess and develop value
accretive projects to deliver growth.
•
•
•
•
•
•
•
•
We are focused on:
Kenmare set a new company safety record in
As part of our commitment to reducing our
Developing a safe and
engaged workforce
Supporting thriving
communities
Protecting a healthy
natural environment
Being a trusted business
Association (KMAD), Kenmare invested $2.3m
emissions by 2024. Looking further ahead,
2021, with our lowest ever Lost Time Injury
Frequency Rate of 0.03 per 200,00 hours
worked. We also conducted a COVID-19
vaccination programme, with 96% of our
employees double vaccinated by year-end.
Through the Kenmare Moma Development
in community initiatives and 198 hectares of
mined land were rehabilitated as part of our
progression rehabilitation programme. We
were also named as the most transparent
company in Mozambique for the second
consecutive year.
environmental impact, Kenmare is installing a
Rotary Uninterruptible Power Supply (RUPS),
which is expected to improve power stability
at the Mineral Separation Plant and be the
most significant contributor to delivering a
12% reduction in Moma’s already low carbon
Kenmare has an ambition to become Net Zero
by 2040.
We continue to raise the environment, social, and
governance standards we hold ourselves to and
further details of Kenmare’s sustainability targets
for 2022 can be found on pages 52–61 and in our
Sustainability Report.
We are focused on:
2021 was a record year for production and
During a five month period in 2021, Moma
Realising the growth
potential of our 100+ year
Mineral Resources
Achieving 1.2 Mtpa safe
and sustainable ilmenite
production, with 20+ years
mine life visibility
• Moving into first quartile
of industry revenue to
cost curve
shipments. Moma achieved a record quarter of
demonstrated that it could operate at its
production in Q3 2021 and operated at a run
nameplate capacity of 1.2 Mtpa. In 2022
rate of 1.2 Mtpa between May and October.
Kenmare’s focus is on achieving this run rate
Total cash operating costs were 3% above the
top end of our guidance range at $189.7 million
due to increased costs relating to repairs and
maintenance, Heavy Mineral Concentrate
(HMC) haulage from the Pilivili operations,
and COVID-19. Cash operating costs per tonne
on a safe and sustainable basis. With increasing
production volumes and cost reduction
initiatives underway, such as the RUPS, Kenmare
continues to advance towards its target of
becoming a first quartile producer on the
industry revenue to cost curve.
decreased by 18% compared to 2020 to $154
Moma has Mineral Resources of more than 100
per tonne, benefitting from higher production
years at a 1.2 Mtpa ilmenite production rate.
volumes.
Therefore the Company will continue to evaluate
growth opportunities to maximise the Mine’s
value for all stakeholders.
We are focused on:
In 2021 Kenmare returned almost $100 million
The RUPS began commissioning in Q1 2022 and
to shareholders through dividends and a share
is expected to deliver benefits relating to power
buy-back. This executed on our stated intention
stability and reduction in carbon emissions.
• Maintaining a strong and
flexible balance sheet
Continuing to make
compelling shareholder
returns
Developing value accretive
growth opportunities
to increase shareholder returns following
the completion of our major capital projects,
supported by robust operational performance
and commodity market strength.
Kenmare also invested in the development of
the RUPS. This project is Net Present Value
positive and has an estimated cost of $18 million.
The majority of the capital was incurred in 2021.
We finished the year with a strong balance sheet
and net debt of $82.8 million, primarily due to
the shareholder returns made during 2021.
We remain focused on delivering significant
shareholder returns, supported by increasing
production and cost reduction initiatives.
A Pre-Feasibility Study in preparation for mining
the Nataka ore zone is underway, which is due
to be completed later in 2022. Wet Concentrator
Plant A is expected to commence mining in
Nataka in 2025.
Kenmare’s corporate development team
continually assess opportunities for organic and
inorganic growth.
STRATEGIC PILLARS
PRIORITIES
PERFORMANCE
OUTLOOK
STRATEGIC REPORT
Operate responsibly
Kenmare believes in "doing the right thing"
and this is central to all aspects of how
we do business. We have a long-standing
commitment to sustainability and are focused
on continually improving our environment,
social, and governance performance. Our
sustainability strategy, comprised of four
strategic goals, ensures we maximise value and
create opportunities from the Moma Mine for
the benefit of all stakeholders.
Deliver long life, low-cost
production
Moma is one of the largest titanium minerals
deposits in the world. With 6.3 billion tonnes of
Mineral Resources, there is significant potential
for further value accretive growth.
Following the completion of our three growth
projects, we now have the mining and
processing capacity to deliver 1.2 million tonnes
per annum (Mtpa) of ilmenite production on
a sustainable basis and are targeting a first
quartile operating position on the industry
revenue to cost curve.
Allocate capital efficiently
We constantly assess the best ways to deploy
the capital generated from our activities to
ensure it creates value for our stakeholders.
A strong balance sheet provides the platform
to fund our capital requirements, while we
established our dividend policy in 2018 to
provide returns to our shareholders. We also
work hard to uncover, assess and develop value
accretive projects to deliver growth.
We are focused on:
•
•
•
•
Developing a safe and
engaged workforce
Supporting thriving
communities
Protecting a healthy
natural environment
Being a trusted business
Kenmare set a new company safety record in
2021, with our lowest ever Lost Time Injury
Frequency Rate of 0.03 per 200,00 hours
worked. We also conducted a COVID-19
vaccination programme, with 96% of our
employees double vaccinated by year-end.
Through the Kenmare Moma Development
Association (KMAD), Kenmare invested $2.3m
in community initiatives and 198 hectares of
mined land were rehabilitated as part of our
progression rehabilitation programme. We
were also named as the most transparent
company in Mozambique for the second
consecutive year.
As part of our commitment to reducing our
environmental impact, Kenmare is installing a
Rotary Uninterruptible Power Supply (RUPS),
which is expected to improve power stability
at the Mineral Separation Plant and be the
most significant contributor to delivering a
12% reduction in Moma’s already low carbon
emissions by 2024. Looking further ahead,
Kenmare has an ambition to become Net Zero
by 2040.
We continue to raise the environment, social, and
governance standards we hold ourselves to and
further details of Kenmare’s sustainability targets
for 2022 can be found on pages 52–61 and in our
Sustainability Report.
We are focused on:
•
•
Realising the growth
potential of our 100+ year
Mineral Resources
Achieving 1.2 Mtpa safe
and sustainable ilmenite
production, with 20+ years
mine life visibility
• Moving into first quartile
of industry revenue to
cost curve
2021 was a record year for production and
shipments. Moma achieved a record quarter of
production in Q3 2021 and operated at a run
rate of 1.2 Mtpa between May and October.
Total cash operating costs were 3% above the
top end of our guidance range at $189.7 million
due to increased costs relating to repairs and
maintenance, Heavy Mineral Concentrate
(HMC) haulage from the Pilivili operations,
and COVID-19. Cash operating costs per tonne
decreased by 18% compared to 2020 to $154
per tonne, benefitting from higher production
volumes.
During a five month period in 2021, Moma
demonstrated that it could operate at its
nameplate capacity of 1.2 Mtpa. In 2022
Kenmare’s focus is on achieving this run rate
on a safe and sustainable basis. With increasing
production volumes and cost reduction
initiatives underway, such as the RUPS, Kenmare
continues to advance towards its target of
becoming a first quartile producer on the
industry revenue to cost curve.
Moma has Mineral Resources of more than 100
years at a 1.2 Mtpa ilmenite production rate.
Therefore the Company will continue to evaluate
growth opportunities to maximise the Mine’s
value for all stakeholders.
We are focused on:
• Maintaining a strong and
flexible balance sheet
•
•
Continuing to make
compelling shareholder
returns
Developing value accretive
growth opportunities
In 2021 Kenmare returned almost $100 million
to shareholders through dividends and a share
buy-back. This executed on our stated intention
to increase shareholder returns following
the completion of our major capital projects,
supported by robust operational performance
and commodity market strength.
Kenmare also invested in the development of
the RUPS. This project is Net Present Value
positive and has an estimated cost of $18 million.
The majority of the capital was incurred in 2021.
We finished the year with a strong balance sheet
and net debt of $82.8 million, primarily due to
the shareholder returns made during 2021.
The RUPS began commissioning in Q1 2022 and
is expected to deliver benefits relating to power
stability and reduction in carbon emissions.
We remain focused on delivering significant
shareholder returns, supported by increasing
production and cost reduction initiatives.
A Pre-Feasibility Study in preparation for mining
the Nataka ore zone is underway, which is due
to be completed later in 2022. Wet Concentrator
Plant A is expected to commence mining in
Nataka in 2025.
Kenmare’s corporate development team
continually assess opportunities for organic and
inorganic growth.
Kenmare Resources plc
Annual Report and Accounts 2021
21
KEY PERFORMANCE INDICATORS
We use various financial and non-financial performance measures
to help evaluate the on-going performance of our business.
Linked to our strategic objectives, the following measures are considered by management
to be some of the most important in evaluating our overall performance year-on-year.
STRATEGIC
LTIFR
Lost Time Injury Frequency Rate.
GHG emissions
Scope 1 and 2 Greenhouse Gas (GHG)
emissions.
Gender diversity
Percentage of women in the workforce at the
Moma Mine.
Finished products produced by the mineral
Finished products shipped to customers
Shipments
during the period.
OPERATIONAL
Processing
separation process.
Cash costs
Total Group cost less freight and other
non-cash costs, including inventory,
excluding movement in the indirect tax
provision. For cash operating costs per
tonne this number is divided by the
tonnes of finished products produced.
0.03 (per 200 k hours)
70,437 tonnes
12.5%
1,228,500 to n nes
1 ,285,30 0 to n nes $189.7 m
9
3
0
.
0
7
4
6
8
5
0
6
3
1
1
1
7
2
0
.
5
2
0
.
9
4
2
1
.
0
3
0
0
.
8
7
5
17
18
19
20
21
17
18
19
20
21
17
18
19
20
21
Relevance
Measures the number of injuries per 200,000
hours worked at the Mine that result in time lost
from work.
Relevance
We acknowledge the human contribution to
climate change and aim to reduce emissions from
our already low carbon intensity operations.
Relevance
We recognise the benefits to our business of
supporting diversity, equity, and inclusion for
long-term sustainable success. Increased gender
diversity has been an important metric at the Mine.
Performance
Kenmare’s safety performance improved in 2021
to 0.03 per 200,000 hours worked. There was one
lost time injury recorded during the year compared
to nine in 2020. The Company achieved one year
without a Lost Time Injury on 6 January 2022.
Performance
In 2021, several GHG Emissions reduction
initiatives were progressed. While diesel
consumption was 9% higher in 2021 at 24 million
litres of diesel, carbon intensity, at 0.057 tCO2e
per tonne of mined product, reduced by 20%,
reflecting some efficiencies in the emissions
intensity of our operations.
Performance
Kenmare is working to increase the number of
women in our workforce. At year-end, 12.5% of
our Mine employees were women, compared with
10.6% in 2020, meeting our stretch gender diversity
target for the year.
Performance
Performance
Kenmare delivered record annual finished product
2021 was a record year for shipments with a
volumes in 2021. Finished products production
51% increase in tonnes shipped compared to
Total cash operating costs increased by 20% in
2021 compared to 2020. The higher costs were
increased by 46% in 2021 compared to 2020, driven
2020, reflecting increased production in addition
offset by higher production volumes resulting in a
by increased Heavy Mineral Concentrate (HMC)
to a drawdown of finished product inventory.
18% decrease in cash operating costs per tonne.
processed. HMC production increased by 30% in
Shipments also benefitted from increased
2021 to 1,555,900 tonnes (2020: 1,201,100 tonnes),
transshipment capacity resulting from the
primarily as a result of increased ore grades and
previously completed upgrades.
Outlook
Kenmare is committed to continual improvement.
In 2022 we will reinforce our safety culture through
improving safety leadership, as well through
further strengthening hazard identification and risk
assessment practices.
Outlook
Kenmare has an ambition to achieve Net Zero
on its Scope 1 and 2 emissions by 2040, through
decarbonisation of our operations and offsetting
hard to abate residual emissions. The Rotary
Uninterruptible Power Supply project is expected
to further reduce diesel consumption and two new
energy efficiency initiatives have been selected for
further study and potential implementation in the
next 12–24 months.
Outlook
In 2022 we are looking to increase female
representation within our Moma workforce to 13%.
Kenmare will progress its structured programme
to increase diversity, including ensuring 70% of our
Graduate Development Programme candidates are
women, and supporting the Kenmare Women in
Mining Forum to identify initiatives to further grow
the representation of women in the workforce.
excavated ore volumes.
Outlook
Production of all products in 2022 is expected
Shipment volumes are expected to be lower than
Total cash operating costs are anticipated to
to be higher than in 2021, due primarily to higher
production in 2022 as a result of the scheduled dry
increase in 2022 due to increased production
tonnes mined, more than offsetting a lower
dock of the Bronagh J transshipment vessel, which
and inflation. However, cash operating costs per
anticipated grade of 4.2%.
will temporarily reduce shipping capacity. The
tonne are expected to remain stable due to higher
dry dock of the vessel will enable more efficient
anticipated production volumes.
Outlook
Outlook
maintenance and positively impact availability
going forward.
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to risks
3
8
9
Link to risks
3
6
Link to risks
N/A
Link to risks
Link to risks
1
2
3
4
5 6
7
8 10
4
6
7
12 13 14
Link to risks
1
2
8 15 16
22
Kenmare Resources plc
Annual Report and Accounts 2021
Relevance
Relevance
shipped to customers.
Provides a measure of production from the Mine.
Provides a measure of finished product volumes
Eliminates freights costs and non-cash costs to
Relevance
identify the actual cash outlay for production
and, as production levels increase or decrease
highlights operational performance by providing
a comparable cash cost per tonne of product
produced over time.
Performance
STRATEGIC
LTIFR
STRATEGIC REPORT
Links to Strategy
Risk key
Operate responsibly
Deliver long life, low cost production
Allocate capital efficiently
Strategic
Operational
Financial
Risk key
1 Grant and maintenance of licences
2 Country risk
3 Geotechnical risk
4 Severe weather events
5 Uncertainty over physical characteristics of the ore body
6 Power supply and transmission risk
7 Asset damage or loss
8 COVID-19
9 Health, Safety and Environment (HSE)
10 Mineral Resource statement risk
11 IT security risk
12 Development project risk
13 Industry cyclicality
14 Customer concentration
15 Foreign currency risk
16 Aggresive cost inflation
OPERATIONAL
Lost Time Injury Frequency Rate.
Scope 1 and 2 Greenhouse Gas (GHG)
Percentage of women in the workforce at the
GHG emissions
emissions.
Gender diversity
Moma Mine.
Processing
Finished products produced by the mineral
separation process.
Shipments
Finished products shipped to customers
during the period.
Cash costs
Total Group cost less freight and other
non-cash costs, including inventory,
excluding movement in the indirect tax
provision. For cash operating costs per
tonne this number is divided by the
tonnes of finished products produced.
0.03 (p e r 20 0k h our s)
70,437 tonnes
1 2.5%
1,228,500 tonnes
1,285,300 tonnes $189.7 m
Measures the number of injuries per 200,000
We acknowledge the human contribution to
We recognise the benefits to our business of
hours worked at the Mine that result in time lost
climate change and aim to reduce emissions from
supporting diversity, equity, and inclusion for
Relevance
Relevance
Relevance
from work.
our already low carbon intensity operations.
long-term sustainable success. Increased gender
diversity has been an important metric at the Mine.
Performance
Performance
Performance
Kenmare’s safety performance improved in 2021
In 2021, several GHG Emissions reduction
to 0.03 per 200,000 hours worked. There was one
initiatives were progressed. While diesel
Kenmare is working to increase the number of
women in our workforce. At year-end, 12.5% of
lost time injury recorded during the year compared
consumption was 9% higher in 2021 at 24 million
our Mine employees were women, compared with
to nine in 2020. The Company achieved one year
without a Lost Time Injury on 6 January 2022.
10.6% in 2020, meeting our stretch gender diversity
target for the year.
litres of diesel, carbon intensity, at 0.057 tCO2e
per tonne of mined product, reduced by 20%,
reflecting some efficiencies in the emissions
intensity of our operations.
Outlook
Outlook
Outlook
Kenmare is committed to continual improvement.
Kenmare has an ambition to achieve Net Zero
In 2022 we are looking to increase female
In 2022 we will reinforce our safety culture through
on its Scope 1 and 2 emissions by 2040, through
representation within our Moma workforce to 13%.
improving safety leadership, as well through
decarbonisation of our operations and offsetting
Kenmare will progress its structured programme
further strengthening hazard identification and risk
hard to abate residual emissions. The Rotary
to increase diversity, including ensuring 70% of our
assessment practices.
Uninterruptible Power Supply project is expected
Graduate Development Programme candidates are
to further reduce diesel consumption and two new
women, and supporting the Kenmare Women in
energy efficiency initiatives have been selected for
Mining Forum to identify initiatives to further grow
further study and potential implementation in the
the representation of women in the workforce.
next 12–24 months.
0
0
3
,
1
8
0
,
1
,
0
0
3
3
4
0
,
1
0
0
3
8
8
9
,
,
0
0
5
8
2
2
,
1
0
0
5
0
4
8
,
,
0
0
3
5
8
2
,
1
,
0
0
4
0
4
0
,
1
,
0
0
4
4
7
0
,
1
,
0
0
3
9
2
0
,
1
0
0
1
,
3
5
8
17
18
19
20
21
17
18
19
20
21
Relevance
Provides a measure of production from the Mine.
Relevance
Provides a measure of finished product volumes
shipped to customers.
Performance
Kenmare delivered record annual finished product
volumes in 2021. Finished products production
increased by 46% in 2021 compared to 2020, driven
by increased Heavy Mineral Concentrate (HMC)
processed. HMC production increased by 30% in
2021 to 1,555,900 tonnes (2020: 1,201,100 tonnes),
primarily as a result of increased ore grades and
excavated ore volumes.
Performance
2021 was a record year for shipments with a
51% increase in tonnes shipped compared to
2020, reflecting increased production in addition
to a drawdown of finished product inventory.
Shipments also benefitted from increased
transshipment capacity resulting from the
previously completed upgrades.
Total cash
operating costs
Cash operating
cost per tonne
.
7
9
8
1
.
0
8
5
1
.
6
6
5
1
3
.
1
5
1
6
.
1
4
1
17
18
19
20
21
Relevance
Eliminates freights costs and non-cash costs to
identify the actual cash outlay for production
and, as production levels increase or decrease
highlights operational performance by providing
a comparable cash cost per tonne of product
produced over time.
Performance
Total cash operating costs increased by 20% in
2021 compared to 2020. The higher costs were
offset by higher production volumes resulting in a
18% decrease in cash operating costs per tonne.
Outlook
Production of all products in 2022 is expected
to be higher than in 2021, due primarily to higher
tonnes mined, more than offsetting a lower
anticipated grade of 4.2%.
Outlook
Shipment volumes are expected to be lower than
production in 2022 as a result of the scheduled dry
dock of the Bronagh J transshipment vessel, which
will temporarily reduce shipping capacity. The
dry dock of the vessel will enable more efficient
maintenance and positively impact availability
going forward.
Outlook
Total cash operating costs are anticipated to
increase in 2022 due to increased production
and inflation. However, cash operating costs per
tonne are expected to remain stable due to higher
anticipated production volumes.
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to risks
3
8
9
Link to risks
3
6
Link to risks
N/A
Link to risks
Link to risks
1
2
3
4
5 6
7
8 10
4
6
7
12 13 14
Link to risks
1
2
8 15 16
Kenmare Resources plc
Annual Report and Accounts 2021
23
KEY PERFORMANCE INDICATORS CONTINUED
FINANCIAL
EBITDA
Earnings before interest, tax, depreciation
and amortisation.
Profit after tax
Profit after tax.
Total capital expenditure
Additions to property, plant and equipment
in the period.
Net cash/(debt)
Total cash and cash equivalents less
Shareholder returns
Dividends and share buy-backs.
Return on Capital Employed
Return on capital employed (ROCE).
$216.1 m
$1 28.5 m
$60.3 m
1
.
6
1
2
.
5
8
2
1
5
.
1
4
1
.
3
3
9
.
6
2
9
.
7
6
7
.
9
0
5
.
8
4
4
.
4
9
1
.
7
6
1
18
19
20
21
17
18
19
20
21
.
5
0
6
17
.
5
8
6
1
.
0
4
.
3
0
6
18
19
20
21
.
2
9
2
17
Relevance
Eliminates the effects of financing, tax,
depreciation, amortisation and foreign exchange
movements to allow assessment of the earnings
and performance of the Group.
Relevance
Measures how well we are managing costs,
increasing productivity and generating the most
profit from our assets. It is also the basis on which
our dividend payout ratio policy is applied.
Relevance
Provides the amount spent by the Group on
additions to property, plant and equipment in the
period.
Performance
EBITDA increased by 182% in 2021, compared to
2020. Shipments of finished products increased by
51%, while average price per tonne FOB increased
by 21%. This was partially offset by a 20% increase
in total cash operating costs.
Performance
We reported profit after tax of $128.5 million,
up 669% on 2020, benefitting from the strong
increase in underlying EBITDA.
Outlook
Kenmare expects to generate strong EBITDA in
2022 on planned production levels and positive
market outlook.
Outlook
We expect earnings to remain strong in 2022,
benefitting from sustained higher production
volumes and a strong commodity market outlook.
Performance
Investment in property, plant and equipment
decreased following the successful completion
of a multi-year capital investment programme.
Capital was incurred sustaining existing operations,
investing in the Rotary Uninterruptible Power
Supply (RUPS) project, and preparing for the
relocation of WCP A to the Nataka ore zone
in 2025.
Outlook
Expenditure on development projects and studies
is expected to be approximately $28.5 million in
2022. These costs primarily relate to improvement
projects, community resettlement, and a Pre-
Feasibility Study on mining at Nataka. Sustaining
capital costs in 2022 are expected to increase
to approximately $33 million. This increase is
principally due to the scheduled dry dock for the
Bronagh J transshipment vessel, which will enable
more efficient maintenance and positively impact
availability going forwards.
bank loans.
$(82 .8) m
$11 3.7 m
15 %
Relevance
Relevance
Relevance
A measure of the Group’s financial leverage.
Shareholder returns comprise the 2021 interim
ROCE is a measure of the profits generated in the
This measures how we are managing our balance
dividend, the proposed 2021 final dividend to be
year in comparison to the capital investment that
sheet and capital structure. A strong balance
approved by shareholders at the AGM, and the
has been made in the Company.
sheet is essential for giving us flexibility to take
share buy back.
advantage of opportunities as they arise, and for
returning cash to shareholders.
Performance
Performance
Performance
At the year-end, gross debt amounted to
Shareholder returns increased by $102.8 million
ROCE increased significantly in 2021, driven by
$151.9 million (2020: $151.2 million). This consists
in 2021. They were comprised of the 2021 dividend
higher commodity prices and lower unit costs.
of debt drawn of $150.0 million and loan interest
of $32.1 million (2020: $10.9 million), and the share
of $1.9 million. Kenmare finished the year with
$69.1 million (2020: $87.2 million) of cash and
cash equivalents.
buy-back of $81.6 million, which was completed in
December 2021.
Outlook
Outlook
Strong product markets in early 2022 are
supportive of continued strong free-cash flow
Kenmare will maintain a minimum dividend
of 20% of profit after tax in 2022, in line with
generation. In 2022, principal repayments of the
the dividend policy.
Term Loan have commenced, while the Revolving
Credit Facility is also due to be repaid this year.
These factors should contribute to a lower gross
and net debt by year end 2022.
Additional capital returns will be considered
against upcoming capital requirements
(particularly the move of WCP A to Nataka),
maintaining a strong balance sheet, and
market conditions.
Outlook
We will continue to focus on maximising returns
from the Moma Mine over the short, medium and
long-term. We will also maintain our disciplined
and rigorous approach and invest capital only in
projects that we believe will deliver returns that
are well above our cost of capital.
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to risks
Link to risks
Link to risks
Link to risks
Link to risks
Link to risks
1
2
3
4
5 6
7
8
1
2
3
4
5 6
7
8
4
5
7
12 15 16
4
7
12 13 15 16
1
2
3
4
5 6
7
8 12
1
2
3
4
5 6
7
8 12
13
14
15 16
13
14
15 16
13
14
15 16
13
14
15 16
24 Kenmare Resources plc
Annual Report and Accounts 2021
STRATEGIC REPORT
Links to Strategy
Risk key
Operate responsibly
Deliver long life, low cost production
Allocate capital efficiently
Strategic
Operational
Financial
Risk key
1 Grant and maintenance of licences
2 Country risk
3 Geotechnical risk
4 Severe weather events
5 Uncertainty over physical characteristics of the ore body
6 Power supply and transmission risk
7 Asset damage or loss
8 COVID-19
9 Health, Safety and Environment (HSE)
10 Mineral Resource statement risk
11 IT security risk
12 Development project risk
13 Industry cyclicality
14 Customer concentration
15 Foreign currency risk
16 Aggressive cost inflation
FINANCIAL
EBITDA
and amortisation.
$216.1 m
Earnings before interest, tax, depreciation
Profit after tax
Profit after tax.
Total capital expenditure
Additions to property, plant and equipment
in the period.
Net cash/(debt)
Total cash and cash equivalents less
bank loans.
Shareholder returns
Dividends and share buy-backs.
Return on Capital Employed
Return on capital employed (ROCE).
$128.5 m
$60.3 m
$(82.8) m
$11 3.7 m
15%
Relevance
Relevance
Relevance
Eliminates the effects of financing, tax,
Measures how well we are managing costs,
Provides the amount spent by the Group on
depreciation, amortisation and foreign exchange
increasing productivity and generating the most
additions to property, plant and equipment in the
movements to allow assessment of the earnings
profit from our assets. It is also the basis on which
period.
and performance of the Group.
our dividend payout ratio policy is applied.
Performance
Performance
EBITDA increased by 182% in 2021, compared to
We reported profit after tax of $128.5 million,
2020. Shipments of finished products increased by
up 669% on 2020, benefitting from the strong
51%, while average price per tonne FOB increased
increase in underlying EBITDA.
by 21%. This was partially offset by a 20% increase
in total cash operating costs.
Outlook
Outlook
Kenmare expects to generate strong EBITDA in
2022 on planned production levels and positive
We expect earnings to remain strong in 2022,
benefitting from sustained higher production
Expenditure on development projects and studies
is expected to be approximately $28.5 million in
market outlook.
volumes and a strong commodity market outlook.
2022. These costs primarily relate to improvement
Performance
Investment in property, plant and equipment
decreased following the successful completion
of a multi-year capital investment programme.
Capital was incurred sustaining existing operations,
investing in the Rotary Uninterruptible Power
Supply (RUPS) project, and preparing for the
relocation of WCP A to the Nataka ore zone
in 2025.
Outlook
projects, community resettlement, and a Pre-
Feasibility Study on mining at Nataka. Sustaining
capital costs in 2022 are expected to increase
to approximately $33 million. This increase is
principally due to the scheduled dry dock for the
Bronagh J transshipment vessel, which will enable
more efficient maintenance and positively impact
availability going forwards.
.
5
3
1
18
.
7
3
1
19
20
21
17
)
1
.
4
3
(
Interim dividend
Final dividend
Share Buy Back
.
)
0
4
6
(
.
)
8
2
8
(
.
9
0
1
20
9
19
17
18
.
7
3
1
1
21
%
5
1
%
7
0
18
%
6
0
19
%
0
3
17
%
0
3
20
21
Relevance
A measure of the Group’s financial leverage.
This measures how we are managing our balance
sheet and capital structure. A strong balance
sheet is essential for giving us flexibility to take
advantage of opportunities as they arise, and for
returning cash to shareholders.
Relevance
Shareholder returns comprise the 2021 interim
dividend, the proposed 2021 final dividend to be
approved by shareholders at the AGM, and the
share buy back.
Relevance
ROCE is a measure of the profits generated in the
year in comparison to the capital investment that
has been made in the Company.
Performance
At the year-end, gross debt amounted to
$151.9 million (2020: $151.2 million). This consists
of debt drawn of $150.0 million and loan interest
of $1.9 million. Kenmare finished the year with
$69.1 million (2020: $87.2 million) of cash and
cash equivalents.
Performance
Shareholder returns increased by $102.8 million
in 2021. They were comprised of the 2021 dividend
of $32.1 million (2020: $10.9 million), and the share
buy-back of $81.6 million, which was completed in
December 2021.
Performance
ROCE increased significantly in 2021, driven by
higher commodity prices and lower unit costs.
Outlook
Strong product markets in early 2022 are
supportive of continued strong free-cash flow
generation. In 2022, principal repayments of the
Term Loan have commenced, while the Revolving
Credit Facility is also due to be repaid this year.
These factors should contribute to a lower gross
and net debt by year end 2022.
Outlook
Kenmare will maintain a minimum dividend
of 20% of profit after tax in 2022, in line with
the dividend policy.
Additional capital returns will be considered
against upcoming capital requirements
(particularly the move of WCP A to Nataka),
maintaining a strong balance sheet, and
market conditions.
Outlook
We will continue to focus on maximising returns
from the Moma Mine over the short, medium and
long-term. We will also maintain our disciplined
and rigorous approach and invest capital only in
projects that we believe will deliver returns that
are well above our cost of capital.
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to risks
Link to risks
Link to risks
Link to risks
Link to risks
Link to risks
1
2
3
4
5 6
7
8
1
2
3
4
5 6
7
8
4
5
7
12 15 16
4
7
12 13 15 16
1
2
3
4
5 6
7
8 12
1
2
3
4
5 6
7
8 12
13
14
15 16
13
14
15 16
13
14
15 16
13
14
15 16
Kenmare Resources plc
Annual Report and Accounts 2021
25
OUR OPERATIONS
Kenmare’s Moma Titanium Minerals Mine is
located on the north east coast of Mozambique.
It is one of the largest titanium minerals deposits
in the world and began production in 2007.
Moma has a low environmental impact, as Kenmare
progressively rehabilitates the land as we mine. It also
benefits from access to low-cost, renewable electricity
(from the Cahora Bassa Hydroelectric Complex),
to supply over 90% of the Mine’s requirements.
Kenmare utilises three Wet Concentrator Plants (WCPs)
to mine the Moma deposit, two of which are in the Namalope
ore zone and one in the Pilivili ore zone.
Kenmare is targeting 1.2 Mtpa of ilmenite production
(plus co-products) on a sustainable basis, which represents
8% of global titanium feedstock supply.
Read more about
our Mineral
Reserves and
Resources on
page 34
C
Previously
mined area
A
Namalope
Mineral
Separation
Plant
Conveyor
and Jetty
Nampula
B
Nataka
Mualadi
Pilivili
0
2
6
8
4
km
26 Kenmare Resources plc
Annual Report and Accounts 2021
R I C A
F
A
Mozambique
Moma Mine
Maputo
STRATEGIC REPORT
Mozambique
Kenmare began exploring for titanium minerals in
Mozambique in 1987 and has had a presence in country for
over 30 years. Mozambique lies on the south east coast of
Africa, with an area of almost 800,000 km2 and a coastline
of 2,470 km.
Mozambique is a mining-friendly jurisdiction with a growing
natural resources industry. In addition to titanium minerals,
coal, gold and aluminium are all mined in Mozambique. The
discovery of the Rovuma basin natural gas fields in the
north of the country in 2011 is set to transform the economy
in the coming decades, with an estimated $20+ billion
investment underway from several multinational companies.
The first offshore project in the Rovuma Basin commenced
production in January 2022.
Working in partnership
During our 30-year history in country, Kenmare has fostered
strong relationships with the Government of Mozambique,
local authorities, and our host communities. The Government
has always upheld the terms of our licences and other
agreements, and we value their partnership highly. Kenmare’s
production accounts for approximately 7% of Mozambique’s
exports.
Good governance
In 2021, Kenmare was named the most transparent
company in Mozambique for the second consecutive year
by the Centre for Public Integrity’s Extractive Industry
Transparency Index. Mozambique is one of 52 countries
that implements the Extractive Industries Transparency
Initiative (EITI) and Kenmare representatives have been
on Mozambique’s EITI coordinating committee since its
inception in 2009.
Democracy in action
Democratic elections have been held every five years in
Mozambique since 1994, with the most recent election held
in October 2019.
WCP A
WCP B
WCP C
WCP A has been mining the Namalope
ore zone since 2007 and is scheduled to
continue mining there until 2025, when
it will move to Nataka. Nataka is the
largest ore zone within Moma’s portfolio.
Within Nataka, a high grade mine path
has been identified that WCP A will mine
for 20 years. WCP A has a throughput
capacity of 3,250 tonnes per hour (tph).
Two dredges, named Catarina and Mary
Ann, and two dry mines provide feed
to WCP A.
WCP B mined the Namalope ore
zone from 2013 to August 2020. In
September 2020, WCP B was relocated
to the high grade Pilivili ore zone and it
recommenced production two months
later. Pilivili was chosen due to a number
of favourable characteristics. WCP B
has a throughput capacity of 2,400 tph,
following the upgrade work undertaken
in 2018. One dredge, named Deirdre, and
one dry mine provide feed to WCP B.
WCP C is the newest and smallest of
the three Wet Concentrator Plants. It
commenced production in February
2020 and it has a throughput capacity
of 500 tph, representing one-fifth of the
size of WCP B and one-sixth of the size
of WCP A. WCP C is mining a high grade
area of the Namalope ore zone, which
is inaccessible to the two larger Wet
Concentrator Plants. It has one dredge,
named Julia.
Kenmare Resources plc
Annual Report and Accounts 2021
27
OPERATING MODEL
Kenmare’s operational process is well
established and environmentally sound.
The Moma Mine is a low-cost, bulk mining operation that predominantly uses dredges
to mine almost 40 million tonnes of titanium-rich sands per year.
2:
WET
CONCENTRATOR
PLANT (WCP)
The first processing
stage at the WCPs
consists of rejecting
oversize material. Next,
the ore feed is passed
over progressive stages
of gravity spirals, which
separate the Heavy
Mineral Concentrate
(HMC) from tailings
(silica sand and clay).
1:
MINING
Dredging takes place
in three artificial ponds,
where four dredges
feed three Wet
Concentrator Plants (A,
B and C). The dredges
cut into the ore at the
pond’s base, causing
the mineralised sand
to slump into the pond
where it is pumped
to a WCP. Kenmare
also has three dry
mining operations to
supplement ore feed to
WCP A and WCP B.
3:
DUNE
REHABILITATION
4:
HEAVY MINERAL
CONCENTRATE
Tailings are deposited
into a series of settling
ponds, dried and
re-contoured, with the
previously removed
topsoil redeposited.
Rehabilitation is
completed by planting
a variety of vegetation
as well as food crops.
The area is then
transferred back to the
local communities.
Read more about
how we rehabilitate
land and hand it
back to our host
communities on
page 58
HMC is pumped to
the Mineral Separation
Plant (MSP), where
it is stockpiled prior
to further processing.
HMC consists of
valuable heavy minerals
(ilmenite, rutile, zircon
and monazite, which
is sold as part of our
concentrates product
stream), other heavy
minerals and a small
amount of other minerals
(the bulk of which is
silica sand).
MINING
28
Kenmare Resources plc
Annual Report and Accounts 2021
STRATEGIC REPORT
>90%
ELECT RICITY FRO M
HY DROPOWER
0
198 ha
TOXI C CHEM ICALS
USED IN OP ERATIONS
L AND REHABILITATED
IN 2021
42,255
NATIVE TREES
PL ANTED IN 2021
Over 90% of Moma’s electricity comes from hydropower and Kenmare uses progressive
land rehabilitation practices to return mined land to communities in a timely manner.
5:
WET HIGH
INTENSITY
MAGNETIC
SEPARATION
HMC is transferred
from stockpiles by
front-end loaders and
fed to the Wet High
Intensity Magnetic
Separation (WHIMS)
plant to separate
magnetic from
non-magnetic
fractions.
6:
MAGNETIC,
GRAVITY AND
ELECTROSTATIC
SEPARATION
The MSP uses magnetic,
gravity and electrostatic
circuits to separate the
valuable minerals of
ilmenite, rutile, zircon and
monazite into individual
products. The magnetic
fraction of WHIMS output
is dried and processed by
electrostatic separation
to produce ilmenite
products. The non-
magnetic fraction of the
WHIMS output passes to
the wet gravity separation
circuit to remove silica
and trash minerals.
Electrostatic separators
are then used to separate
the conducting mineral
rutile from the non-
conducting minerals
zircon and monazite.
7:
PRODUCT STORAGE
WAREHOUSE
8:
CONVEYOR
AND JETTY
9:
OCEAN-GOING
BULK CARRIER
The conveyor
transports product
to the end of a 400
metre-long jetty, where
product is loaded onto
transshipment vessels,
at a rate of 850 tonnes
per hour. Kenmare
owns and operates two
transshipment vessels,
the Bronagh J and
the Peg.
The vessels
transport the products
to a deep water
transshipment point
10 km offshore, where
they self-discharge
into ocean-going
third-party vessels.
These vessels then
transport the final
products to multiple
destinations around
the world.
Ilmenite and rutile are
stored in a 229,000
tonne capacity
warehouse, which
also contains an
enclosed area to store
the mineral sands
concentrate product
(containing monazite).
Zircon is stored in a
separate 35,000 tonne
capacity warehouse to
reduce the potential for
cross-contamination.
The warehouses load
the products onto a
2.4 km-long overland
conveyor.
PROCESSING
STOR AGE AND EXPORT
OTHER INFRASTRUCTURE
Other infrastructure on site includes a 170km 110kV power transmission line, a sub-station, a leased 9.6 MW
diesel generator plant, an accommodation village, offices, a laboratory, an airstrip, water supply and sewage
treatment plants.
Kenmare Resources plc
Annual Report and Accounts 2021
29
OPERATING REVIEW
Targeting
a safe and
sustainable
1.2 Mtpa
BEN BA XTER
CHI EF OP ERATIO NS O FFICER
HIGI NO JAMISSE
MOMA MINE GE NERAL MA NAG ER
2021 was a record year for Kenmare in terms of safety,
production, and shipments. We achieved our lowest ever
Lost Time Injury Frequency Rate of 0.03 per 200,000
hours worked for the 12 months to 31 December 2021. This
represents more than six million hours worked, and an 88%
improvement compared to 2020. We recorded only one
Lost Time Injury (LTI) during the year, in early January
2021, and as a result, we achieved one year without a LTI
on 6 January 2022.
This is a particularly significant achievement given that
the Moma Mine continued to be impacted by COVID-19
during the year, particularly in H1. Kenmare’s best ever
safety performance comes as a result of improvements
made to hazard identification and risk assessment, coupled
with greater focus from site leadership on safety standards
and creating an environment of care in the workplace.
Important improvements in management experience and
organisational development were realised at the Moma
Mine in 2021, and this is contributing to improved levels of
employee engagement and decision-making relating to both
production and safety. Kenmare also increased its focus on
measurement and management of sustainability outcomes
in 2021 and more information about this can be found on
pages 50 to 63.
Kenmare’s three development projects were largely
completed by the end of 2020, which formed the bedrock
of our strategy to expand production to 1.2 million tonnes
per annum (Mtpa) of ilmenite, plus co-products. Ilmenite
production increased by 48% in 2021 to 1,119,400 tonnes
compared to 2020 and, between May and October, the
operations delivered 600,000 tonnes of ilmenite production,
confirming that Moma can achieve its 1.2 Mtpa nameplate
capacity. Our focus is now on achieving this run rate on an
annual and sustainable basis and reducing our unit costs,
while maintaining our industry-leading safety performance.
Mining
Kenmare achieved record Heavy Mineral Concentrate
(HMC) production in 2021 of 1,555,900 tonnes up 30%
compared to 2020 (1,201,100 tonnes). This was due primarily
to a 19% increase in ore grades to 4.63% as a result of
Wet Concentrator Plant (WCP) B’s relocation to the high
grade Pilivili ore zone in Q3 2020. Grades are expected to
normalise at around 4.2% in 2022.
HMC production also benefitted from record excavated ore
volumes (39.3 million tonnes), up 14% compared to 2020,
primarily as a result of a full year of production from WCP
B, compared to 2020 when two months were lost due to
the move.
Read more about
our sustainability
performance on
page 50
Mining throughputs
Excavated ore (Mt) and grade (%HM)
Mine overall utilisation (%)
5
3
2
5
,
4
8
1
,
5
2
2
8
4
,
4
3
6
4
,
18
19
20
21
Spiral Feed Rate (t/hr)
30 Kenmare Resources plc
Annual Report and Accounts 2021
33,507,865
36,803,750
30,007,377
33,961,274
4.4%
4.6%
3.6%
3.6%
18
19
20
21
Dredged ore (t)
Dry mining ore (t)
Excavated ore Grade (%)
1
7
9
6
3
6
20
18
19
3
7
21
NB: Overall Utilisation weighted
by WCP nominal capacity
STRATEGIC REPORT
Looking at the performance of each of Kenmare’s three Wet
Concentrator Plants (WCPs), WCP A had a challenging year, with
steadily rising slimes levels in the ore impacting the operation.
This came in combination with a loss of key skills and personnel in
H1 2021 due to a spike in COVID-19 cases at site. In 2022, slimes
levels are expected to remain high and consequently, extensive
mitigation measures are underway. These include the installation of
an additional cyclone for ore desliming, an extended flocculation trial
following an encouraging initial trial in Q4 2021, and upgrades to the
tailings infrastructure, so as to reduce slimes recirculation, improve
metallurgical recoveries, and reduce limitations to mining throughputs.
Following WCP B’s relocation to Pilivili in Q3 2020, the plant performed
in line with expectations in 2021, delivering 54% of total HMC for the
year. However, mining rates were reduced at times to accommodate
very high grades and prevent metallurgical overloading in the plant,
limiting excavated ore tonnes. Despite this, overall Mine throughputs
improved slightly to 5,235 tonnes per hour (tph) for the year (2020:
5,184 tph).
2021 was WCP C’s first full year of production and it exceeded
expectations. The plant outperformed in terms of mining rates and
utilisations, and remedial actions were successfully completed by the
construction contractor to ensure limited ore losses and recoveries
exceeding design expectations.
Utilisation rates at all three WCPs improved in 2021, averaging 73% and
up 15% compared to 2020, with no major plant outages. This followed
the completion of the Projecto Oitenta utilisation improvement project.
Utilisations benefitted from adding an additional feed source (dry
mining) to the WCP A operation, meaning that its two metallurgical
circuits could be run for more of the time, and this partially offset the
impact of harder mining conditions. Plant spares availability was also
a concern in some areas, with manufacturing delays experienced,
but overall the operations benefitted from improved critical spares
stockholdings.
These improvements were partially offset by power disruptions, which
impacted all three WCPs, particularly in Q4 2021. Although overall
power reliability from the national grid was good, significant outages
were experienced in October and early November 2021. This was
due to the failure of voltage support equipment in the transmission
network, coupled with insufficient balancing support from the power
barge contracted by the state power company, Electricidade de
Moçambique. These issues were resolved by mid-November, with
a return to reliable supply, but they significantly reduced HMC
production in Q4 2021. It also followed a period where we drew down
our HMC stocks, so inventories were not available for processing, and
this limited final product production in Q4 2021.
Recoveries at WCP B and WCP C were above expectation, but overall
Mine recoveries were softened by the slimes impacts at WCP A, which
negatively affected the efficiency of separation on the spirals.
The operations team is continuing to monitor HMC product grades to
ensure that the Mineral Separation Plant (MSP) receives a consistent
feedstock. Improvements have been made in metallurgical control, although
product grade is impacted on occasion by disruptions in utilisation and by
high slimes conditions affecting the quality of sampling and the grade itself.
Nevertheless, HMC grade performance improved slightly, and as predicted,
ilmenite content in HMC also improved relative to 2020.
Looking ahead, mining remains Moma’s main constraint to production.
Throughputs and utilisation rates have strengthened, delivering
increased excavated ore, and further improvement work will be
undertaken to ensure sufficient feedstock is delivered to the MSP,
including measures to manage slimes levels.
Processing
2021 was a record year for production of all products, with total finished
products of 1,228,500 tonnes, up 46% on 2020 (840,500 tonnes). It
was also the first year that Kenmare produced more than one million
tonnes of ilmenite. Product volumes benefitted from increased HMC
production, and consequently increased HMC processed, and the
successful debottlenecking of the MSP.
During the strongest period of HMC production during the year, the MSP
operated consistently at a 1.2 Mtpa ilmenite run rate. HMC production
was predicted to fall in Q4 2021 due to a lower grade area in the mine
path. However, this was exacerbated by falling utilisation rates due to
unplanned power disruptions. As a result, Q4 2021 finished products
production was below expectations as there was limited HMC availability.
39,000 tonnes of HMC were drawn down from the stockpiles and
processed during 2021 to partially offset the reduced HMC availability
and this meant closing stocks of HMC at year-end were 11,600 tonnes
(2020: 50,200 tonnes).
Kenmare produced 1,119,400 tonnes of Ilmenite in 2021, achieving
our ilmenite production guidance for the year. Ilmenite production
was up 48% on 2020, which was due primarily to a 30% increase in
HMC production. It also benefitted from increased ilmenite content
in the HMC following the relocation of WCP B to Pilivili. Additional
resilience has been built into the MSP to ensure strong production
levels are maintained and this brings added flexibility to the operations.
Consequently, the ilmenite circuits performed well in 2021, with robust
utilisation rates, up 23% on 2020, and throughputs increased by 17%.
Mine recovery (%)
Mine HMC quality (%THM)
HMC treated (t)
.
0
2
9
1
.
2
9
6
.
1
9
.
7
8
8
.
9
2
9
.
9
2
9
.
9
2
9
.
8
2
9
18
19
20
21
Spiral Recovery (%HM)
18
19
20
21
8
7
1
,
0
5
1,594,540
1,367,997
1,214,713
1,157,859
1
7
5
9
1
,
18
3
7
9
6
,
2
9
4
,
1
1
19
20
21
HMC treated (t)
Closing HMC Stock (t)
Kenmare Resources plc
Annual Report and Accounts 2021
31
OPERATING REVIEW CONTINUED
Ilmenite recovery rates were in line with expectations during the
year, averaging over 90%. Despite the impacts of COVID-19 limiting
personnel availability, recoveries benefitted from more stable operations
and the significant efforts made to reduce spillage.
Primary zircon production increased by 30% in 2021 to 56,300 tonnes
(2020: 43,300 tonnes), achieving the mid-point of guidance. Kenmare’s
primary zircon is categorised for sale as higher grade standard zircon
and lower grade special zircon. The ratio of standard zircon to special
zircon remained at 48% in 2021, similarly to 2020, which is lower for
standard zircon than historical levels, as a result of higher levels of
aluminium silicates and fine rutile contaminating the feed. Improved
metallurgical control was seen in the second half of the year and we
expect the amount of standard zircon to improve going forwards.
Zircon and rutile production, which are more complex parts of the
MSP circuit, were impacted more significantly in H1 2021 than ilmenite
production as metallurgical and maintenance skills availability were
compromised by the high number of COVID-19 cases at the Mine.
Although primary zircon recoveries were in line with expectation at 59%,
both primary zircon and rutile recoveries were negatively affected by this
skills shortage. Conversely, concentrates production benefitted, with the
unrecovered primary zircon and rutile captured in this product stream.
Record concentrates production was achieved in 2021, totalling 43,900
tonnes and up 25% compared to 2020. Concentrates production
exceeded the upper end of the guidance range, benefitting from strong
HMC availability, lower recoveries in the primary zircon and rutile
product streams reporting to the concentrates product stream, and the
processing plant delivered ahead of expectation.
Rutile production increased by 50% in 2021 to 8,900 tonnes, benefitting
from increased HMC availability in the same way as our other products
and as a result of a successful recovery improvement project. Rutile
recovery rates increased by 20% compared to 2020, with an improving
profile through the year. This improvement had the effect of retaining
rutile in the higher value single product stream rather than capturing
less value in the concentrates product stream. The rutile circuit in the
MSP was impacted significantly by personnel and expertise shortages
relating to COVID-19, which delayed delivery of the improvement
project at the start of 2021. It was also negatively impacted by power
disruptions in Q4 2021, which resulted in rutile production being 5%
below the bottom end of the guidance range.
The outlook for processing will be driven by HMC production, as we
have successfully debottlenecked the MSP and it can consistently
operate at its nameplate capacity of 1.2 Mtpa of ilmenite production. In
addition, the implementation of the Rotary Uninterruptible Power Supply
(RUPS), which began commissioning in Q1 2022, will bring additional
Ilmenite produced (kt)
Ilmenite recovery (%)
.
4
9
1
1
,
1
4
.
1
9
.
9
3
9
.
9
6
8
.
0
0
9
.
5
8
5
9
.
9
2
9
8
.
0
6
5
7
recovery improvements through consistency of operations. More
information on the RUPS is included below.
2022 production guidance
Kenmare’s 2022 guidance for production is as follows:
Production
Ilmenite
Primary zircon
Rutile
Concentrates1
1 Concentrates include secondary zircon and mineral sands concentrate.
2022 Guidance
1,125,000–1,225,000
54,400–63,200
9,500–11,500
40,300–46,800
Unit
tonnes
tonnes
tonnes
tonnes
2021 Actual
1,119,400
56,300
8,900
43,900
Production of all finished products in 2022 is expected to be higher
than in 2021, due primarily to anticipated higher tonnes mined,
more than offsetting a lower anticipated ore grade of 4.2%. Ilmenite
production in 2022 is expected to be between 1.125 million and
1.225 million tonnes as we target 1.2 Mtpa of ilmenite production
on a safe and sustainable basis.
Shipments are expected to be lower than production in 2022 as one
of Kenmare’s transshipment vessels, the Bronagh J, is due to go into
its five-yearly dry dock for approximately 10 weeks during the year.
This will temporarily reduce shipping capacity but it will enable more
efficient maintenance and positively impact availability going forwards.
It will also enable Kenmare’s dedicated port facilities to consistently
operate at 1.3 million tonnes per annum of shipping capacity going
forwards.
Development projects
Since 2018 Kenmare has progressed three development projects
that together have the objective of increasing ilmenite production
to 1.2 million tonnes per annum (plus co-products) on a sustainable
basis. The first development project, a 20% expansion of WCP B, was
commissioned successfully in late 2018.
The second development project, the construction of WCP C, has
delivered targeted throughput of 500 tonnes per hour on a consistent
basis since Q1 2020. The previously highlighted outstanding items
for completion of the WCP C project were satisfactorily resolved
in H1 2021 and the project has been closed out, with a final cost of
US$43.5 million versus the forecast cost of US$45 million.
The third capital project, the relocation of WCP B to Pilivili including
associated infrastructure, was substantially completed in H1 2021. Work
is underway to increase the utilisation rate of the pumping system to
transport HMC from Pilivili to the MSP. Road haulage will continue to
be reduced as these improvements take effect, which is expected to
benefit operating costs. The overall forecast capital cost for the WCP B
project remains in line with prior guidance of US$127 million.
Zircon production including
concentrates (t)
100,158
87,181
76,550
78,138
Primary zircon recovery (%)
7
6
3
.
1
6
1
.
9
5
.
4
9
5
18
19
20
21
Total ilmenite (kt)
18
19
Recovery of ilmenite (%)
20
21
32
Kenmare Resources plc
Annual Report and Accounts 2021
19
21
20
18
Standard zircon (t)
Special zircon (t)
Secondary zircon concentrate (t)
Mineral sands concentrate (t)
18
19
20
21
STRATEGIC REPORT
A Pre-Feasibility Study for mining the Nataka ore zone progressed
during the year, which is due to be completed in 2022. WCP A
is expected to commence mining in Nataka in 2025. Ore body
characterisation works continue and will be combined with mining,
processing and tails management studies. The environmental and
social assessment process has also commenced.
Rotary Uninterruptible Power Supply
Historically the MSP has utilised diesel-powered electric generators
during the Mozambican summer wet season (December to March).
However, Kenmare believes that summer 2021–2022 will be the last
time this is necessary as the RUPS began commissioning in Q1 2022.
The installation of a RUPS was approved by Kenmare’s Board in early
2021 and it is expected to improve the year-round reliability of the
power supply to the MSP, benefitting mineral recovery, operating time,
and operating costs. It is also anticipated to make the most significant
contribution to Kenmare’s short-term target to reduce carbon
emissions by 12% by 2024, through lower diesel consumption. The
estimated cost of the project is $18 million, which generates a positive
Net Present Value using conservative assumptions.
Shipping
2021 was a record year for shipments, with 1,285,300 tonnes of finished
products shipped during the year. This represented a 51% increase
compared to 2020, due to significantly increased product volumes and a
drawdown of finished product inventory. It also reflected strong demand
from Kenmare’s product markets. Shipments were comprised 1,186,900
tonnes of ilmenite, 52,900 tonnes of primary zircon, 3,700 tonnes of
rutile and 41,800 tonnes of concentrates.
Record shipping volumes benefitted from the improved cycle time for
the transshipment vessels, which was the culmination of significant
work to strengthen both the reliability and effectiveness of the vessels
in H1 2021, and improved land-based product loading processes.
Weather impacted operations at varying times in the year, however,
this was mitigated by the improved cycle times and the strengthened
resilience of the transshipment vessels.
A total of 48 ocean-going vessels visited Moma’s dedicated port
facilities during 2021.
Outlook
Delivering a record year for safety, production, and shipments was a
huge achievement by the Moma team, especially given the challenges
we were facing from COVID-19, so I would like to thank all of our
employees for their contribution.
We are now focused on maintaining our strong safety performance during
2022 and I was delighted that we achieved eight million hours worked
without a LTI in early March 2022. Our operations are continuing to ramp
up to 1.2 Mtpa of ilmenite production on a safe and sustainable basis and
through these higher volumes and our initiatives to reduce operating
costs, we are advancing towards our goal of becoming a first quartile
producer on the industry revenue to cost curve.
BE N BA XTE R
C HIE F O PERAT IO NS O FF IC E R
OUR CONTINUING RESPONSE TO
COVID-19
Kenmare had a challenging start to 2021 due to COVID-19 with
a significant number of employees at the Moma Mine, including
several members of the site leadership team, taken ill and
isolating following a positive test result. Sadly, Kenmare lost three
employees due to the impacts of COVID-19. Our sympathy goes
to their families and we thank them for their service at Kenmare.
While there were no direct closures of operating areas as a result
of personnel shortages, with production and shipments continuing
throughout the year, operational efficiency, maintenance, and
production volumes were also negatively impacted.
As a result of the spike in positive COVID-19 cases in H1 2021,
Kenmare implemented blanket testing of the entire workforce
every two weeks in order to identify positive cases more quickly
and reduce the spread of the virus. A vaccination programme
was rolled out at Moma in July 2021 and by year-end, 96% of
Kenmare’s 1,551 employees had received two doses. There
here has been no serious illness due to COVID-19 among our
employees since the vaccination programme was rolled out. The
Company also donated 12,000 vaccines to our host communities.
In December 2021 there was a second significant spike in
employees testing positive for COVID-19 as a result of the highly
contagious Omicron variant. However, due to Kenmare’s fortnightly
testing programme and the double vaccinated status of the vast
majority of our employees, none of our people were seriously ill.
Kenmare continues to be vigilant against COVID-19, with various
health protocols and mitigation measures in place, as protecting
our employees and our host communities is our top priority.
Overall zircon recovery (%)
Rutile produced (t)
.
5
9
8
.
6
8
7
.
9
6
7
.
0
7
7
4
5
1
,
8
8
7
2
8
,
4
1
9
8
,
7
5
9
5
,
Rutile recovery including that
sold in other products (%)
1
8
6
6
.
9
6
6
.
3
8
6
18
19
20
21
18
19
20
21
18
19
20
21
Rutile recovery single product (%)
Rutile recovery in other products (%)
Kenmare Resources plc
Annual Report and Accounts 2021
33
1.5 bn
to nnes
TOTAL O RE RES ERVES
6.3 bn
tonnes
TOTA L MINERAL RESOURCES
149 M
to nnes
ILMENITE MINERAL RESOURC ES
34 Kenmare Resources plc
Annual Report and Accounts 2021
STRATEGIC REPORT
GLOBALLY SIGNIFICANT
MINERAL RESOURCES
Introduction
Kenmare’s Moma Mine is one of the largest titanium minerals deposits
in the world. It is estimated that the Group’s Mineral Resources contain
approximately 149 million tonnes of ilmenite, which is equivalent to over
100 years’ production at a rate of 1.2 million tonnes of ilmenite per annum,
and associated co-products of zircon, rutile, and monazite, a rare-earth
element.
The nature of the Moma deposit, with abundant fresh water, no
overburden, an economic ore grade and attractive minerals that do not
have to be upgraded before being used, gives Kenmare the ability to
mine, concentrate and separate its products with relatively low capital and
operating costs, in part due to more than 90% of electricity consumed
being derived from low-cost hydroelectric power. Kenmare operates a
dedicated port facility adjacent to the Mineral Separation Plant, which
allows for the shipment of products to customers at minimum cost.
Summary of Ore Reserves and Mineral Resources
The total proved and probable Ore Reserves under the Namalope, Pilivili,
and Nataka mining concession are estimated as at 31 December 2021 at
1,534 million tonnes (Mt), grading 2.7% ilmenite, 0.18% zircon and 0.059%
rutile, containing 41 Mt of ilmenite, 2.7 Mt of zircon, 0.90 Mt of rutile, and
0.16 Mt of monazite. The total Mineral Resources (excluding Ore Reserves)
held by the Group under a combination of exploration licences and mining
concessions is estimated as at 31 December 2021 at 6.3 billion tonnes,
grading 2.4% ilmenite, 0.16% zircon and 0.052% rutile, containing 149 Mt of
ilmenite, 10 Mt of zircon and 3.3 Mt of rutile. Details are set out in the Ore
Reserve-Mineral Resource table on page 37.
See page 38 to read about our product markets
Kenmare Resources plc
Annual Report and Accounts 2021
35
MINERAL RESERVES AND RESOURCES CONTINUED
Exploration
licences and mining
concessions held
by Kenmare
Nampula
Nampula
Province
Nametil
l
Mogincual
Quinga
Quinga
North
MOZAMBIQUE
Zambézia
Province
Namalope
Nataka
Larde
Congolone
and Marrua
Angoche
Map area
(Moma Mine)
Moma
Mualadi
Pilivili
Mpuitine
Maputo
0 10 20 30
km
In 2021 the Wet Concentrator Plant (WCP) A and WCP C mining
operations continued to mine the Namalope ore zone and WCP B
continued to mine the Pilivili ore zone. Reductions in the Ore Reserves
statement relate to depletion from mining in 2021 and dredge path
revisions that were made during the year to optimise the mine plan.
An economic assessment has yet to be completed as part of this PFS,
and hence until completed, the mine path will not be upgraded into
Ore Reserve category. A further 13,748 m of geotechnical and Mineral
Resource drilling was completed during the year to complement
this work.
The Pilivili Ore Reserves now comprise 163 Mt of ore at 3.4% ilmenite,
representing 5.6 Mt of contained ilmenite, 0.24% zircon (0.4 Mt) and
0.08% rutile (0.13 Mt). The 2021 Pilivili drilling programme, which
comprised 14,892 m, focused on improving ore body knowledge within
the dry mining path and south western areas of the ore zone.
Across all ore zones within the Moma deposit, 123 piezometers were
installed to assist with the development of water management plans,
comprising 1,032 m of drilling.
No drilling activity was undertaken in the Congolone, Mpuitine or
Quinga North ore zones during 2021. A conceptual study of mining
potential in Quinga was however undertaken.
At year-end, Namalope Ore Reserves comprised 123 Mt of ore at
2.6% ilmenite, representing 3.2 Mt contained ilmenite, 0.18% zircon
(0.22Mt) and 0.060% rutile (0.07Mt). Notably, the WCP C mining area
was extended with an upgrade of 35 Mt of Mineral Resources to Ore
Reserves. During the year, 18,886 metres (m) of drilling was undertaken
at Namalope with the purpose of:
•
•
Facilitating mineral fractionation analysis within the 2022 and 2023
mine paths to better understand ilmenite product quality
Improving knowledge of the WCP A path in Namalope West to
optimise the mining floor as WCP A is expected to travel through
this previously poorly drilled area to reach the Nataka deposit
The Nataka ore zone represents a large, long-life mining opportunity
for Kenmare. Ore Reserve status was unchanged in 2021, with probable
Ore Reserves of 1,248 Mt of ore at 2.56% ilmenite, representing 32 Mt
of contained ilmenite, 0.17% zircon (2.11Mt) and 0.06% rutile (0.70Mt).
In 2021, work on the Pre-Feasibility Study (PFS) for mining Nataka
continued, with the development of a 20-year high grade mining
plan for WCP A following completion of its mine path in Namalope.
36 Kenmare Resources plc
Annual Report and Accounts 2021
STRATEGIC REPORT
The following unaudited table sets out Kenmare’s Ore Reserves and Mineral Resources as at 31 December 2021:
Zones
Category
Ore
(Mt)
%
THM*
% Ilmenite
in THM
% Ilmenite
in ore
% Rutile
in ore
% Zircon
in ore
THM
(Mt)
Ilmenite
(Mt)
Rutile
(Mt)
Zircon
(Mt)
Reserves
Namalope
Namalope
Pilivili
Pilivili
Nataka
TOTAL
RESERVES
Resources
Congolone
Namalope
Pilivili
Namalope
Congolone
Nataka
Pilivili
Congolone
Pilivili
Mualadi
Nataka
Mpuitine
Marrua
Quinga North
TOTAL
RESOURCES
Proved
Probable
Proved
Probable
Probable
Proved &
Probable
Category
Measured
Measured
Measured
Indicated
Indicated
Indicated
Indicated
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
66
57
30
133
1,248
1,534
Sand
(Mt)
205
102
8
100
55
1321
99
24
35
327
3,637
287
54
71
3.2
3.3
5.1
4.0
3.1
3.2
%
THM*
3.3
3.3
3.2
2.8
3.8
3.2
3.0
2.4
2.3
3.2
2.6
3.6
4.1
3.5
81
81
82
83
82
82
2.6
2.6
4.1
3.3
2.56
0.06
0.06
0.09
0.08
0.06
2.7
0.059
% Ilmenite
in THM
80
81
81
81
79
84
76
78
76
80
82
80
80
80
% Ilmenite
in sand
2.7
2.7
2.6
2.2
3.0
2.7
2.3
1.9
1.7
2.6
2.1
2.9
3.3
2.8
% Rutile
in sand
0.07
0.06
0.06
0.05
0.08
0.05
0.05
0.05
0.04
0.06
0.04
0.07
0.19
0.14
0.18
0.19
0.29
0.23
0.17
0.18
% Zircon
in sand
0.22
0.19
0.17
0.16
0.23
0.17
0.16
0.13
0.13
0.21
0.14
0.24
0.19
0.28
2
1.9
1.5
5.3
39
50
THM
(Mt)
6.8
3.4
0.2
2.7
2.1
42.9
3.0
0.6
0.8
10
93
10
2.2
2.5
1.7
1.5
1.3
4.4
32
41
Ilmenite
(Mt)
5.5
2.7
0.2
2.2
1.7
36.0
2.3
0.4
0.6
8.4
77
8.3
1.8
2.0
0.04
0.04
0.03
0.10
0.70
0.90
Rutile
(Mt)
0.1
0.1
0.0
0.0
0.0
0.7
0.1
0.0
0.0
0.2
1.6
0.2
0.1
0.1
0.12
0.11
0.09
0.31
2.11
2.7
Zircon
(Mt)
0.4
0.2
0.0
0.2
0.1
2.2
0.2
0.0
0.0
0.7
5.0
0.7
0.1
0.2
6,324
2.9
82
2.4
0.052
0.16
180
149
3.3
10
* THM is total heavy minerals of which ilmenite (typically 82%), rutile (typically 2.0%) and zircon (typically 5.5%) total approximately 90%. Tonnes and grades have been rounded and hence
small differences may appear in totals. Mt represents million tonnes.
Mineral Resources are additional to Ore Reserves. Estimates for
Namalope, Nataka and Pilivili reserves and the Namalope, Nataka,
Congolone and Pilivili resources comply with the Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves
(“JORC Code”) 2012 edition. Table 1 documentation for these reserves
and resources can be found at www.kenmareresources.com. Estimates
for all other resources were prepared and first disclosed under
the 2004 edition of the JORC Code. They have not been updated
to comply with the JORC Code 2012 edition on the basis that the
information has not materially changed since they were last reported.
The competent person for the Kenmare mineral reserves and
resources is Mouhamed Drame (MAusIMM). Mouhamed Drame is an
employee of Kenmare and takes part in the Kenmare Resources Share
Plan. Mouhamed Drame has sufficient experience relevant to the style
of mineralisation and type of deposit under consideration and to the
activity which they are undertaking to qualify as Competent Persons as
defined in the JORC Code 2012 edition. Mouhamed Drame consents to
the inclusion in this report of the matters based on his information in
the form and context in which it appears.
Kenmare Resources plc
Annual Report and Accounts 2021
37
MARKET REPORT
A market-leading
position
CI LL IAN MURPHY
MA RKETING MANAG ER
Kenmare produces two main product groups –
titanium feedstocks (ilmenite and rutile) and zircon.
Titanium feedstocks and zircon are used to produce quality-of-life products such as paints, paper, plastic, and ceramic tiles. Titanium feedstocks
are also used to produce titanium metal, playing a key role in reducing fuel consumption within the aerospace industry due to titanium metal’s
lightweight qualities. Kenmare also produces a mineral sands concentrate, which contains monazite, a rare-earth element.
2021 revenue by product (%)
15%
5%
1%
79%
Ilmenite
Primary zircon
Concentrates
Rutile
TITANIUM FEEDSTOCKS
ZIRCON
Kenmare is the fifth largest supplier of
zircon globally. The ceramics industry
accounts for over 50% of global zircon
demand, where it is the preferred
raw material due to its unmatched
opacifying qualities, high refractive
index, and high melting point. Zircon is
also used in the refractory and foundry
industries, and zirconia chemicals.
Zircon sand production is largely
concentrated in Australia and Africa
and the major markets for zircon sand
are Europe and China.
Kenmare supplies the global titanium
feedstocks market through our production
of ilmenite and rutile. Ilmenite is Kenmare’s
primary product, representing more than
70% of our revenues, and we are the largest
supplier of merchant ilmenite in the world.
Titanium pigment accounts for ~90% of
global demand for titanium feedstocks
and is used in everyday items such
as paint, plastics, and textiles for its
brilliant whiteness, ultraviolet protection,
and opacifying properties. These are
considered quality-of-life products
and their consumption increases as
urban populations grow and disposable
income rises.
Kenmare’s ilmenite and rutile products
are also used in the production of
titanium metal, specialty glass and for
welding electrode fluxes.
See more about our products and their
uses on pages 6–7.
38 Kenmare Resources plc
Annual Report and Accounts 2021
STRATEGIC REPORT
The macroeconomic environment
Global economic activity recovered well in 2021 following the contraction in 2020 caused by the COVID-19 pandemic. The World Bank estimates
that gross domestic product grew by 5.5% in 2021. However, the recovery was unevenly distributed, with traded goods outpacing services
spending, which supported strong titanium pigment consumption. The recovery has also been unequal regionally, with advanced economies
recovering more quickly than emerging economies.
The World Bank is forecasting strong growth in 2022 and this is expected to result in positive demand growth in Kenmare’s product markets. However,
several major risks to global markets exist, with supply chain bottlenecks and high energy prices persisting into 2022, adding to global inflation concerns.
Market trends
How will this impact us?
How are we responding?
Record pigment
production in
China
2021 was another record year for titanium pigment production
using the chloride process (chloride pigment production) in
China, with additional capacity commissioned in late 2021
and early 2022. More imported ilmenite will be required to be
upgraded to high-grade feedstocks to supply the growing
Chinese pigment market as domestic ilmenite is not suitable.
Kenmare continues to partner with the strongest and
most stable consumers of ilmenite in China, where we
are a preferred supplier. We continue to support these
customers during commissioning and ramp-up phases,
while maintaining strong relations with consumers
outside China.
Increasing
demand from
Chinese titanium
metal market
The production of titanium sponge, which is a raw titanium
metal that is a starting point for producing any metallic titanium
product, has almost doubled since early 2019, requiring more
ilmenite as feed for this chemical process. Domestic Chinese
ilmenite is unsuitable for making titanium sponges so ilmenite
must be imported to meet this growing demand.
Kenmare increased its sales to the titanium metal market
in China in 2021 to meet the growing demand. We remain
close to our customers and we are capable of increasing
our supply to this market as it continues to grow.
Depleting global
rutile supply
As global rutile production declines, consumers will need
to consider using other products as feed for their plants.
Beneficiated ilmenite, such as chloride slag and synthetic rutile,
are the most likely products to replace rutile.
Kenmare produces high-quality ilmenite products for
upgrading and we expanded our production in 2021 to
meet growing demand. We have strong relationships with
the customers and we expect to benefit from this trend.
Higher logistics
costs
Kenmare ships all its product directly from the Moma Mine.
Higher fuel costs and shipping bottlenecks have increased
the cost of this. We expect this to ease as the bottlenecks are
removed, but higher fuel costs are likely to remain, which is
likely to impact Kenmare’s cash operating costs.
Kenmare continues to try to limit the number of ships
that visit Moma’s dedicated port facilities by increasing
the average size of the shipments. Where possible, we
are also increasingly combining products for different
customers on the same vessel to lower costs.
Growing supply
of ilmenite
concentrates
Ilmenite supplied to China in the form of low-quality
concentrates for further processing is a growing trend in the
market. Some of this material competes with Kenmare ilmenite
in the Chinese market.
Kenmare continues to work closely with our customers in
China to show them the value of purchasing high-quality
Kenmare ilmenite. Through the relationships we have
built, our customers also understand that Kenmare can
offer stability in terms of quality and quantity.
Long-term market opportunities
Increasing chloride pigment
production in China
•
Growing global demand for titanium
pigment is forecast to be met
predominantly by increased chloride
pigment production. This will require
more high-grade chloride feedstocks.
•
Kenmare ilmenite is a preferred product
for upgrading to chloride slag and
synthetic rutile and we are in a good
position to continue to benefit from this
market trend.
Changing trends in ceramic tiles
•
Technical advancements have led to a
growing trend to produce significantly
larger ceramic tiles. Large ceramic tiles
are increasingly penetrating alternative
markets, such as surface counters, as they
offer a high-quality alternative to other,
more expensive materials, such as marble.
•
Larger ceramic tiles tend to have
increased zircon content due to zircon’s
high strength and aesthetic qualities.
With supply constraints impacting global
zircon production, Kenmare is well-
positioned to benefit from this trend.
Increasing focus on reducing emissions
• Mineral sands have an important role
to play in the transition to clean energy
from fossil fuels.
•
Titanium metal is increasingly consumed
in the aerospace industry to reduce
emissions as its high melting point and
high strength to weight ratio makes
aeroplanes more fuel efficient.
• Wind and nuclear energy consumption is
expected to grow as the world becomes
more carbon conscious. This will support
demand for rare-earth elements and
zircon, which are used in the construction
of various renewable energy plants.
Kenmare Resources plc
Annual Report and Accounts 2021
39
MARKET REPORT CONTINUED
2021 was a strong year for all of Kenmare’s product markets,
resulting in record sales volumes at higher average received
prices for all products, compared with 2020. Average
received prices for ilmenite, our primary product, increased
by 28% in 2021.
Strong momentum in our product markets ($/t)
Average price
of finished
products
received ($/t)
Average
ilmenite price
received ($/t)
400
350
300
250
200
150
100
50
0
H1
H2
H1
H2
H1
H2
H1
H2
H1
H2
2017
2018
2019
2020
2021
2020 Apparent pigment consumption per capita
(kg/capita)
Middle East & Asia
0.25
Asia Pacific ex China & Japan
0.37
Central Europe
0.93
Japan
China
Western Europe
North America
1.25
1.51
2.53
2.92
0.0
0.5
1.0
1.5
2.0
2.5
3.0
40 Kenmare Resources plc
Annual Report and Accounts 2021
TITANIUM FEEDSTOCKS
(ILMENITE AND RUTILE)
Global titanium feedstocks market in 2021
The positive momentum of H2 2020 for the global titanium
feedstocks market continued into 2021, with market
conditions remaining tight.
As the global economy recovered from the temporary
downturn caused by the COVID-19 pandemic, titanium
pigment producers operated at high utilisation rates seeking
to meet increasing demand. Pigment demand continued to
benefit from the strong DIY paint market and the recovery
of other major end-markets. Consequently, 2021 was a
record year for titanium pigment production.
Chinese chloride pigment production, which is cleaner than
the sulfate pigment production, continued to expand during
the year. Chloride plants require imported ilmenite to feed
them, as domestic ilmenite is unsuitable. Q4 2021 was a
record quarter for chloride pigment production and further
capacity has been added in early 2022. Kenmare benefitted
from this trend in 2021 and is well-positioned to continue to
see strong demand from this market going forwards. Ilmenite
demand in China was further boosted by growth in titanium
metal production, which also requires imported ilmenite.
Kenmare also experienced robust demand from customers in
other regions. With little inventory in the supply chain, increased
demand for titanium pigment in Europe, North America, and
Asia (excluding China) quickly flowed through to demand for
ilmenite, as economies recovered from the COVID-19 downturn
in H1 2020. The titanium metal sector also strengthened
in these regions. The combination of these factors drove
strong demand for titanium feedstocks in 2021, with Kenmare
achieving quarter-on-quarter ilmenite price increases.
Despite supply disruption in South Africa, global supply
of titanium feedstocks increased in 2021, primarily from
Kenmare, and producers in China and Norway. Following
the completion of our growth projects, Kenmare’s ilmenite
shipments increased by 55% compared to 2020. There was
also an increase in the export to China of low-quality ilmenite
bearing concentrates from other producers in Mozambique.
However, the increase in supply was insufficient to meet
increased demand, with Kenmare drawing down its
inventories to below normal levels and global inventories
decreasing during the year.
The ilmenite market ended 2021 stronger than at any other
point during the year. Demand from all major regions and
end-use markets remained firm and global inventories were
well below normal levels, causing prices to accelerate in Q4
2021. This positive market momentum has continued into
2022. Demand for Kenmare ilmenite is exceeding our ability
to supply, and this is likely to be exacerbated during the
spring, which tends to deliver seasonally stronger demand
for paint and coatings.
However the war in Ukraine, which began in late February
2022, has created significant uncertainties in global trade
routes and the wider economy. While it is too soon to
speculate on the overall effects on our markets, Ukraine is a
significant supplier of titanium feedstocks but lower global
growth as a result of the conflict could reduce demand for
our products.
STRATEGIC REPORT
Key developments in 2021
1 GROWING TREND
OF ILMENITE BENEFICIATION
2 STRONG DEMAND
FROM CHINA
2021 saw a continuation of the trend to
upgrade ilmenite to high-grade chloride feedstocks.
High-grade chloride feedstocks are essential in the
production of chloride pigment and titanium metal.
Natural high-grade chloride feedstocks, such as
rutile, are depleting. Upgraded ilmenite products,
namely chloride slag and synthetic rutile, are needed
to replace natural rutile and also to meet growing
demand for high-grade chloride feedstocks. Higher
levels of chloride slag and synthetic rutile capacity is
entering the market without an integrated ilmenite
source and therefore ilmenite must be purchased
from the merchant market. Kenmare ilmenite is
a high-quality product that is well-suited to this
purpose.
2021 was another record year for pigment production
in China. The domestic pigment market showed
strong demand growth, while exports to other regions
also increased as pigment producers from other
regions struggled to meet demand. Although ilmenite
production in China increased to meet the demand
from the sulphate pigment market, further chloride
pigment capacity was also added. This saw demand
for imported ilmenite increase, as domestic ilmenite is
unsuitable for upgrading.
We expect to see this market grow further in 2022
as three new chloride pigment plants have recently
been commissioned, while some existing producers
are also expected to increase production.
Ilmenite consumed for beneficiation ('000 TiO2 units)
Pigment production in China ('000 tonnes)
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
2015
2016 2017
2018 2019 2020
2021f 2022f 2023f 2024f
2025f
4500
4000
3500
3000
2500
2000
1500
1000
500
0
2016
2017
2018
2019
2020
2021
For beneficiation (integrated)
For beneficiation (non-integrated)
3 DIVERSIFIED
CUSTOMER BASE
4 STRENGTHENING
RUTILE MARKET
In 2021, Kenmare sold its ilmenite and rutile products
to over 20 customers in 13 different countries.
We have built strong relationships with long-term
customers, including several customers who have
bought titanium feedstocks from Kenmare every
year since the Moma Mine began production in 2007.
We have also focused on finding new customers
in different end-markets and regions, leading to an
increased supply to the titanium metal sector in 2021.
Our broad customer base has both regional and
end-use diversification, providing protection against
a downturn in any sector or geography.
Rutile, a valuable co-product to our ilmenite
production, has seen significant price appreciation
in recent years. Rutile has a wide range of potential
end-uses, including welding electrode fluxes,
specialty glass, and titanium pigment. 2021 saw a
strong increase in the market for medical glass for
use in pharmaceutical packaging.
Global rutile supply is in decline and in 2021 there was
also some supply disruption. This led to tight market
conditions, which we expect to continue into 2022.
2021 revenue by product (%)
Increasing rutile prices received ($/t)1
22%
19%
10%
49%
1400
1000
600
200
t
/
$
H1
H2
H1
H2
H1
H2
H1
H2
H1
H2
2017
2018
2019
2020
2021
Europe
China
USA
Other
1. Kenmare did not sell any rutile during H1 2021
Kenmare Resources plc
Annual Report and Accounts 2021
41
MARKET REPORT CONTINUED
ZIRCON
The zircon market in 2021
The zircon market recovered strongly in 2021 following
a prolonged period of subdued market conditions. The
rebound in the global economy led to an upturn in demand
for zircon sand from all end-uses. The ceramics market led
the way, with low interest rates supporting the construction
industry, while government stimulus packages in major
economies resulted in a significant increase in renovation
projects. Refractory and foundry end-uses also experienced
positive market conditions in 2021, benefitting from
recovering economic activity.
Large zircon producers were able to increase zircon sand
production and release some excess inventories into the
market to meet demand. However, global supply chain
bottlenecks, particularly a lack of shipping containers,
caused huge disruption resulting in delays to zircon
reaching customer plants and consequently, consumer
inventories were drawn down. The supply disruption was
exacerbated by the suspension of operations at a major
zircon mine and zircon availability became a concern for the
industry in H2 2021.
As a result, zircon market conditions became increasingly
tight throughout the year. Kenmare saw a 23% increase in
average received prices for its zircon compared to 2020 and
achieved price increases in Q2, Q3, and Q4.
In China, zircon prices started to increase in Q1 2021
because of stronger demand. Zircon prices continued to
improve in Q2 2021 and then accelerated in the third quarter
as zircon availability concerns grew, before stabilising in
Q4 2021.
As we move into 2022, we see positive market conditions
continuing for zircon. Global zircon inventories are low, and
demand continues to grow in line with global economic
activity.
A number of risks face the industry including higher energy
costs in Europe and China, rising inflation in many parts
of the world, and uncertainty in the Chinese real estate
sector. It is not fully known how these risks will impact
zircon demand. However, supply concerns also continue
into 2022, due to on-going supply disruption and low global
inventories, and consequently further price increases for
Kenmare zircon in all regions were seen in Q1 2022.
Kenmare's zircon market share
Zircon prices recovered in 2021
6%
Kenmare
Other
94%
t
/
$
1,500
1,000
500
0
18%
$ per tonne
1
2
42
Kenmare Resources plc
Annual Report and Accounts 2021
STRATEGIC REPORT
RARE-EARTH ELEMENTS
The rare-earth elements market in 2021
Kenmare entered the rare-earth elements market in
2019 when we commenced sales of our mineral sands
concentrate (MSC) product, which contains valuable
quantities of monazite, zircon, and rutile. Monazite is the
highest value component of the MSC product due to the
high value rare-earth elements contained in the product.
The market conditions for our MSC product improved
steadily through 2021 on the back of strong demand for the
contained rare-earths.
Demand for Kenmare’s MSC product was robust in 2021
primarily due to the growing demand from the permanent
magnets market for Neodymium (Nd) and Praseodymium
(Pr). NdPr permanent magnets are consumed in rapidly
growing industries such as wind energy and electric
vehicles. The transition towards renewable energy is
supporting the rapid growth of industries consuming these
permanent magnets.
Kenmare is one of only a few suppliers of monazite in the
world, however our production represents just a small part
of the rare-earths market, which is dominated by Chinese
production. Most rare-earths deposits are located in China
and consequently, prices are dependent on Chinese supply.
Looking forward to 2022, we expect to see continued global
demand growth for permanent magnets, driven by the
electric vehicle and wind energy markets. As a result, we
anticipate that robust market conditions for Kenmare’s MSC
will continue in the year ahead.
Mineral sands concentrate value composition
Monazite prices in China
Rare-earth elements
Zircon
Rutile
9%
24%
67%
t
/
B
M
R
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
9
1
n
a
J
9
1
r
a
M
9
1
y
a
M
9
1
l
u
J
9
1
p
e
S
9
1
v
o
N
0
2
n
a
J
0
2
r
a
M
0
2
y
a
M
0
2
l
u
J
0
2
p
e
S
0
2
v
o
N
1
2
n
a
J
1
2
r
a
M
1
2
y
a
M
1
2
l
u
J
1
2
p
e
s
1
2
v
o
N
60% Monazite
concentrate
price (Chinese
Renminbi/t)
Kenmare Resources plc
Annual Report and Accounts 2021
43
FINANCIAL REVIEW
Record financial
performance with
51% EBITDA margin
TONY MCCLUSK EY
FI NAN CI AL DI RECTOR
Highlights
Kenmare delivered an outstanding financial performance in
2021, generating an 87% increase in revenues to $455.9 million
(2020: $243.7 million) and a 182% increase in EBITDA to $216.1
million (2020: $76.7 million). Record revenues and profits were
supported by a 46% increase in production, which in turn
enabled us to achieve record shipment volumes and a 21%
increase in the average price received for Kenmare’s products.
We were delighted to return almost $100 million to
shareholders during the year, through dividend payments
and a share buy-back. This was comprised of the 2020 final
dividend totalling $8.4 million, the 2021 interim dividend
totalling $8.0 million, and the share buy-back of $81.6 million.
The full year 2021 proposed dividend of USc32.71 per share
represents a 227% increase on 2020. This is in line with the
Company’s increased 2021 target to return 25% of profit after
tax to shareholders this year, above the 20% minimum policy.
Total cash operating costs increased by 20% to $189.7
million (2020: $158.0 million) in 2021 as a result of the 46%
increase in finished product production, plus increased
costs relating to repairs and maintenance, Heavy Mineral
Concentrate (HMC) haulage from the Pilivili operations,
and COVID-19 management. However, cash operating costs
per tonne decreased by 18% to $154 per tonne (2020: $188
per tonne), benefitting from economies of scale with the
increased production volumes.
Capital investment requirements reduced in 2021 to $60.3
million (2020: $158.0 million) as the third of Kenmare’s three
growth projects, to increase ilmenite production to 1.2 million
tonnes per annum, was largely completed in 2020. Kenmare
incurred $30.6 million of sustaining capital and $29.7 million
of development capital during the year, which included
investing in the construction of a Rotary Uninterruptible
Power Supply (RUPS) to improve power stability and reduce
the Moma Mine’s carbon emissions.
Kenmare finished the year with cash of $69.1 million (2020:
$87.2 million) and net debt of $82.8 million (2020: net debt
of $64 million).
2021 results
The key financial metrics were as follows:
Revenue ($ million)
Freight ($ million)
Revenue FOB ($ million)
Finished products shipped (tonnes)
Average price per tonne FOB ($/t)
Average ilmenite price per tonne FOB ($/t)
Average zircon price per tonne (FOB) ($/t)
Total operating costs1 ($ million)
Total cash operating cost ($ million)
Cash operating cost per tonne of finished product ($/t)
EBITDA ($ million)
Profit after tax ($ million)
Net debt ($ million)
Full year dividend per share (USc)
2021
2020
FY change %
455.9
(35.4)
420.5
1,285,300
327
282
1,185
303.0
189.7
154
216.1
128.5
82.8
32.7
243.7
(12.2)
231.5
853,100
271
220
1,003
209.4
158.0
188
76.7
16.7
64.0
10.0
87%
190%
82%
51%
21%
28%
18%
45%
20%
(18%)
182%
669%
28%
227%
Notes to table:
Additional information in relation to these Alternative Performance Measures (APMs) is disclosed in the glossary.
1 Depreciation and amortisation are included in total operating costs.
44 Kenmare Resources plc
Annual Report and Accounts 2021
STRATEGIC REPORT
Revenue
Revenue increased by 87% in 2021 to $455.9 million (2020:
$243.7 million) due to a 51% increase in shipments and a
21% increase in the average price per tonne received (FOB).
Shipments during the year comprised 1,187,000 tonnes
(2020: 766,500 tonnes) of ilmenite, 52,900 tonnes (2020:
43,100 tonnes) of primary zircon, 41,800 tonnes (2020:
37,200 tonnes) of concentrates and 3,600 (2019: 9,500)
tonnes of rutile.
Ilmenite revenue (FOB) increased by 98% to $335.0 million
(2020: $168.9 million) in 2021, as a result of a 55% increase
in shipment volumes and a 28% increase in average prices.
The increase in shipment volumes was mainly attributable
to increased production as a direct result of a multi-year
capital investment programme and increased consumer
demand. Primary zircon revenue (FOB) increased by 46%
to $62.7 million (2020: $42.9 million) due to a 19% price
increase and a 23% increase in shipment volumes. Freight
costs in 2021 increased to $35.4 million (2020: $12.2 million),
reflecting higher volumes shipped and elevated average
freight rates during the year.
Read more about
our operations on
page 26
Read more about
the RUPS on
page 33
Operating costs
Cost of sales
Other operating costs
Total operating costs
Freight charges
Total operating costs less freight charges
Non-cash costs
Depreciation
Share-based payments
Indirect tax provision
Mineral products inventory movements
Total cash operating costs
Finished product production (tonnes)
Cash operating cost per tonnes of finished product ($/t)
2021
$m
245.0
58.0
303.0
(35.4)
267.6
(63.1)
(3.5)
(2.0)
(9.3)
189.7
1,228,500
154
2020
$m
179.1
30.3
209.4
(12.2)
197.2
(42.3)
(1.8)
–
4.9
158.0
840,500
188
FY change
%
37%
91%
45%
190%
36%
49%
94%
100%
(290%)
20%
46%
(18%)
Total operating costs increased by 45% in 2021 to $303.0 million compared to 2020 ($209.4 million) and adjusted total
cash operating costs increased by 20% to $189.7 million (2020: $158.0 million). This was due primarily to higher production
volumes, in addition to increased repairs and maintenance costs, HMC haulage costs, and increased costs relating to
COVID-19. Cash operating costs per tonne decreased by 18% to $154 per tonne in 2021 (2020: $188 per tonne), benefitting
from the 46% increase in production of finished products.
Finance income and costs
The Group recognised finance income of $0.3 million
in 2021 (2020: $0.6 million), consisting of interest
on bank deposits. Finance costs were $12.1 million
(2020: $11.3 million), including loan interest of $9.5
million (2020: $9.3 million), factoring and other fees of
$1.4 million (2020: $0.7 million), lease interest of $0.2 million
(2020: $0.3 million), commitment fees of $0.2 million
(2020: $0.3 million), and unwinding of the discount on the
mine closure provision of $0.7 million (2020: $0.7 million).
Exchange movements
An exchange loss of $3.9 million (2020: $1.0 million) arose
during the year, principally relating to a sharp appreciation
of the Mozambican Metical against the US Dollar and was
contributed to by an adverse move by Sterling purchased
to fund the share buy-back.
“Record revenu es
and profit s were
suppor ted by record
shi pment volumes
and a 21% increase
in the average
price received for
Kenmare's products.”
TON Y MCCLUSK EY
FINANC IA L DIREC TO R
Kenmare Resources plc
Annual Report and Accounts 2021
45
FINANCIAL REVIEW CONTINUED
Read more about
the share buy-
back on page 85
Tax
The tax charge for the year amounted to $8.8 million (2020:
$6.0 million). The majority of this tax charge is payable
by Kenmare Resources plc’s mining subsidiary, Kenmare
Moma Mining (Mauritius) Limited (“KMML”) in Mozambique.
KMML’s tax charge amounted to $5.7 million
(2020: $5.7 million) based on KMML’s taxable profits of
$16.2 million (2020: $16.4 million). The income tax rate
applicable to taxable profits of KMML is 35% (2019: 35%).
The Company, Kenmare Resources plc had a tax charge
of $3.0 million (2020: $0.3 million) in the financial year. The
increase in taxable profits in the Company was largely due
to a $20 million dividend received from Kenmare Moma
Mining (Mauritius) Limited, which was subject to Irish
corporation tax at an effective tax rate of 9.5%.
Dividends
Profit after tax increased by 669% to $128.5 million in 2021
(2020: $16.7 million) primarily as a result of significantly
increased revenues only partially offset by higher total
operating costs. In 2021 Kenmare increased its dividend
payout target to 25% of profit after tax, above the 20%
minimum policy, and delivered an interim dividend in line
with this target. The Board is recommending a final dividend
of USc25.42 per share, which is subject to shareholder
approval at the AGM. This would give a full dividend of
USc32.71 per share for 2021, which represents 25% of profit
after tax and an increase of 227% per share on 2020. The
financial statements do not reflect the final dividend that
is being recommended for shareholders to approve at the
2022 AGM.
Share buy-back
Under the authority granted at the Company’s Extraordinary
General Meeting held on 9 December 2021, Kenmare
completed a share buy-back. Kenmare re-purchased
14,814,412 ordinary shares of €0.001 each in the capital of
the Company, representing 13.5% of the issued share capital
for a total consideration of $81.6 million. The share buy-back
executes on Kenmare’s intention to increase shareholder
returns after the successful completion of its major capital
projects, supported by robust operational performance and
commodity market strength in 2021.
All ordinary shares acquired by the Company were
subsequently cancelled. Transaction costs associated
with the transaction amounted to $1.5 million and were
recognised as a deduction from equity.
Cash flows
Net cash generated from operations increased by 108% to
$147.8 million in 2021 (2020: $70.9 million).
Investing activities of $60.3 million during the year, a
decrease of 57% compared to 2020 ($139.3 million),
represented additions to property, plant, and equipment.
Shareholder returns in 2021 totalled $98 million. They were
comprised of the final 2020 dividend of USc7.69 per share
(2020: USc5.52) totalling $8.4 million, the H1 2021 interim
dividend of USc7.29 per share (2020: USc2.31) totalling
$8.0 million, and the share buy-back totalling $81.6 million.
Transaction costs of the share buy-back amounted to
$1.5 million.
Lease repayments of $1.4 million (2020: $1.1 million) were
made during the year.
Consequently, Kenmare finished the year with $69.1
million (2020: $87.2 million) of cash and cash equivalents,
representing a decrease of $13.5 million before foreign
exchange movements (2020: increase $4.6 million), primarily
due to the significant shareholder returns made during 2021.
Balance sheet
In 2021 there were additions to property, plant, and
equipment of $60.3 million (2020: $141.4 million). Additions
consisted of $10.8 million (2020: $104.4 million) for the
relocation of Wet Concentrator Plant (WCP) B to the Pilivili
ore zone, $13.9m (2020: $nil) in relation to the investment in
the RUPS, $5.0 million (2020: $nil) in relation to preparing for
the relocation of WCP A to the Nataka ore zone, and
$30.6 million (2020:$27.7 million) on sustaining capital.
Depreciation increased to $63.1 million in 2021 (2020:
$42.3 million), primarily due to higher mining asset costs
relating to the significant investment in new property, plant,
and equipment in recent years and increased depreciation
related to production. The mine closure provision decreased
by $2.2 million in 2021 (2020: $10.9 million increase). This
was due to an increase in the discount rate used to estimate
the closure cost provision. Capital disposals amounted to
$18.0 million (2020: $11.1 million), principally relating to heavy
mobile fleet and other assets no longer operational and
disposed of during the year.
87%
INC REASE IN R EVEN UE
182%
INCREAS E IN EBITDA
51%
EBITDA MARGIN
46 Kenmare Resources plc
Annual Report and Accounts 2021
The Group conducted an impairment review of property,
plant, and equipment at year-end and the key assumptions
of this review are set out in Note 13 of the financial
statements. No impairment provision is required as a result
of this review.
Inventory at year-end amounted to $60.2 million
(2020: $63.7 million), consisting of intermediate and finished
mineral products of $22.2 million (2020: $31.4 million) and
consumables and spares of $38.2 million (2020: $32.3 million).
The increased investment in consumables and spares reflects
increased stock holdings to maintain production in 2022 and
additional holdings to maintain new plant and machinery.
Closing stock of HMC at the end of 2021 was 11,500 tonnes
compared with 50,200 tonnes at the start of the year. Closing
stock of finished products at the end of 2021 was 100,200
tonnes (2020: 145,000 tonnes). The decrease in finished
products at year-end was largely due to increased shipments
in 2021, in response to strong customer demand.
Trade and other receivables amounted to $74.8
million (2020: $29.9 million), of which $66.2 million
(2020: $23.1 million) was trade receivables from the sale of
mineral products and $8.5 million (2020: $6.8 million) was
comprised of prepayments and other miscellaneous debtors.
The increase in trade receivables at year-end was mainly
attributable to an increase in sales in Q4 2021 which was a
record quarter for shipments, with 368,600 tonnes shipped.
All trade receivables are current and an expected credit loss
of $0.4 million (2020: $0.2 million) was recognised during
the year.
Cash and cash equivalents decreased by $18.2 million (2020:
increase of $6.1 million) during the year and at 31 December
2021 amounted to $69.1 million (2020: $87.2 million).
Lease liabilities amounted to $2.2 million (2020: $3.4 million)
at year-end.
Tax liabilities amounted to $4.8 million (2020: $1.6 million)
and trade and other payables amounted to $32.8 million
(2020: $50.1 million). The decrease in trade and other
payables is due to the decreased level of capital projects
creditors and timing of payments.
At year-end, debt amounted to $148.1 million (2020:
$145.8 million). This consisted of debt drawn of $150.0
million and loan interest of $1.9 million, net of transaction
costs of $3.8 million. The weighted average interest rate on
Group debt at year-end was 5.8% (2020: 5.8%).
STRATEGIC REPORT
INSIGHTS FROM TASK FORCE ON CLIMATE-
RELATED FINANCIAL DISCLOSURE (TCFD)
SCENARIO ANALYSIS
In 2021 Kenmare’s management identified and assessed climate-related
risks based on the recommendations of the TCFD, considering two
major risk categories: physical risks, such as the increased probability
of extreme weather events in the future, and transition risks associated
with the move to a low-emission economy and society. We assessed risks
using two temperature scenarios1, comparing a business-as-usual case
with an accelerated decarbonisation pathway, aligned to the goals of the
Paris Agreement. Forecasts out to 2030 and 2050 for each temperature
scenario were reviewed. Overall, management deemed Kenmare’s
strategy and operations as being resilient and noted the existence of
robust mitigation measures designed to manage potential physical and
transitional risks.
Physical risk
Kenmare has identified extreme weather events as a Principal Risk
since 2009, with Mozambique being one of the most affected countries
globally2 by the impacts of extreme weather events. Notwithstanding this
risk, Kenmare considers our controls to be strong, through our weather
monitoring and regular emergency response exercises, as well as our
financial mitigation controls, including insurance cover, and we therefore
mitigate against this risk as far as is possible. Further information can be
found in our Principal Risks section on page 67.
Transition risk and opportunity
Kenmare has a low carbon footprint and an intention to further
decarbonise in line with our ambition to achieve Net Zero by 2040.
This will align with stakeholders’ expectations on decarbonisation
and minimise the risk of potential carbon taxes. Additionally, there are
opportunities to competitively position our products’ low-emissions
footprint with customers.
Demand for titanium metal and rare-earth elements is likely to grow
as the world transitions to a low carbon economy. Given the small
proportion of Kenmare’s existing revenues attributable to sales of
these products, this trend represents a moderate financial opportunity,
providing some potential upside to Kenmare’s cash flow.
In assessing the overall financial impact of climate-related risks on the
business, management have concluded these considerations do not have
a material impact on the financial reporting judgements and estimates,
nor are they expected to have a significant impact on the Group’s going
concern or viability assessment. Further information can be found on
page 67.
Kenmare has set out our full TCFD disclosures in our separate Climate
Strategy Report, which provides additional context and a better
understanding of our overall strategic response to climate change.
1 Temperature pathways used were International Panel on Climate Change (IPCC)
Representative Concentration Pathways (RCPs) 4.5 and 8.5 and the International Energy
Agency (IEA)’s Stated Policies and Sustainable Development Scenarios.
2 Global Climate Risk Index 2021.
Kenmare Resources plc
Annual Report and Accounts 2021
47
FINANCIAL REVIEW CONTINUED
Read more about
the Nataka Pre-
Feasibility Study
on page 32
Read more about
our strategic
priorities on
page 20
Accounting policies
The financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS)
adopted by the European Union; therefore, the Group
financial statements comply with Article 4 of the IAS
Regulation. The parent company financial statements have
been prepared in accordance with Financial Reporting
Standard 101 Reduced Disclosure Framework (FRS 101).
The Group and parent financial statements have also been
prepared in compliance with the Irish Companies Act 2014.
The Group’s significant accounting policies and details
of the significant accounting judgements and critical
accounting estimates are disclosed in Note 1 to the
financial statements.
Financial outlook
Capital expenditure in 2022 is expected to continue
at reduced levels relative to recent years during which
we completed three major capital programmes that
successfully delivered increased production.
Expenditure on development projects and studies is
expected to be approximately $28.5 million in 2022,
including a pre-feasibility study on mining at Nataka
($9.2 million), which represents the future mining for WCP A.
Sustaining capital costs are expected to be approximately
$33 million, which is above the average of recent years
principally due to the scheduled five-yearly dry-dock for our
Bronagh J transshipment vessel.
We will continue to focus on actively managing our
operating cost base in a safe and sustainable manner,
cognisant of the inflationary pressures and other risks
that face our business during the coming year, in order
to minimise unit costs. With supportive product markets,
elevated production levels relative to recent years and
initiatives to minimise unit costs, Kenmare continues to
target becoming a first quartile producer on the industry
revenue to cost curve. This will provide increased cash
flow stability and the ability to remain cash flow positive
throughout the market cycle.
Kenmare’s strategic priorities are to operate responsibly,
deliver long life, low-cost production, and to allocate
capital efficiently, including developing accretive growth
opportunities. We are focused on maintaining a robust
and flexible balance sheet to enable us to deliver all of
these goals, particularly to fund our capital investment
requirements and to continue to make compelling
shareholder returns.
TONY M CCLUSK EY
FI NA NC IA L D IRECTO R
$128.5 m
PROFIT AFTER TAX
USc32.7
2021 D IVIDEND
PER SHARE
227%
INCREAS E IN 2021
DIVIDEND
48 Kenmare Resources plc
Annual Report and Accounts 2021
STRATEGIC REPORT
Kenmare Resources plc
Annual Report and Accounts 2021
49
SUSTAINABILITY STRATEGY
Kenmare’s sustainability mission is to achieve
a balance between the needs of our host
communities, environmental conservation, and
economic returns. In doing so, we aim to deliver
increased value to Kenmare's shareholders and
our host country Mozambique and work towards
the individual missions outlined in each of our
four strategic pillars opposite.
In 2021, Kenmare developed a Sustainability
Strategy, which built on our 17-year track record of
sustainable development, and set out a longer-term
vision with measurable targets.
In developing this strategy, Kenmare considered the
major macro and national sustainability themes that
are likely to both influence Kenmare’s operations
and provide either risks or opportunities that
Kenmare needs to consider.
These themes included:
•
•
•
•
The global focus and urgent need to tackle climate
change and reverse the loss of biodiversity
A growing Mozambican population, adding pressure
to existing socio-economic issues
Understanding the root causes of insurgency in
Cabo Delgado and their applicability to Kenmare
The COVID-19 pandemic and its health and
economic impacts
50 Kenmare Resources plc
Annual Report and Accounts 2021
Safe and
engaged
workforce
Mission
To sustain a safe, healthy and
engaged workforce.
Overview
Protecting the safety of our
employees, suppliers and contractors
is of the utmost importance to
Kenmare. We take a proactive
approach to managing safety,
identifying major risks and sharing
lessons to be learnt to continuously
improve performance.
Our ability to attract, retain and
motivate a diverse, high calibre and
localised workforce is at the heart of
our success and sustainability as a
business.
Material issues
• Workforce health, safety and
well-being
Security
Diversity, inclusion and equal
opportunities
Localisation
Labour practices
Employee skills development
•
•
•
•
•
2025 targets
•
Top quartile ICMM1 TRIFR2
• Measurable reduction in
prevalence of malaria
•
•
•
20% female representation in
Moma Mine workforce
Engaged workforce, as measured
by survey and less than 3%
voluntary turnover
95% of employees having a
development plan and knowing
what they need to do to ready
themselves for their next position
See page 52 to read more about our
safe and engaged workforce
International Council on Mining and Metals
1
2 Total Recordable Injury Frequency Rate
STRATEGIC REPORT
Thriving
communities
A healthy
natural
environment
Trusted
business
Mission
To increase the prosperity of
Kenmare's host communities.
Mission
To create and sustain a positive
environmental legacy.
Overview
Kenmare is privileged to be able to
use its presence in Moma to support
the economic and social prosperity
of our communities, which we take
very seriously. We seek to operate in
a safe, inclusive, and transparent way
and engage openly with communities
associated with our operations and
activities.
Kenmare is committed to listening to
communities’ concerns and priorities,
and constructively resolving any
differences in a transparent manner.
Material issues
•
Community relationships
Socio-economic contributions
Community health and safety
•
•
•
•
Overview
We focus on reducing GHG4 emissions
from our own operations, ensuring
our business is resilient to climate-
related risks, and can capitalise on
opportunities related to the transition
to a low carbon economy.
Minimising or mitigating the impacts
of our operations on the natural
environment and biodiversity
includes our progressive rehabilitation
programme, water use, and
management of waste, air emissions,
noise, and dust.
Material issues
•
Climate change
•
•
GHG emissions
Energy use
Land use and food security
• Water stewardship
Land acquisition and
resettlement
•
•
•
Rehabilitation and closure
Biodiversity and ecological impacts
Tailings storage
• Waste management
2025 targets
•
Increase in operating
expenditure with Mozambique-
based suppliers
•
Positive measurable
improvement in:
− Repayment of loans by
micro-business
− Number of students passing
school Grade 3
− Water quality at community
boreholes
•
Progress against relevant SDGs3
– see Sustainability Fact Book
2025 targets
•
•
•
•
•
Progress against short and
medium term climate targets
Support designation and
protection of Icuria forest as a
sustainable community forest
Balanced post-mining land
use programme providing food
security and biodiversity
Complete implementation of
water re-use infrastructure.
Complete alignment of WAF5
and accounting with ICMM
guidelines
No reportable tailings releases,
no significant findings from six
monthly audit
Mission
To drive improved ethics and
transparency in our business and
supply chain.
Overview
We aim to be a trusted business
and support transparent disclosure,
so we can be accountable for our
actions and commitments. All our
staff recognise their personal and
collective responsibility in upholding
Kenmare's business integrity. Our
high standards are enshrined in our
policies and the laws and regulations
of Ireland, the UK and Mozambique.
We also work with our suppliers
to ensure our high sustainability
standards are upheld.
Material issues
•
Business transparency
•
•
•
•
Anti-bribery and
corruption (ABC)
Protection of human rights
Supply chain management and
standards
Legal and regulatory compliance
2025 targets
•
External Risk Assessment of
ABC risks in business and
supply chain
•
•
85% compliance of on site
suppliers with Kenmare's policies
External Assurance of public
security forces upholding the VPs6
See page 54 to read more about our
thriving communities
See page 56 to read more about our
healthy natural environment
See page 60 to read more about our
trusted business
3 Sustainable Development Goals
4 Greenhouse Gas
5 Water Accounting Framework
6 Voluntary Principles on Security and Human Rights
Kenmare Resources plc
Annual Report and Accounts 2021
51
SAFE AND ENGAGED WORKFORCE
Kenmare’s Health and Safety Policy sets out our commitment to zero-harm, proactive
management of safety risks, and maximising opportunities to enhance employee well-being.
Our performance against these objectives is monitored by the Board and externally audited.
2021 Performance
2022 Targets
88% reduction in Lost Time Injury Frequency Rate (LTIFR)
20% LTIFR improvement against a three-year average (2019–2021)
Began roll out of THRIVE programme
On-going implementation of THRIVE programme
Implementation of Malaria Vector Control programme
Implementation of Malaria Vector Control programme
Achieved 12.5% female representation at Moma Mine
13.5% female representation at the Moma Mine
Implement 2020 engagement survey actions and undertake second
engagement survey
Not Achieved
Achieved
Safety performance
In 2021 Kenmare achieved its lowest ever LTIFR of 0.03 incidents per
200,000 hours worked, an 88% reduction compared to 2020. We had
no work-related fatalities and one recorded Lost Time Injury (LTI) in
January. We achieved one year without a LTI in early January 2022 and
the milestone of eight million hours without a LTI in March 2022. The
improved safety performance reflected a number of communication
and leadership initiatives and improved engagement with contractors.
Malaria
The Moma Mine is situated in a malaria endemic region of Mozambique
and Kenmare is committed to reducing the risk to our workforce and
host communities. The overall incidence rate of malaria amongst
our workforce reduced in 2021, with 1,314 cases throughout the year,
compared to a five-year average of 1,492. The number of workdays lost
to malaria cases was 3,942, which compared to 4,476 for the average
between 2015-2020.
Health and well-being
COVID-19 response
In response to COVID-19 we implemented a range of stringent risk
mitigation measures including on-site screening, social distancing
measures, hygiene protocols, and the wearing of approved masks. We
also provided for the voluntary double vaccination of our workforce and
donated 12,000 vaccines to local communities. During 2021, there were
close to 1,200 positive COVID-19 cases amongst our employees at the
Moma Mine.
HIV/AIDS
In 2021 Kenmare continued to conduct HIV/AIDS awareness initiatives.
Shirts printed with HIV/AIDS awareness messages were distributed
to all employees, along with booklets and leaflets providing general
awareness information, and KMAD volunteers carried out health
education and awareness programmes in our host communities.
A community-agreed programme to spray the inside of every house,
led to a 21% reduction in the prevelance of malaria, despite a 27%
increase in testing. In 2022, Kenmare will conduct an epidemiological
survey with academic experts to develop new tools and management
strategies, which was delayed from 2021 largely due to COVID-19.
Security
During the year, Kenmare’s security strategy was reviewed and
provided a renewed focus on people protection, theft mitigation
and insurgency monitoring. Since June 2021 the number of security
incidents decreased by over 50%. There have been challenges,
however, with the severity of threats and escalating violence used
during attempted theft.
We also invested in building new external navy and police barracks and
commissioned a navy security patrol boat, scheduled for delivery in
2022. This vessel will significantly enhance our sea-based operational
security and mitigate potential insurgency risks.
Highlights
6 m
HOURS
without a Lost Time Injury
52
Kenmare Resources plc
Annual Report and Accounts 2021
5 STAR
NOSA H&S RATING
for sixth consecutive year
27
STUDENTS SPON SO RED
to study at Topuito Technical
Training College on average each year
STRATEGIC REPORT
Read more
about our
record year
for safety on
page 30
Read more
about how
we engage
with our
workforce
on page 18
TOPUITO TECHNICAL
TRAINING COLLEGE
Encarnacão Pastola is 24 years old and has
been a recipient of the mechanical bursary
for female students since 2019. She will
complete her mechanical training course in
mid-2022. She lives in Topuito with a local
family, who are all subsistence farmers.
Before joining the technical college, Pastola
studied in Nampula where she completed
her Grade 12 education. Her main ambition
is to support her younger brothers and to
continue studying. The Kenmare bursary
helps her to pay for educational materials,
photocopies, and food. From time to time,
she also uses her bursary money to help the
family she lives with. She says her challenge
now is to continue learning and also start
gaining some practical work experience.
She enjoys studying the practices of safe
working and she is thankful to Kenmare for
the assistance she has received.
Kenmare Resources plc
Annual Report and Accounts 2021
53
Diversity, inclusion and equal opportunities
2021 KENMARE GENDER REPRESENTATION
(MOMA MINE)
Senior management
Middle management
Professionals / specialists
Junior management
Artisans and maintainers
Operators and assistants
Total
FEMALE
MALE
TOTAL
4 (24%)
4 (9%)
21 (17%)
11 (9%)
45 (10%)
109 (14%)
194 (12.5%)
13 (76%)
41 (91%)
105 (83%)
105 (91%)
419 (90%)
674 (86%)
1,357 (87.5%)
17
45
126
116
464
783
1551
Board composition and diversity
Kenmare’s Board is made up of 10 members, with female representation at 30%. Planned
changes to the Board mean that, following the 2022 AGM, this will increase to 33.3%.
Kenmare is working to increase the number of women in our workforce. At year-end, 12.5%
of our Mine employees were women, compared with 10.6% in 2020, meeting our stretch
gender diversity target for the year. In 2021, women represented 20% of the Executive
Committee, up from 11% in 2020.
To build the pipeline of future talent, Kenmare sponsors on average 27 female students
per year to take a three-year course at the Technical Training College in Topuito and the
first round of sponsored students will graduate in 2022. Kenmare also ensures that 70% of
its Graduate Development Programme candidates are women. We aim to hire local people
wherever possible and, in 2021, 97% of our workforce was Mozambican and 59% were from
the local district or province.
Moma Mine workforce
Total Mozambican %
District/Provincial %
Expatriates %
Total number of employees
2017
93%
51%
7%
1,335
2018
95%
52%
5%
1,422
2019
97%
52%
3%
1,488
2020
97%
57%
3%
1,485
2021
97%
59%
3%
1,551
Labour practices
Kenmare respects the right of all employees to freedom of association and the right
to collective bargaining without interference and freedom from discrimination. Our
commitments are set out in full in our Freedom of Association Policy. Of our Mozambican
workforce, 52% are trade union members and throughout 2021, we enjoyed positive labour
relations with no industrial action or disputes.
Training and development
Investing in training and development is key to equipping our people with the skills and
knowledge they need to perform their work efficiently and safely, and to achieve the
Company’s goals. Kenmare invested $639,000 to provide more than 56,900 hours of
training for our employees at the Moma Mine in 2021.
THRIVING COMMUNITIES
A key outcome of our sustainability programme is the positive social and
economic uplift that Kenmare can bring to our host communities, ensuring the
mine's presence is used as a force for good.
2021 Performance
2022 Targets
Kenmare and KMAD have a more comprehensive set of metrics and KPIs
which are tracked. Go to the Sustainability Fact Book for more information.
Achieve annual procurement target in Mozambique
93% delivery of the Kenmare Moma Development Association
(KMAD) 3-year plan
6% increase in operating expenditure with local suppliers
Additional five contracts with local suppliers
Delivery of first year of KMAD 3-year plan (2022–2024)
Positive improvement on the following metrics:
1) repayment of loans by micro-businesses
2) number of pupils passing Grade 3
3) water quality in community boreholes
Not Achieved
Achieved
Community relationships
Our community engagement and social performance programmes
aim to minimise risk and use our presence to maximise social and
economic opportunities for local people to share in the benefits of the
Moma Mine.
KMAD’s work
In 2021, Kenmare invested $2.3 million in community programmes,
benefitting approximately 27,000 people (6,000 families) living close
to the Namalope operations and 29,600 people (6,700 families) living
close to the Pilivili operations.
Our community team engages with communities and local authorities
and Kenmare funds and oversees the work of KMAD. KMAD designs
and implements development programmes and projects focusing on
three core activities: livelihoods and economic development; healthcare
development; and educational development. More information about
KMAD’s work can be found in the KMAD Annual Report 2021 and the
Sustainability Report.
Having invested significantly in and established infrastructure required to
deliver health and education services, KMAD’s new 2022–2024 strategic
plan reflects local input and focuses less on infrastructure building and
more on capacity development of communities, teachers, medical staff,
local authorities, and other key stakeholders. In addition, it will focus on
improving water and sanitation.
KMAD 3-year strategic priorities (2022–2024)
Strategic pillar
Livelihoods and economic
development
Healthcare development
Educational development
Clean water and sanitation
Highlights
$95.8 m
OPERATING SPEND
with Mozambican suppliers
(2020: $78.2M)
Sustainable
Development Goal
KMAD metrics to assess progress
•
•
•
•
•
•
•
•
•
Revenues generated by KMAD-supported businesses
Direct/indirect participation in value chain
Vulnerable people supported
People with access to healthcare provision
Infant mortality rates
Instances of HIV/AIDS and malaria
Teenage pregnancies
Literacy and numeracy rates amongst girls, vulnerable people, and adults
Children going on to higher education
• Water quality (measured by bacteria levels)
•
Community ownership for water quality
12 k
COVID-19 VACCIN ES
donated to local
communities
$673 k
REVEN UE GENERATED
by KMAD-sponsored
entrepreneurs (2020: $557k)
54 Kenmare Resources plc
Annual Report and Accounts 2021
STRATEGIC REPORT
Read more about
our 30+ year
presence in
Mozambique on
page 27
Read more about
our operating
model on page 28
Socio-economic contributions
Kenmare supports the socio-economic
development of communities and
businesses locally and across Mozambique
in two ways. First, through Kenmare’s
Strategic Sourcing department, which works
to develop a sustainable, resilient local
supply chain through local procurement,
and second, through KMAD’s sponsorship of
micro-businesses and entrepreneurs.
Local procurement
Throughout 2021, Kenmare continued
to identify potential local procurement
opportunities. These included the supply
and repair of gear-boxes, water pumps,
valves, and filters by local suppliers. In
2021, of our 1,074 active suppliers, 460
were Mozambique-based and 614 were
international. Kenmare and our partners
hosted two supplier forums attended by 150
existing and potential suppliers.
Procurement with Mozambican suppliers,
as part of our operating expenditure, grew
by 23% in 2021 to $95.8 million (2020:
$78.2m). As a proportion of spend within our
supply chain, operational expenditure with
Mozambican suppliers reduced from 53%
in 2020 to 49% in 2021 due to an increase
in spend with a specialist international
chartering agent providing logistical support
and shipment of mineral sands. Spend with
suppliers from Nampula province increased
in 2021 by 22% to $16.8 million (2020: $13.8
million), due to increased maintenance
support for higher heavy mineral
concentrate production.
In 2021, KMAD provided interest-free loans
and technical support to 23 businesses,
which generated a combined income of over
$673,000 during the year (2020: $557,000)
providing employment or income to 376
beneficiaries.
Community health and safety
Water and sanitation
Access to clean water has been a major
focus of KMAD’s programmes. In 2021,
Kenmare commissioned an independent
third-party consultant to investigate the
water, sanitation, and hygiene (WASH)
issues in Topuito and Pilivili and an action
plan for the partnership to take forward the
WASH requirements is under discussion.
Access to education and skills
In 2021, KMAD supported the improvement
of sanitary conditions in schools by funding
the refurbishment of the Moma Secondary
School’s changing rooms. KMAD also
constructed two schools in the Pilivili
communities of Caneia and Hori.
Land use and food security
Conservation Agriculture
In 2021, 700 farmers participated in KMAD’s
Conservation Agriculture (CA) project, which
aims to increase farming productivity. The
2021 production season showed that the CA
techniques yielded 49% more crops than
traditional production methods.
Land acquisition and resettlement
Kenmare conducts a comprehensive
consultation process to involve our host
communities and the Government in the
planning process for our operations to
identify and address any potential impacts.
In 2021, the key focus of engagement was
the Namalope West area, an extension of
the existing Namalope mine plan that will
facilitate the transfer of Wet Concentrator
Plant (WCP) A to Nataka, a new ore zone
that Kenmare will begin mining in 2025. The
Namalope West area required an addendum
to the original Environment, Safety and
Health Impact Assessment and a new
Resettlement Action Plan (RAP). During
the development of the RAP, there was a
17% increase in the number of houses that
were required to be relocated and eligible
for compensation, resulting from organic
population growth in that area.
Under the RAP for the Pilivili operations,
which began production in 2020, the final
homes were completed and compensation
packages were finalised, which had been
under negotiation during 2021.
LOCAL SUPPLIER
CASE STUDY
Destiny Limited is a Nampula-based
company that has supplied general goods
and services, such as protective clothing,
stationery and mechanical engineering
services, to Kenmare since 2013. On average,
Kenmare spends $700,000 per year with
this supplier. Over the years, Destiny has
benefitted from many Kenmare-sponsored
training programmes, including training
on ISO certification procedures, finance,
EHS, and quality control of their processes.
Training has helped Destiny to grow its
business and secure loans and financing.
In 2021, Destiny received the Kenmare
certificate for the highest capital investment
($78,000) and the highest number of jobs
created at district level (17 local people).
“The training Kenmare provided was very
helpful. Achieving an ISO9001 and 45000
certification will help us to uphold high
standards of efficiency, production, and most
of all service, which will ultimately position
Destiny for better long-term growth.”
Enoque Gadaga, Destiny’s General Manager
Total procurement by
category 2021
3.5
% 5%
51%
23.4%
8.8%
8.3%
Local districts
Rest of Nampula
Rest of Mozambique
International
Electricity - Mozambique
Fuel – Mozambique
Kenmare Resources plc
Annual Report and Accounts 2021
55
A HEALTHY NATURAL ENVIRONMENT
Kenmare aims to adopt, develop and promote good environmental practice across our
business, in line with the environmental laws and standards of Mozambique, and IFC
Performance Guidelines (2012), as well as to continually improve our environmental performance.
2021 Performance
2022 Targets
Identification of a Greenhouse Gas (GHG) reduction target
Implementing a climate change programme aligned to the
Task Force on Climate-related Financial Disclosures (TCFD)
198 hectares (ha) of land rehabilitated, missing our target by 2 ha
Implementing a Water Accounting Framework that aligns with the
International Council on Mining & Metals (ICMM) principles
Not Achieved
Achieved
Implementation of Rotary Uninterruptible Power Supply (RUPS) delivering
short-term emissions reduction of 12% by 2024, with 2% delivery in 2022
Progress energy efficiency projects
1) 154 ha of land rehabilitated
2) Successful execution of expanded agro-forestry and soil fertility trial
3) Update Environmental Management Plan (EMP) to create balance
of biodiversity and food security
Ongoing maturation of Water Accounting Framework in line with ICMM
principles. Establish accurate current water reuse rate and set 2023
target to increase water reuse rate
We are committed to protecting the natural environment. We do this
by setting challenging targets and monitoring our performance on a
wide range of metrics, including the number of hectares of mined land
we rehabilitate to return to host communities, water use, responsible
waste management, and biodiversity protection. We also recognise the
role all businesses and governments must take in reducing global GHG
emissions and are exploring opportunities to reduce emissions from
our already low carbon intensity operations.
Climate change and GHG emissions
Kenmare’s Scope 1 and 2 emissions for 2021 were 70,437 tCO2e,
which represented an 18% increase compared to 2020 (59,521 tCO2e)
largely due to increased diesel consumption associated with higher
production and additional reporting of fugitive emissions associated
with refrigerant and air conditioning gases. Diesel consumption was
9% higher in 2021 at 24 million litres of diesel (2020: 22 million litres of
diesel) largely due to higher consumption by the Mineral Separation
Plant delivering a 46% increase in total finished products relative to
2020. Carbon intensity, at 0.057 tCO2e per tonne of mined product,
reduced by 20%, demonstrating some improved efficiencies in the
emissions intensity of our operations.
We have begun accounting for our Scope 3 emissions and currently
report against the six categories of: Purchased Goods and Services,
Business Travel, Employee Commuting, Upstream and Downstream
Transportation, and Waste Disposal. The most significant category of
Scope 3 emissions is from the processing of our products downstream,
which we will begin measuring in 2022. In 2021 our Scope 3 emissions
were 104,203 tCO2e, compared to 76,903 tCO2e in 2020, due to
shipping higher volumes of product.
In 2021, Kenmare’s Board approved the Company’s ambition to
achieve Net Zero on its Scope 1 and 2 emissions by 2040, through
decarbonisation of our operations and offsetting residual emissions
which are hard to abate. In 2021, we made progress on the RUPS,
an NPV positive project delivering security of energy to our Mineral
Separation Plant (MSP) as well as associated diesel and carbon
emissions savings. The RUPS began commissioning in Q1 2022. Its full
benefit in terms of emissions saving is during the period of December
to March each year, therefore, the first full calendar year of emissions
savings will be delivered in 2023.
When Kenmare approved the RUPS project in 2020, it was anticipated
to deliver a 15% reduction in diesel and associated emissions. The
fundamentals of the RUPS project have not changed, however, since
we initiated this project Kenmare’s production profile and associated
diesel consumption has grown and therefore the contribution of RUPS
to reducing emissions will be 12%, delivered by 2024.
We are also investigating additional, incremental energy efficiency
projects, with 70+ initiatives identified in total. Several projects have
been identified for further study in the next 12–24 months including
better monitoring and controls on diesel consumption from our heavy
mobile equipment and reducing moisture from the product on the MSP
belt filters, requiring less energy to dry the product later in the process.
Looking ahead to Kenmare’s medium-term emissions profile, studies
are on-going to establish the energy source and method to mine the
Nataka ore body, anticipated to begin in 2025. The higher levels of
slimes in this ore body and greater distances from the MSP will create
a higher energy demand for the mine. If economically feasible, we will
use low-carbon energy sources and mining methods.
Highlights
20%
REDUC TIO N IN
CA RBO N INTENSITY
56 Kenmare Resources plc
Annual Report and Accounts 2021
28 %
IM PROV EMENT
IN WATER EFFICIENCY
1,370
ICURIA
DUNEN SIS TREES PL AN TED
STRATEGIC REPORT
Our long-term ambition is to achieve Net Zero by 2040 (Scope 1
and 2) and therefore we are committed to researching and investing
in low-carbon technologies to enable us to reduce our operational
emissions, where economically feasible.
Disclosures consistent with TCFD recommendations
Climate-related disclosures on governance, strategy, risk
management, as well as metrics and targets, are integrated into
this Annual Report. Given space constraints in this Annual Report,
our 2021 Climate Strategy Report supplements the disclosures on
climate-related governance, strategy, risk management, and metrics
and targets that are made here to address the requirements under the
TCFD Recommendations and Recommended Disclosures. The 2021
Climate Strategy Report provides additional context and a better
understanding of Kenmare’s approach to climate risk management
and our overall strategic response to climate change, including our
Energy and Climate Strategy and the results of a comprehensive risk
and scenario analysis review, which we anticipate updating every
three years.
The Company has not historically measured all Scope 3 GHG
emissions from the processing of our products and therefore does
not report all Scope 3 categories. Kenmare anticipates doing so
from 2022. Otherwise, these disclosures together meet all the TCFD
Recommendations and Recommended Disclosures. An index for the
relevant Recommended Disclosures is set out on page 58. The Climate
Strategy Report can be found at www.kenmareresources.com.
Energy use
Total energy consumption in 2021 from all sources of energy including:-
diesel consumption for heavy mobile equipment, transshipment vessels
and light vehicles; grid energy from Electricidade de Moçambique
(EdM); Dublin office energy; petrol and LPG was 451,489 MWh.
Kenmare continues to source most of its electrical power from
hydro-electricity and supplements this with electricity from
diesel-powered generators. Total electricity used during 2021
was 223,188 MWh (2020: 206,900 MWh), of which over 90% was
renewable energy supplied by EdM directly from the Hidroeléctrica
de Cahora Bassa dam.
Water stewardship
Water is essential to mining operations and Kenmare’s Water
Stewardship Strategy guides the use of water in our operations.
Through KMAD’s work we ensure community access to water
and improved sanitation.
All water extracted for the Moma Mine is in an area identified as low
baseline water stress. In 2021, Kenmare used 0.41 m3 water per tonne
of excavated ore use, a 28% improvement on the previous year. Water
extraction licences for Pilivili and Namalope were not exceeded in 2021.
Kenmare believes transparent disclosure is critical for meaningful
stakeholder engagement and to drive improved water stewardship
across the industry. We are working with the University of
Queensland's Sustainable Minerals Institute to achieve alignment with
the "Towards Sustainable Mining" initiative established by the Mining
Association of Canada, ICMM and the Global Reporting Initiative (GRI).
Scope 1 and 2 emissions (absolute and intensity)
Electricity from renewable and non-renewable sources (MWh)
800,00
600,00
e
2
O
C
t
400,00
200,00
0
2017
2018
2019
2020
2021
t
c
u
d
o
r
p
t
/
e
2
O
C
t
0.08
0.06
0.04
0.02
0
250,000
200,000
h
W
M
150,000
100,000
50,000
0
2017
2018
2019
2020
2021
Scope 1 and 2 greenhouse gas emissions (tonnes CO2)
Total Electricity use from renewable sources (MWh)
Carbon intensity (CO2/tonne of product)
Total Electricity use from non-renewable sources (MWh)
Kenmare Resources plc
Annual Report and Accounts 2021
57
SUSTAINABILITY CONTINUED
TCFD disclosure index
Our full climate-related financial disclosures addressing the four recommendations and 11 recommended disclosures set out by the Task Force
on Climate-related Financial Disclosures (TCFD) are contained in our separate Climate Strategy Report, available at www.kenmareresources.com.
The table below sets out where in our Climate Strategy Report those disclosures are to be found.
GOVERNANCE
CLIMATE STRATEGY REPORT PAGE REFERENCE
a) Describe the Board's oversight of climate-related risks and opportunities
b) Describe management's role in assessing and managing climate-related risks and opportunities
STRATEGY
a) Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term
b) Describe the impact of climate-related risks and opportunities on the organisation's businesses, strategy, and financial planning
3
3
12–18
6–9,
14–15, 17
c) Describe the resilience of the organisation's strategy, taking into consideration different climate-related scenarios, including a 2°C
12, 16
or lower scenario
RISK MANAGEMENT
a) Describe the organisation's processes for identifying and assessing climate-related risks
b) Describe the organisation's processes for managing climate-related risks
12
14–15, 17–18
c) Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisation's overall
risk management
METRICS & TARGETS
a) Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk
management process
b) Disclose Scope 1, 2 and if appropriate Scope 3 greenhouse gas (GHG) emissions and the related risks
c) Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets
12
19
5
10–11
Biodiversity and ecological impacts
In 2021, monitoring of the Biodiversity Management Plan took place
to determine the impact of the Mine on the Primeiras and Segundas
Archipelagos Protected Area. This will be repeated in 2022.
Surface water abstraction from the Mualadi River in 2021 was just
under one million m3, well within the annual abstraction limit of
the Aquatic Ecosystem Management Plan. The plan’s monitoring
requirements will be reviewed in 2022, taking into account this
year’s data.
Waste management
Kenmare is committed to minimising the environmental footprint
associated with our waste management. At the Moma Mine, our 2021
efforts focused on reducing waste, separation of waste at source,
appropriate management of non-recyclable materials, and responsible
management of landfill. Reclamation of recyclable materials diverted
570 tonnes from landfill.
Rehabilitation and closure
Kenmare is a transitory custodian of the land we mine and as a
responsible land manager, we work to minimise our impact on the land,
protect biodiversity and rehabilitate disturbed areas effectively and
efficiently.
In 2021, we rehabilitated 198 hectares (ha) of land, close to our target of
200 ha. We plant indigenous trees to support the restoration of native
biodiversity. Our rehabilitated land included 22 ha of land planted with
52,222 casuarina trees, a future potential commercial forestry crop,
using community nurseries to supply saplings.
READ OUR CLIMATE
STRATEGY REPORT 2021
Read Kenmare's Climate
Strategy, scenario analysis,
climate risks and opportunities
in full and targets to address
climate change.
RESPONSIBLY MEETING
GLOBAL DEMAND FOR
QUALITY-
OF-LIFE
MINERALS
2021 CLIM ATE STRATEGY RE PO RT
58 Kenmare Resources plc
Annual Report and Accounts 2021
STRATEGIC REPORT
CONSERVING AND RESTORING
ICURIA DUNENSIS
Icuria dunensis is a tree species endemic to
Mozambique and is listed as Endangered on the
International Union for the Conservation of Nature
Red List. A forest of Icuria dunensis of 220 ha falls
within the Primeiras and Segundas Archipelagos
Protected Area situated within our license area.
During 2021, Kenmare continued its work in
partnership with the National Conservation Agency
(ANAC) and the National Agrarian Research
Institute (IIAM) to establish this Icuria forest as a
Conservation Area for Sustainable Use.
In addition, we continued our work to restore and
conserve the Icuria forest adjacent to our operations
in Mulimuni. Kenmare is a member of, and the
private sector representative on the Primeiras and
Segundas Archipelagos Protected Area Management
Committee, which is working to establish a
Community Conservation Area. Work is on-going to:
•
•
•
Demarcate the natural limits of the Mulimuni
Icuria forest, in the Namalope area
Promote natural regeneration. Kenmare’s
rehabilitation team planted Icuria saplings,
propagated by Kenmare and community
nurseries, on its outer limits
Assess the status quo of the Icuria forest
and collect seeds for propagation. Kenmare
sponsored a botanical survey by Mozambique’s
Eduardo Mondlane University, which assessed
the ecological status of the Icuria dunensis
forest. The survey discovered new endemic
species within the Icuria forest, and a taxonomic
identification is being carried out at IIAM
Herbarium.
Climate change
Net Zero
AMBIT IO N BY 2040
(SCO PE 1 AND 2)
12%
EMISSIONS REDUCTION TARG ET
BY 2024
>90%
ELECTRICITY SOURCED
FRO M GRID (HYDR0POWER)
Kenmare Resources plc
Annual Report and Accounts 2021
59
TRUSTED BUSINESS
Kenmare is committed to responsible management and oversight of our operations and
business activities, which is essential to mitigating risk and creating long-term value for
all our stakeholders.
2021 Performance
2022 Targets
Completed next phase of supply chain compliance audits
100% of on-site suppliers audited against sustainability questionnaire
Implemented tactical security plan
Implement security strategy
Demonstrated security practices are in conformance with the VPs
through training of internal security forces
Demonstrate security practices are in conformance with the VPs
through training of external security forces
Developed and published Modern Slavery Statement
Not Achieved
Achieved
Sustainability and safety are integrated into all levels of the business,
with key objectives outlined in our policies, standards, strategies,
business, and incentive plans.
The Board’s Sustainability Committee plays a key role in monitoring
this work. It meets five times a year and conducts in-depth discussions
on the strategies for mitigating Kenmare’s top safety and sustainability
risks, progress on internal metrics and public targets, and plans to
continuously improve the Company’s performance.
Business transparency
Kenmare has a values-based culture and our principles, values and
standards set out in our policies guide how we perform our work. Our
overarching policies cover: Business Ethics; Community Engagement
and Investment; Environment; Climate; Freedom of Association;
Health and Safety; Stakeholder Engagement; Anti-Bribery; Diversity
and Inclusion; Employment (Labour Rights); Human Rights; and
Whistleblowing. These policies state the minimum requirements for
employees and those acting on behalf of Kenmare’s business interests.
Moma employees undergo induction or annual refresher training,
where they must show that they have read and understood the
requirements of our Business Ethics Policy and internal code of
conduct and that they will comply with them.
Kenmare subscribes to the Extractive Industries Transparency Initiative
(EITI). In line with UK and Irish law and with the EITI, Kenmare discloses
the payments it makes to governments annually. All payments disclosed
have been made to national governments, either directly or through a
ministry or department of the national government on a cash basis.
Kenmare is also actively involved in the efforts of the Mozambique
branch of the EITI to promote revenue transparency and accountability,
and we report on annual tax and royalty payments. For full details of
Kenmare’s EITI disclosure see our Sustainability Fact Book.
Political engagement
Kenmare maintains positive working relationships with Government
stakeholders at national, regional, district and local levels to ensure
they are aware of and can provide input to our activities and future
plans. Kenmare does not make any form of political donation.
Anti-bribery and corruption
Kenmare has zero tolerance of bribery and we are committed to acting
professionally, fairly and with integrity in all our business dealings
and relationships. Kenmare’s business activities both in Ireland and
in Mozambique are bound by Irish law, including the Criminal Justice
(Corruption Offences) Act 2018. We also comply with Mozambican
law on countering bribery and corruption. Employees receive annual
training on our anti-bribery policy, and during inductions.
Whistleblowing
Kenmare’s whistleblowing policy and procedure provides Kenmare
employees, contractors and suppliers, as well as any member of the
public, with the opportunity to independently and anonymously report
conduct that is in contravention of any of Kenmare’s policies. As the
table opposite outlines, we received three cases via our confidential
whistleblowing line, Safecall, two of which were escalated and are being
further investigated. The third whistleblowing case related to a disputed
late payment of a supplier invoice, which was resolved soon after being
raised.
Protecting of human rights
We are committed to upholding the human rights of all our
stakeholders. We recognise that the nature and context of our
business – based in a remote area in a developing country – exposes
our organisation and supply chain to the potential risk of adverse
human rights impacts. We work to continually assess the extent of this
risk and to take steps to ensure that modern slavery has no place in
Kenmare’s business or supply chain. We have not been informed of, nor
are we aware of, any modern slavery or human trafficking issues in our
supply chain or in our own operations.
Transparency
$27 m
IN WAGES & BENEFITS
for Mozambican staff (2020: $25m)
60 Kenmare Resources plc
Annual Report and Accounts 2021
$26.5 m
PAYMEN TS
to Mozambique Government
(2020: $20m)
$311 m
ECON OMIC VALUE 1
distributed (2020: $335m)
1 Economic value defined as operating costs, employee
wages & benefits, capital spend, payments to government
and community investment in Mozambique.
STRATEGIC REPORT
VOLUNTARY PRINCIPLES ON
SECURITY & HUMAN RIGHTS
Kenmare is a supporter of the UN’s
Voluntary Principles (VPs) on Security and
Human Rights and upholds the principles
by providing annual training on the VPs
and their application to our security
management.
We also engage with our public security
forces on the VPs and in 2021 Kenmare
consulted with them on the application of
the UN’s rules of engagement and principles
of peacekeeping. At the end of 2021 we
were in the process of renegotiating an
updated Memorandum of Understanding,
which reinforces the public security forces’
commitment to upholding the VPs, and
from 2022 provides for external training
and assurance of their understanding of the
implementation of the VPs.
Economic value
distributed, Mozambique ($)
2.3
26.5
Total
$311m
60.3
27.1
195.5
2021 ethics investigations
New issues captured in third party whistleblowing line
Total number of issues investigated (substantiated and unsubstantiated)
Total substantiated cases
Total
3
2
0*
2
2
2021 nature of ethics matters investigated
Concerns about corruption
Total
*Investigations ongoing
Supply chain management
In 2021, we asked the 658 suppliers we
did business with in that calendar year
to reconfirm their adherence to Kenmare
policies and sign a declaration that they
have no conflicts-of-interest.
We also extended and enhanced our
sustainability evaluation and audit process.
Our 62 suppliers who operate on site were
prioritised for audit, as they were deemed
highest risk given their direct exposure
to and influence over our operations.
The supplier sustainability audit revealed
evidence of strong support for and
compliance with Kenmare’s policies as
well as some areas for improvement.
Capacity building programmes have
begun and a further 33 suppliers will be
audited in the first half of 2022.
In early 2022, Kenmare's Board approved a
new Supplier Code of Conduct, which sets
out the minimum standards of responsible
business conduct that we expect our
suppliers to adhere to.
Sustainability supplier audit
From 2022, suppliers who are selected for
tender offers will also go through a forensic
audit to ensure their business is financially
viable and upholds strong business ethics
prior to contract award.
Legal and regulatory compliance
Kenmare’s Internal Audit function reviews
and assures our systems and controls are
reliable and secure, and reports to the
Board’s Audit & Risk Committee.
The Government of Mozambique requires
a registered independent auditor to
conduct annual environmental audits
of the operation and conducts separate
audits of completed Resettlement Action
Plans (RAPs) to ensure commitments have
been implemented. During 2021 Kenmare
submitted regular Pilivili RAP monitoring
reports to the Government. They found all
aspects of the RAP were in conformance
and commended Kenmare for the quality
of the resettlement housing. Kenmare
received zero fines or sanctions during
the reporting period.
90%
MOMA SUPPLIE RS
confirming adherence
to Kenmare policies
29 /62
ON-SI TE SUPP LI ERS
audited on adherence
to Kenmare policies
12
ON-SITE SUPPLIERS
progressing on capacity-
building programmes
Operating costs
Employee wages
and benefits*
Capital spend
Payments to
government
Community
investment
* excludes payroll taxes
Kenmare Resources plc
Annual Report and Accounts 2021
61
which includes rare-earth elements (REEs), both of which
have a role to play in the transition to a low carbon economy.
TiO2 pigment enhances the durability and sustainability
of construction products and buildings through its
resistance to heat, ultraviolet degradation, and weathering.
Consumption of raw materials as well as waste production
is reduced with lower maintenance requirements. In plastics,
TiO2 pigment helps to protect and extend product lifetime,
reducing plastic waste. TiO2 pigment in paint also has a
high refractive capability, reflecting heat generated by
the infrared rays of the sun. When applied to the surfaces
of buildings and cool roofs, paint can therefore also
help to reduce heat build-up and avoid air conditioning
requirements.
Titanium metal represents a small proportion (4–5%) of
the total market for Kenmare’s products, however, demand
for titanium metal in low-carbon technologies such as
geothermal, nuclear, and solar is growing. In addition, REEs
are essential for permanent magnets in wind turbines and
electric vehicle motors. In a scenario where temperature
increases are limited to 1.5°C due to rapid decarbonisation
of the economy, the projected growth for these metals
is 60% for titanium metal and 80% for REE, relative to a
business-as-usual case, where temperature increases
continue their current trajectory.
We will, in due course, examine whether our economic
activities are covered by the delegated acts yet to be
adopted on the remaining four environmental objectives as
well as categorisation of the various metals and minerals
within the mining sector.
SUSTAINABILITY CONTINUED
Read more about
our products
on page 6
Read more about
how we are
mitigating climate
risk on page 67
EU taxonomy disclosures
The EU is committed to strong climate action and the EU
taxonomy1 regime classifies sustainable economic activities
with the aim of promoting investment in them. It defines
an economic activity as environmentally sustainable if it
substantially contributes to achieving one or more of the
following environmental objectives:
•
•
•
•
•
•
Climate change mitigation
Climate change adaptation
The sustainable use and protection of water and marine
resources
The transition to a circular economy
Pollution prevention and control
The protection and restoration of biodiversity and
ecosystems
At the same time, an economic activity must not
significantly harm the other environmental objectives and
must be carried out in compliance with the minimum social
safeguards.
The EU Taxonomy Climate Delegated Act introduces
the first set of technical screening criteria to determine
which activities contribute significantly to achieving two
of the environmental objectives set out above, namely
climate change mitigation and climate change adaptation.
The Delegated Act covers economic activities of about
40% of listed companies in sectors that account for
nearly 80% of direct Greenhouse Gas emissions in Europe.
These sectors include energy, forestry, manufacturing,
transport, and buildings.
On review of the Delegated Act and associated technical
screening criteria, Kenmare concludes that our economic
activities are not currently covered by the categories within
the Delegated Act and are consequently not taxonomy
eligible. The share of taxonomy-eligible economic activities
therefore accounts for 0% of our total sales, as well as 0%
of related capital expenditures and operating expenses.
However, the technical screening criteria notes that mining
is an important sector in terms of avoiding bottlenecks in
the deployment of low-carbon technologies by providing
the critical materials needed, as well as the value chain
link with energy-intensive manufacturing sectors. The EU
technical expert group (TEG) on sustainable finance did not
complete the analysis of this sector due to time constraints
and the complexity of the issues. However, further analysis
is planned on the role the sector plays in terms of enhancing
availability of the critical materials needed for current and
future technologies to create a climate neutral, circular and
resource efficient economy, while sourcing raw materials in a
sustainable and responsible way.
Kenmare’s products include titanium feedstocks, which are
primarily used in the production of titanium dioxide (TiO2)
pigment, and a monazite-rich mineral sands concentrate,
1 Regulation (EU) 2020/852 of the European Parliament and of the Council of June 2020 on the establishment of a framework to facilitate sustainable
investment, and amending Regulation (EU) 2019/2088
62
Kenmare Resources plc
Annual Report and Accounts 2021
STRATEGIC REPORT
Annual Report and Accounts 2021 63
Kenmare Resources plc
PRINCIPAL RISKS AND UNCERTAINTIES
Managing risk is an integral part of our business. A comprehensive process
is in place for assessing and managing risks associated with business and
strategic corporate decisions. Through this process, significant risks faced
by the Group are identified, evaluated and appropriately managed.
Risk management framework
An overview of the risk management and internal control framework, responsibilities within it and the relationship between functions is illustrated
below. While the Board is ultimately responsible for risk management within the Group, it has delegated responsibility for the monitoring of the
effectiveness of the Group’s risk management and internal control systems to the Audit & Risk Committee. The Board and Audit & Risk Committee
receive reports from the Executive Committee on the key risks to the business and the steps being taken to mitigate such risks. The Audit & Risk
Committee reviews the principal risks and uncertainties.
BOARD OF DIRECTORS
AUDIT AND RISK COMMITTEE
Operations
Executive Committee
Moma Mine
Executive Directors
Internal Audit
Maputo office
Senior Management
1st line of defence
•
Operational management has
ownership, responsibility and
accountability for directly
assessing, controlling and
mitigating risks.
•
Provided assurance to senior
management and Executive
Directors.
2nd line of defence
•
The Board of Directors has
ultimate responsibility for risk
management. The Board receives
reports and updates from the
Board Committees and the
Executive Directors on the key
risks facing the business and the
steps taken to manage these risks.
•
The Executive Committee
monitors and facilitates the
implementation of effective
risk management practices by
departmental management and
ensures appropriate risk reporting
up and down the organisation.
3rd line of defence
•
The Board delegates its risk
management responsibilities to the
Audit & Risk Committee, whereby
the Audit & Risk Committee
monitors the effectiveness of the
Group’s risk management and
internal control systems.
•
Internal audit provides assurance
to the Board on how effectively
the organisation assesses and
manages its risks. It includes
assurance on the effectiveness
of the first and second lines of
defence.
Risk assessment process
The Group’s risk assessment process is based on a co-ordinated,
Group-wide approach to the identification and evaluation of risks and
the manner in which they are monitored and managed. This process
begins with a bottom-up approach involving managers from the
Mine’s departmental areas who, through a programme of workshops,
regularly perform a detailed risk review to update the departmental
risk registers. In assessing the potential impact and likelihood of each
risk identified, management considers the existing key controls and
evaluates the risks in terms of potential residual impact. A standard
risk-scoring matrix is used to ensure consistency in reporting across
all areas.
Departmental risk registers are consolidated into a Group Risk
Register. The Executive Committee provides input to ensure that there
is a top-down view of the key risks facing the Group. This includes
consideration and assessment of any newly identified emerging
risks. Following a review of the Group Risk Register by the Executive
Committee, the principal risks identified for the Group and their
mitigations are submitted to the Audit & Risk Committee and Board for
review and approval.
As part of this review and approval process the Audit & Risk
Committee provides a robust assessment of the emerging and
principal risks faced by the Group. This is achieved by offering
alternative viewpoints and challenging risk scoring assumptions as
appropriate.
Risk appetite
Exploration for and the development of Mineral Resources, together
with the construction and development of mining operations in
Mozambique, are activities that involve high risk. Kenmare makes
informed decisions prior to engaging in any associated activities which
64 Kenmare Resources plc
Annual Report and Accounts 2021
pose a significant risk to the Group. Where activities are undertaken,
appropriate mitigations are put in place commensurate with the degree
of risk that is faced. For some risks, such as country risk and industry
cyclicality, these risks are inherent to the Company’s business and
there is a limit on the level of mitigation that can be put in place given
the single jurisdiction and the single industry in which the Group
operates. For catastrophic and operational risks, our risk appetite for
areas which have safety implications is very low.
Emerging risks
Kenmare considers emerging risk as part of the risk assessment
process within our risk management framework. An emerging risk is
one that could potentially impact the Group; however, the risk is not
yet fully understood, limiting our ability to fully assess the likelihood
and impact of such risks. Such risks are closely monitored, enabling
us to implement mitigations when necessary or appropriate. Emerging
risks for the Group include geo-political developments that could
impact our supply chain; our ability to make and complete sales of
our products (including as a result of sanctions and disruptions to
international shipping); and/or our customer markets. In particular, the
conflict in Ukraine has become a key emerging risk for the Group with
the potential to have a broad effect on our business. While it appears
that the conflict could impact demand for our products and our ability
to make and complete sales, further implications of the conflict (not
currently understood or anticipated) may emerge.
TASKFORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES
In line with regulatory reporting requirements, Kenmare used
two alternate warming scenarios to evaluate climate-related
risks applicable to our operations and business model. These
included both physical risks and those related to the transition
to a low carbon economy, such as policy, regulatory, technology,
market and reputational risks.
We have set out our full climate risk analysis in a separate online
Climate Strategy Report, however, the outcome of this analysis
underlines the findings of our overall risk evaluation process,
confirming that extreme weather events and in particular
cyclones and storms present the most material climate-related
risk to our business. The controls in place to mitigate this
risk are set out on page 67. No other climate-risks have been
identified as a principal risk and uncertainty.
Principal risks and uncertainties
Under Section 327(1)(b) of the Companies Act 2014 and Regulation
5(4)(c)(ii) of the Transparency (Directive 2004/109/EC) Regulations
2007 and UK Disclosure and Transparency Rule 4, the Group is
required to give a description of the principal risks and uncertainties
that it faces. These risks are similar to those faced by many companies
in the mining industry. A description of the principal risks and
uncertainties, together with any mitigating factors and controls, are set
out in the table on pages 66 to 71. This table is not prioritised nor is it
an exhaustive list of all risks that may impact the Group, but rather the
Board’s view of principal risks at this point in time. There are additional
risks which are not yet considered material or which are not yet
known to the Board or fully understood but which may assume greater
importance in the future. The Loan default risk identified in prior years
has been removed as it is no longer regarded as a principal risk and
uncertainty.
STRATEGIC REPORT
Risk heat map
>
h
g
H
i
5 1
4
2
7
9
6
8
13
t
c
a
p
m
I
3
5
10 12
3
14 15
4
11
16
2
w
o
L
<
1
1
Strategic
1 Grant and maintenance of licences
2 Country risk
Operational
3 Geotechnical risk
4 Severe weather events
5 Uncertainty over physical characteristics of the ore body
6 Power supply and transmission risk
7 Asset damage or loss
8 COVID-19
9 Health, Safety and Environment (HSE)
10 Mineral Resource statement risk
11 IT security risk
12 Development project risk
Financial
13 Industry cyclicality
14 Customer concentration
15 Foreign currency risk
16 Aggressive cost inflation
Kenmare Resources plc
Annual Report and Accounts 2021
65
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
STRATEGIC
DESCRIPTION
POTENTIAL IMPACT
HOW WE MANAGE THE RISK
RISK TREND
Grant, maintenance and renewal of licences
Kenmare assesses
the risk as unchanged
from the previous year.
The Namalope West
Resettlement Action Plan
(RAP) has been approved
by authorities.
The overall risk remains
unchanged from the
previous year.
The Group’s mining and
processing activities
require licences,
concessions and
approvals to be in place in
the relevant mining areas
in northern Mozambique.
The Group may not be
granted, may not maintain,
or may not obtain a
renewal of necessary
licences, concessions
and approvals for it to
operate in accordance
with its plans. In addition,
the costs associated with
obtaining, maintaining
or renewing a licence,
concession or approval
may be higher than
expected.
Country risk
The Group’s operations
are located entirely in
Mozambique. There may
be potential adverse
operational or financial
impacts from changes in
the political security or
economic circumstances
in Mozambique; in
addition, changes
in, or disputes over,
the regulatory or tax
regimes in Mozambique
(including changes in
the interpretation or
application of those
regimes to the Group)
could also have an
adverse impact.
A failure to obtain, maintain
or renew a necessary licence,
concession or approval would
significantly affect the Group’s
ability to operate, its ability
to generate cash and the
valuation of the Group’s assets.
In addition, if the cost associated
with obtaining, maintaining or
renewing a licence, concession
or approval are higher than
expected, the financial
performance of the Group may
be adversely affected.
Kenmare has operated in
Mozambique since 1987; however,
it remains subject to risks similar
to those prevailing in many
developing nations, including
economic and social instability,
the risk of insurgency, changing
regulatory or tax regime (or the
application thereof) or disputes
with the authorities in relation to
the same.
These risks may cause significant
disruption to the operation or
cause an increase in costs in
order to ameliorate their impact;
increases in taxes could have an
adverse effect on the Group’s
financial results.
•
Robust foundation agreement (Mineral
Licensing Contract and Implementation
agreement) provides rights to be issued a
number of licences and approvals.
• Maintenance of existing licences in good
standing.
•
•
•
•
•
•
•
•
•
•
The Group continually demonstrates
its commitment to the future long-term
development of the Mine.
The Group maintains a positive working
relationship with the Government of
Mozambique through regular contact,
promoting open and honest two-way
communication.
Engagement with affected local communities
to work towards obtaining the required
environmental approvals.
Binding foundation agreements are in place
with legal and fiscal stability clauses and
international arbitration provisions.
The Group maintains a positive working
relationship with the Government of
Mozambique, including the Ministry of
Resources and Energy (MIREME) and the tax
authorities.
Kenmare monitors closely any developments in
the national environment.
Frequent engagement with the Mozambique
Defence Department, navy marines, and police.
In-house monitoring of activities and on-going
improvement of security strategy.
On-site diesel storage and power generation
system sufficient to maintain processing and
export activities in place to mitigate electrical
supply infrastructure impacts.
Internal and external compliance reviews of
Kenmare’s tax administration.
Trend key
Risk is increased
Risk is unchanged
Risk is decreased
N
New risk
66 Kenmare Resources plc
Annual Report and Accounts 2021
STRATEGIC REPORT
OPERATIONAL
DESCRIPTION
POTENTIAL IMPACT
HOW WE MANAGE THE RISK
RISK TREND
Geotechnical risk
An external berm failure
at the Moma Mine could
result in a major slimes/
water spill into adjoining
valleys, potentially
impacting on local
communities and/or the
operating assets.
Severe weather events
Climate change and
the location of the
Group’s operations on
the Mozambican coast,
gives rise to the risk
from cyclone activity and
severe wind/flooding.
Such events pose risk
to the safety of mine
staff, contractors, and
visitors, as well as to
physical damage to the
operational assets. For
further information on
the climate-related risks
Kenmare faces, see our
Climate Strategy Report.
The nature of dredge mining
gives rise to the creation of
artificial ponds and a potential
for failure of berm systems that
surround the ponds. A failure of
a berm could cause loss of life,
damage to the operating assets
and cessation of the operation
of the Wet Concentrator Plants
(WCPs) for a prolonged period.
•
•
•
•
•
•
Permanently employed staff with geotechnical
engineering skills.
Prudent geotechnical design and controls.
Daily inspections.
Interlocking external audits from two separate
and independent geotechnical consultants.
Safety/diversion berm erected to protect
downstream from pond berm failure.
On-going installation and monitoring of pipes
on ponds to control excess water.
In extreme weather
circumstances, there is a risk
of loss of life. There is a risk of
physical damage to the operating
assets of the Mine, which may
result in an inability to operate
the Mine. The probability of
adverse weather events is
considered low. They are also
foreseeable, thereby allowing for
disaster planning. Less severe
adverse weather could impact
supply logistics to and from
the Mine.
• Mine and associated infrastructure designed to
•
•
•
•
•
•
appropriate cyclone rating.
Designated cyclone-proofed buildings at
the Mine.
On-going weather/cyclone monitoring.
Cyclone readiness plan covering land-based
and marine assets.
Disaster management programme.
Insurance cover.
Adequate stocks of materials and supplies
on site.
There have been no
significant changes to the
assessment of the risk.
There have been no
significant changes to the
assessment of the risk.
Uncertainty over and/or changes in physical characteristics of the ore body
Ore body characteristics,
including slime levels, may
not conform to existing
geological or other
expectations or may have
an unanticipated effect
on production. Ore body
characteristics, including
slime levels, in some of our
ore bodies may differ from
those previously mined
and may require changes
in mining methods and/
or additional plant and
equipment.
Physical characteristics of an ore
body, including divergence from
expectations, may cause reduced
production levels or a necessity
to incur increased operating
or capital costs to maintain
production at the intended level.
•
•
•
•
•
•
•
Extensive sample testing.
Extensive ore body drill programme including
introduction of cone penetration testing
to measure ore body properties relating to
hardness.
Test pits/trenching implemented.
Growing expertise in managing slimes and in
managing unexpected mining conditions.
Dry mining operations.
Improved throughput modelling.
Pre-Feasibility Study for Nataka considering
the impact of slimes on mining, processing, and
tailings emplacement.
There have been no
significant changes to the
assessment of this risk.
Kenmare Resources plc
Annual Report and Accounts 2021
67
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
OPERATIONAL (continued)
DESCRIPTION
POTENTIAL IMPACT
HOW WE MANAGE THE RISK
RISK TREND
On-going investment by Electricidade de
Mocambique (EdM) in power supply and
transmission infrastructure.
On-site diesel-powered generators to maintain
part of the operations in the event of a loss of
grid power.
Robust and open relationship with EdM, based
on long-term power supply agreement.
Company’s Synchronous Condenser (Dip
Doctor) reducing the effect of grid power
instability.
Construction of the Rotary Uninterruptible
Power Supply (RUPS) project, with the aim
of being operational during 2022, providing
increased power reliability while maintaining the
advantages of low-cost hydroelectrical power.
There have been no
significant changes to
the overall assessment of
this risk.
It is expected that the
RUPS project, together
with the EdM relationship
and related infrastructure
investments, will reduce
this risk in the future.
Programme of inspections and planned
maintenance with a team of specialist engineers.
Standard operating procedures.
Fire detection and suppression systems.
Annual external risk assessment and
compliance audit.
Insurance cover.
Carrying sufficient strategic spares to continue
operations.
This risk sees a marginal
increase in terms of
likelihood, as the Mineral
Separation Plant is
expected to run closer
to full capacity. Related
incidents therefore have
more of an impact on
the Mine.
COVID-19 management plan, which includes an
on-site PCR testing facility. Proactive workforce
testing and isolation protocols for new/returning
employees prior to commencing work.
•
Completed vaccination programme during 2021.
The risk presented by
COVID-19 has decreased
as a result of the successful
mitigations, both at
our Mine and globally
(including testing, vaccines
and treatments), which
have reduced the likelihood
of a material impact on
our operations. However,
management remain
cognisant of the threat
posed by new variants.
•
•
•
•
•
•
•
•
•
•
•
•
Power supply and transmission risk
The Mine is reliant on
the delivery of stable
and continuous electric
power from the Cahora
Bassa Dam via a power
transmission line to the
Mine.
Significant disruption to, or
instability in, the power supply at
the Mine could have a material
and adverse effect on the ability
to operate the Mine or to operate
it in the lowest cost manner,
thereby adversely affecting
production volumes and/or
operating costs.
An occurrence of these risks
could result in damage to, or
destruction of, key mining,
processing or shipping facilities
at the Mine, such as the
transshipment vessels, the jetty
or product conveyor belt. Loss of
such key assets could result in
disruption to production and/or
shipping, significant replacement
cost and consequential monetary
losses.
Higher levels of COVID-19 in our
workforce and contractors could
result in reduced operations or
delay in execution of projects due
to staff being unable to work.
Asset damage or loss
The operation of a large
mining and processing
facility carries an inherent
risk of technical failure of
equipment, fires and other
accidents. In addition, the
assets are exposed to the
risk of theft.
COVID-19
COVID-19 represents
a risk to all personnel
involved in our operations
and to our host
communities. COVID-19
could have an impact
on the health and
availability of workforce
and contractors, and the
health of the surrounding
community.
Trend key
Risk is increased
Risk is unchanged
Risk is decreased
N
New risk
68 Kenmare Resources plc
Annual Report and Accounts 2021
STRATEGIC REPORT
OPERATIONAL (continued)
DESCRIPTION
POTENTIAL IMPACT
HOW WE MANAGE THE RISK
RISK TREND
Health, Safety and Environment (HSE)
The operation of a large
mining and processing
facility carries a potential
risk to the health and
safety of the workforce,
visitors and the local
community. Incidents
carry potential for
environmental damage to
surrounding areas.
The improper use of machinery,
technical failure of certain
equipment or failure to meet
and maintain appropriate
safety standards could result in
significant injury, loss of life or
significant negative impact on the
surrounding environment and/or
communities.
In addition, it is possible that
a failure to comply fully with
applicable regulations exposes
the Mine to the risk of fines or
other sanctions by a relevant
regulator.
Mineral Resource statement risk
A material misstatement
in the Ore Reserves
and Mineral Resources
statement.
A material misstatement could
adversely impact the Company’s
valuation.
IT security risk
The Group is dependent
on the employment of
advanced information
systems and is exposed
to risks of failure in
the operation of these
systems. Further, the
Group is exposed to
security threats through
cybercrime.
A failure in these systems could
lead to:
•
Disruption to critical
business systems
•
•
Loss or theft of confidential
information, competitive
advantage, or intellectual
property
Financial and/or
reputational harm.
•
•
•
•
Prioritisation of HSE by management.
Appropriately trained staff.
Standard operating procedures.
On-going hazard identification programme.
• Health and Safety awareness programme
implemented for the Company and community.
• Mine clinic and evacuation procedures for staff.
There have been no
significant changes to
the overall assessment of
this risk.
•
•
•
•
•
•
•
•
•
•
Community investment and programmes
including health clinic and education
programmes.
Compliance with applicable HSE standards and
legislation.
JORC-compliant statement prepared by
competent persons.
On-going drilling and sampling programme.
On-going reconciliation of mining results to
Mineral Resource models.
There have been no
significant changes to
the overall assessment of
this risk.
Analysis by external certified IT specialists of
Group information systems to ensure reliability
and protected to top information security
standards.
Third-party specialists provide network
assurance.
On-going strategic and tactical efforts to
address the evolving nature of cyber threats.
Increased user training and IT security
awareness.
Increased management attention, including
additional internal and external resources.
The additional focus
by management and
increased resources is
regarded as addressing
heightened perception of
risk. Therefore, the overall
assessment of this risk
remains unchanged.
Kenmare Resources plc
Annual Report and Accounts 2021
69
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
OPERATIONAL (continued)
DESCRIPTION
POTENTIAL IMPACT
HOW WE MANAGE THE RISK
RISK TREND
The impact of potential delays
and overruns of development
projects is currently limited as
the three projects designed
to increase production are
operational, with the exception
of the positive displacement
pumping (PDP) system at Pilivili.
In relation to existing development projects:
•
•
•
•
Appropriate management of PDP piping
delivery.
Commissioning plans for PDP pump system.
Alternative trucking system in place.
Insurance cover in place.
In relation to future development projects:
Given that there are
no new active major
development projects , the
overall assessment of this
risk remains unchanged.
•
•
Project appraisal and design process, including
Pre-Feasibility and Feasibility Studies.
Owner’s team and use of industry experts
with track records of delivery of development
projects for Kenmare.
Development project risk
The Group’s long-term
plan is to deliver a
significant increase in
production capacity
of ilmenite plus co-
products through the
implementation of a
number of development
projects. In addition, our
large licence area means
that from time to time our
plants need to be moved
to different parts of the
ore body, which will entail
further development
projects. It is currently
planned that WCP A will
be moved in 2025 to
the Nataka ore zone. All
development projects
include the risk of taking
longer and costing more
than anticipated.
FINANCIAL
DESCRIPTION
POTENTIAL IMPACT
HOW WE MANAGE THE RISK
RISK TREND
Industry cyclicality
The Group’s revenue
generation may be
significantly and adversely
affected by declines in the
demand for and prices
of the ilmenite, zircon
and rutile products that
it produces. During rising
commodity markets, there
may be upward pressure
on operating and capital
costs.
Unfavourable product market
events beyond its control and/
or pressure on operating or
capital costs may adversely affect
financial performance.
•
•
•
•
Global portfolio of customers.
Long-term contracts with certain key
customers.
On-going cost control and disciplined financial
management.
Industry analysis to develop suitable
assumptions in our commodity price forecasting
used for planning purposes.
There have been no
significant changes to
the overall assessment of
this risk.
Trend key
Risk is increased
Risk is unchanged
Risk is decreased
N
New risk
70 Kenmare Resources plc
Annual Report and Accounts 2021
STRATEGIC REPORT
FINANCIAL (continued)
DESCRIPTION
POTENTIAL IMPACT
HOW WE MANAGE THE RISK
RISK TREND
Customer concentration
The customer base for the
Group’s ilmenite, zircon,
rutile and concentrate
products is concentrated.
The Group’s revenue generation
may be significantly affected if
there ceases to be demand for
its products from major existing
customers and it is unable to
further expand its customer base
in respect of the relevant product.
Foreign currency risk
The Group’s revenues
are entirely denominated
in US Dollars, whereas
costs are denominated in
a number of currencies
including South African
Rand, Mozambican
Meticais, Euros and US
Dollars.
The nature and location of the
Mine and the intrinsic volatility
of exchange rates give rise to an
on-going significant probability
of occurrence of an adverse
exchange rate fluctuation. The
impact of such a fluctuation can
be large across calendar years.
•
Active management of existing customer
relationships and development of new
customers.
• Market intelligence to track developments in
customer demand.
•
•
•
•
Development of mineral sands concentrate as
an additional co-product stream with a different
customer base.
Group debt is denominated in US Dollars.
A natural hedge exists between revenue
receipts and US Dollar-denominated costs.
A further natural hedge exists between the
value of US Dollars and commodity prices over
the long-term. When commodity prices increase,
the Group’s non-US Dollar-denominated costs
tend to increase in US Dollar terms. When
commodity prices decrease, the Group’s non-US
Dollar-denominated cost tend to decrease in US
Dollar terms.
There have been no
significant changes to
the overall assessment of
this risk.
There have been no
significant changes to
the overall assessment of
this risk.
Aggressive cost inflation
Inflationary related
increase in operating
or capital costs above
expected inflation rates.
Aggressive inflation could
have a negative impact on the
Group’s cash cost per tonne and
profitability.
•
Fixed price supply agreements where possible.
N
• Multi-year labour agreements.
Kenmare Resources plc
Annual Report and Accounts 2021
71
GOVERNANCE
74 Governance at a glance
76 Board of Directors
78 Executive Committee
80 Corporate governance report
92 Nomination Committee report
96 Sustainability Committee report
98 Audit & Risk Committee report
104 Remuneration Committee report
106 Annual report on remuneration
118 Remuneration policy report
123 Directors’ report
The number of female empl oyees at t h e
Moma Mine increased by 18% in 202 1.
By year-end, 12.5% of the workforce
was fe mal e, up f rom 10.6% i n 2020.
PAUL A AGOSTINHO
ELECTRI CA L MAI NTAINER
GOVERNANCE AT A GLANCE
OUR BOARD
How the composition of our Board allows us to deliver long-term
sustainable value for us and our stakeholders.
Length of tenure
Composition
0–3 years
3–6 years
6+ years
3
2
Board gender diversity
Male
Female
3
5
7
2
1
1
Executives
Chair
Non-Executive
Directors
Independent
Non-Executive
Directors
d
n
a
e
r
I
l
1
A
S
U
1
l
i
z
a
r
B
1
k
r
a
m
n
e
D
6
Nationality
4
3
i
m
o
d
g
n
K
d
e
t
i
n
U
Skills matrix
Kenmare requires that each Director is recognised as a person of the highest integrity and standing, both personally and professionally. Each
Director must be ready to devote the time necessary to fulfil his or her responsibilities to the Company in accordance with the terms and
conditions of his or her letter of appointment. Each Director should have demonstrable experience, skills and knowledge that enhance Board
effectiveness and will complement those of the other Board members. This is to ensure an overall balance of experience, skills and knowledge and
to create long-term sustainable value for the Company and its stakeholders.
Area
Executive management
Qualifications, skills and experience required
to create long-term sustainable value
No. of Board members
Experience as a Director, CEO, CFO or other office holder or similar in
medium to large entities.
Specific industry knowledge
Senior executive, advisory or Board experience in a mining or resources
organisation.
Accounting & Finance
Sustainability
Legal & Governance
Senior executive experience in financial accounting and reporting,
or business development or Board Remuneration and Nomination
Committee experience.
Experience and knowledge of working on sustainability activities directly
or as part of operational responsibility.
Experience in organisations with a strong focus on and adherence to
governance standards.
International Experience
An understanding of the complexities of operating in foreign
jurisdictions.
74 Kenmare Resources plc
Annual Report and Accounts 2021
GOVERNANCE
RESPONSIBLY MEETING GLOBAL DEMAND
How the Board has supported the Group to responsibly meet global demand for quality-of-life mineral sands.
DEVELOPING
OUR CULTURE
ENGAGING WITH
OUR STAKEHOLDERS
SUPPORTING OUR OPERATIONS
TEAM TO ACHIEVE OUR GOALS
Our values of integrity, commitment,
accountability, respect, and excellence
underpin everything we do and create
the Kenmare culture. This means that
we care for and nurture the well-being
not only of our employees but also of the
environment and our host communities.
The Board receives regular briefings
on relations with the workforce and the
community to ensure that policy, practices,
and behaviour throughout the business
are aligned with the Group’s purpose,
values and strategy. Due to COVID-19
restrictions in 2021, it was not possible to
visit the Mine but, in 2022, the Board had
the opportunity to travel to Mozambique.
When there, one of the Board's priorities
was to meet with our employees and
host communities. The Board met with
a community women's group and visited
community projects in Mutiticoma and
Topuito as well as reviewing social aspects
of mine planning. Our recent Board
evaluation found that the Board and
management had a deep commitment to
“do the right thing”. This is instilled in our
people through our Business Ethics policy.
Please see page 15
for more information on our
vision, strategy, values, and purpose
The Sustainability Committee actively
engages with management and provides
advice and oversight on matters such
as health and safety, environment,
community, security and human rights,
all of which impact on the Group’s
relationships with stakeholders. Its
meetings include in-depth discussion on
strategies to ensure that both we and
our stakeholders understand not only the
context and impact of our operations but
also the benefits. The Committee also
reviews progress on internal sustainability
metrics and public targets which provide
an incentive to continuously improve
engagement.
Please see pages 18 to 19
for more information about our
stakeholder engagement
Please see pages 96 to 97
for more information on
Sustainability Committee’s
activities during 2021
The Board provides feedback and
constructive challenge to management in
relation to operational performance and,
through the Company’s remuneration
structure, sets targets to incentivise
the executives to reach and maintain
production targets and achieve market
guidance. The Remuneration Committee
reviews remuneration and related policies
applicable to the wider workforce,
ensuring that this is taken into account
when setting the policy for executive
remuneration. The aim across the Group
is to provide a reward package that is
aligned to shareholders’ interests, supports
the achievement of the Company’s annual
and strategic objectives, is competitive
against the appropriate market and is
consistent with our focus on performance
and our core values.
Please see pages 104 to 105
for more information on the
Remuneration Committee's activities
Please see pages 118 to 122 for
information on our
current remuneration policy
Kenmare Resources plc
Annual Report and Accounts 2021
75
BOARD OF DIRECTORS
R
N
S
A
N
R
ST EVEN MCTI ERNAN
CH AIRMAN AND NO N-EXECUTIVE DIRECTOR
MICHAEL CARVILL
MANAGING DIRECTOR
TONY MCCLUSKEY
FINANCIAL DIRECTOR
Age: 70 Appointed: 2013
Skills and experience: Steven McTiernan has
over 45 years of diverse natural resources industry
and investment banking experience with Amoco,
BP, NatWest Markets, CIBC and Chase Manhattan
Bank, where he was Senior Vice President. He
served as Senior Independent Director of Tullow Oil
plc and was a Non-Executive Director for 11 years
until January 2013. He was an Independent Director
at First Quantum Minerals Ltd until June 2012, and
was an Independent Director at Songa Offshore
SE until January 2014. He was Non-Executive
Chairman of Hurricane Energy plc until 2021.
He received an MA in Natural Sciences from the
University of Cambridge.
External appointments: None
Age: 62 Appointed: 1986
Skills and experience: Michael Carvill is a Fellow of
the Institute of Engineers of Ireland (FIEI). He holds
a BSc in Mechanical Engineering from Queen’s
University Belfast and an MBA from the Wharton
School of the University of Pennsylvania. He worked
as a contracts engineer in Algeria and as a project
engineer at Tara Mines, Ireland.
External appointments: Michael is a director
of a number of privately-owned property and
construction companies in Ireland and the UK.
Age: 57 Appointed: 1999
Skills and experience: Tony McCluskey has
worked with Kenmare since 1991. He was originally
appointed as Company Secretary and Financial
Controller, before becoming Financial Director in
1999. He holds a Bachelor of Commerce degree
from University College Cork and is a Fellow of
the Institute of Chartered Accountants. Before
joining Kenmare, he worked for a number of years
with Deloitte as a Senior Manager in Dublin. He
has worked on a part-time basis as a lecturer with
Chartered Accountants Ireland and has worked
overseas.
External appointments: None
G RA HA M M ART IN
NO N-EX ECU TI VE DI RECTOR
AN D S ENI OR I NDEPE NDENT DI RECTOR
M ET TE DO BE L
NO N-EX ECU TI VE DI RECTOR
Age: 68 Appointed: 2016
Age: 54 Appointed: 2022
Skills and experience: Graham Martin has over 30
Skills and experience: Mette Dobel is currently
years’ experience in the global natural resources
Regional President, Europe, North Africa, Russia/CIS
sector with a particular focus on Africa. From
for FLSmidth, an engineering, equipment and service
1997 to 2016 he served as an Executive Director
solutions provider to the global mining and cement
of Tullow Oil plc, an oil and gas exploration,
industries. She was previously a Director of FLSmidth
development and production company listed on the
A/S, and FLSmidth & Co. A/S which is listed on
London, Irish and Ghanaian stock exchanges. Prior
Nasdaq OMX Exchange in Copenhagen. She holds
to Tullow, he was a partner at the US energy law
a Masters in Engineering and a Bachelor of Science
firm Vinson & Elkins LLP, and at the UK corporate
(Commercial) from Københavns Teknikum.
law firm Dickson Minto WS. He holds a degree
in Law and Economics from the University of
Edinburgh.
External appointments: Mette is Regional
President, Europe, North Africa, Russia/CIS for
FLSmidth and is a Director of FLSmidth Rusland
External appointments: Graham is Non-Executive
Holding A/S, FLSmidth Real Estate A/S and Matr.
Chairman of United Oil & Gas plc, an AIM listed oil
nr. 2055 A/S, all of which are Danish incorporated
and gas company.
members of the FLSmidth group of companies.
S
A
N
A
S
R
EL A IN E DORWARD-KING
NON- EXECU TIV E DIR ECTOR
CLEVER FO NSECA
NON-EXECUTIV E DIRECTOR
SAMEER O UND HAK AR
NON-EXECUT IVE DIREC TOR
D EI RDR E S OM E RS
NO N-EX ECU TI VE DI RECTOR
A ND RE W WE BB
NO N-EX ECU TI VE DI RECTOR
AN D C HA IR D ESI G NAT E
Age: 64 Appointed: 2019
Skills and experience: Elaine Dorward-King has over
30 years’ experience in the mining, chemicals and
engineering industries, including the mineral sands
sector. She served as Executive Vice President of
Sustainability and External Relations for Newmont
Goldcorp, the world’s leading gold mining company,
from March 2013 to December 2019. Prior to that,
she worked from 1992 to 2013 for Rio Tinto, holding
positions including Global Head of Health, Safety
and Environment, and Managing Director of Richards
Bay Minerals in South Africa. She holds a Bachelor of
Science, magna cum laude, from Maryville College,
Tennessee and a PhD in Analytical Chemistry from
Colorado State University.
External appointments: Elaine is a Non-Executive
Director of NASDAQ-listed Great Lakes Dredge &
Dock Corporation, JSE and NYSE-listed Sibanye
Stillwater Ltd, and NYSE and TSX-listed Novagold
Resources Inc.
Age: 68 Appointed: 2018
Skills and experience: Clever Fonseca has worked
in the titanium industry for over 35 years. He has
extensive knowledge and board-level management
experience of mineral sands mining and he has
worked in the titanium pigment and feedstock
industries. He was responsible for developing
Brazil’s only dredge-mined mineral sands operation,
was Vice President of Global Supply and Mining
for Millennium Inorganic Chemicals (now Cristal
Global) in the US, and also served as Executive
Director of Mineral Deposits Ltd in Melbourne. Most
recently, he was Chief Executive of TiZir Ltd until
2012. He has a BSc in Mining Engineering from
Universidade Federal De Pernambuco, and an MBA
from Fundacao Getulio Vargas, both in Brazil.
External appointments: None
Age: 48 Appointed: 2021
Skills and experience: Sameer Oundhakar is a
Senior Manager in the Diversified Private Equity
Investments department of OIA (Oman Investment
Authority), having joined in 2018. He has extensive
Private Equity experience across industry sectors
and geographies. He has worked in the Middle East
(OIA, Seera Investments), UK (Boston Consulting
Group, Columbia Threadneedle, American Express)
and India (HSBC, Larsen & Toubro). He has a
Bachelor’s degree with distinction in Mechanical
Engineering from Veermata Jijabai Technological
Institute (VJTI), Mumbai, a Post Graduate Diploma
in Management from the Indian Institute of
Management Lucknow and an MBA from INSEAD.
External appointments: Sameer is a Non-
Executive director of Strategic and Precious Metals
Processing LLC (SPMP), an antimony and gold
plant in Oman, Nova S.A. an Argentina based crop
protection products company and Kore Potash plc,
a postash producing company listed on AIM, the
ASX and the JSE.
76 Kenmare Resources plc
Annual Report and Accounts 2021
Age: 55 Appointed: 2020
Age: 53 Appointed: 2021
Skills and experience: Deirdre Somers has over 20
Skills and experience: Andrew Webb was
years’ experience in senior management positions,
previously a Managing Director at Rothschild &
having served as Chief Executive of the Irish Stock
Co. in the Global Advisory team, where he worked
Exchange (ISE) from 2007 to 2018 and, prior to
that, as its Director of Listing. She led the ISE’s
transformation to a highly profitable entity with
for 25 years until September 2018. During this
time, Andrew advised governments, private and
listed companies and joint ventures on strategy,
global specialisms culminating in its sale in March
fundraisings, debt financings, mergers, on and off-
2018 to Euronext NV. She also held the position
of President and Board Chair of the Federation
of European Securities Exchanges from 2015 to
2018. Deirdre, a qualified Chartered Accountant,
market acquisitions, disposals and restructurings.
He currently acts as a non-executive director
of several private companies and voluntary
organisations and as a consultant to Berkeley
also worked with KPMG for eight years and holds
Research Group. Andrew has a BA & MA in Natural
a Bachelor of Commerce degree from University
Sciences from the University of Cambridge.
College Cork.
External appointments: Andrew is a Director of
External appointments: Deirdre is a Non-Executive
Alysium Consulting Limited, an IT consultancy, BG
Director of a number of investment entities including
Sports Enterprises Limited, a sports memorabilia
iShares plc, BlackRock Institutional Pooled Funds
company, AdeptoMines Limited, a mining
plc, BlackRock Fixed Income Dublin Funds plc and
software company, Launcherley Tourism, a holiday
Institutional Cash Series plc, both of which are listed
apartment letting company as well as a number
on Euronext Dublin, Aquis Exchange plc which is
of community interest/not-for-profit companies
listed on the Alternative Investment Market of the
in England. All are private unlisted companies.
London Stock Exchange, M&G General Partner
Andrew also acts as a consultant to Berkeley
Inc. and Episode Inc.. She is also a Non-Executive
Research Group.
Director of Cancer Trials Ireland Limited.
R
N
S
STE VEN MCTIERNAN
MICHAEL CA RVILL
C HAI RMAN A ND NON-EXECUT IV E DIRECTOR
MA NAGING DIRECTOR
TONY MCCLUSKEY
FINANCIAL DIRECTOR
Age: 70 Appointed: 2013
Age: 62 Appointed: 1986
Age: 57 Appointed: 1999
Skills and experience: Steven McTiernan has
Skills and experience: Michael Carvill is a Fellow of
Skills and experience: Tony McCluskey has
over 45 years of diverse natural resources industry
the Institute of Engineers of Ireland (FIEI). He holds
worked with Kenmare since 1991. He was originally
and investment banking experience with Amoco,
a BSc in Mechanical Engineering from Queen’s
appointed as Company Secretary and Financial
BP, NatWest Markets, CIBC and Chase Manhattan
University Belfast and an MBA from the Wharton
Controller, before becoming Financial Director in
Bank, where he was Senior Vice President. He
School of the University of Pennsylvania. He worked
1999. He holds a Bachelor of Commerce degree
served as Senior Independent Director of Tullow Oil
as a contracts engineer in Algeria and as a project
from University College Cork and is a Fellow of
plc and was a Non-Executive Director for 11 years
engineer at Tara Mines, Ireland.
External appointments: Michael is a director
of a number of privately-owned property and
construction companies in Ireland and the UK.
the Institute of Chartered Accountants. Before
joining Kenmare, he worked for a number of years
with Deloitte as a Senior Manager in Dublin. He
has worked on a part-time basis as a lecturer with
Chartered Accountants Ireland and has worked
overseas.
External appointments: None
until January 2013. He was an Independent Director
at First Quantum Minerals Ltd until June 2012, and
was an Independent Director at Songa Offshore
SE until January 2014. He was Non-Executive
Chairman of Hurricane Energy plc until 2021.
He received an MA in Natural Sciences from the
University of Cambridge.
External appointments: None
GR AH AM MA RTIN
NO N -EX ECUTIVE DIRECTOR
AND S ENIOR INDEPENDENT DIRECTOR
METTE DOBEL
NON-EXECUTIVE DIRECTOR
Age: 68 Appointed: 2016
Skills and experience: Graham Martin has over 30
years’ experience in the global natural resources
sector with a particular focus on Africa. From
1997 to 2016 he served as an Executive Director
of Tullow Oil plc, an oil and gas exploration,
development and production company listed on the
London, Irish and Ghanaian stock exchanges. Prior
to Tullow, he was a partner at the US energy law
firm Vinson & Elkins LLP, and at the UK corporate
law firm Dickson Minto WS. He holds a degree
in Law and Economics from the University of
Edinburgh.
External appointments: Graham is Non-Executive
Chairman of United Oil & Gas plc, an AIM listed oil
and gas company.
Age: 54 Appointed: 2022
Skills and experience: Mette Dobel is currently
Regional President, Europe, North Africa, Russia/CIS
for FLSmidth, an engineering, equipment and service
solutions provider to the global mining and cement
industries. She was previously a Director of FLSmidth
A/S, and FLSmidth & Co. A/S which is listed on
Nasdaq OMX Exchange in Copenhagen. She holds
a Masters in Engineering and a Bachelor of Science
(Commercial) from Københavns Teknikum.
External appointments: Mette is Regional
President, Europe, North Africa, Russia/CIS for
FLSmidth and is a Director of FLSmidth Rusland
Holding A/S, FLSmidth Real Estate A/S and Matr.
nr. 2055 A/S, all of which are Danish incorporated
members of the FLSmidth group of companies.
S
A
N
A
S
R
A
N
R
E L A IN E DORWA RD-KING
NO N-EXECUTIVE DIRECTOR
CLEVER FONSECA
NON-EXECUTIVE DIRECTOR
SAMEER OUNDHAKAR
NON-EXECUTIVE DIRECTOR
DEI R DRE SO MERS
NO N -EX ECUTIVE DIRECTOR
Age: 64 Appointed: 2019
Age: 68 Appointed: 2018
Age: 48 Appointed: 2021
Skills and experience: Elaine Dorward-King has over
Skills and experience: Clever Fonseca has worked
Skills and experience: Sameer Oundhakar is a
30 years’ experience in the mining, chemicals and
in the titanium industry for over 35 years. He has
Senior Manager in the Diversified Private Equity
engineering industries, including the mineral sands
extensive knowledge and board-level management
Investments department of OIA (Oman Investment
sector. She served as Executive Vice President of
experience of mineral sands mining and he has
Sustainability and External Relations for Newmont
worked in the titanium pigment and feedstock
Goldcorp, the world’s leading gold mining company,
industries. He was responsible for developing
Authority), having joined in 2018. He has extensive
Private Equity experience across industry sectors
and geographies. He has worked in the Middle East
from March 2013 to December 2019. Prior to that,
Brazil’s only dredge-mined mineral sands operation,
(OIA, Seera Investments), UK (Boston Consulting
she worked from 1992 to 2013 for Rio Tinto, holding
was Vice President of Global Supply and Mining
Group, Columbia Threadneedle, American Express)
positions including Global Head of Health, Safety
for Millennium Inorganic Chemicals (now Cristal
and India (HSBC, Larsen & Toubro). He has a
and Environment, and Managing Director of Richards
Global) in the US, and also served as Executive
Bachelor’s degree with distinction in Mechanical
Bay Minerals in South Africa. She holds a Bachelor of
Director of Mineral Deposits Ltd in Melbourne. Most
Engineering from Veermata Jijabai Technological
Science, magna cum laude, from Maryville College,
recently, he was Chief Executive of TiZir Ltd until
Institute (VJTI), Mumbai, a Post Graduate Diploma
Tennessee and a PhD in Analytical Chemistry from
2012. He has a BSc in Mining Engineering from
in Management from the Indian Institute of
Colorado State University.
Universidade Federal De Pernambuco, and an MBA
Management Lucknow and an MBA from INSEAD.
External appointments: Elaine is a Non-Executive
Director of NASDAQ-listed Great Lakes Dredge &
Dock Corporation, JSE and NYSE-listed Sibanye
Stillwater Ltd, and NYSE and TSX-listed Novagold
Resources Inc.
from Fundacao Getulio Vargas, both in Brazil.
External appointments: None
External appointments: Sameer is a Non-
Executive director of Strategic and Precious Metals
Processing LLC (SPMP), an antimony and gold
plant in Oman, Nova S.A. an Argentina based crop
protection products company and Kore Potash plc,
a postash producing company listed on AIM, the
ASX and the JSE.
Age: 55 Appointed: 2020
Skills and experience: Deirdre Somers has over 20
years’ experience in senior management positions,
having served as Chief Executive of the Irish Stock
Exchange (ISE) from 2007 to 2018 and, prior to
that, as its Director of Listing. She led the ISE’s
transformation to a highly profitable entity with
global specialisms culminating in its sale in March
2018 to Euronext NV. She also held the position
of President and Board Chair of the Federation
of European Securities Exchanges from 2015 to
2018. Deirdre, a qualified Chartered Accountant,
also worked with KPMG for eight years and holds
a Bachelor of Commerce degree from University
College Cork.
External appointments: Deirdre is a Non-Executive
Director of a number of investment entities including
iShares plc, BlackRock Institutional Pooled Funds
plc, BlackRock Fixed Income Dublin Funds plc and
Institutional Cash Series plc, both of which are listed
on Euronext Dublin, Aquis Exchange plc which is
listed on the Alternative Investment Market of the
London Stock Exchange, M&G General Partner
Inc. and Episode Inc.. She is also a Non-Executive
Director of Cancer Trials Ireland Limited.
ANDREW WEBB
NON-EXECUTIVE DIRECTOR
AND CHAIR DESIGNATE
Age: 53 Appointed: 2021
Skills and experience: Andrew Webb was
previously a Managing Director at Rothschild &
Co. in the Global Advisory team, where he worked
for 25 years until September 2018. During this
time, Andrew advised governments, private and
listed companies and joint ventures on strategy,
fundraisings, debt financings, mergers, on and off-
market acquisitions, disposals and restructurings.
He currently acts as a non-executive director
of several private companies and voluntary
organisations and as a consultant to Berkeley
Research Group. Andrew has a BA & MA in Natural
Sciences from the University of Cambridge.
External appointments: Andrew is a Director of
Alysium Consulting Limited, an IT consultancy, BG
Sports Enterprises Limited, a sports memorabilia
company, AdeptoMines Limited, a mining
software company, Launcherley Tourism, a holiday
apartment letting company as well as a number
of community interest/not-for-profit companies
in England. All are private unlisted companies.
Andrew also acts as a consultant to Berkeley
Research Group.
GOVERNANCE
Committee key
A Audit & Risk Committee
N Nomination Committee
R Remuneration Committee
S Sustainability Committee
Committee Chair
Kenmare Resources plc
Annual Report and Accounts 2021
77
EXECUTIVE COMMITTEE
MICHAEL CARVILL
MANAGING DIRECTOR
TONY MCCLUSKEY
FINANCIAL DIRECTOR
Michael Carvill has been the Managing Director of Kenmare since 1986. He
worked as a contracts engineer in Algeria and as a project engineer at Tara
Mines, Ireland. He is a Fellow of the Institute of Engineers of Ireland (FIEI). He
holds a BSc in Mechanical Engineering (Queen’s University, Belfast) and an MBA
(Wharton School, University of Pennsylvania).
Tony McCluskey has worked with Kenmare since 1991. He was originally
appointed as Company Secretary and Financial Controller, before becoming
Financial Director in 1999. Before joining Kenmare, he worked for a number of
years with Deloitte as a senior manager in Dublin and also worked overseas. He
holds a Bachelor of Commerce degree from University College Cork and is a
Fellow of the Institute of Chartered Accountants.
BEN BAXTER
CHIEF OPERATIONS
OFFICER
ANNA BROG
HEAD OF SUSTAINA BILITY
Ben Baxter joined Kenmare in 2015 and has over 25 years’ experience in the
mineral sands industry. He was previously employed by Rio Tinto at Richards
Bay Minerals (RBM) in South Africa and QMM in Madagascar, where he held
a broad range of geological, mine planning and leadership roles before being
appointed General Manager Mining at RBM. Ben holds a BSc (Hons) in Applied
Geology from the University of Leicester and an MSc in Mining Geology from
the Camborne School of Mines.
Anna Brog joined Kenmare in 2021. She was previously at Tullow Oil plc, whose
assets are predominantly in Africa, where she led the development of the company’s
ESG programme as its Sustainability Manager. Prior to this she was head of
Corporate Social Responsibility at Logica plc, a multinational IT and management
consultancy company. Anna holds a post graduate Certificate in Sustainability from
the University of Cambridge and a BA from the University of Sussex.
GARETH CLIFTON
MOZA MBIQUE MANAG ER
JEREMY DIBB
CORPORATE DEVELOPMENT AND
INVESTOR REL ATI ONS
Gareth Clifton holds a BA Economics degree from the University of Exeter and
an MSc in African Studies from the University of Edinburgh. He joined Kenmare
in 2001 having worked as a General Manager for Union Transport LDA. He
previously held the position of manager for a Mozambican shipping agent and
also worked for the UNDP.
Jeremy Dibb joined Kenmare in 2014, having previously covered the mining
sector as an equity research analyst at Macquarie and Canaccord Genuity.
Prior to this he worked in asset management at Cazenove Capital and Fidelity.
Jeremy holds an MBA from Saïd Business School at the University of Oxford, a
BA from the University of Nottingham, and is a CFA® charterholder. Jeremy is a
Non-Executive Director of DP Poland plc.
TERE N CE FITZPATRI CK
GROUP GENERAL MANAGER-TEC HNI CAL
CHELITA HEA LY
COMPANY SECRETARY
Terence Fitzpatrick is a graduate of University of Ulster (Mech. Eng.). He worked
as Project Manager and then Technical Director of Kenmare from 1990 to
1999. He was responsible for the development of the Ancuabe Graphite Mine
in Mozambique, which achieved completion in 1994. He was appointed to the
Board of Kenmare in 1994. He served as a Non-Executive Director from 2000 to
2008. He was appointed as Technical Director in February 2009.
Chelita Healy graduated from University College Dublin with a Bachelor of Civil
Law degree and a Masters in European Law. She qualified as a Solicitor in 1996.
She then worked as a solicitor and, later, as a Partner, in a Dublin legal firm
before joining Kenmare’s Company Secretarial department in 2019. She was
appointed Company Secretary in May 2021.
78
Kenmare Resources plc
Annual Report and Accounts 2021
GOVERNANCE
CILLIAN MURPHY
MARKETING MANAGER
RA JAN SUBBERWAL
GENERAL COUNSEL
Cillian Murphy joined Kenmare in October 2016. He graduated with a BSc in
Economics and Finance from University College Dublin. Cillian initially worked
in Kenmare’s Investor Relations and Corporate Development team before
becoming a Marketing Executive. He has been Marketing Manager since
January 2020.
Rajan Subberwal joined Kenmare in June 2013. He previously worked at Sullivan
& Cromwell LLP since 2001, where he advised Kenmare on various commercial
and financing aspects of the Moma Mine, and he trained with Clifford Chance
LLP. Rajan has a BA from Oxford University, an LLB from London University, and
an LLM from Harvard Law School.
Kenmare Resources plc
Annual Report and Accounts 2021
79
CORPORATE GOVERNANCE REPORT
The Directors recognise the importance of corporate governance and ensure
that appropriate corporate governance procedures are in place.
In the financial year under review, the Directors have complied with all relevant provisions of the 2018 UK
Corporate Governance Code (the “Code”) issued by the UK’s Financial Reporting Council (FRC) in July
2018. A copy of the Code can be obtained from the Financial Reporting Council’s website, www.frc.org.uk.
This report, together with the other reports in the “Governance” part of this document, explains how the
principles of the Code have been applied by the Company.
Board leadership and company purpose: our Governance framework
BOARD OF DIRECTORS
ROLE OF THE BOARD
The Board is collectively responsible for the leadership, oversight, control, development
and long-term success of the Group. It works with management to set corporate
vision and develop strategy, with the aim of creating long-term sustainable value for
its shareholders, while recognising and discharging wider responsibilities to other
stakeholders, including employees, customers, suppliers and the communities in which
it operates, and to the environment. The Board constructively challenges and holds to
account the management team, in regard to both operational and financial performance
of the Group and wider sustainability goals. It is also responsible for ensuring that
accurate and understandable information is provided about the Group to shareholders,
finance providers and other stakeholders on a timely basis.
The Board’s responsibilities include:
•
•
•
•
•
•
•
•
•
ensuring that appropriate management, development and succession plans are
in place;
reviewing the environmental and health and safety performance of the Group;
approving the appointment of Directors’ and their remuneration and severance;
ensuring that satisfactory dialogue takes place with shareholders;
understanding the views of the Group’s other key stakeholders and keeping
engagement mechanisms under review so that they remain effective;
assessing the basis on which the Group generates and preserves value over the
long-term;
assessing and monitoring culture;
providing a means for the workforce to raise concerns in confidence and reviewing
its operation;
carrying out a robust assessment of the Group’s emerging and principal risks; and
• monitoring the Group’s risk management and internal control systems and
reviewing their effectiveness.
MATTERS RESERVED
FOR THE BOARD
The Board has a formal schedule of
matters specifically reserved for its
decision, including:
•
•
•
•
•
•
•
•
•
•
strategic decisions;
risk management and internal
controls;
acquisitions and capital expenditure
above agreed thresholds;
approval of interim and final dividends
and share purchases;
changes to the capital structure;
tax and treasury oversight;
approval of half-yearly and annual
financial statements;
budgets and matters currently or
prospectively affecting the Group and
its performance;
Board and Committee
membership; and
Remuneration policy.
This schedule is available at https://www.
kenmareresources.com/en/about-us/
corporate-governance
SUPPORTED BY
AUDIT & RISK
COMMITTEE
Monitors the
appropriateness and
integrity of the Group’s
financial reporting,
external audit,
internal audit and risk
management processes.
NOMINATION
COMMITTEE
Evaluates the composition
of the Board to ensure
an effective balance of
skills and experience and
considers succession
planning for Directors and
Senior Executives.
REMUNERATION
COMMITTEE
Determines the policy
for remuneration of the
Chairperson, the Executive
Directors, the Company
Secretary and such other
executive management
as it is designated to
consider.
SUSTAINABILITY
COMMITTEE
Oversees the
implementation of the
Group’s sustainability-
focused corporate policies.
80 Kenmare Resources plc
Annual Report and Accounts 2021
GOVERNANCE
Board and Committee meeting information flows
Stage 1
Stage 2
Stage 3
Chair agrees agenda
with Company Secretary
The Board and each Committee has an
annual workplan. This is supplemented
with current issues and items proposed
at previous meetings or by the Executive
Committee. The Company Secretary
prepares a draft agenda and this is reviewed
and agreed with the relevant Chair and
circulated to the Executive Committee for
preparation of meeting papers.
Material is circulated ahead
of the meeting
All Board and Committee papers are
made available to Directors at least one
week ahead of the relevant meeting via an
electronic platform.
Board and Committee
meetings
Speakers present their reports to
the meeting and the Chair allows an
opportunity for Directors to ask questions
and make comments. Directors can also
raise items for discussion under “Any Other
Business”. The Company Secretary takes
minutes of each meeting.
Stage 4
Stage 5
Stage 6
Minutes are prepared,
circulated and approved
The Company Secretary prepares draft
minutes of each meeting and clarifies
points with speakers, where necessary. The
draft minutes are sent to the meeting Chair
for approval and circulated to the Directors
in the papers for the next meeting at which
they are considered, amended, approved
and signed.
Responsibilities of members of the Board
Director
Responsibilities
Action lists are developed
following key items
The Company Secretary prepares and
circulates a list of key items discussed at
each meeting that require any follow up
action. This list is updated and its progress
monitored.
Non-formal meetings,
updates and progress reports
following meetings
Management discusses any key issues
that arose at the meetings, meeting with
Directors if necessary to clarify issues. Any
information requested is delivered and
updates on issues provided either at the
next meeting or, if the matter is urgent, by
way of meeting/conference call.
Chairperson
The Chairperson leads the Board and is responsible for its overall effectiveness in
directing the Company. The Chairperson should demonstrate objective judgement
throughout their tenure and promote a culture of openness and debate. In addition, the
Chairperson facilitates constructive Board relations and the effective contribution of all
Directors, and ensures that Directors receive accurate, timely and clear information.
Managing Director
The responsibilities of the Managing Director are to manage the Company and the
Group on a day to day basis within policy parameters set by the Board.
Financial Director
The responsibilities of the Financial Director are to contribute to the attainment of the
Company’s business objectives by providing strategic and financial guidance to ensure
that the Company’s financial commitments are met and by developing all necessary
policies and procedures to ensure the sound financial management and control of the
Company’s business.
Senior Independent
Director
The Senior Independent Director (SID) provides a sounding board for the Chairperson
and serves as an intermediary for the other directors and shareholders.
Non-Executive
Directors
The Non-Executive Directors’ main responsibilities are to review the performance of
management and the Group’s financial information, assist in strategy development, and
ensure that appropriate and effective systems of internal control and risk management
are in place. They provide a valuable breadth of experience and independent judgement
to Board discussions.
Summaries of the responsibilities of the Chairman, Managing Director and Senior Independent Director can be found at
https://www.kenmareresources.com/en/about-us/corporate-governance
How the Board spent
its time in 2021
5%
5%
15%
20%
25%
30%
Culture
Strategy
Operations
Finance and risk management
Sustainability
Corporate governance
For more details on the Board’s
activities in 2021 see pages 83-84
Kenmare Resources plc
Annual Report and Accounts 2021
81
CORPORATE GOVERNANCE REPORT CONTINUED
Composition and operation of the Board
The Board consists of the Chairman and nine Directors, of whom
two are Executive and seven are Non-Executive. Biographical details,
including each Director’s date of appointment, are set out on pages
76 and 77. The majority of the Board is made up of independent
Non-Executive Directors. The Chairperson is required to be a Non-
Executive.
The Board has delegated responsibility for management of the Group
to the Managing Director and the management team.
A clear division of responsibility exists between the Chair, whose
principal responsibility is the effective running of the Board and is
not responsible for executive matters regarding the Group’s business,
and the Managing Director, whose principal responsibility is running
the Group’s business. A summary of the role and responsibilities of
each of the Chairs and the Managing Director can be found on the
Company website at www.kenmareresources.com/about-us/corporate-
governance.
The Board has delegated some of its responsibilities to four
Committees of the Board: Audit & Risk, Remuneration, Nomination and
Sustainability. Each Committee has written terms of reference that
set out its authorities and responsibilities. These terms of reference
are available for review at the Company’s registered office and on
the Company’s website at www.kenmareresources.com/about-us/
corporate-governance.
In March 2021, Tim Keating resigned as a Director and Sameer
Oundhakar was appointed to the Board having been nominated by
African Acquisitions S.à.r.l, the Company’s largest shareholder and a
company controlled by the Oman Investment Authority (OIA). At the
AGM in May 2021, Gabriel Smith retired from the Board. In December
2021, Peter Bacchus resigned as a Director and Graham Martin was
appointed as the Senior Independent Non-Executive Director in his
place. In December 2021, Andrew Webb was appointed as a Director
and Chair Designate and, on 1 January 2022, Mette Dobel became a
Director of the Company.
As a result, the Board is now comprised of three female and seven
male directors. Steven McTiernan will retire from the Board at this
year’s AGM following which female Directors will comprise one third of
the Board. The diversity policy on Board appointment is set out in the
Nomination Committee report on page 93.
All Directors, save for Steven McTiernan who has completed his tenure
of nine years with the Board, offer themselves for re-appointment or
appointment, as the case may be, at the Company’s AGM in May 2022.
Board meetings
The Board meets regularly to ensure that all its duties are discharged
effectively. All Directors are expected to prepare for and attend
meetings of the Board and the AGM. If a Director is unable to attend a
Board meeting in person, teleconference arrangements are available
to facilitate participation. As a result of the COVID-19 pandemic, most
Board and Committee meetings in 2021 were held virtually. In the event
that a Board member cannot attend or participate in the meeting, the
Director may discuss agenda items with the Chairperson, Managing
Director or Company Secretary in advance of the meeting.
A schedule of Board and Committee meetings is circulated to the
Board for the following year. A more detailed agenda and Board
materials are made available electronically in the week preceding
the meeting.
During 2021, the Board held 10 meetings. Details of the Directors’ and
Secretary’s attendance at Board and Committee meetings are set
out below:
Full Board
B
A
Audit & Risk
Committee
B
A
Remuneration
Committee
B
A
Nomination
Committee
B
A
Sustainability
Committee
B
A
Non-Executive Director
Steven McTiernan
Peter Bacchus1
Elaine Dorward-King
Clever Fonseca
Tim Keating2
Graham Martin
Sameer Oundhakar3
Gabriel Smith4
Deirdre Somers
Andrew Webb5
Executive Directors
Michael Carvill
Tony McCluskey
Company Secretary
Deirdre Corcoran6
Chelita Healy6
10
10
10
10
2
10
8
4
10
0
10
10
4
6
10
10
10
10
2
10
6
4
10
0
10
10
4
6
1 Peter Bacchus resigned on 31 December 2021.
2 Tim Keating resigned on 16 March 2021.
6
6
2
6
2
4
6
6
2
6
2
4
5
5
3
2
3
2
5
5
3
2
3
2
4
4
4
2
2
2
4
4
4
2
2
2
6
6
3
6
3
3
6
6
2
6
3
3
3 Sameer Oundhakar was appointed on 16 March 2021. Sameer Oundhakar recused himself from two Board meetings which were held to consider and approve the Tender Offer as he was
nominated to the Board by African Acquisition S.à.r.l. It was the largest shareholder in the Company at that time and so had an interest in the Tender Offer.
4 Gabriel Smith retired as a Director on 13 May 2021.
5 Andrew Webb was appointed as a Director on 2 December 2021.
6
In attendance only. Deirdre Corcoran resigned as Company Secretary on 13 May 2021 and Chelita Healy was appointed in her place.
Column A indicates the number of meetings held during the period the Director was a member of the Board and/or Committee.
Column B indicates the number of meetings attended during the period the Director was a member of the Board and/or Committee.
82
Kenmare Resources plc
Annual Report and Accounts 2021
GOVERNANCE
LINK TO STRATEGY
STAKEHOLDERS CONSIDERED
Shareholders, Lending
Banks and Employees
Deliver long life, low-cost
production
Board activities in 2021
STRATEGIC
Conducted an overall strategic review covering operational robustness, product
markets, financial base case and internal growth options, power supply and
transhipment, assessment of external opportunities, Company valuation and
capital allocations
Developed and reviewed Board objectives for 2021
Received a report at every Board meeting on Corporate Development
opportunities and Investor Relations
•
•
•
•
Received a presentation from the Company’s brokers on the stock market,
investors and strategic options
Allocate capital
efficiently
OPERATIONS
LINK TO STRATEGY
STAKEHOLDERS CONSIDERED
•
•
•
•
Received reports at every Board meeting from the Chief Operations Officer on
operational performance covering mining, processing, power supply, security,
shipping, human resources and community relationships. Received an expert
report and internal briefings on the security situation in Mozambique.
Received updates at every meeting on the progress of development projects such
as completion of the WCP B move and the RUPS project
Received updates on the progress of the pre-feasibility study for mining the
Nataka ore zone
Received a report at every Board meeting from the Marketing Manager on
product markets and customer relationships
Operate responsibly
Deliver long life, low-cost
production
Shareholders,
Employees, Suppliers,
Contractors and
Communities
HEALTH & SAFETY
LINK TO STRATEGY
STAKEHOLDERS CONSIDERED
•
•
Received reports at every Board meeting from the Chief Operations Officer
on health and safety performance at the Mine including new risk assessment
procedures, the management of COVID-19 infections and the rollout of
vaccinations
Considered the report of Graham Martin (as Workforce Engagement Director) on
his engagement with the workforce and on their remuneration
Operate responsibly
Employees, Communities
GOVERNANCE & CORPORATE
LINK TO STRATEGY
STAKEHOLDERS CONSIDERED
•
•
•
•
•
•
•
•
•
Approved the appointments of Sameer Oundhakar, Mette Dobel and Andrew
Webb to the Board
Approved the changes in composition of Committees and roles following the
departure of Tim Keating, Gabriel Smith and Peter Bacchus during 2021
Operate responsibly
Shareholders,
Employees, Government
& Regulators
Received and approved the report on arrangements for compliance with the
Company’s relevant obligations under section 225 of the Companies Act 2014
Considered and approved Directors assuming additional Board appointments
Approved the discretionary underpin for KRSP awards made to the Executive
Directors in 2021
Commissioned an external Board evaluation
Approved a review of the Company’s Market Abuse Regulation compliance
Approved awards under the KRSP to employees and the Executive Directors
Considered and approved the buy-back by the Company of 13.5% of its issued
shares pursuant to the Tender Offer and convened an EGM at which shareholders
approved the tender offer
Kenmare Resources plc
Annual Report and Accounts 2021
83
CORPORATE GOVERNANCE REPORT CONTINUED
FINANCE & RISK MANAGEMENT
LINK TO STRATEGY
STAKEHOLDERS CONSIDERED
•
•
•
•
•
•
•
•
Received reports and presentations at every meeting from the Financial Director
regarding the Group’s financial performance
Approved the annual accounts for 2020 and the half year results to 30 June 2021
Considered the Company’s distributable reserves in the context of payment of
dividends and the buyback of the Company’s shares
Allocate capital
efficiently
Shareholders, Lending
Banks and governments
Approved the Group’s 2022 budget and operating plan
Approved the Company’s Treasury Policy
Reviewed the principal risks and uncertainties facing the Group
Received regular updates on the Mozambican tax authority audit of the tax
obligations of KMML Mozambique Branch
Received regular reports from the Chair of the Audit & Risk Committee
SUSTAINABILITY
LINK TO STRATEGY
STAKEHOLDERS CONSIDERED
Communities,
Government &
Regulators,
Shareholders
Operate responsibly
•
•
•
•
•
•
•
•
Considered Kenmare’s Climate Policy and Energy & Climate Strategy
Received and discussed a report on shipping capacity and weather (including a
study on Moma wind and wave climate)
Received a briefing on TCFD
Approved the RUPS project
Received updates from the Chief Operations Officer on environmental
management, rehabilitation of land, power and water supply
Received regular updates from the Chair of the Sustainability Committee
Reviewed arrangements for the resettlement of the Namalope West community
and its access to alternative farmland
Received updates from the Chief Operations Officer on relations with the local
community
CULTURE
LINK TO STRATEGY
STAKEHOLDERS CONSIDERED
•
Received regular briefings on employee and Community relations
• Met with the Women in Mining group on the visit to Site in 2022
• Met with the Community Women’s Group on the Site visit and discussed
Community issues highlighted during 2021
Visited Community projects in Mutiticoma and Topuito
Received regular updates on the Mozambican political situation
Received regular reports from the Chair of the Sustainability Committee
Considered the report of Graham Martin on Workforce engagement during 2021
•
•
•
•
Communities,
Government &
Regulators,
Shareholders
Operate responsibly
84 Kenmare Resources plc
Annual Report and Accounts 2021
GOVERNANCE
Our Board in action this year
Tender offer: case study
In November 2021, the Board approved the Tender Offer
to shareholders. In December 2021, following approval of
shareholders at an EGM, the Company completed the buyback
of 13.5% of its share capital returning approximately $81.6 million
to eligible shareholders.
RUPS project: case study
In January 2021, the Board approved the implementation of the
RUPS project at a cost of US$18 million with the intention of
improving the quality of energy supply and reducing emissions.
Independence of Non-Executive Directors
The Board has carried out an evaluation of the independence of its
Non-Executive Directors, taking account of the relevant provisions
of the Code and whether the Non-Executive Directors discharge
their duties in a proper and consistently independent manner, and
constructively challenge the Executive Directors and the Board.
In March 2021, Sameer Oundhakar was appointed to the Board by
African Acquisition S.à.r.l, as provided for under the Subscription and
Relationship Agreement entered into in 2016. As a result, Sameer
Oundhakar is not considered to be independent. The Board is satisfied
that each of the other current Non Executive Directors fulfils the
independence requirements of the Code.
Steven McTiernan has been Chairman of the Company since June
2014. On his appointment as Chairman, Steven McTiernan met the
independence criteria as set out in the Code. Having completed
his tenure of nine years with the Board, he will retire at the AGM in
May 2022 and Andrew Webb will then assume the role of Chairman.
Andrew Webb meets the independence criteria as set out in the Code.
Senior Independent Director
Graham Martin is the Group’s Senior Independent Director (SID).
The principal role of the SID is to provide a sounding board for the
Chairman and to act as an intermediary for other Directors and
shareholders. The SID is responsible for the appraisal of the Chairman’s
performance throughout the year. He is also available to meet
shareholders upon request, in particular if they have concerns that
cannot be resolved through the Chairman or the Managing Director.
A summary of the role of the SID can be found at
https://www.kenmareresources.com/en/about-us/corporate-governance
Directors’ Compliance Statement
The Directors have drawn up a Compliance Policy Statement
as defined in section 225(3)(a) of the Irish Companies Act 2014.
Arrangements and structures have been put in place that are, in the
Directors’ opinion, designed to secure material compliance with the
Company’s relevant obligations. These arrangements and structures
were reviewed during the financial year to ensure they remained
appropriate and comprehensive. The Directors’ Compliance Statement
is set out in full in the Directors’ Report on page 126.
Share ownership and dealing
Details of the Directors’ interests in Kenmare shares are set out in the
Annual Report on Remuneration on page 112. The Kenmare Resources
plc Dealing Policy applies to the Directors and to all employees. Under
this policy, Directors and employees may not deal in Kenmare shares
while they are in possession of inside information about the Group.
Kenmare also operates a Dealing Code which applies to the Directors
and to employees who are able to access restricted information about
the Group. Under the Dealing Code, Directors and relevant employees
are required to obtain clearance from the Company before dealing in
Kenmare shares and persons discharging managerial responsibilities
are prohibited from dealing in the shares during closed periods, as
defined by the Dealing Code.
Kenmare Resources plc
Annual Report and Accounts 2021
85
CORPORATE GOVERNANCE REPORT CONTINUED
Company Secretary & legal
The Directors have access to the advice and services of the Company
Secretary who advises the Board and Committees on governance
matters. The Company’s Articles of Association provide that the
appointment or removal of the Company Secretary is a matter for
the Board.
Kenmare’s General Counsel and Company Secretary provide advice,
guidance and support to executive and operational management
and work closely with them to provide training to our employees.
Together they provide support on a range of matters including
establishing policies and procedures, providing compliance training
and communications, providing legal advice on compliance and
business issues, monitoring and investigating whistleblower calls, and
ensuring the Group is informed of any changes to regulation and/or
reporting requirements. They work with the Head of Sustainability in
relation to sustainability governance and, together with management
at the Mine, review compliance and governance matters on a Group-
wide basis. During 2021, workflows included third party due diligence,
a supply chain audit, review of anti-bribery policies including gifts and
hospitality and various sustainability policies and reporting.
Directors may take independent advice in the furtherance of their
duties at the Company’s expense.
Induction and development of Directors
New Non-Executive Directors undertake a structured induction
process, which includes a series of meetings with management,
a briefing session with internal and external solicitors on the
responsibilities of a Director under Irish law and applicable stock
exchange rules, and a briefing with the Company Secretary regarding
corporate policies.
External experts may be invited to attend certain Board or Committee
meetings to address the Board (or relevant Committee, as the
case may be) on relevant industry matters and on developments in
corporate governance, risk management and executive remuneration.
Training and development requirements for the Directors are discussed
in the evaluation process and Directors are encouraged to undertake
appropriate training on relevant matters. In addition, all Directors have
access to an online database which is regularly updated with relevant
publications and changes in legislation.
Board evaluation
In accordance with provisions of the Code, a performance evaluation of
the Board is carried out annually and facilitated externally every third
year. In 2021, a comprehensive performance evaluation of the Board
and all of its Committees was conducted by Board Excellence Limited
(Board Excellence). The evaluation did not include Andrew Webb and
Mette Dobel who were appointed subsequently.
Board Excellence is an international board consultancy and advisory
practice based in Ireland and the UK and is a signatory to the Code
of Practice for Board Reviewers (2021) issued by the Chartered
Governance Institute. In selecting the evaluator and conducting the
evaluation, the Company has followed the Chartered Governance
Institute’s Principles of Good Practice for Listed Companies Using
External Board Reviewers.
Evaluation proposals were received from four evaluation firms. These
were reviewed by the Nomination Committee and a recommendation
made to the Board in this regard. The Board accepted this
recommendation, subject to several Directors first engaging with Board
Excellence to assess its suitability. Based on the proposal received and
discussions with Board Excellence, the Board was satisfied that Board
Excellence had the necessary skills and experience to carry out an
evaluation of the Board. Following this, Board Excellence was appointed
and its terms of engagement were agreed. The Company Secretary
was designated as the person within Kenmare responsible for providing
the external reviewer with the necessary access and support.
A summary of the main steps involved in the evaluation process is set
out in the diagram “Board Evaluation process in 2021”. The views of all
the Directors, the Company Secretary, the Chief Operating Officer and
Andrew Webb were sought as part of the evaluation.
Deirdre Somers sits on the boards of several BlackRock investment
entities with Ros O’Shea, a partner in Board Excellence. Deirdre is a
Director of Cancer Trials Ireland Limited, a company which was, until
December 2021, chaired by Dr. Jonathan Westrup also a partner in
Board Excellence. Neither Ros O’Shea nor Jonathan Westrup had any
involvement in the Kenmare Board evaluation. Save for this, Board
Excellence has no connection with the Company or individual Directors
and has not conducted any previous evaluations for the Company.
Board Excellence’s overall assessment was that the Kenmare Board
is an effective board. It concluded that there is a highly capable
international board in place with a diverse mix of sector specialists
and generalists. Board Excellence found that “the standard of and
commitment to corporate governance in the Kenmare Board is strong
with a key focus not only on formal compliance with the Code but
also the Directors “bringing to life” the spirit and intent of the code
to ensure a genuine corporate governance core that underpins the
functioning and effectiveness of the Board”. The evaluator was of
the opinion that “the Kenmare Board, Executive Team and Company
are an exemplar in terms of culture, purpose and values with a deep
commitment to “do the right thing” and excel on behalf of shareholders,
employees and stakeholders.” The report identified areas with scope
for improvement and re-focus and, following an analysis of the
evaluation report by Graham Martin (as SID) and the Nomination
Committee, the Board approved an action plan for the areas which it
agreed require improvement. This will be undertaken during 2022.
86 Kenmare Resources plc
Annual Report and Accounts 2021
GOVERNANCE
The description of the external evaluation process and the opinions
of Board Excellence included in this section entitled “Board Evaluation
Process in 2021” and in the various Committee reports have been
agreed with Board Excellence.
The Chairman subsequently appraised the performance of each of
the Non-Executive Directors by meeting each Director individually to
review their knowledge and effectiveness at meetings and the overall
time and commitment to their role on the Board. The appraisal process
concluded that each Director is performing well and is committed to
their role in terms of dedication of time and attendance at meetings.
In addition, Graham Martin, as SID, formally appraised the performance
of the Chairman. This appraisal was similar to the Non-Executive
Director evaluation process which included feedback from all Directors
on the Chairman’s performance during the year. The Chairman
received unanimous praise from each Director for his performance
throughout his tenure as Chairman with particular note being made of
his deep knowledge of the business, in maintaining mutual respect on
the Board and its cohesion during COVID-19 restrictions when physical
meetings were not possible.
In reviewing the composition of the Board, Board Excellence concluded
that, across the Non-Executive Directors, there is a strong blend
of financial, investment finance, engineering/technology, natural
Board evaluation process in 2021
resources, human resources, health and safety skills and experiences
complemented by strong executive leadership and non-executive
board experience. It suggested however that the Board could be
further strengthened by a Non-Executive Director with robust
operations experience in both the mineral sands area and potentially in
other mining areas and by an Africa-based director. Currently, however,
there are no plans to enlarge the Board and to appoint additional
directors but this suggestion will be borne in mind should a vacancy
arise on the Board. Given that several of the Directors were appointed
to the Board in the last 18 months and that Andrew Webb will assume
the role of Chairman in May 2022, it would be prudent to allow the
appointees to settle into their roles and for a new Board dynamic to
evolve before assessing whether any additional skills or experience are
required.
As regards diversity, the evaluator was of the opinion that the Board
has a reasonable level of diversity and that the Board has and
continues to demonstrate strong commitment to improving diversity in
terms of ethnicity/geography, gender and age.
The evaluation highlighted the need for a renewed focus by the
Board and, in particular, the Nomination Committee, on management
succession planning.
Stage 1
Stage 2
Stage 3
Familiarisation with the Company
including discussions with the
Chairman and Company Secretary,
review of 12 months’ Board and
Committee papers and other
information on areas such as risk,
culture, governance.
Customisation of the Board
questionnaire, completion of the
questionnaire by the Directors and
Company Secretary and analysis of
the responses.
Individual interviews with the
Directors, Company Secretary
and Chief Operating Officer and
attendance at Board meeting
and meetings of the Audit & Risk
Committee and Sustainability
Committee in December 2021.
Stage 4
Stage 5
Stage 6
Submission to the Chairman of the
draft evaluation report findings
and engagement with him and the
Company Secretary on the findings
and proposed recommendations.
Presentation of the report’s principal
findings and recommendations
at the Kenmare Board meeting in
January 2022.
Report reviewed by Nomination
Committee and Senior Independent
Director and action plan drawn up
and approved by Board.
Kenmare Resources plc
Annual Report and Accounts 2021
87
CORPORATE GOVERNANCE REPORT CONTINUED
No business may be transacted at any General Meeting unless a
quorum is present at the time when the meeting proceeds to business.
Three persons entitled to attend and to vote upon the business to be
transacted, each being a member or a proxy for a member, constitutes
a quorum.
The shareholders have the right to receive notice of a General Meeting.
In the case of an Annual General Meeting or of a meeting for the
passing of a special resolution, twenty-one clear days’ notice at the
least, and in any other case fourteen clear days’ notice at the least,
needs to be given in writing in the manner provided for in the Articles
to all the members (subject to any restrictions imposed on any shares),
to the Directors, the Secretary and the Auditors and any other person
entitled to receive notice under the Companies Act. The shareholders
also have the right to attend, speak, vote and ask questions at General
Meetings. In accordance with Irish company law, the Company specifies
record dates for General Meetings, by which date shareholders
must be registered in the Register of Members of the Company to
be entitled to attend. Record dates are specified in the notes to the
Notice of a General Meeting. Shareholders may exercise their right to
vote on some or all of their shares by appointing a proxy or proxies,
by electronic means or in writing. The requirements for the receipt of
valid proxy forms are set out in the notes to the notice convening the
meeting. A shareholder, or a group of shareholders, holding at least
3% of the issued share capital of the Company has the right to put an
item on the agenda of the Annual General Meeting or to table a draft
resolution for inclusion in the agenda of a General Meeting, subject to
certain timing requirements prescribed by the Companies Act and any
contrary provision of Irish company law.
Voting at any General Meeting is by a show of hands unless a poll is
properly demanded. On a show of hands, every member who is present
in person or by proxy has one vote regardless of the number of shares
they hold. On a poll, every member who is present in person or by
proxy has one vote for each share they hold. A poll may be demanded
by the Chairman of the meeting or by at least three members
having the right to vote at the meeting or by a member or members
representing not less than one-tenth of the total voting rights of all the
members having the right to vote at the meeting or by a member or
members holding shares in the Company conferring a right to vote at
the meeting, being shares on which an aggregate sum has been paid
up equal to and not less than one-tenth of the total sum paid up on all
shares conferring that right.
Deadlines for exercising voting rights
Voting rights at General Meetings of the Company are exercised when
the Chairman puts the resolution at issue to a vote of the meeting.
Where a person is appointed to vote for a shareholder as proxy, the
instrument of appointment must be received by the Company not later
than the latest time approved by the Directors.
Powers of the Directors
Under the Articles of Association of the Company, the business of the
Company is to be managed by the Directors who may exercise all the
powers of the Company subject to the provisions of the Companies
Act, the Constitution of the Company and to any directions given
by resolution of a General Meeting (not being inconsistent with the
Companies Acts and the Articles of Association). The Articles of
Association permit the Directors to delegate any of their powers,
authorities and discretions to any committee provided that a majority
of the members of a committee shall be Directors.
The Directors may also, from time to time appoint any company,
firm or person to be the attorney(s) of the Company subject to such
conditions as they may think fit.
The Articles of Association also provide that the Directors may
establish any local or divisional boards or agencies for managing any
of the affairs of the Company in any specified locality, either in Ireland
or elsewhere, and may delegate to any such board or agent any of their
powers, authorities and discretions upon such terms and subject to
such conditions as the Directors may think fit.
Appointment and removal of Directors
The Articles of Association empower the Board to appoint Directors
but require such appointees to retire and submit themselves for
re-appointment at the first Annual General Meeting following their
appointment.
Under the Articles of Association, a third of the Board must retire
annually but may offer themselves for re-election. However, in
accordance with the provisions contained in the Code, the Board has
decided that all Directors should retire annually at the Annual General
Meeting and offer themselves for re-election.
Directors may be removed by the shareholders in a General Meeting of
the Company.
Memorandum of Association and Articles of Association
The Company’s Memorandum of Association and Articles of
Association set out the objects and powers of the Company and may
be amended by shareholders at a General Meeting of the Company by
special resolution (requiring the resolution to be passed by 75% of the
eligible votes).
General meetings and shareholders’ rights
Under the Articles of Association, the power to manage the business
of the Company is generally delegated to the Directors. However, the
shareholders retain the power to pass resolutions at a General Meeting
of the Company which may give directions, not being inconsistent with
the Companies Act and the Articles of Association, to the Directors as
to the management of the Company.
The Company must hold a General Meeting each year as its Annual
General Meeting, in addition to any other meetings in that year. The
Annual General Meeting will be held at such time and place as the
Directors determine. All General Meetings, other than Annual General
Meetings, are called Extraordinary General Meetings. The Directors
may at any time call an Extraordinary General Meeting. Extraordinary
General Meetings shall also be convened by the Directors on the
requisition of members holding, at the date of the requisition, not less
than 5% of the paid-up capital carrying the right to vote at General
Meetings.
88 Kenmare Resources plc
Annual Report and Accounts 2021
GOVERNANCE
Audit, risk and internal control
Board’s approach to risk management
and internal control
The Board of Directors has responsibility for the Group’s system
of internal control and risk management. This involves an ongoing
process of identifying, evaluating and managing the significant risks
faced by the Group and regularly reviewing the effectiveness of the
resultant system of internal control and risk management that have
been in place throughout the financial year and up to the date of
approval of the Annual Report and Accounts. The Board has delegated
to management the planning and implementation of the system of
internal control throughout the Group. The system of internal control
is designed to provide reasonable, but not absolute, assurance against
material misstatement or loss. Both it and the risk management
system accord with Financial Reporting Council’s Guidance on Risk
Management, Internal Control and Related Financial and Business
Reporting (September 2014). The key elements of the systems include
the following:
•
•
•
•
The Board, in conjunction with management, identifies the major
risks faced by the Group and determines the appropriate course of
action to manage these risks;
Risk assessment and evaluation are an integral part of the
management process throughout the Group. Risks are identified
and evaluated and appropriate risk management strategies are
implemented;
The Board maintains control and direction over appropriate
strategic, financial, organisational and compliance issues, and
has put in place an organisational structure with defined lines of
responsibility and authority; and
Capital expenditures are controlled centrally and, if in excess of
predefined levels, are subject to approval by the Board.
Review and effectiveness of the risk management
and internal control systems
The Board conducted a review of the effectiveness of the Group’s
risk management and internal controls systems, including financial,
operational and compliance controls, and as part of this it obtained a
report from the internal auditor. In the course of this review the Board
did not identify nor was it advised of any failings or weaknesses which
it determined to be significant.
Compliance policies & training
Kenmare insists on honesty, integrity and fairness in all aspects of
its business and expects the highest standards of professionalism
and ethical conduct to be maintained in all its activities. The Group
has detailed policies and procedures in place on a range of relevant
areas such as anti-bribery, diversity and inclusion, health and safety,
environment, human rights and business ethics. Depending on the
nature of their role, Directors and employees of the Group receive
more detailed training on those policies both as part of their induction
process and Kenmare’s ongoing training programme. An e-Learning
programme, which includes topics such as insider dealing, anti-bribery,
market abuse regulation and whistleblowing, has been put in place.
Whistleblowing
Kenmare promotes a culture of openness and accountability and
encourages staff to report suspected wrongdoing as soon as possible,
in the knowledge that their concerns will be taken seriously and
investigated as appropriate, and that their confidentiality will be
protected wherever possible. Concerns can be raised with a line
manager, externally with SafeCall, an independent external reporting
line or with the Chair of the Audit & Risk Committee or our General
Counsel. Employees may raise concerns anonymously if they wish.
Kenmare’s policies make clear that retaliation against any employee
who raises a genuine concern is prohibited. Where concerns are raised,
they are investigated in an appropriate and independent manner.
Stakeholder engagement
Kenmare has adopted a Stakeholder Engagement Policy (available
on its website at www.kenmareresources.com/sustainability/policies)
pursuant to which it will, inter alia:
•
•
Engage openly and honestly with its key stakeholders (including
shareholders) using appropriate communication tools and
in a regular and timely manner, having regard to commercial
sensitivities; and
Consult and listen to all its stakeholders as appropriate,
understand their aspirations, concerns and their views within the
context of its decision-making processes.
More details on stakeholder engagement can be found on page 18
and 19.
Community engagement
Kenmare values highly its strong relationship with its host
communities. Our stakeholder engagement plan is updated annually
and reflects the changing dynamics in the relationship between the
Mine and the community. We work with local communities through
the Kenmare Moma Development Association (KMAD). Read more on
pages 54 and 55 or read the KMAD Annual Report 2021 at https://www.
kenmareresources.com/en/sustainability/kmad
As a result of the COVID-19 pandemic and resulting travel restrictions,
the Non-Executive Directors were unable to visit the Moma Mine in
2021 but in February 2022, Kenmare hosted a Mine visit for the Board
and Executive Committee. The Directors took the opportunity to meet
with management, staff and community members and to visit some of
the projects being implemented by KMAD.
Workforce engagement
The Board has designated Graham Martin as the Non-Executive
Director responsible for engagement with the Group’s workforce.
As a result of the COVID-19 pandemic, Graham was unable to visit
the Mine in connection with this role but, in December 2021, he held
video-conference calls with employee representatives at the Mine and
met with staff in the Dublin office to discuss any concerns they might
have or issues they wished to raise with the Board. In February 2022,
the Board visited the Mine and Graham continued these discussions
with the workforce. More details on workforce engagement are on
page 91.
Kenmare Resources plc
Annual Report and Accounts 2021
89
CORPORATE GOVERNANCE REPORT CONTINUED
OIA relationship agreement
OIA (formerly the State General Reserve Fund (“SGRF”)) currently
does not fall within the definition of controlling shareholder under the
Listing Rules as it holds less than 30% of Kenmare’s equity. However,
the Company and African Acquisition S.à.r.l., the vehicle through which
SGRF invested in the Company, have entered into arrangements
equivalent to those that would be expected to be in place between a
listed company and its controlling shareholder. This is to ensure the
independence of the Company from that shareholder. In particular,
the Company entered into a subscription and relationship agreement,
dated 18 June 2016, with African Acquisition S.à.r.l. that, amongst other
things, sets forth the relevant arrangements.
Substantial holdings
The Company is not owned or controlled directly or indirectly by any
government or by any corporation or by any other natural or legal
person severally or jointly. The major shareholders do not have any
special voting rights. Details of the substantial holdings as at
31 December 2021 and 31 March 2022 are provided on page 126.
Stock exchange listings
Kenmare, which is incorporated in Ireland and subject to Irish company
law, has a premium listing on the London Stock Exchange (LSE) and is
subject to the Listing Rules of the UK Listing Authority.
Kenmare has a secondary listing on Euronext Dublin. For this reason,
the Company is not subject to the same ongoing listing requirements
as those which would apply to an Irish company with a primary listing
on Euronext Dublin, including the requirement that certain transactions
require the approval of shareholders. For further information,
shareholders should consult their own financial adviser.
AGM update
The AGM is an opportunity for the Executive Directors to deliver
presentations on the business and for shareholders, both institutional
and private, to question the Board directly. Generally, all Directors
attend the AGM and are available to meet with shareholders. Notice
of the AGM, proxy statement and the Annual Report and financial
statements are sent to shareholders at least 21 days before the
meeting. A separate resolution will be proposed at the AGM on
each separate issue including a particular resolution relating to the
adoption of the Directors’ Report and Auditor’s Report and the financial
statements. Details of the proxy votes for and against each resolution,
together with details of votes withheld, are announced after the result
of the votes by hand. These details are published on the Company’s
website following the conclusion of the AGM. At the AGM held on
13 May 2021, there were no material votes cast against any resolutions.
Shareholder engagement
Communications with shareholders are given high priority. Annual
Reports and Accounts are sent to shareholders. Major transactions
and production guidance are also notified to the market, and the
Company’s website www.kenmareresources.com, provides the full text
of all announcements. The website also contains the annual reports,
half year results and investor presentations. In addition, the Company
maintains several social media accounts such as Twitter, LinkedIn and
Facebook, which are regularly updated with operational, financial and
sustainability-focused news.
The following Corporate Governance documents are available on the
Company's website:
•
•
Directors’ Remuneration Policy
Terms of reference of the Nomination, Remuneration, Audit & Risk
and Sustainability Committees together with their most recent
reports and meeting attendance details
• Memorandum and Articles of Association of the Company
•
Policies on Health and Safety, Human Rights, Business Ethics,
Anti-Bribery, Whistleblowing, Employment, Diversity and Inclusion,
Freedom of Association, Community Engagement and Investment
and Stakeholder Engagement
• Whistleblower hotline contact numbers
•
•
Principal risks and uncertainties
Statement of payments to governments
Our website contains the following information for investors:
•
•
•
•
•
•
•
•
Annual reports, half year results and presentations
Share price information
Regulatory news
FAQs on our debt financing
Details of meetings and voting
Circulars
Details of major shareholders
FAQs for shareholders about their holdings
Where necessary, the Board and Committee Chairs engage with
shareholders on specific topics and, where relevant, provide feedback
to other Directors. The Chairman and Senior Independent Director are
also available throughout the year to meet shareholders on request.
The Board is kept informed of the views of shareholders through
the Executive Directors’ attendance at investor presentations and
results presentations. Relevant feedback from such meetings, investor
relations reports and brokers notes are provided to the entire Board on
a regular basis. The Board also receives briefings from the Company’s
brokers.
Capital Markets days and Mine visits for major shareholders are held
periodically and feature presentations by the Executive Committee
and the site leadership team. In addition to shareholders, these events
are attended by members of the Board, advisers, sell-side analysts
and potential investors. Physical meetings were restricted during 2021
due to the COVID-19 pandemic but video-conference calls were held
instead.
On an ongoing basis, our Investor Relations team acts as a focal point
for contact with investors and they provide information and deal with
queries as they arise. The Company Secretary engages annually with
proxy advisers in advance of the Company’s AGM. The Company’s
AGM affords shareholders the opportunity to question the Chairman
and the Board.
90 Kenmare Resources plc
Annual Report and Accounts 2021
GOVERNANCE
Workforce engagement
“Throughout 2021 when COVID-19 restrictions were in place, management kept
in touch with employees and contractors in a variety of ways, with visits to the
Mine when circumstances allowed. Understandably, it was possible to convene
some but not all of the usual employee-engagement forums.
Despite the challenges, I believe that we managed as well as possible in the
circumstances to facilitate effective engagement with the workforce. In late 2021,
I engaged over a video link with some Heads of Department at the Mine and
met a number of staff in the Dublin office. We had very open and wide-ranging
discussions.
I noted that major changes in 2021 in some key roles and responsibilities in the
Dublin office appeared to have been managed smoothly and the new recruits
were settling in well. The Dublin staff made several constructive suggestions
which I passed on to the Executive Directors.
In December, I reported to the Board on my interactions with the workforce.
In February 2022, we visited the Mine and met with a considerable number
of employees and contractors in both work and social settings.”
GRAHA M MA RTIN
DESIG NATED WORKFORCE
ENGAG EMENT DIREC TOR
“A recently recruited manager remarked that there is a refreshing
culture of openness at the Mine and that the relationships between
staff and supervisors were among the best she had seen in mining."
Kenmare Resources plc
Annual Report and Accounts 2021
91
NOMINATION COMMITTEE REPORT
A diverse
and effective
Board
GRA HAM MARTIN
CHA I R OF TH E NOMI NATI ON COMMITTE E
PRINCIPAL RESPONSIBILITIES OF THE COMMITTEE:
•
•
•
•
•
•
Regularly reviewing the structure, size, composition and length
of service of the Board and making recommendations to the Board
with regards to changes considered advisable;
Assessing the effectiveness and performance of the Board and
Committees including consideration of the balance of skills,
knowledge, independence, diversity and experience of the Board
and Committees, and other factors relevant to its effectiveness;
Considering succession planning for Directors and other Senior
Executives, taking into account the challenges and opportunities
facing the Group, what skills and expertise are needed in the future,
and ensuring a diverse pipeline for succession;
Identifying, and nominating for the approval of the Board, candidates
for appointment as Directors and ensuring that there is a formal,
rigorous and transparent procedure for appointment;
Reviewing the results of the Board performance evaluation process
that relate to the composition of the Board, its diversity and how
effectively the members of the Board work together; and
Reviewing periodically the time input required from a Non-Executive
Director.
The standard terms of contract for Non-Executive Directors are available
on request from the Company Secretary, at the Company’s registered
office during normal business hours, and at the AGM (for 15 minutes prior
to the meeting and during the meeting).
See the Committee’s terms of reference at https://www.kenmareresources.
com/en/about-us/corporate-governance/nominations-committee
I am pleased to present the report of the Nomination
Committee for 2021. During the year, the Committee met
four times and the main areas of focus were changes to the
Board, which included assessing the skills and experience
of existing Board members, diversity on the Board, the
composition of the Board’s Committees, and Board and
Committee evaluations. This report describes how the
Committee has fulfilled its responsibilities during the
year under its Terms of Reference and under the relevant
requirements of the UK Corporate Governance Code 2018.
MEMBERSHIP AND MEETINGS
In May 2021, Gabriel Smith retired from the Board.
On 31 December 2021, Peter Bacchus resigned from
the Board, Deirdre Somers joined the Committee in
his place and I took over the Chair. As a result, the
Nomination Committee now consists of myself, Elaine
Dorward-King and Deirdre Somers, all of whom are
Independent Non-Executive Directors. Gabriel Smith
and Peter Bacchus attended all of the Committee
meetings held in 2021 during the periods in which
they were members of the Committee.
Committee membership
Name
Graham Martin
Elaine Dorward-King
Deirdre Somers
92
Kenmare Resources plc
Annual Report and Accounts 2021
Role
Chair
Member
Member
Independent
Date of Appointment
to Committee
Meetings
Attended
Yes
Yes
Yes
25/05/2017
13/05/2020
31/12/2021
4
4
N/A
GOVERNANCE
Read more about
diversity on
page 53
Read more about
the annual board
evaluation on
page 86
Succession and changes to the Board this year
During 2021, the Committee considered the structure, size,
skills and composition of the Board and its Committees. The
Committee maintains a skills matrix of the current Board to
identify areas for enhancement and to highlight skills that
may be required, or which need to be replaced due to Board
retirements. In early January 2021, the Committee considered
that the Board would be enhanced by the appointment of
an additional Director with suitable expertise in sub-Saharan
Africa, natural resources technology or capital projects, all
areas which it was felt would strengthen the Board.
An external recruitment consultant, The Effective Board
LLP (which has no connection with the Company other
than its involvement in previous searches), was engaged
to assist in the process which resulted in the co-option of
Mette Dobel to the Board with effect from 1 January 2022.
This process is outlined on page 94. Mette is currently
Regional President, Europe, North Africa, Russia/CIS for
FLSmidth, an engineering, equipment and service solutions
provider to the global mining and cement industries. She
holds a Masters in Engineering and a Bachelor of Science
(Commercial) from Københavns Teknikum.
In March 2021, Tim Keating, a Non-Executive Director,
stepped down from his role with Oman Investment Authority
(OIA), which controls African Acquisition S.à.r.l. (AAS) one of
Kenmare’s largest shareholders and which had nominated
Tim to the Kenmare Board. As a result, he stepped down from
the Kenmare Board and AAS nominated Sameer Oundhakar
in his place. The Committee reviewed Sameer’s suitability for
the role and recommended that his appointment to the Board
proceed. Sameer joined OIA in 2018 and is a Senior Manager
in the Diversified Private Equity Investments department
of OIA. He has a Bachelor’s degree with distinction in
Mechanical Engineering from VJTI Mumbai, a Post Graduate
Diploma in Management from the Indian Institute of
Management Lucknow and an MBA from INSEAD.
In 2021, the Committee together with the Managing Director
also led the search for a new Chair of the Board noting that
Steven McTiernan would have completed nine years on
the Board on 11 March 2022. This was a long and important
process as it was necessary to find a candidate who not
only possessed the necessary leadership qualities and
corporate expertise but who would also work well with the
existing Board. The Effective Board LLP was also engaged
to assist in this search which culminated in the appointment
of Andrew Webb as a Non-Executive Director and Chair
designate on 2 December 2021. Andrew brings extensive
natural resources and financial advisory experience to the
Board. He was previously a Managing Director at Rothschild
& Co. in the Global Advisory team, where he worked for 25
years until September 2018. It has been agreed that Steven’s
tenure will be extended by two months to the Annual
General Meeting of the Company in May this year to allow
for Andrew to gain more experience of the operation of the
Board and its Committees (especially given the difficulty in
holding physical meetings due to COVID-19 restrictions).
These three appointments have brought mining technology
and automation, private equity and financial advisory skills
and expertise as well as additional gender and ethnic
diversity and diverse geographical experience to the Board.
Ensuring that the Board continues to have the requisite
skills to support the Company’s strategy will remain a
priority for my tenure as Chair. I will also focus on the
strategy for further enhancing the Board’s diversity. As
shown on page 74, there is a good range of terms of tenure
on the Board with five Non-Executive Directors in their first
term of three years; two in their second term and Steven
McTiernan completing his final term of three years.
Training
2021 saw the launch of an online training platform for
Kenmare staff which was extended to Directors later in the
year. This covers legal and regulatory areas such as market
abuse regulation, data protection and whistleblowing as
well as internal company policies and procedures. This will
allow Directors to update and refresh their knowledge in
their own time. Directors are also encouraged to undertake
appropriate external training on relevant matters.
In addition, external experts may be invited to attend
certain Board or Committee meetings to address the Board
(or relevant Committee, as the case may be) on relevant
industry matters and on developments in corporate
governance, risk management and executive remuneration.
Succession
Each year the Committee considers the leadership needs of
the Group and succession planning for senior management
roles including the Managing Director and Financial Director.
During the year, the Committee received updates from
management on succession planning activities through the
Group. Board members regularly engage with members of
the senior management team who present at Board and
strategy meetings.
Committee composition
During the year, the Committee considered and made
recommendations to the Board regarding several changes
to the composition of the Board’s Committees. In May,
following the retirement of Gabriel Smith from the Board
at the Annual General Meeting, Deirdre Somers took over
the role of Chair of the Audit & Risk Committee and joined
the Remuneration Committee as a member. Following
the resignation of Peter Bacchus on 31 December 2021, I
assumed the role of Chair of this Committee, Deirdre Somers
became a member of this Committee, Clever Fonseca joined
the Remuneration Committee, and Elaine Dorward-King
joined the Audit & Risk Committee. The current committee
memberships of each Director are set out on pages 76 to 77.
Diversity and inclusivity
Kenmare recognises the benefits of diversity and its
objective to achieve greater diversity at Board and senior
management level, as well as across the wider workforce.
This is supported by the Group’s Diversity and Inclusion
Policy which can be found at https://www.kenmareresources.
com/en/sustainability/policies.
The Board keeps this policy under review to ensure that it is
effective in achieving diversity in its broadest sense, having
regard to experience, age, gender, religious beliefs, sexual
orientation, race, ethnicity, disability, nationality, background
and culture and instructs any search consultants it engages
to consider this in sourcing candidates. We recognise that
Kenmare Resources plc
Annual Report and Accounts 2021
93
NOMINATION COMMITTEE REPORT CONTINUED
diversity aids implementation of our strategy by providing
the Board with different ways to tackle an issue, healthy
debate and challenge of the Board and the executive team
as well as making Kenmare more adaptable to changes in
our environment.
While the Board will always seek to appoint candidates on
merit against objective criteria, greater diversity is actively
considered when making Board appointments. Gender and
diversity will continue to be given careful consideration
when shortlisting candidates as part of the process of Board
refreshment and renewal, as it was in 2021. Following the
appointment of Mette Dobel to the Board with effect from
1 January 2022 and following Steven McTiernan’s retirement
from the Board at the 2022 Annual General Meeting, female
representation on the Board will be one third.
The recent external evaluation (details of which are on page
86) found that Board has a reasonable level of diversity and
that the Board has and continues to demonstrate strong
commitment to improving diversity in terms of ethnicity/
geography, gender and age. The issue of diversity will
be reviewed by the Board later in the year when it has
completed a period of adjustment following the appointment
of a new Chair and other Non-Executive Directors.
The Board and Executive Management is committed to
increasing female representation in senior leadership
positions across the Group. The Group is also making
progress with this objective, with 20% of the Executive
Committee being female and a further 6 women in their
direct reports.
The Board and management continue to focus on evolving
and implementing strategies for recruiting and developing
colleagues in ways that promote diversity and inclusion.
Additional Directorships
During the year, Peter Bacchus was appointed as a Non-
Executive Director of Trident Royalties plc and Sameer
Oundhakar was appointed as a Non-Executive Director of
Kore Potash plc. Prior to accepting these appointments,
both Peter and Sameer discussed the matter with either
the Chairman of the Board or the Board itself which was
satisfied that the responsibilities resulting from these new
positions would not adversely impact on their respective
time commitments to Kenmare, would not result in a conflict
of interest and would be likely to enhance their respective
abilities to contribute to the long-term success of the Group.
Board effectiveness
In accordance with provisions of the Code, a performance
evaluation of the Board is carried out annually and facilitated
externally every third year. In 2021, an external performance
evaluation was conducted by Board Excellence. Further
details of the evaluation, the process, outcomes and actions
are set out on page 86 of the Corporate Governance section
and are incorporated into this report by reference. The
results of the 2021 evaluation process were largely positive
but a number of areas for improvement were identified and
an action plan has been drawn up for their implementation,
which will be overseen by this Committee.
The evaluation suggested that the Board could be further
strengthened by a Non-Executive Director with robust
operations experience in both the mineral sands area and
potentially in other mining areas and by an Africa based
director. Currently, however, there are no plans to enlarge
the Board and to appoint additional directors but this
suggestion will be borne in mind should a vacancy arise
on the Board. Given that several of the Directors were
appointed to the Board in the last 18 months and that
Andrew Webb will assume the role of Chairman in May 2022,
it would be prudent to allow the appointees to settle into
their roles and for a new Board dynamic to evolve before
assessing whether any additional skills or experience are
required.
Committee effectiveness and priorities for 2022
The Committee’s performance and effectiveness was also
considered as part of the external evaluation. The evaluator
found that the Committee has scope for improvement
particularly in the area of succession planning for both
senior Executives and Non-Executive directors and this will
be a key area of focus for this Committee in 2022.
Acknowledgments
I would like to thank the Committee members for their
commitment and input to the work of the Committee in
2021. I would also like to acknowledge the contribution of
both Gabriel Smith and Peter Bacchus to the Committee
over the years and to thank them for their efforts and wish
them well.
GR AHA M MA RTI N
C HAI R OF T HE NOM INATI ON COMMI T TE E
4 April 2022
PROCESS FOR BOARD APPOINTMENTS:
01 The Committee approves a role specification
based on skills and experience required and the
Diversity Policy
02 An independent search agent is appointed
03 The Committee considers a longlist and then
a shortlist of potential candidates and holds
interviews
04 The preferred candidate is invited to meet with all
Board members and due diligence is carried out
05 The Committee makes a recommendation to the
Board for consideration
06 Following Board approval, the appointment
is announced in line with regulations and an
induction process takes place.
94 Kenmare Resources plc
Annual Report and Accounts 2021
GOVERNANCE
Annual Report and Accounts 2021 95
Kenmare Resources plc
SUSTAINABILITY COMMITTEE REPORT
A record year
for safety
EL AINE DORWA RD- K ING
CHAIR OF THE SU STA I NA BILI T Y COM MIT TE E
PRINCIPAL RESPONSIBILITIES OF THE COMMITTEE:
•
•
•
•
Oversee management of health, safety, security, social and
environmental risks, and facilitate progressive employment
practices on our operating sites;
Facilitate fair land access, compensation, and timely
rehabilitation arrangements in our mining areas;
Advocate for and promote community development,
particularly economic, healthcare and education in our host
communities;
Incorporate management of climate change and other
sustainability factors into Group plans, with external reporting
where appropriate to recognised international norms; and
• Monitor socio-political developments within the region and
Mozambique.
See the Committee’s terms of reference at
www.kenmareresources.com/en/about-us/corporate-governance/
sustainability-committee
MEMBERSHIP AND MEETINGS
In March 2021, Tim Keating, African Acquisition S.à.r.l.'s Board
representative, stepped down from the Board. As a result, the
Sustainability Committee now consists of myself as Chair, Clever
Fonseca and Graham Martin, all of whom are Independent Non-
Executive Directors. The committee met six times in 2021.
I am pleased to present the report of the Sustainability Committee
for 2021. During the year, the Committee met six times. Unfortunately,
due to COVID-19 restrictions, all but one meeting were held by
video-conference but we were pleased to finally meet in person in
December and to visit the Mine in February 2022. The main areas of
focus for our meetings were as set out below. This report describes
how the Committee has fulfilled its responsibilities during the year
under its Terms of Reference and under the relevant requirements of
the UK Corporate Governance Code 2018.
2021 sustainability performance
We commend the team for their continued focus on health and
safety and on the significant achievement of the lowest ever LTIFR
the Company has recorded of 0.03 per 200,000 hours worked. The
team recorded over six million hours worked without an LTI to the
end of 2021 and achieved one year without an LTI on 6 January 2022.
In addition, the Moma Mine retained a NOSA five-star accreditation
for its health, safety and environmental performance for a sixth
consecutive year.
The camp health clinic also successfully rolled out COVID-19
vaccinations, with 96% of employees double vaccinated by year-end
and 12,000 vaccines donated to the local communities.
2021 also saw a significant focus on Kenmare’s climate strategy and
the Company drafted its first Climate Strategy Report aligned to the
recommendations of TCFD, and set an ambition to achieve Net Zero
Greenhouse Gas emissions by 2040 for Scope 1 & 2. In addition, the
Company has set a short-term carbon emissions reduction target
of 12% by 2024, which will be delivered largely by the RUPS project,
due to begin commissioning in the first half of 2022. Achieving this
emissions reduction will be dependent on reliable supply of electricity
by EdM outside of the rainy season.
Committee membership
Name
Elaine Dorward-King
Clever Fonseca
Graham Martin
96 Kenmare Resources plc
Annual Report and Accounts 2021
Role
Chair
Member
Member
Independent
Date of Appointment
to Committee
Meetings
Attended
Yes
Yes
Yes
4/11/2019
2/10/2019
2/10/2019
6
6
6
GOVERNANCE
Kenmare’s commitment to local socio-economic development through
KMAD continued, with 700 farmers participating in the Conservation
Agriculture programme, delivering a productivity increase of 49% for
those using this approach, and the construction of the Pilivili health
centre, providing 27,000 community members with healthcare access.
Steady progress on improving the gender diversity of the Board,
Executive Team and overall female representation at the Moma
Mine continued and by the end of 2021, 12.5% of the workforce at the
mine was female (2020: 10.6%). Our Mine workforce comprised 97%
Mozambican employees and the number of employees living locally to
the Mine grew to 70% (2020: 62%).
Areas of focus in 2021
AREA OF FOCUS
SUSTAINABILITY COMMITTEE ACTION
ESG strategy,
targets and reporting
Health and Safety
•
•
•
•
•
Reviewed and approved the Company’s sustainability strategy, including mid-term public ESG targets
Reviewed and approved Executives’ 2022 ESG targets and progress against 2021 ESG targets
Approved the Sustainability Report for 2020
Discussed TCFD and other sustainability reporting requirements and the Company’s approach to these
Considered management’s report on Health and Safety of Employees and the Community around the Moma
Mine at every meeting
Reviewed management’s plans to minimise COVID-19 exposure at the Moma Mine
•
• Monitored the number of cases of COVID-19 at the Mine and the condition of infected employees
•
•
Reviewed the Mine's community safety management and incidents reporting
Reviewed a new wellness initiative at the Mine
Environment
Community and
social affairs
Employees
Human rights
Security
Terms of reference
•
•
•
•
•
•
•
•
•
Reviewed and approved the Net Zero Climate Policy, and Climate-strategy following a review of climate-related
risks & opportunities
Received and reviewed Land Management and Water Strategy updates
Discussed the Conservation Agriculture programme and food security for communities
Considered management’s report on Community and Social Affairs and Community Development at every meeting
Instigated an investigation into the viability of a river crossing in connection with the Namalope West
resettlement plan and the socio-economic situation in Namalope West
Received and reviewed an update on external relations with local regional and national authorities in Mozambique
Reviewed plans for the sustainable development of the Moma/Larde area
Reviewed the KMAD three year Strategic plan 2022-2024
Received updates on the political situation in Mozambique and its country risk factors
• Monitored health and safety incidents and initiatives at the Moma Mine
•
•
•
•
•
Reviewed results of the supply chain compliance audit
Approved the Modern Slavery Statement in respect to 2020
Reviewed procedures around the use and discharge of weapons at site
Approved the site security strategy
Considered its terms of reference to ensure they remain appropriate for the Group’s needs. The terms of
reference are available on the Kenmare website at https://www.kenmareresources.com/en/about-us/corporate-
governance/sustainability-committee
Committee effectiveness and priorities for 2022
As outlined in the Corporate Governance Report, during 2021 there was an external evaluation of the Committee’s performance and effectiveness. I am
pleased to confirm that the Committee continues to operate effectively and in 2022 will enhance its focus on the longer term strategic sustainability
related risks and their mitigation plans. Priorities for the Committee during 2022 will include evaluating the long-term risks associated with Kenmare’s
social licence to operate in Moma; an update to Kenmare’s land rehabilitation strategy to better align the community and Kenmare’s priorities with
regards to food security, biodiversity and carbon sequestration; and overseeing KMAD’s progress on its new strategic pillar of water and sanitation.
Conclusion
I would like to thank the Committee members for their commitment and input to the work of the Committee during 2021. In particular I would like
to thank Michael Carvill, Managing Director, for his continued leadership, Ben Baxter and his operations team for their efforts, and the external
affairs team led by Gareth Clifton for their dedication to strong social and environmental performance.
EL A INE DORWARD-KING
C HAIR OF THE SUSTAINA BI LITY COMM ITTEE
4 April 2022
Kenmare Resources plc
Annual Report and Accounts 2021
97
AUDIT & RISK COMMITTEE REPORT
Effective risk
management and
internal control
DEIRDRE SO MER S
CHAIR OF THE AU DIT & RISK COMMI TT EE
PRINCIPAL RESPONSIBILITIES OF THE COMMITTEE:
• Monitoring the integrity of the Group’s financial statements and any formal
announcements relating to the Group’s financial performance and reviewing
significant financial reporting judgements contained in them;
Assessing whether the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable, and provides the information necessary for
shareholders to assess the Group’s performance, business model and strategy;
• Monitoring the external auditor’s independence and objectivity and, in particular,
•
the appropriateness of the provision of non-audit services;
• Monitoring the effectiveness of the Group’s internal control and risk management
•
•
systems;
Considering the appropriate risk appetite for the Group and overseeing the current
and prospective risks faced by the Group and its strategy in relation to future risks;
Ensuring the risk management function is properly resourced, with adequate
information rights and sufficient independence such that it is free from
management interference;
• Making recommendations for the Board to put to shareholders for their approval
in General Meetings regarding the appointment, remuneration and terms of
engagement of the external auditor;
• Monitoring the effectiveness of the internal audit function; and
•
Reporting to the Board, identifying any matters in respect of which it considers
that action or improvement is needed, and making recommendations as to the
steps to be taken.
The Chair of the Audit & Risk Committee attends the Annual General Meeting to
answer questions on the report on the Committee’s activities and matters within the
scope of the Committee’s responsibilities.
See the Committee’s terms of reference at https://www.kenmareresources.com/en/
about-us/corporate-governance/audit-risk-committee.
I am pleased to present the report of the Audit
& Risk Committee for 2021. During the year, the
Committee met six times and the main areas of
focus were as set out on page 101. This report
describes how the Committee has fulfilled its
responsibilities during the year under its terms
of reference and under the relevant requirements
of the UK Corporate Governance Code 2018.
MEMBERSHIP AND MEETINGS
In May 2021, Gabriel Smith retired from
the Board and, in December 2021, Peter
Bacchus resigned as a Director. The
Audit & Risk Committee now consists of
myself, as Chair, Clever Fonseca and Elaine
Dorward-King, all of whom are Independent
Non-Executive Directors. As outlined in the
Directors’ biographical details, members
bring considerable accounting, corporate
financial and mining industry experience to
the work of the Committee. I am a Chartered
Accountant and have been designated
by the Board as the Committee’s financial
expert. Details of the skills and experience
of the Committee members are set out on
pages 76 and 77.
Both Gabriel Smith and Peter Bacchus
attended all Committee meetings held
prior to their respective departures from
the Company.
Committee membership
Name
Deirdre Somers
Clever Fonseca
Elaine Dorward-King
98 Kenmare Resources plc
Annual Report and Accounts 2021
Role
Chair
Member
Member
Independent
Yes
Yes
Yes
Date of
Appointment to
Committee
Meetings
Attended
19/08/2020
13/05/2020
31/12/2021
6
6
N/A
GOVERNANCE
Read more about
our financial
performance on
page 44 to 48
Read more about
our principal risks
on page 64 to 71
External audit
Independence and non-audit services
The Committee is responsible for ensuring that the external
auditor is independent and for implementing appropriate
safeguards where the external auditor also provides
non-audit services to the Group. The Committee closely
monitors the level of audit and non-audit services that audit
firms provide to the Group. The Committee has adopted a
policy on the provision of non-audit services by the external
auditor on the basis that they may provide such services
only where the engagement will not compromise their audit
objectivity and independence, they have the understanding
of the Group necessary to provide the service and they
are considered to be the most appropriate to carry out the
work. All non-audit services provided by audit firms must be
approved by the Committee.
KPMG is the Group’s external auditor and has confirmed
to the Committee that it is independent from the Group
under the requirements of the Irish Auditing and Accounting
Supervisory Authority’s (IAASA) Ethical Standards for
Auditors. The Committee reviews and approves any
appointment of an individual, within three years of having
previously been employed by the current external auditor, to
a senior managerial position in the Group.
The Company Secretary, the external audit lead partner and,
from time to time, the Financial Director attend meetings
at the invitation of the Committee. Twice each year, the
Committee and the external auditor discuss, without
management present, matters relating to its remit and any
issues.
KPMG was approved as auditor by the Company at the AGM
in May 2019 and began its engagement in July 2019. From
the commencement of KPMG’s engagement, the lead audit
partner was David Meagher and audit partner was Keith
Watt. Following David’s retirement in 2021, Keith assumed
the role of lead audit partner.
In 2021, KPMG provided a number of audit services and
non-audit services. The non-audit services consisted mainly
of audit-related assurance concerning the review of the half-
yearly financial statements and Mozambican tax compliance
services and other related matters. The Committee is
satisfied that the external auditor’s knowledge of the Group
was an important factor in choosing it to provide these
services. The fee paid to KPMG in 2021 in respect of audit
services and non-audit services was $166,000 and $92,000
respectively, a ratio of 1.8:1. KPMG has stated that it does not
consider that these fees create a self-interest threat since
the level of fees is not significant to the firm as a whole. The
Committee is therefore satisfied that the non-audit work did
not compromise KPMG’s independence or objectivity and
that it was in the interests of the Group to retain KPMG for
those services. Details of the amounts paid to KPMG during
the year for audit and other services are set out in Note 7 to
the consolidated financial statements on page 150.
Effectiveness
The Committee, on behalf of the Board, is responsible for
the relationship with the external auditor and for monitoring
the effectiveness and quality of the external audit
process. The Committee’s primary means of assessing the
effectiveness of the external audit process is by monitoring
performance against the agreed audit plan. In addition, we
consider the following:
•
•
•
•
•
The experience and knowledge of the external
audit team;
The quality of presentations to the Board and
Committee;
The technical insights provided relevant to the Group;
Demonstration of a clear understanding of the Group’s
business and key risks; and
The results of post-audit interviews with management
and the Audit & Risk Committee Chair.
Based on the above, the Committee is satisfied with the
effectiveness of the external auditor for 2021.
Kenmare Resources plc
Annual Report and Accounts 2021
99
AUDIT & RISK COMMITTEE REPORT CONTINUED
Internal audit
The Internal Auditor prepares an Internal Audit plan for each
financial year proposing the audit areas to be covered and
the timeframe for each. This is presented to the Committee
for approval. The Internal Auditor updates the Committee on
progress at regular intervals and prepares reports for each
Committee meeting which he presents at the meetings.
The Committee can question the Internal Auditor on the
contents of the reports and the processes employed by
him in investigations. These reports are considered by the
Committee and material matters and recommendations are
then reported to the Board.
The Committee is responsible for monitoring and reviewing
the operation and effectiveness of the Internal Audit
function including its focus, plans, activities and resources.
To fulfil its duties during 2021, the Committee:
•
•
•
•
•
Reviewed and approved the Internal Audit annual plan
to ensure alignment with the Group’s principal risks;
Considered and was satisfied that the competencies,
experience of and level of resources available to
the Internal Auditor were adequate to achieve the
proposed plan;
Considered the role and effectiveness of internal audit
in the overall context of the Group’s risk management
framework and was satisfied that the function has
appropriate standing within the Group;
Ensured that the Internal Auditor had access to the
Chair of the Board if required; and
Ensured co-ordination between Internal Audit and the
external auditor to maximise the benefits from clear
communication and co-ordinated activities.
On the basis of the above the Committee concluded that,
for 2021, the Internal Audit function was performing well and
is satisfied that the quality, experience and expertise of the
function is appropriate for the Group.
Whistleblowing
The Company has a Whistleblowing Policy in place and
a third-party service provider is engaged to provide a
confidential 24/7 whistleblowing service available to all
employees to report any wrongdoing in the workplace. The
service does not replace the internal processes within the
organisation, but seeks to provide an alternative for those
employees who, for any reason, do not wish to use the
internal processes. The Audit & Risk Committee Chair is also
positioned to receive written complaints in confidence on
accounting, risk issues, internal controls, auditing issues and
related matters for reporting to the Audit & Risk Committee.
Three reports were received in 2021. Two are still under
investigation as progress has been delayed for reasons
outside Kenmare’s control. A third report was dealt with
satisfactorily by our finance team.
Financial reporting and significant
financial judgements
A key responsibility of the Committee is to consider the
significant areas of complexity, management judgement
and estimation that have been applied in the preparation
of the financial statements. The Committee has reviewed
the suitability of the accounting policies which have been
adopted and whether management have made appropriate
judgements and disclosures. The table on page 102 sets
out the significant matters considered by the Committee
in relation to the financial statements for the year ended 31
December 2021.
Under Provision 25 of the 2018 UK Corporate Governance
Code, the Committee, upon request from its Board, should,
“provide advice on whether the annual report and accounts,
taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to
assess the company’s position and performance, business
model and strategy”. The Board has tasked the Committee
with this role, which is incorporated into the Committee’s
terms of reference. In line with the above, the Committee
has undertaken a review of the 2021 Annual Report and
Accounts and confirmed to the Board that it was the opinion
of the Committee that, taken as a whole, the 2021 Annual
Report and Accounts are fair, balanced and understandable
and provided the information necessary for shareholders
to assess the Group’s position and performance, business
model and strategy. In advance of providing such a
confirmation to the Board, the Committee considered
the adequacy of the systems and internal controls, the
consistency of the various elements of the 2021 Annual
Report and Accounts (taking into account reports received
by the Board during the year), the level of information
provided, the narrative reporting and the language used.
Risk management
The Group has identified and documented critical risks to
the business, including key operational risks and related
controls in its risk register. The Mine’s operational risks
to the business are reviewed quarterly and updated. The
Group’s operational risks are reviewed annually and the
corporate and business risks on the Group’s risk register
are updated.
Following a review of the Group risk register by senior
management, the principal risks identified for the Group
and their mitigations are submitted to the Audit & Risk
Committee and Board for review and approval. These risks
are included in the principal risks and uncertainties facing
the Group as set out on pages 64 to 71. As part of the
internal audit function, controls identified in the risk register
are tested to ensure they are operating effectively.
The Committee assessed the Group’s risk management and
internal control framework in line with the FRC Guidance on
Risk Management, Internal Control and Related Financial
and Business Reporting and reviewed the audit and review
summary reports from the external auditor. The Committee,
having assessed the above information, is satisfied that
the internal control and risk management framework is
operating effectively and has reported this opinion to
the Board.
100 Kenmare Resources plc
Annual Report and Accounts 2021
GOVERNANCE
Areas of focus in 2021
AREA OF FOCUS
AUDIT & RISK COMMITTEE ACTION
Financial Reporting
Distributable Reserves
Risk Management
and Internal Control
Internal Audit
External Audit
Mozambique Tax
Authority Audit
Terms of Reference
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
The Committee reviewed the 2020 Annual Report and Accounts in March 2021, the 2021 Half Yearly Financial
Report issued in August 2021 and all formal announcements relating to these statements before submitting
them to the Board of Directors with a recommendation to approve.
The Committee undertook a review of the 2020 Annual Report and Accounts and confirmed to the Board that
it was the opinion of the Committee that, taken as a whole, the 2020 Annual Report and Accounts are fair,
balanced and understandable and provided the information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
The Committee reviewed management’s impairment assessment together with the viability and going concern
statements in the 2020 Annual Report and Accounts and 2021 Half Yearly Financial Report.
The Committee reviewed the Company’s distributable reserves to ensure these were sufficient to pay the 2020
final dividend, the 2021 interim dividend and to buy back shares pursuant to the Tender Offer.
The Committee reviewed the Group’s risk management and internal control framework established for
identifying, evaluating and managing key risks.
The principal risks facing the Group were reviewed and considered.
The Committee received updates on insurance renewals.
The Committee reviewed the Anti-Bribery and Whistleblower policies to ensure they remained appropriate for
the Group’s business.
The Group reviewed the Treasury Management Policy and recommended it for approval by the Board.
The Committee reviewed the internal audit charter and was satisfied that it remained appropriate for the Group.
The Committee approved the internal audit plan for 2021 and received quarterly updates on progress in this
regard as well as in relation to ad hoc work undertaken during the year.
The Committee received quarterly reports from the internal auditor on Safecall (anonymous whistleblower line)
reports received and resulting investigations.
The Committee reviewed internal audit reports during the year covering a review of the plant spares and
consumables warehouse relocation plan, the mine’s plant maintenance process and foreign currency payments
process. The Committee also received reports on the investigations into the Safecall reports noted above, a
report investigating impersonation of Kenmare as part of an alleged “scam” and a report on a procurement
process-related issue.
The Committee reviewed the effectiveness of the internal audit function.
The Committee agreed the audit plan of the external auditor, KPMG, for their audit of the 2021 Annual Report
and Accounts and their review of the 2021 Half Yearly Financial Report.
The Committee reviewed the independence and effectiveness of the external audit process including
the safeguards designed to avoid the possibility that the auditor’s objectivity and independence could be
compromised. The Committee is satisfied that the appropriate policy is in place in respect of services provided
by external auditors.
The Committee approved the non-audit services provided by KPMG to the Group in 2021.
Post completion of the 2020 audit and 2021 half year review, in conjunction with KPMG, review meetings were
held with senior finance management and it was confirmed by both parties that no issues had arisen during the
audit or review process.
The Committee received a presentation from KPMG on proposed UK audit reforms.
The Committee received regular updates on the Mozambican tax authority’s audit of the tax obligations of
KMML Mozambique Branch.
The Committee received input into the audit from local counsel in Mozambique.
The Committee reviewed financial reporting disclosures in relation to the audit.
The Committee considered its terms of reference to ensure they remain appropriate for the Group’s needs.
The terms of reference are available on the Kenmare website at https://www.kenmareresources.com/en/about-
us/corporate-governance/audit-risk-committee.
Kenmare Resources plc
Annual Report and Accounts 2021
101
AUDIT & RISK COMMITTEE REPORT CONTINUED
Estimates and judgements
The Committee reviewed in detail the following areas of significant judgement, complexity and estimation in connection with the 2021 financial
statements. The Committee considered the report from the external auditor on the audit work undertaken and conclusions reached as set out in
its audit report on pages 130 to 133.
AREAS OF JUDGEMENT
AUDIT & RISK COMMITTEE CONSIDERATIONS
Property, plant and
equipment
Revenue recognition
Other matters
The recovery of property, plant and equipment is dependent upon the successful operation of the Mine. The
realisation of cash flow forecast assumptions would result in the recovery of such amounts. During the financial
year the Group carried out an impairment review of property, plant and equipment. As a result of the review no
impairment provision is required in the financial year 2021. Details of the impairment review, assumptions and
judgements are included in Note 13 to the consolidated financial statements.
The Group sells its mineral products on the international commercial terms (Incoterms) FOB, CFR and CIF and
has identified the performance criteria and recognition of revenue in relation to products, freight and insurance.
Following discussions with management, the Audit & Risk Committee was satisfied that the revenue recognition
methodology used by management is appropriate.
The Committee considered and is satisfied with a number of other judgements and estimates which have been
made by management including provisioning for tax matters, the mine closure and mine rehabilitation provision,
units of production depreciation, considerations of the impact of climate change on amounts reported in the
financial statements and the carrying amounts of the Parent Company’s investments in subsidiary undertakings.
Audit & Risk Committee effectiveness and priorities for 2022
As outlined in the Corporate Governance Report, during 2021 there was an external evaluation by Board Excellence of the Board and its
Committees’ performance and effectiveness. I am pleased to confirm that the evaluator found that the Committee is working well, is highly
effective, is well-led, and well supported by the Financial Director, Company Secretary and financial Team. The Committee will continue to focus on
internal control, external audit planning and risk management during 2022.
The Committee would like to thank KPMG for their work on the 2021 financial statements. I would also like to thank my fellow Committee members
for their commitment and input to the work of the Committee during 2021 and the financial team for their assistance, guidance and support.
Lastly, I would like to thank both Gabriel Smith and Peter Bacchus for their contribution to the Committee and to wish them well in their future
endeavours.
DEIRDRE SOMERS
C HAIR OF THE AUDIT & RISK COMMITTEE
4 April 2022
102 Kenmare Resources plc
Annual Report and Accounts 2021
GOVERNANCE
Kenmare Resources plc
Annual Report and Accounts 2021
103
REMUNERATION COMMITTEE REPORT
A remuneration
policy that supports
Kenmare's goals
GRAH AM MARTIN
CHAIR OF THE REMU NE RATI ON CO MM I TT E E
Read more about
remuneration
policy on page
118 to 122
Read more about
the 2021 bonus
outcome on page
110 to 111
Chair’s Overview
On behalf of the Board, I am very pleased to present the
Remuneration Committee’s report for 2021 on Directors’
remuneration.
This report is divided into three main sections:
•
•
•
This statement, which provides a summary of the year
under review and, together with the annual report on
remuneration, describes how the Committee has fulfilled
its responsibilities during the year under its Terms of
Reference and under the relevant requirements of the
UK Corporate Governance Code 2018;
The annual report on remuneration which provides
details of the remuneration earned by the Directors in
the year ended 31 December 2021 and how the current
Remuneration Policy will operate for the year ending
31 December 2022; and
A summary of the remuneration policy which was
approved by shareholders at the 2020 AGM, and which
applies for the three-year period from the date of that
approval.
Summary of the work of the Committee in 2021
In early 2021, most of the Committee’s work focused on
assessing the outcome of the key performance indicators
(KPIs) under the Executive Directors' bonus scheme for
2020, and agreeing some modifications to those metrics for
the application of the scheme in 2021.
We reviewed benchmarking reports prepared by PwC on
the salaries, benefits and fees of the Executive Directors, the
Company Secretary, and the Chairman and set their 2021
levels appropriately, while also reviewing and discussing with
the Executive Directors the remuneration of the executive
committee and senior Mine management.
We also agreed the amount of the annual award to the
Executive Directors under the Group’s long term share
plan, the Kenmare Restricted Share Plan (KRSP), and
the performance indicators to be considered under the
performance underpin while at the same time agreeing
the annual KRSP awards for other employees within the
Committee’s remit.
During the remainder of the year, the Committee monitored
the performance of the Group against the KPIs on a quarterly
basis and we provided regular feedback to the Executives.
The Committee also kept under review during the year the
remuneration and benefits of the Executive Directors in the
context of the remuneration of the Group’s workforce as a
whole. We received presentations from management on the
remuneration structure for workers at the Mine and satisfied
ourselves that our staff receive pay and benefits which
are benchmarked appropriately, take into account local
employment regulations and conditions as well as seniority,
and afforded our workers the opportunity to share in the
benefits from the success of the Group. We are particularly
pleased to note that, following the extension in 2020 of
KRSP awards to certain categories of employee at the Mine
in Mozambique, this was extended to further categories of
Mine staff in 2021. The Committee also notes that there is
no discrimination between our male and female workers at
the Mine in their pay and benefits for similar jobs.
The Committee also received a presentation on terms
and conditions of employment of our Dublin, London, and
Beijing based staff and satisfied itself that the remuneration
and benefits of our employees remained appropriately
benchmarked and that they also had opportunities through
a bonus scheme and the KRSP to share in the success of
the Group.
In December, we were delighted that COVID-19 restrictions
had temporarily eased and allowed us to meet in person
for the first time since early 2020. At that meeting, the
Committee received a presentation from PwC with an
update on current remuneration matters with particular
focus on a review of the 2021 AGM season and investor
feedback on remuneration issues.
Performance and reward for 2021
Under the current Directors’ remuneration policy, the
Executive Directors receive a base salary (which, apart
from inflationary adjustments, has not been increased since
2010), pension contributions in line with market levels and
the Irish workforce, certain other benefits, an award of
shares under the KRSP, and the opportunity to earn a bonus
104 Kenmare Resources plc
Annual Report and Accounts 2021
depending on the outcome of the remuneration KPIs. In 2021, the
Directors’ remuneration policy operated in line with the intentions set
out in the 2020 Annual Report on Remuneration.
As noted by the Chairman and the Managing Director in their
respective reports, Kenmare delivered a record year for safety,
production, and shipments with EBITDA increasing by 182% and almost
US$100 million returned to shareholders during the year.
These results are reflected in the outcome of the KPIs and
consequently the bonus earned by the Executive Directors.
The performance criteria set by the Committee under the bonus
scheme reflected a mix of quantitative targets and qualitative targets
and were set at stretching levels for the maximum award. The
quantitative targets for 2021 comprised 72.5% (2020: 67.5%) of the
maximum 100% opportunity and the qualitative targets 27.5% (2020:
32.5%).
The quantitative targets covered metrics reflecting mineral production,
financial results and certain environmental, social and governance
(ESG) targets. The qualitative targets included matters such as
completion of an ore body knowledge plan for Nataka in preparation
for a formal Pre-Feasibility Study, certain ESG targets, continuing
COVID-19 management, and Executives’ personal performance.
Outcome
The outcome of the Committee’s assessment of performance
against the quantitative and qualitative criteria resulted in each of
the Executive Directors receiving a bonus of 60.38% of salary. In
accordance with our remuneration policy, any bonus in excess of 50%
of salary was paid in nil-cost share options granted under the KRSP,
which will vest in three years and the balance was paid in cash. The
Committee considers these outcomes a fair reflection of the corporate
performance for the year and the respective individual performances of
the Executives.
The Committee confirms that no malus and clawback provisions were
used during the year.
Implementation of the remuneration
policy for 2022
The Committee believes that the current Directors’ remuneration
policy remains appropriate for 2022. We believe it remains easy to
understand, is relatively simple, and remains motivating. It also allows
sufficient discretion to the Committee to take account of all relevant
matters affecting the Group or its performance in the year. Accordingly,
for 2022 we are proposing to retain the existing structure subject
to some changes to the performance metrics to reflect corporate
priorities for the year including a focus on the long-term strategic plan.
We have also agreed to increase the Executive Directors’ salaries and
all Non-Executive Directors’ fees by 5% to reflect inflationary pressure.
This aligns with wage increases already agreed this year for our
corporate staff. Further details of the intended implementation of the
remuneration policy for 2022 are set out on page 107.
Workforce engagement
As well as the management presentations noted above on the
remuneration benefits of our world-wide staff, I personally had an
opportunity in my capacity as “Workforce Engagement Director” to
engage directly in 2021 with senior Mine staff and head office staff as
noted more fully on page 91. In those discussions, I explained the role
and responsibilities of the Remuneration Committee, in particular in
setting the salaries and benefits of the Executive Directors.
GOVERNANCE
We discussed our desire to ensure that executive pay is aligned in its
short, medium and long term structure with our culture and values
and with the incentives and rewards available to all of our staff and I
took questions regarding employment conditions. Those discussions
with the Mine staff took place over a video link but I was very pleased
during our Board visit to the Mine in February 2022 to be able to have
some follow up discussions in person.
In the wider context, management engaged with the workforce during
the year in relation to performance reviews, salaries, bonus outcomes
(which reflect personal and company performance) and awards made
under the KRSP. As the KRSP has been recently introduced for senior
Site employees, management there delivered a presentation to those
employees on the operation and main features of the scheme and dealt
with any queries arising. Unfortunately, due to COVID-19 restrictions
some of these meetings had to be held virtually but we are now in a
position to return to physical meetings which will aid communication
and discussion.
Shareholder dialogue
Shareholders’ views on executive remuneration are very important
to the Board. Throughout the year we take every opportunity when
engaging with our shareholders to invite them to raise any concerns
or give any observations on executive remuneration, even when
executive remuneration is not the specific purpose of the meeting.
No specific concerns were raised by our shareholders in the course
of 2021 and any observations which were made were either taken into
account in the determination of outcomes in 2021 or will be considered
in the context of the new three year remuneration policy to be put to
shareholders for approval next year.
I hope you will vote in support of the vote on the Remuneration report
at this year’s AGM. Should you have any questions, comments or
feedback on remuneration matters at Kenmare I would be very pleased
to hear from you. I can be reached via the Company Secretary at
chealy@kenmareresources.com.
Conclusion
The Committee continues to believe that the current Directors’
remuneration policy with its blend of short, medium and long-term
aspects remains appropriate for the Group and in our view clearly
aligns the interests of the Executives with those of the shareholders.
In addition, it gives discretion to the Committee to look back over each
three-year period in determining the ultimate KRSP vesting outcomes.
I would like to thank our employees and contractors for all their efforts
and hard work in what continued to be challenging circumstances
owing to the residual presence of COVID-19. As ever, I am very grateful
for the support and guidance given to me throughout the year by my
fellow members of the Remuneration Committee, the support to the
Committee by Chelita Healy, the Company Secretary, and I would,
in particular, like to thank Gabriel Smith and Peter Bacchus for their
much-valued contributions.
GR AHA M MA RTIN
C HAI R OF T HE REM UNE RAT I ON COMMI T TE E
4 April 2022
Kenmare Resources plc
Annual Report and Accounts 2021
105
ANNUAL REPORT ON REMUNERATION
Responsibilities of the Committee
The role of the Committee is to assist the Board to fulfil its
responsibility to shareholders to ensure that:
•
•
Remuneration policy and practices of the Group are designed
to support strategy and promote long-term sustainable success,
reward fairly and responsibly, with a clear link to corporate and
individual performance, having regard to statutory and regulatory
requirements; and
Executive remuneration is aligned to Group purpose and values
and linked to delivery of the Group’s long-term strategy.
The primary responsibilities of the Committee are to:
− Determine and agree with the Board the Group’s policy on
executive remuneration;
− Within the terms of the agreed policy, determine the total
individual remuneration package of the Chair, Executive
Directors, Company Secretary and such other members of the
senior executive management as it is designated to consider;
− Review workforce remuneration, related policies and the
alignment of incentives and rewards with culture; and
− Oversee the preparation of the annual report on remuneration.
See the Committee’s terms of reference at https://www.
kenmareresources.com/en/about-us/corporate-governance/
remuneration-committee
The Committee gives full consideration to legal and regulatory
requirements, to the principles and provisions of the 2018 UK
Corporate Governance Code and to related guidance. The Committee
also seeks to ensure that risk is properly considered in the setting of
the remuneration policy, by ensuring that targets are appropriately
stretching but do not lead to the taking of excessive risk.
The Committee reviews remuneration and related policies applicable
to the wider workforce, ensuring that this is taken into account when
setting the policy for executive remuneration. The aim across the
Group is to provide a reward package that is aligned to shareholders’
interests, supports the achievement of the Company’s annual and
strategic objectives, is competitive against the appropriate market and
is consistent with our focus on performance and our core values. This
means:
•
•
base salaries are set in line with the market recognising the
individual’s skill, knowledge, experience levels and contribution to
the role;
high performance and exceptional contribution are recognised
through in-year incentives;
•
•
•
packages for leadership roles have an increased emphasis on
longer-term share-based reward;
providing employees with competitive post-retirement benefits in
line with practices applicable in relevant jurisdictions; and
ensuring access to a competitive and cost-effective package of
other benefits as part of the total reward offering.
The Company Secretary acts as Secretary to the Committee. The
Managing Director and Financial Director may be invited to attend
meetings of the Committee, except when their own remuneration is
being discussed. No Director is involved in consideration of his or her
own remuneration.
The Remuneration Committee seeks independent advice when
necessary from external remuneration consultants. In 2019, the
Committee conducted a competitive tender process following which
PwC, which has no other connection with the Group, Company or
the Directors, were retained as independent external remuneration
advisors. In 2020 and 2021, the Committee renewed their appointment.
PwC is paid a fixed fee for a fixed scope of work and charges fees
on a time and materials basis for work outside of the agreed scope.
During the year ended 31 December 2021 the total fees payable to
PwC in respect of these services was £35,500 (2020: £35,500). PwC
is a member of the Remuneration Consultants Group and a signatory
of that Group’s Code of Practice for remuneration consultants. The
Committee reviews the services and advice provided by PwC each year
and is satisfied that the advice it receives is independent and objective.
Membership and meetings
In May 2021, Gabriel Smith retired from the Board and Deirdre Somers
took his place on the Committee. Deirdre has attended all Committee
meetings held since her appointment. On 31 December 2021, Peter
Bacchus resigned from the Company and Clever Fonseca became
a member of the Committee. Both Gabriel Smith and Peter Bacchus
attended all Committee meetings held in 2021 during their respective
periods of membership. The Remuneration Committee now consists of
Graham Martin as Chair, Deirdre Somers, and Clever Fonseca. We are
all Independent Non-Executive Directors. Biographical details for each
of the Committee members and a description of their respective skills,
expertise, and experience are set out on pages 76 and 77.
The Committee formally met five times during the year but there were
also a number of less formal communications throughout the year on
remuneration issues between members of the Committee and with the
Executive Directors.
Committee membership
Name
Graham Martin
Deirdre Somers
Clever Fonseca
Role
Chair
Member
Member
Independent
Yes
Yes
Yes
Date of
Appointment to
Committee
Meetings
Attended
14/10/2016
13/05/2021
31/12/2021
5
2
N/A
106 Kenmare Resources plc
Annual Report and Accounts 2021
GOVERNANCE
Consideration of employment conditions
outside the Group
The Committee reviews the remuneration of the Executive Directors
in light of the remuneration of the executive directors of other
appropriate quoted companies. The Committee’s advisers prepare
annual reports benchmarking their remuneration (and that of the
Non-Executive Directors) against peer companies and this assists the
Committee in determining the appropriateness of the remuneration
payable to the Executive Directors.
Implementation of the Directors’ Remuneration Policy
In implementing the current remuneration policy, the Remuneration
Committee considered the following factors set out in the Code:
•
•
Clarity and simplicity – We believe that the remuneration package
for our Executive Directors is clear and transparent, in particular
the KRSP is a simple structure which cascades where appropriate
down the organisation. The operation of the KRSP was simplified
in 2020 by adjusting the vesting schedule so that all awards vest
after three years subject to a further two-year holding period.
Risk – The Remuneration Committee has a number of tools at its
disposal to ensure that reputational and other risks are identified
and mitigated. These include malus and clawback provisions on
both the annual bonus and the KRSP (which have been extended
in the new policy to cover a wider range of scenarios), the use of
a minimum share price when determining KRSP awards to the
existing Executive Directors and the introduction of a discretionary
underpin on the vesting of KRSP awards. Furthermore, the
Remuneration Committee has the discretion to amend the
formulaic outcome of the annual bonus if the Committee believes
this does not reflect the true underlying performance of the
Group or the experience of shareholders. When determining
the outcomes of the 2021 bonus, the Committee considered
these factors and determined that the formulaic outcome
was appropriate in light of the Group’s record year for safety,
production, and shipments and returns to shareholders.
Predictability and proportionality – A range of potential
remuneration outcomes under the policy can be calculated
including a share price appreciation scenario. This enables
shareholders to assess the impact of performance outcomes and
share price appreciation on the value of remuneration for individual
Directors. The 2021 bonus outcome reflected the Group’s strong
overall performance particularly in safety and production.
Alignment to culture – The introduction of a discretionary underpin
assessment ensures that the vesting level of KRSP awards takes
into account the overall business performance, including non-
financial factors such as environmental, social and governance
considerations which are at the heart of our culture, values and
strategy.
•
•
Directors’ remuneration (audited)
The following tables set out the remuneration for Directors for the year ended 31 December 2021 and the prior year. The base salaries increased by
1.5% in 2021 reflecting an inflation adjustment.
Executive Directors’ remuneration
Fixed Pay
Basic salary
Benefits
Pension
Total fixed pay
Variable Pay
Bonus (i)
Long-term incentives
- Kenmare Restricted
Share Plan (KRSP) (ii)
Total variable pay
Total single figure
2021
$’000
661
9
66
736
399
–
399
1,135
Michael Carvill
2021
%
2020
$’000
2020
%
2021
$’000
Tony McCluskey
2021
%
2020
$’000
619
7
62
688
382
–
382
1,070
65%
35%
64%
36%
436
5
44
485
264
–
264
749
65%
35%
409
4
41
454
243
–
243
697
2020
%
65%
35%
i The 2021 performance outcome of Michael Carvill and Tony McCluskey is 60.38% of salary. The bonus in excess of 50% of salary is paid in nil-cost share options granted under the KRSP,
which will vest in three years and the balance (10.38%) is paid in cash.
ii The KRSP awards granted in 2021 include a performance underpin and will be reviewed at the end of the three-year vesting period.
iii The underlying currency of the Executive Directors’ emoluments is Euros.
iv This disclosure forms an integral part of the financial statements.
Kenmare Resources plc
Annual Report and Accounts 2021
107
ANNUAL REPORT ON REMUNERATION CONTINUED
Non-Executive Directors’
remuneration1,2,3
Peter Bacchus
Elaine Dorward-King
Clever Fonseca
Elizabeth Headon
Tim Keating
Graham Martin
Steven McTiernan
Sameer Oundhakar
Gabriel Smith
Deirdre Somers
Andrew Webb
Total
Basic fee
Committee Chair &
Membership fee
2021
$’000
68
68
68
–
16
68
230
55
26
68
6
673
2020
$’000
68
68
68
32
68
68
214
–
68
25
–
679
2021
$’000
25
16
13
–
1
27
–
–
11
20
–
113
2020
$’000
13
25
10
13
3
22
–
–
24
2
–
112
Senior Independent
Director fee
2021
$’000
11
–
–
–
–
–
–
–
–
–
–
11
2020
$’000
6
–
–
4
–
–
–
–
–
–
–
10
Audited total
2021
$’000
104
84
81
–
17
95
230
55
37
88
6
797
2020
$’000
87
93
78
49
71
90
214
–
92
27
–
801
1 The fees set out in the table above relate to the period of the directorship.
2 The Non-Executive Directors’ remuneration is 100% fixed. In 2022, it was agreed to increase all Non-Executive Directors’ fees by 5% to reflect inflation. Prior to this there had been no
increase in basic fees since 2011. The underlying currency of the fees is Euros.
3 This disclosure forms an integral part of the financial statements.
Total Directors’ remuneration
Executive Directors
Salary
Benefits
Bonus
Pension
Long-term incentive plan (LTIP)
Total Executive Directors' remuneration
Non-Executive Directors
Fees
Total remuneration
Audited total
2021
$’000
2020
$’000
1,097
14
663
110
–
1,884
797
2,681
1,028
11
625
103
–
1,767
801
2,568
Executive and Non-Executive Directors’ remuneration and fees for services as Directors provided to the Company and the entities controlled
by the Company are $1.9 million (2020: $1.8 million) and $0.8 million (2020: $0.8 million) respectively. These figures have been calculated based
on the requirements of the UK’s Large and Medium-sized Companies and Groups (Accounts and Report) (Amendment) Regulations 2013 (the
“Regulations”), to which the Company has regard.
2021 annual bonus award (audited)
The performance metrics for the 2021 annual bonus award sought to deliver continuous and stretching progress in relation to operational
performance, cost efficiency and capital expenditure management, health and safety initiatives, and corporate objectives. Different performance
targets for corporate performance were set for each Executive Director according to their roles. The maximum opportunity under the annual bonus
award for 2021 was 100% of base salary for the Managing Director and Financial Director.
108 Kenmare Resources plc
Annual Report and Accounts 2021
GOVERNANCE
Kenmare Resources plc
Annual Report and Accounts 2021
109
ANNUAL REPORT ON REMUNERATION CONTINUED
Performance targets and outcomes for the 2021 financial year were as follows:
2021 annual bonus
outcome
Operational
Financial
Environmental,
Social and
Governance
(ESG)
Ilmenite production (tonnes)
Zircon (standard & special) production (tonnes)
Rutile production (tonnes)
Concentrates production (tonnes)
EBITDA ($m)
Cash operating costs ($m)
Cash operating cost per tonne ($/t)
We confirm that we have included the climate
related financial disclosures consistent with the
four recommendations and eleven recommended
disclosures set out by the Task Force on
Climate-related Financial Disclosures (TCFD).
Average share price in December 2021 (including
dividends paid in 2021) (£ per share)
Lost Time Injury Frequency Rate (LTIFR) per
200,000 hours worked
Health and safety leading indicators
Performance needed for pay out at
Threshold
(25% of maximum
vests)
1,100,000
53,100
Target
(50% of maximum
vests)
1,140,000
55,500
Stretch
(100% of maximum
vests
1,200,000
57,900
Weighting %
23.0
5.0
1.0
1.0
10.0
10.0
5.0
5.0
5.0
3.5
9,500
37,900
138.0
184
146
3.76
9,900
39,650
163.0
175
139
4.07
10,300
41,400
187.0
166
132
4.38
0.25
0.22
0.20
Risk assessment processes embedded through compliance
audits, a new leadership programme initiated, a programme
rolled out to destigmatise HIV and certain improvements in
malaria controls.
Environment: greenhouse gas (GHG) emissions
3.0 With a goal of identifying a GHG reduction target,
energy efficient projects were to be identified, the Rotary
Uninterruptible Power Supply (RUPS) project to be
implemented and two other GHG projects advanced.
The bonus threshold was for there to be no major
community incidents from our activities and no material
environmental incidents. Target added the implementation
of water reporting in alignment with International Council
on Mining and Metals (ICMM) water reporting guidelines
and stretch further added the implementation of a climate
change programme.
180
84.90
11.0
200
86.36
11.5
220
88.02
12.5
Various targets including developing and publishing a
Modern Slavery Statement, completing the next phase of
supply chain compliance audits, demonstrating our security
practices conform to the Voluntary Principles on Security
and Human Rights and implementing a security tactical plan.
Complete the Nataka orebody knowledge workplan to a
sufficient degree to inform a Pre-Feasibility Study (PFS), with
a Stretch target of being on course to achieving this by end
Q1 2022.
The Committee considered how each Executive performed
in terms of the Board’s expectations of his role, including:
leadership, strategic vision and planning, business
development, succession planning and alignment with the
company’s vision and values.
Continue to proactively and safely mitigate the impact of
COVID-19 on the business, while taking into account the
interest of all stakeholders.
3.5
2.0
2.5
3.0
2.5
5.0
5.0
5.0
100
Environment and social
Environment: Annual rehabilitation target (ha)
Social: Procurement in Mozambique ($m)
Social: Gender diversity (%)
Human Rights
Long-term strategy
Project
Execution
Corporate,
Leadership,
People
COVID-19
Management
Total
i
Formulaic level of award equates to the weighting multiplied by the proportion of element vesting.
ii Average share price for December 2021 plus dividends per share paid in 2021.
110 Kenmare Resources plc
Annual Report and Accounts 2021
Performance achieved
Proportion
of element
1,119,400
56,300
8,900
43,900
216.1
189.7
154
37.1
66.6
0.0
100.0
100.0
0.0
0.0
4.47(ii)
100.0
2021
%
8.55
3.33
0.00
1.00
10.00
0.00
0.00
5.00
0.03
100.0
5.00
The embedding of the risk assessment processes scored well and clear results were seen from the leadership programme.
The HIV destigmatisation programme was rolled out but is ongoing and while a review of the malaria control programme was
completed it could not be implemented in full in the time period. The committee concluded that target performance had been
met but stretch performance had not been met in full.
Over 70 energy efficiency initiatives were identified, a few of which will be studied in the coming months. A Net Zero ambition by
2040 has been agreed and various short-term steps toward that target identified. However the RUPS timetable slipped a little
and some other GHG projects are still under review. The Committee determined that target but not the full stretch performance
had been achieved.
There were no major environmental or community incidents. A climate change programme aligned with Taskforce for Climate-
related Financial (TCFD) recommendations has been agreed and is being implemented. The water reporting is well underway
with certain data gaps identified and some but not full alignment yet with ICMM guidelines. The Committee determined that
performance almost reached Stretch.
57.1
2.00
66.7
2.00
92.9
3.25
198
95.8
12.5%
47.5
100.0
100.0
92.0
0.95
2.50
3.00
2.30
The Modern Slavery Statement was published and the next phase of supply chain audits implemented. The business
demonstrated through various means that our security practices conform to the Voluntary Principles and ~ 90% of the security
tactical plan has been implemented. The Committee determined that Stretch performance had almost been achieved.
The PFS work proceeded well but with some impact from COVID-19 on personnel and logistics. Additionally, the scope of the
PFS was extended in light of new information form certain tests and studies. The PFS work continues and the Committee
50.0
2.50
determined that Target performance was achieved in the year.
Overall the Committee concluded that the leadership, vision and values of the Executive Directors led to a very successful year
in terms of health and safety, operations, financial results and planning and our ESG agenda in the face of continuing challenges
from COVID-19, and awarded 80% achievement in each case. Specifically noted in the case of Michael Carvill were: his leadership
of and contribution to our record breaking safety record; our programmes for localisation and for coaching of current and future
leaders, helping to instil a new organisational culture at the mine; and his continuing focus on the long term needs of our local
communities. In the case of Tony McCluskey the Committee commended his financial stewardship throughout 2021 in what was
a transitional year in terms of succession in certain key roles and in strengthening the financial team; the successful execution
of the share buy-back; maintaining our key banking relationships; and a significant strengthening of our information and
communications technology systems.
There was continuous, active management of COVID-19 during the year. There was significant organisational disruption but the
measures taken kept this to a minimum with a steady fall in active cases. Of particular note was the vaccine rollout programme
both at the Mine and in the community. The Committee determined that Stretch performance had been achieved.
80.0
4.00
100.0
5.00
60.38
Performance targets and outcomes for the 2021 financial year were as follows:
2021 annual bonus
outcome
Operational
Financial
EBITDA ($m)
Ilmenite production (tonnes)
Zircon (standard & special) production (tonnes)
Rutile production (tonnes)
Concentrates production (tonnes)
Cash operating costs ($m)
Cash operating cost per tonne ($/t)
We confirm that we have included the climate
related financial disclosures consistent with the
four recommendations and eleven recommended
disclosures set out by the Task Force on
Climate-related Financial Disclosures (TCFD).
Average share price in December 2021 (including
dividends paid in 2021) (£ per share)
Lost Time Injury Frequency Rate (LTIFR) per
200,000 hours worked
Health and safety leading indicators
Environmental,
Social and
Governance
(ESG)
Performance needed for pay out at
(25% of maximum
(50% of maximum
(100% of maximum
Target
Stretch
Weighting %
Threshold
vests)
1,100,000
53,100
9,500
37,900
138.0
184
146
3.76
vests)
1,140,000
55,500
9,900
39,650
163.0
175
139
4.07
vests
1,200,000
57,900
10,300
41,400
187.0
166
132
4.38
Environment: greenhouse gas (GHG) emissions
3.0 With a goal of identifying a GHG reduction target,
Environment and social
3.5
The bonus threshold was for there to be no major
23.0
5.0
1.0
1.0
10.0
10.0
5.0
5.0
5.0
3.5
2.0
2.5
3.0
2.5
5.0
100
0.25
0.22
0.20
Risk assessment processes embedded through compliance
audits, a new leadership programme initiated, a programme
rolled out to destigmatise HIV and certain improvements in
malaria controls.
energy efficient projects were to be identified, the Rotary
Uninterruptible Power Supply (RUPS) project to be
implemented and two other GHG projects advanced.
community incidents from our activities and no material
environmental incidents. Target added the implementation
of water reporting in alignment with International Council
on Mining and Metals (ICMM) water reporting guidelines
and stretch further added the implementation of a climate
change programme.
180
84.90
11.0
200
86.36
11.5
220
88.02
12.5
Various targets including developing and publishing a
Modern Slavery Statement, completing the next phase of
supply chain compliance audits, demonstrating our security
practices conform to the Voluntary Principles on Security
and Human Rights and implementing a security tactical plan.
5.0
Complete the Nataka orebody knowledge workplan to a
sufficient degree to inform a Pre-Feasibility Study (PFS), with
a Stretch target of being on course to achieving this by end
Q1 2022.
5.0
The Committee considered how each Executive performed
in terms of the Board’s expectations of his role, including:
leadership, strategic vision and planning, business
development, succession planning and alignment with the
company’s vision and values.
Continue to proactively and safely mitigate the impact of
COVID-19 on the business, while taking into account the
interest of all stakeholders.
Environment: Annual rehabilitation target (ha)
Social: Procurement in Mozambique ($m)
Social: Gender diversity (%)
Human Rights
Long-term strategy
Project
Execution
Corporate,
Leadership,
People
COVID-19
Management
Total
i
Formulaic level of award equates to the weighting multiplied by the proportion of element vesting.
ii Average share price for December 2021 plus dividends per share paid in 2021.
GOVERNANCE
Performance achieved
1,119,400
56,300
Proportion
of element
37.1
66.6
8,900
43,900
216.1
189.7
154
4.47(ii)
0.0
100.0
100.0
0.0
0.0
100.0
2021
%
8.55
3.33
0.00
1.00
10.00
0.00
0.00
5.00
0.03
100.0
5.00
The embedding of the risk assessment processes scored well and clear results were seen from the leadership programme.
The HIV destigmatisation programme was rolled out but is ongoing and while a review of the malaria control programme was
completed it could not be implemented in full in the time period. The committee concluded that target performance had been
met but stretch performance had not been met in full.
Over 70 energy efficiency initiatives were identified, a few of which will be studied in the coming months. A Net Zero ambition by
2040 has been agreed and various short-term steps toward that target identified. However the RUPS timetable slipped a little
and some other GHG projects are still under review. The Committee determined that target but not the full stretch performance
had been achieved.
There were no major environmental or community incidents. A climate change programme aligned with Taskforce for Climate-
related Financial (TCFD) recommendations has been agreed and is being implemented. The water reporting is well underway
with certain data gaps identified and some but not full alignment yet with ICMM guidelines. The Committee determined that
performance almost reached Stretch.
198
95.8
12.5%
The Modern Slavery Statement was published and the next phase of supply chain audits implemented. The business
demonstrated through various means that our security practices conform to the Voluntary Principles and ~ 90% of the security
tactical plan has been implemented. The Committee determined that Stretch performance had almost been achieved.
The PFS work proceeded well but with some impact from COVID-19 on personnel and logistics. Additionally, the scope of the
PFS was extended in light of new information form certain tests and studies. The PFS work continues and the Committee
determined that Target performance was achieved in the year.
Overall the Committee concluded that the leadership, vision and values of the Executive Directors led to a very successful year
in terms of health and safety, operations, financial results and planning and our ESG agenda in the face of continuing challenges
from COVID-19, and awarded 80% achievement in each case. Specifically noted in the case of Michael Carvill were: his leadership
of and contribution to our record breaking safety record; our programmes for localisation and for coaching of current and future
leaders, helping to instil a new organisational culture at the mine; and his continuing focus on the long term needs of our local
communities. In the case of Tony McCluskey the Committee commended his financial stewardship throughout 2021 in what was
a transitional year in terms of succession in certain key roles and in strengthening the financial team; the successful execution
of the share buy-back; maintaining our key banking relationships; and a significant strengthening of our information and
communications technology systems.
There was continuous, active management of COVID-19 during the year. There was significant organisational disruption but the
measures taken kept this to a minimum with a steady fall in active cases. Of particular note was the vaccine rollout programme
both at the Mine and in the community. The Committee determined that Stretch performance had been achieved.
57.1
2.00
66.7
2.00
92.9
3.25
47.5
100.0
100.0
92.0
0.95
2.50
3.00
2.30
50.0
2.50
80.0
4.00
100.0
5.00
60.38
Kenmare Resources plc
Annual Report and Accounts 2021
111
ANNUAL REPORT ON REMUNERATION CONTINUED
Overall, the outcome of the scorecard and therefore outcome for
Michael Carvill and Tony McCluskey was 60.38% of maximum. The
Committee believes this appropriately reflects the Executive Directors’
performance during the year and the Group’s results, and therefore has
not applied further discretion to this outcome. 83% of the 2021 annual
bonus award was delivered in cash (i.e. 50% of base salary) and the
balance of 17% was deferred in shares for three years (as restricted
shares under the KRSP), consistent with the Directors’ remuneration
policy.
Total pension entitlements
Pension provision for the Executive Directors was made in 2021 based
on 10% of base salary, in line with the remuneration policy and the
contributions for the Kenmare corporate staff. Fees paid to Non-
Executive Directors are not pensionable. No Director has a prospective
entitlement to a defined benefit pension by reference to their service
as a Director.
Payments for loss of office (audited)
No payments for loss of office were made during the year.
Payments to past Directors (audited)
Elizabeth Headon stepped down as a Director on 13 May 2020 and
her appointment as a Director terminated on that date. Pursuant to a
contract for services with Erzulie Limited (a company wholly owned
by her), effective from 1 June 2020, Erzulie Limited was paid €2,500
for the period from 1 January 2021 to 1 April 2021 (€2,917 from 1 June
2020 to 31 December 2020) for consulting services provided to the
Sustainability Committee.
Terence Fitzpatrick stepped down as a Director on 1 July 2018 but has
remained an employee of the Company. His salary is for his services
as an employee and not loss of office compensation. During the year
contributions of $30,450 (2021: $30,450) were paid into his pension.
Directors’ and Secretary’s shareholdings (audited)
The interests of the Secretary and Directors who held office during 2021, their spouses and minor children, in the ordinary share capital of the
Company, other than pursuant to share options or share awards, were as set out below:
Peter Bacchus
Michael Carvill1
Clever Fonseca
Elaine Dorward-King
Tim Keating
Graham Martin
Tony McCluskey
Steven McTiernan
Sameer Oundhakar
Gabriel Smith
Deirdre Somers
Andrew Webb
Deirdre Corcoran (Former Secretary)
Chelita Healy (Secretary)
1
147,062 shares held by Rostrevor One Limited, a company controlled by Michael Carvill are included in his holding.
Shares held
31 March
2022
–
363,320
970
10,000
1,532
100,000
223,223
228,607
–
30,078
3,940
–
32,045
–
Shares held
31 December
2021
–
301,559
970
10,000
1,532
100,000
182,463
228,607
–
30,078
3,940
–
32,045
–
Shares held
1 January 2021
–
251,844
–
3,600
–
84,135
134,953
216,353
–
30,078
–
–
16,383
–
112 Kenmare Resources plc
Annual Report and Accounts 2021
Share awards scheme (audited)
Number of nil cost options
Name
Michael
Carvill
Tony
McCluskey
Deirdre
Corcoran
Share
Plan
KRSP
KRSP
KRSP
KRSP
KRSP
KRSP
KRSP
KRSP
KRSP
KRSP
KRSP
KRSP
KRSP
KRSP
At 1 Jan
2021
53,786
149,362
152,074
157,206
–
512,428
35,497
98,574
100,364
103,750
–
338,185
31,094
33,519
54,795
–
119,408
Awarded
1,3291
3,2341
–
–
133,930
138,493
Vested &
exercised
(28,222)
(92,851)
–
–
–
(121,073)
Lapsed
–
–
–
–
–
–
8761
2,1351
–
–
86,632
89,643
1,5361
–
–
16,512
18,048
(18,625)
(61,279)
–
–
–
(79,904)
(32,630)
–
–
–
(32,630)
–
–
–
–
–
–
–
–
–
–
–
–
Chelita Healy KRSP
–
2,158
–
1 Dividend equivalent entitlements relating to share awards vesting.
The aggregate gain on awards that vested during the year for
Executive Directors was $1.2 million (2020: $0.5 million).
In the case of the Executive Directors, the KRSP awards made prior
to 2020 vest, subject to continued employment, 60% on the third
anniversary of grant date, 20% on fourth anniversary, and 20% on fifth
anniversary.
The 2021 awards for Michael Carvill and Tony McCluskey represent
100% of base salary based on a share price of £4.05; the actual share
price at the date of award. The value of these awards totalled £0.5
million ($0.7 million) for Michael Carvill and £0.3 million ($0.4 million)
for Tony McCluskey.
The Executive Directors’ 2021 and 2020 KRSP awards vest, subject
to continued employment and to the Remuneration Committee’s
assessment against a discretionary underpin, on the third anniversary
of grant date. The vested KRSP awards are subject to a two-year
holding period which may extend beyond an Executive Director’s
cessation of employment in accordance with the post-employment
holding requirements of the 2020 remuneration policy.
In the case of Deirdre Corcoran, the above KRSP awards vest, on the
third anniversary of grant date. In the case of Chelita Healy the above
KRSP awards vest, subject to continued employment, on the third
anniversary of grant date. Non-Executive Directors do not receive
awards under share plans.
GOVERNANCE
Market
price at
exercise £
£4.40
£4.35
£4.40
£4.02
£4.31
At 31 Dec
2021
26,893
59,745
152,074
157,206
133,930
529,848
17,748
39,430
100,364
103,750
86,632
347,924
–
33,519
54,795
16,512
104,826
Date of grant
26 May 2017
15 March 2018
15 March 2019
13 May 2020
28 April 2021
Exercise period
26/05/2021-26/05/2024
15/03/2021-15/03/2025
15/03/2022-15/03/2026
13/05/2023-13/05/2027
28/04/2024-28/04/2028
26 May 2017
15 March 2018
15 March 2019
13 May 2020
28 April 2021
26/05/2021-26/05/2024
15/03/2021-15/03/2025
15/03/2022-15/03/2026
13/05/2023-13/05/2027
28/04/2024-28/04/2028
17 April 2018
23 March 2019
26 March 2020
28 April 2021
17/04/2021-17/04/2025
23/03/2022-23/09/2022
26/03/2023-26/09/2023
28/04/2024-28/10/2024
2,158
28 April 2021
28/04/2024-28/04/2028
Executive Directors’ shareholding requirement
In accordance with the current Remuneration Policy, the Executive
Directors are required to build up shareholdings equal to 250% of
their respective salaries by 25 May 2022. This requirement can be met
both by shareholdings held by the Executive Directors (directly or
indirectly) and, on a net of tax basis, by unvested share awards that are
not subject to performance or underpin conditions. As of 31 December
2021, the shareholding of each of the Executive Directors exceeded
this requirement.
Kenmare Resources plc
Annual Report and Accounts 2021
113
ANNUAL REPORT ON REMUNERATION CONTINUED
Performance graph and table
The value at 31 December 2021 of $100 invested in the Group in 2011 compared with the value of $100 invested in the FTSE All Share Mining
Index, as this is a relevant sector index of which Kenmare is a constituent, is shown in the graph below.
Value at 31 December 2021 of $100 investment at 31 December 2011
$160
$140
$120
$100
$80
$60
$40
$20
$0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Kenmare Resources PLC
FTSE All Share Mining Index
The statutory chart above includes a period prior to the capital raise in 2016. The share price declined significantly during this period due to a
number of factors, including challenging commodity markets. However, Kenmare's share price performance since the 2016 capital raise has been
strong (with the share price as at 31 December 2021 being £4.64, 100% above the 2016 capital raise price of £2.32). As this performance is not
easily visible in the statutory chart above, we therefore present a chart below prepared on the same basis but starting from 31 December 2015.
Value at 31 December 2021 of $100 investment at 31 December 2015
$600
$500
$400
$300
$200
$100
$0
2015
2016
2017
2018
2019
2020
2021
Kenmare Resources PLC
FTSE All Share Mining Index
114 Kenmare Resources plc
Annual Report and Accounts 2021
GOVERNANCE
The remuneration paid to the Managing Director in the past 10 years is set out below:
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
Michael Carvill
Michael Carvill
Michael Carvill
Michael Carvill
Michael Carvill
Michael Carvill
Michael Carvill
Michael Carvill
Michael Carvill
Michael Carvill
Single figure of total
remuneration $’000
1,135
1,070
1,444
1,652
1,528
1,340
744
967
809
783
Bonus pay-out
(as % maximum opportunity)
60%
62%
47%
58%
59%
66%(i)
22%(i)
26%(i)
0%
0%
Long-term incentive vesting rates
(as % maximum opportunity)
N/A
N/A
25%
83.3%
0%
N/A
N/A
N/A
0%
N/A
(i) Amount shown reflects the cash and deferred share award under the Kenmare Incentive Plan (KIP), part of which is conditional on long-term performance.
In line with the European Union (Shareholders’ Rights) Regulations 2020 and with the regulations set out in the UK’s Large and Medium-sized
Companies and Groups (Accounts and Report) (Amendment) Regulations 2013, to which the Group has regard, figures shown in the table above
relate to remuneration for performance each year.
Percentage change in remuneration and Company performance
Annual change
Directors' remuneration
Executive Directors
Michael Carvill, Managing Director(i)
Tony McCluskey, Financial Director(i)
Non-Executive Directors (ii)
Peter Bacchus
Elaine Dorward-King
Clever Fonseca
Tim Keating
Graham Martin
Steven McTiernan
Sameer Oundhakar
Gabriel Smith
Deirdre Somers
Andrew Webb
Group performance
Net profit
Employee average remuneration on a full-time equivalent basis
Employees of the Company Kenmare Resources plc
2021
%
6%
7%
20%
(10%)
4%
(76%)
6%
7%
N/A
(60%)
226%
N/A
2020
%
(26%)
(28%)
13%
29%
18%
8%
6%
0%
N/A
0%
N/A
N/A
669%
(63%)
10%
7%
(i) The reduction in 2020 was driven by the introduction of the underpin in the KRSP which means the 2020 awards will be reflected in the single figure table at the time of vesting.
(ii) The changes in the Non-Executive Directors fees are a result of changes to Board and/or Committee composition and responsibilities during 2021.
Relative importance of spend on pay
Annual change
Overall spend on pay including Directors
Profit distributed by way of dividend and share back
Group cash operating costs
2021
$’000
46,712
97,983
189,700
2020
$’000
40,518
8,594
158,000
Change
6,194
89,389
31,700
Average numbers throughout the Group increased from 1,499 in 2020 to 1,551 in 2021.
Group cash operating costs have been included in the table in order give a context to spend on pay relative to the overall cash operating costs.
Kenmare Resources plc
Annual Report and Accounts 2021
115
ANNUAL REPORT ON REMUNERATION CONTINUED
Statement of implementation of policy in 2022 (audited)
Base salary
The base salaries for the forthcoming year are due to increase by 5.0% reflecting an inflation adjustment for the period and in line with agreed
increases to Kenmare corporate staff and are set out below:
Executive Director
Michael Carvill
Tony McCluskey
2021
$’000
684
452
2020
$’000
651
430
% Change
5.0
5.0
The underlying currency of Michael Carvill and Tony McCluskey’s base salaries is Euro. The US Dollar figures shown above for 2022 have been
calculated using the average 2021 Euro to US Dollar exchange rate. The final US Dollar figure for 2022 will vary depending on exchange rate
movements.
Annual bonus
The incentive opportunity for the Executive Directors under the incentive scheme for 2022 will be as follows:
Executive Director
Michael Carvill
Tony McCluskey
The performance metrics for 2022 annual bonuses and their associated weightings are as follows:
On-target
incentive
(% of salary)
50
50
Maximum
incentive
(% of salary)
100
100
Area
Operational
Financial
ESG
Project execution
Corporate
Measure
Ilmenite, zircon, rutile and concentrates production volumes
EBITDA
Total cash operating costs
Cash operating cost per tonne
TSR
Safe & Engaged Workforce
A Healthy, Natural Environment
Thriving Communities
Trusted Business
Weight(i)
30%
10%
10%
5%
5%
25%
10%
5%
i The respective weightings for the Managing Director and Financial Director will be the same for all metrics except for the corporate category, where the Remuneration Committee will
determine appropriate splits reflecting their respective responsibilities and challenges in these areas in 2022.
The targets have not been disclosed due to commercial sensitivity
but will be disclosed in the 2022 annual report on remuneration.
The performance metrics as set out above seek to deliver ongoing
progress in relation to operational performance, cost efficiency,
ESG, and strategic corporate objectives. The performance targets
associated with the quantitative measures are in line with guidance
issued in January 2022.
Kenmare Restricted Share Plan
The maximum award level for the Executive Directors under the
KRSP for 2022 will be 100% of base salary. For the current Executive
Directors only, the share price used to determine the award levels will
not be less than £2.32, the open offer price for the 2016 capital raise.
In addition to the assessment of the appropriate award level prior to
grant, the Remuneration Committee will also undertake a discretionary
underpin performance assessment prior to vesting. The assessment of
the underpin will consider Company and individual performance over
the three-year vesting period. This provides the Committee with the
ability to take a holistic view of the Company’s performance to ensure
that the vesting level is appropriate.
The following four core elements will be considered as part of the
underpin assessment, although the Committee may consider other
factors in addition to these:
•
•
•
Operational performance outcomes under the annual bonus
scorecard over the three-year period;
Share price performance since grant;
ESG performance; and
• Major strategic or project decisions and return on investment.
The Committee does not intend to set fixed, quantitative underpins
in respect of these factors. Instead, in completing its assessment, the
Committee may consider the following questions:
116 Kenmare Resources plc
Annual Report and Accounts 2021
GOVERNANCE
• Has operational performance been below threshold in any
year during the vesting period? If so, has this been offset by
performance in a prior or subsequent year?
• Has there been a material decline in the share price or failure to
meet shareholder expectations for growth?
• Have there been any adverse ESG issues arising during the vesting
period, or any significant health and safety incidents?
•
For major projects which have commenced during the vesting
period, what progress has been made? For major projects that
have been completed during the vesting period, what were the
outcomes against original expectations and how do these translate
to returns to shareholders?
In making an adjustment to vesting levels, the Committee will also
consider the extent to which the matter has already been reflected
in the annual bonus scheme outcomes. Furthermore, the Committee
will consider these factors in both an individual and collective context,
meaning that there may be different vesting levels for each participant.
Malus and clawback provisions will apply, as set out in the Directors’
remuneration policy. Awards will be subject to malus during the vesting
period. Clawback will apply for two years post-vesting.
Statement of voting at AGM
The table below shows the outcome of the advisory vote on the Directors’ Remuneration Report at the 2021 AGM and the Directors’ Remuneration
Policy at the 2020 AGM
Item
Advisory vote on 2020 Directors’ Remuneration Report
Advisory vote on Directors’ remuneration policy
Votes
for
78,022,305
70,960,538
%
98.02
91.02
Votes
against
1,572,956
6,997,155
%
1.98
8.98
Votes
withheld
34,776
11,440
This report was approved by the Board of Directors and signed on its behalf by:
GR A HAM MARTIN
C HAIR OF THE REMUNERATION COMMI TTEE
4 April 2022
Kenmare Resources plc
Annual Report and Accounts 2021
117
REMUNERATION POLICY REPORT
Introduction
The remuneration policy (the “policy”) as summarised below was approved by a shareholder vote at the Annual General Meeting on 13 May 2020
and applies for the period of three years from the date of approval. For clarity, a summary of the policy is included in this report. The full policy can
be found in the 2019 Annual Report, which is available under the Investors section of our website, www.kenmareresources.com.
Remuneration policy
The main components of the remuneration policy and how they are linked to and support the Group’s business strategy are summarised in the
table below. The policy covers all remuneration payments to Directors, and includes no provisions for derogations.
Element of
remuneration
How the element supports our
strategic objectives
Base Salary
Supports the recruitment
and retention of Executive
Directors recognising the
scope and responsibility of
the roles and the individual’s
skills and experience.
Benefits
Provides market competitive
benefits to support
Executive Directors in
carrying out their duties.
Performance metrics, weighting,
minimum payout and time period
(where applicable)
None.
Maximum potential value
Base salary reviews for
Executive Directors are
at the discretion of the
Remuneration Committee
but will generally be
increased with the cost of
living and with consideration
to general Group increases.
The only exceptions to this
rule are where:
•
•
•
there is a significant
movement in the
benchmarking data for
that role; or
an individual is brought
in below market level
with a view to increasing
base pay over time
to reflect proven
competence in role; or
there is a material
increase in scope or
responsibility of the
Executive Director’s role.
None.
Set at a level appropriate
to the individual’s role and
circumstances.
The maximum opportunity
will depend on the type
of benefit and cost of its
provision, which will vary
according to the market and
individual circumstances.
Operation of the element
including any provision for
malus or clawback
Reviewed annually with
increases generally
effective from 1 January.
When determining levels,
consideration is given to:
•
•
•
•
•
•
•
Group performance;
the performance of the
Executive Director over
the previous 12 months;
the salary review budget
for all employees for the
coming year;
retention risk and the
ability to replace higher
value skills if needed in
the market;
benchmarking data of
other UK and Irish listed
companies of similar
market capitalisation
and practice in the
global mining sector;
inflation; and
the rewards, incentives
and conditions available
to the Group’s workforce.
Benefits include holiday
and sick pay, family health
insurance, permanent health
insurance, life assurance and
an annual health check.
The Managing Director has a
company car.
The Group also reimburses
the Executive Directors
in respect of all expenses
reasonably incurred by them
in the proper performance of
their duties.
The Group may introduce
new benefits that are,
or become, prevalent in
a jurisdiction in which it
operates and in which a
Director is located.
118 Kenmare Resources plc
Annual Report and Accounts 2021
Element of
remuneration
How the element supports our
strategic objectives
Pension
To provide a market
competitive remuneration
package by facilitating long-
term saving for retirement.
Annual
bonus
To ensure a market
competitive package and
to incentivise Executive
Directors to achieve the
Group’s business objectives.
GOVERNANCE
Performance metrics, weighting,
minimum payout and time period
(where applicable)
None.
Maximum potential value
The maximum pension
contribution for Executive
Directors is 10% of salary.
The maximum annual
opportunity is 100% of base
salary.
Performance is measured over
the financial year.
Performance metrics and
targets are determined at
the start of each year by the
Remuneration Committee
and will consist of a balanced
scorecard of financial and
non-financial measures. The
Remuneration Committee
has the discretion to vary the
weighting of the metrics or to
substitute different measures
over the lifetime of the policy
to take account of changes
in business strategy and/or
external market conditions,
but a significant proportion of
the bonus scorecard will be
weighted towards financial
and operational metrics.
The targets and actual
levels of performance will
be disclosed retrospectively
within the implementation
section of the Annual Report
on Remuneration.
The Remuneration Committee
will have the discretion to
adjust the results of the
outcome of the scorecard
if it believes this does
not accurately reflect the
underlying performance or
align with the experience of
shareholders.
Operation of the element
including any provision for
malus or clawback
Each Executive Director
is entitled to receive a
payment into the Company’s
group personal pension
plan or their private
pension arrangements,
or alternatively a salary
supplement in lieu of such a
contribution.
Based on the level of
performance over the
financial year, the annual
bonus will be paid in cash
shortly after the end of the
relevant financial year up to
a maximum cash payment
of 50% of base salary. Where
the annual bonus achieved
exceeds 50% of base salary,
Executive Directors will be
granted restricted shares
under the KRSP in respect of
the excess outcome above
this level, which will vest
three years from grant date.
If the Remuneration
Committee, in exceptional
circumstances, believes
that payment in cash is not
appropriate it will instead
be able to make an award
of shares under the KRSP
of equivalent value. Such
restricted shares would
not be subject to forfeiture
but would be subject to a
minimum retention period.
Clawback will apply to cash
annual bonus awards for
two years from the date of
payment.
Annual bonus awards made
in the form of restricted
shares will be subject to
malus during the vesting
period. Clawback will apply
to these for two years post-
vesting.
Kenmare Resources plc
Annual Report and Accounts 2021
119
REMUNERATION POLICY REPORT CONTINUED
Element of
remuneration
How the element supports our
strategic objectives
Share awards
under the
Kenmare
Restricted
Share Plan
(“KRSP”)
To increase shareholder
alignment by providing
Executive Directors with
longer-term interests in
shares.
Maximum potential value
The maximum award level
in any year is 100% of base
salary.
Operation of the element
including any provision for
malus or clawback
Annual awards of shares
will be made under the
Kenmare Restricted
Share Plan.
The awards will vest on
the third anniversary
of grant subject to
continued employment
and the Remuneration
Committee’s assessment
against a discretionary
underpin. Vested shares
are then subject to a
further two-year holding
period. Participants may
sell sufficient shares at the
point of vesting to cover
their tax liabilities.
Awards will be subject to
malus during the vesting
period. Clawback will apply
for two years post-vesting.
Awards made under
the KRSP may carry an
entitlement to dividend
equivalents in respect of
dividends paid between
grant and vesting.
Performance metrics, weighting,
minimum payout and time period
(where applicable)
The Remuneration Committee
will use its discretion to
consider the appropriate level
of award (including making
no award) if it believes this
is appropriate in light of the
Group’s performance and that
of the individual Executive
Director at the time of making
of the award.
The share price used to
determine the award levels
will normally be the share
price shortly before the date
of grant. However, for the
current Executive Directors
only, the share price used will
not be less than the open offer
price for the 2016 capital raise
(£2.32).
Vesting of the award will be
subject to a performance
underpin based on a number
of corporate indicators.
The Committee will consider
whether performance against
such indicators has been
adequately adjusted for under
the annual bonus outcome
when considering their use of
discretion.
The underpin has no
predetermined targets and will
be assessed retrospectively
based on performance over
the three-year vesting period.
The Committee will provide
a full disclosure of their
assessment within the Annual
Report on Remuneration.
120 Kenmare Resources plc
Annual Report and Accounts 2021
Element of
remuneration
How the element supports our
strategic objectives
Shareholding
requirement
To strengthen the
alignment between the
interests of Executive
Directors and those of
shareholders.
Operation of the element
including any provision for
malus or clawback
Executive Directors’
shareholding measured
after the five-year period
from the 2017 AGM (or date
of appointment if later).
Non-
Executive
Director
fees
To provide a level of fees
to support recruitment
and retention of Non-
Executive Directors with the
necessary experience and
ability to make a significant
contribution to the Group’s
activities.
The Non-Executive
Directors are remunerated
entirely through fees and
associated benefits. They
are not eligible to receive
any performance-related
remuneration nor do they
hold share options.
GOVERNANCE
Performance metrics, weighting,
minimum payout and time period
(where applicable)
N/A
None.
Maximum potential value
Shareholding requirement
during employment of 250%
of salary.
Post-cessation shareholding
requirement of 100%
of the in-employment
shareholding requirement
(or actual shareholding on
departure if lower) for two
years post-employment.
Unvested shares which are
not subject to performance
or underpin conditions
will count towards the
shareholding requirement
on a net of tax basis.
The post-cessation
shareholding requirement
applies to awards granted
after the 2020 AGM. This
does not apply to shares
purchased voluntarily from
an Executive Director’s
own funds.
The fees paid to the
Non-Executive Directors
are set at a level to
attract individuals with
the necessary experience
and ability to make a
significant contribution
to the Group’s activities,
while also reflecting the
time commitment and
responsibility of the role.
Kenmare Resources plc
Annual Report and Accounts 2021
121
REMUNERATION POLICY REPORT CONTINUED
Performance measures and targets
The Remuneration Committee selects performance conditions for the
Annual Bonus which reflect the Group’s overall strategy and are the
key metrics used by the Executive Directors to oversee the operation
of the business. They are determined annually. They typically include
both production, financial and non-financial performance criteria. In
the past, they have, for example, related to areas such as community
safety, environmental compliance, health and safety (both workforce
and community related) and other ESG targets. The performance
criteria for 2021 are described on pages 110 and 111 and those for 2020
are described on pages 104 and 105 of the 2020 Annual Report. The
performance metrics for 2022 are set out on page 116.
The Committee believes that the KRSP will continue to provide
an opportunity for the Executive Directors to build meaningful
shareholdings in the Company and therefore further align the longer-
term experience of shareholders and management. The introduction
of a performance underpin ensures that the Committee has the
ability to reduce vesting outcomes if Group or individual performance
does not warrant full vesting of the award. The underpin will not be
assessed based on pre-determined targets; it will be a discretionary
retrospective assessment and the Committee will provide a full
disclosure of its assessment. The Remuneration Committee intends to
use a broad range of corporate indicators which are intended to reflect
overall performance of the Group during the vesting period.
Service Contracts
The Company’s policy is that Executive Directors should have a
notice period of no more than 12 months. Other than in the case of
termination by an Executive Director on change of control, the notice
periods are 12 months’ notice from the Company and three months’
notice from the Executive Director.
As a listed company, all of the Executive Directors and Non-Executive
Directors are subject to annual re-election at the AGM. The Executive
Directors’ service contracts have no fixed duration save for a
retirement age of 65.
In the event of termination, the Remuneration Committee will agree an
appropriate termination payment for the relevant individual reflecting
the circumstances, service and existing contractual terms and
conditions.
The Company has the right, or may be required in certain
circumstances, to make a payment in lieu of notice of termination,
the amount of that payment being base salary and benefits that would
have accrued to the Executive Director during the contractual notice
period. In addition, the Remuneration Committee reserves the right to
allow continued participation in the Company’s incentive arrangements
during the notice period.
Upon a change of control, each Executive Director has the right to
terminate his employment by notice and be entitled to receive an
amount equal to 12 months’ salary, cash equivalent of benefits and
pension contributions, subject to such amount being reduced by
the equivalent amounts in respect of any months worked by the
Executive Director after his giving of notice. Such payment would be in
settlement of all claims that the Executive Director may have against
the Group, but shall not affect the Executive Director’s entitlement
to accrued but unpaid salary, deferred bonus or similar incentive
payments and certain other amounts.
Michael Carvill serves as a Director for a number of private companies
but receives no fee for his services. Tony McCluskey does not serve as
a Non-Executive Director elsewhere.
Non-Executive Directors’ remuneration
Non-Executive Directors’ appointment may be terminated by either
party giving to the other one month’s prior written notice. The Non-
Executive Directors are remunerated entirely through fees. They are
not eligible to receive any performance-related remuneration nor do
they hold share options. The fees paid to the Non-Executive Directors
are set at a level to attract individuals with the necessary experience
and ability to make a significant contribution to the Group’s activities,
while also reflecting the time commitment and responsibility of the
role. Additional per diem rates may be paid to Non-Executive Directors
when the meeting load has significantly exceeded what would be
expected in the normal course of business.
None of the Non-Executive Directors had a beneficial interest in any
contract to which the Company or any of its subsidiary undertakings
was a party to during the financial year.
Non-Executive Directors are not entitled to any compensation on the
termination of their appointment. All Directors are subject to annual
re-election. No compensation is payable to Non-Executive Directors
if they are not re-elected.
122 Kenmare Resources plc
Annual Report and Accounts 2021
GOVERNANCE
Read more about
our financial
performance on
page 44 to 48
Read more about
our sustainability
performance on
page 50 to 62
DIRECTORS’ REPORT
The Directors present their report below and the audited financial statements for the financial year ended 31 December 2021.
Principal activities
The principal activity of Kenmare Resources plc and
its subsidiary undertakings is the operation and further
development of the Moma Titanium Minerals Mine in
Mozambique.
Strategic report
The Strategic Report, including a financial and risk review
and a review of the likely future developments of the Group,
set out on pages 8 to 71, forms part of the Directors’ Report
and is incorporated by reference.
Statement of results and key performance
indicators
The consolidated statement of profit or loss and other
comprehensive income for the year ended 31 December
2021 are set out on page 134. The financial review on pages
44 to 48 contains a detailed business review including an
analysis of the key performance indicators used to measure
the Group’s performance and is incorporated by reference.
Dividends
In May 2021, the Company paid a final 2020 dividend of $8.4
million representing USc7.69 per share (2020: USc5.52). In
October 2021, the Company paid a 2021 interim dividend
of USc7.29 (H1 2020: USc2.31) per ordinary share, totalling
$8.0 million. The Board is recommending a final dividend of
USc25.42 (2020: USc7.69) per share. This would give a total
dividend in respect of 2021 of USc32.71 (2020: USc10.00)
per share. It is proposed to pay the final dividend on 1 June
2022 to shareholders registered at the close of business on
29 April 2022.
Principal risks and uncertainties
Under Section 327 of the Companies Act 2014, the Directors
are required to give a description of the principal risks
and uncertainties facing the Group. These principal risks
and uncertainties are set out on pages 64 to 71 and are
incorporated by reference.
Directors and Company Secretary
The names of the Directors and Company Secretary who
held office during 2021 and a biographical note on each
appear on pages 76 and 77. In accordance with the UK
Corporate Governance Code, all Directors submit to re-
election at each AGM. However, Steven McTiernan, who has
completed his tenure of nine years on the Board, will retire at
the AGM in May 2022 and not submit himself for re-election.
Directors’ and Company Secretary’s
shareholdings and share awards
The interests of the Directors and Secretary of the
Company, their spouses, and minor children in the ordinary
share capital of the Company, and details of the share
awards granted in accordance with the rules of the Kenmare
Restricted Share Plan (KRSP), are detailed in the Annual
report on remuneration on pages 112 to 113.
Share option and share award schemes
At 31 December 2021, there were options in respect of
2,284,429 Ordinary Shares in issue. These are nil cost
options to subscribe for Ordinary Shares and were granted
pursuant to the KRSP. There were no outstanding interests
under any previous share award schemes.
Non-financial reporting statement
In compliance with the European Union (Disclosure of
Non-Financial and Diversity Information by certain large
undertakings and groups) Regulations 2017, the table
below sets out the relevant sections in this Annual Report
to understand the Group’s approach to these non-financial
matters.
Reporting Requirements Page Reference Our Policies
Risk Assessment
Environmental
matters
Social and
employee matters
Pages 56 to 59 Environmental
Page 53
Pages 52
Page 60
Diversity
Health and safety
Whistleblowing
Conflicts of interest
Employment
Community
engagement
and investment
Human rights
Page 61
Human rights
Freedom of association
Anti-bribery and
corruption
Page 60
Anti-bribery
Business ethics
Description of
business model
Non-Financial
key performance
indicators
Pages 16 and 17
Included in KPIs on pages 22 to 23
and the Sustainability report on pages
50 to 51
Environmental risk is included in the risk entitled “Health,
Safety and Environment (“HSE”) described in the “Principal
risks and uncertainties” section on page 69.
Health and safety risk is included in the risk entitled “Health,
Safety and Environment (“HSE”) described in the “Principal
risks and uncertainties” section on page 69. Community
engagement and investment is relevant to the risk entitled
“Grant and maintenance of licences”, described in the “Principal
risk and uncertainties” section on page 66. Otherwise, although
the risks associated with social and employee matters are
actively monitored, the Group does not believe these risks meet
the threshold of a principal risk for our business.
Although the risks associated with human rights abuses are
actively monitored, the Group does not believe these risks
meet the threshold of a principal risk for our business.
Although the risks associated with bribery and corruption
are actively monitored, the Group does not believe these
risks meet the threshold of a principal risk for our business.
Kenmare Resources plc
Annual Report and Accounts 2021
123
DIRECTORS’ REPORT
Read more about
the Audit & Risk
Committee on
page 98 to 102
Read more about
our principal risks
on page 64 to 71
Share capital
The Company’s authorised share capital consists of
181,000,000 ordinary shares of €0.001 each (“Ordinary
Shares”). The Company’s ordinary shares rank equally in all
respects and carry no special rights. They carry voting and
dividend rights. There are no restrictions on the transfer of
the Company’s shares or voting rights and the Company
has not been notified of any agreements between holders
of securities in this regard.
At the AGM held on 13 May 2021,
•
•
the Company was granted an authority to make
market purchases, within a set price range, of up to
10% of its own shares; and
the Directors were given the authority by shareholders
to allot shares up to an aggregate nominal amount
equal to €36,578.
The authorities referenced above will expire at the
conclusion of this year’s AGM at which shareholders
will be asked to grant new authorities to the Company.
At an EGM held on 9 December 2021, the Company
was authorised for the purposes of section 1074 of the
Companies Act 2014 to make one or more market purchases
and overseas market purchases (within the meaning of
section 1072 of the Companies Act 2014) of Ordinary Shares
in connection with the Tender Offer, discussed below,
at a price of £4.17 per share provided that the maximum
number of Ordinary Shares authorised to be purchased was
14,814,412. This authority expired on 31 March 2022 and was
in addition to that granted at the AGM and referred to above.
On 10 December 2021, the Company purchased 14,814,412
Ordinary Shares which had been acquired by Peel Hunt LLP
pursuant to the Tender Offer. These Ordinary Shares were
cancelled on that date resulting in an issued share capital of
94,921,970 Ordinary Shares after the transaction.
Save for the foregoing, the Company did not issue, hold,
purchase, sell or cancel any Ordinary Shares during 2021
and no member of the Group held any Ordinary Shares
during 2021.
Going concern
The Directors have evaluated the appropriateness of the
going concern basis in preparing the 2021 Consolidated
Financial Statements for a period of at least twelve months
from the date of approval of these financial statements
(the ‘period of assessment’). The evaluation is based on the
Group’s cash flow forecast (“the Group Forecast”).
The Group’s business activities, together with the factors
likely to affect its future development, performance and
position are set out in the Strategic Report on pages 8 to 71.
The financial position of the Group, its cash flows, liquidity and
borrowing position are described in the Financial Review on
pages 44 to 48. Note 28 to the financial statements includes
the Group’s policy for managing its capital.
The Group Forecast has been prepared by management
with best estimates of production, pricing and cost
assumptions over the period of assessment. The Group
recognises the principal risks which can impact on the
outcome of the Group Forecast and have therefore
applied sensitivity analysis to the assumptions to test the
robustness of the cash flow forecast for changes in market
prices, shipments, operating and capital cost assumptions.
Changes in these assumptions affect the level of sales and
profitability of the Group and the amount of capital required
to deliver the projected production levels. Debt covenants
are complied with and Group liquidity is maintained,
although at lower levels, in each of these scenarios.
Having assessed the principal risks facing the Group,
together with the Group’s cash flow forecast, the Directors
have a reasonable expectation that the Group has adequate
resources for the foreseeable future and can continue to
adopt the going concern basis of accounting in preparing
the annual financial statements.
Viability statement
In line with Provision 31 of the UK Corporate Governance
Code, the Directors have assessed the prospects of the
business and have a reasonable expectation that the
Group can meet its liabilities as they fall due over the three
year period 2022 to 2024. The Directors concluded that
three years is an appropriate period for the assessment
as they have reasonable clarity over the Group Forecast
assumptions over this period.
Key assumptions upon which the Group Forecast is
based include a mine plan covering production using the
Namalope, Nataka, Pilivili and Mualadi Ore Reserves and
Mineral Resources as set out in the unaudited Mineral
Reserves and Resources table on page 37. Production
levels for the purpose of the forecast are approximately
1.2 million tonnes per annum of ilmenite plus co-products
(zircon, concentrates and rutile) over the next three
years. Assumptions for product sales prices are based on
contract prices as stipulated in marketing agreements with
customers or, where contract prices are based on market
prices or production is not presently contracted, prices are
forecast taking into account independent titanium mineral
sands expertise and management expectations. Operating
costs are based on approved budget costs for 2022, taking
into account the current running costs of the Mine and
escalated by 2% per annum thereafter. Capital costs are
based on the capital plans and include escalation at 2%
per annum.
Sensitivity analysis is applied to the assumptions above to
test the robustness of the cash flow forecasts. The Group
has performed a range of scenario analyses which supports
the viability statement. The scenario analysis considered
include reductions in sales price, reductions in production,
increases in operating costs and a combined case of the
aforementioned factors. In addition, the Group considered
the impact of a reduction in shipping capacity due a
prolonged dry docking of the Bronagh J. The analysis takes
into account potential mitigating measures available to the
Group, including the ability to reduce capital expenditure
and the potential to avail of existing debt facilities. The
Board is satisfied that sufficient financial headroom exists
to address the potential negative impacts arising from the
events considered.
The Directors have also carried out a robust assessment
of the principal risks facing the Group, including those that
would threaten its business model, future performance,
solvency and liquidity.
124 Kenmare Resources plc
Annual Report and Accounts 2021
GOVERNANCE
As a result of these assessments, the Board has a
reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due
over the three year period.
Directors’ responsibilities statement
The Directors are responsible for preparing the Annual Report
and the Group and parent company financial statements, in
accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and
parent company financial statements for each financial year.
Under that law, the Directors are required to prepare the Group
financial statements in accordance with IFRS as adopted by
the European Union and applicable law including Article 4
of the IAS Regulation. The Directors have elected to prepare
the parent company financial statements in accordance
with Financial Reporting Standard 101 Reduced Disclosure
Framework (‘FRS 101’) and the Companies Act 2014.
Under company law the Directors must not approve the
Group and parent company financial statements unless they
are satisfied that they give a true and fair view of the assets,
liabilities, and financial position of the Group and parent
company and of the Group’s profit or loss for that year. In
preparing each of the Group and parent company financial
statements, the Directors are required to:
•
Select suitable accounting policies and then apply them
consistently;
• Make judgements and estimates that are reasonable
and prudent;
•
•
•
State whether applicable Accounting Standards have
been followed, subject to any material departures
disclosed and explained in the financial statements;
Assess the Group and parent company’s ability to
continue as a going concern, disclosing, as applicable,
matters related to going concern; and
Use the going concern basis of accounting unless they
either intend to liquidate the Group or parent company
or to cease operations, or have no realistic alternative
but to do so.
The Directors are also required by the Transparency
(Directive 2004/109/EC) Regulations 2007 and the
Transparency Rules of the Central Bank of Ireland to
include a management report containing a fair review of
the business and a description of the principal risks and
uncertainties facing the Group.
The Directors are responsible for keeping adequate
accounting records that disclose with reasonable accuracy
at any time the assets, liabilities, financial position, and profit
or loss of the Group and which enable them to ensure that
the financial statements comply with the provision of the
Companies Act 2014. The Directors are also responsible for
taking all reasonable steps to ensure such records are kept
by its subsidiaries which enable them to ensure that the
financial statements of the Group comply with the provisions
of the Companies Act 2014 including Article 4 of the IAS
Regulation. They are responsible for such internal controls
as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error, and have general responsibility
for safeguarding the assets of the Group, and hence for
taking reasonable steps for the prevention and detection
of fraud and other irregularities. The Directors are also
responsible for preparing a Directors’ report that complies
with the requirements of the Companies Act 2014.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Group’s and Company’s website. Legislation in
the Republic of Ireland concerning the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
Responsibility statement as required by the
transparency directive and UK corporate
governance code:
Each of the Directors, whose names and functions are listed
on pages 76 and 77 of this Annual Report, confirm that, to
the best of each person’s knowledge and belief:
•
•
•
The Group financial statements, prepared in accordance
with IFRS as adopted by the European Union and the
Company financial statements prepared in accordance
with Financial Reporting Standard 101 Reduced Disclosure
Framework (‘FRS 101’) and the Companies Act 2014,
give a true and fair view of the assets, liabilities, and
financial position of the Group and parent company at
31 December 2021 and of the profit of the Group for the
year then ended;
The Directors’ report contained in the Annual Report
includes a fair review of the development and
performance of the business and the position of the
Group and parent company, together with a description
of the principal risk and uncertainties that they face; and
The Annual Report and financial statements, taken as a
whole, provides the information necessary to assess the
Group’s performance, business model, and strategy and
is fair, balanced and understandable and provides the
information necessary for shareholders to assess the
parent company’s position and performance, business
model, and strategy.
Takeover directive
In the event of a change in control, directly or indirectly,
of the Company, the Project Companies or any other
subsidiary which is a borrower under the debt facilities,
such facilities will be cancelled and all outstanding amounts
together with accrued interest shall become immediately
due and payable. The KRSP contains change of control
provisions that provide for accelerated crystallisation of
awards and vesting of shares (including by way of exercise
of nil-paid options) in the event of a change of control of
the Company. Other than as described in the Remuneration
Policy Report on pages 118 to 122, there are no agreements
between the Company and its Directors or employees
providing for predetermined compensation for loss of office
or employment that would occur in the event of a bid for the
Company, save that certain employees, not being Directors,
have service contracts that either provide for extended
notice periods and/or fixed payments on termination
following a change in control of the Company.
Corporate Governance Statement
For the purpose of Section 1373 of the Companies Act
2014, the Directors have prepared a Corporate Governance
Statement in respect of the financial year ended 31
December 2021, which is set out on pages 80 to 91 and is
incorporated into this report by reference.
Kenmare Resources plc
Annual Report and Accounts 2021
125
DIRECTORS’ REPORT CONTINUED
Diversity and Inclusion
The Diversity and Inclusivity Report, which is within the Nomination Committee Report on page 93, is incorporated into this report by reference.
Taxonomy Regulation
For the purposes of the EU Taxonomy Climate Delegated Act, the Directors have prepared a taxonomy disclosure in respect of the financial year
ended 31 December 2021, which is set out on page 62 and is incorporated into this report by reference.
Substantial interests
As at 31 March 2022 and 31 December 2021, the Company had been notified of the following shareholdings in excess of 3% of the issued ordinary
shares of the Company:
African Acquisition S.à.r.l.
M&G plc1
FIL Limited
Premier Miton Group plc
Nortrust Nominees Ltd, London UK
J O Hambro Capital Management Limited
As at 31 March 2022
As at 31 December 2021
No. of
ordinary shares
20,381,795
18,013,408
8,823,420
7,547,068
5,388,201
3,660,576
% of issued
share capital
21.47
18,98
9.29
9.25
5.68
3.3
No. of
ordinary shares
20,381,795
18,013,408
8,823,420
7,547,068
5,388,201
3,660,576
% of issued
share capital
21.47
18.98
9.29
9.25
5.68
3.3
1
Share figures provided directly by M&G as its most recent disclosure did not reflect the number of shares held following completion of the Tender Offer
Accounting records
The Directors have employed appropriately qualified accounting
personnel and have maintained appropriate accounting systems to
ensure that proper accounting records are kept in accordance with
Sections 281 to 285 of the Companies Act 2014. The books of account
are kept at the Company’s office at 4th Floor, Styne House, Hatch
Street Upper, Dublin 2, Ireland.
Audit & Risk Committee
The Board of the Company has established an Audit & Risk Committee.
See pages 98 to 102 for the Audit & Risk Committee Report for the
financial year under review.
Subsidiary undertakings and branches
The subsidiary undertakings of the Company at 31 December 2021 are
outlined in Note 5 to the Company financial statements. Each of the
subsidiary undertakings Kenmare Moma Mining (Mauritius) Limited,
Kenmare Moma Processing (Mauritius) Limited and Mozambique
Minerals Limited operates branches in Mozambique. In addition, the
Company established and maintains a branch in the UK registered at
UK Companies House.
Political donations
There were no political donations made during 2021 that require
disclosure under the Electoral Act 1997 (as amended).
UK Listing Rule 9.8.4
No information is required to be disclosed in respect of Listing
Rule 9.8.4.
Risk exposure
The exposure of the Group to credit, liquidity, market, currency and cash
flow risk is detailed in Note 27. Capital management is detailed in Note 28.
Events since the financial year end
Details of events since the financial year end are set out in Note 35 to
the consolidated financial statements.
Auditors
KPMG, a global chartered accounting firm, was first appointed statutory
auditor on 14 May 2019 and has been reappointed annually since that
date and pursuant to Section 383(2), of the Companies Act 2014 will
continue in office. The financial statements on pages 134 to 177 have
been audited by KPMG.
126 Kenmare Resources plc
Annual Report and Accounts 2021
Disclosure of information to statutory auditor
In accordance with the provisions of Section 330 of the Companies Act
2014, each of the persons who are Directors of the Company at the date of
approval of this report confirms that:
•
•
So far as each Director is aware, there is no relevant audit
information (as defined in the Companies Act 2014) of which the
statutory auditor is unaware; and
Each Director has taken all the steps that he/she ought to have
taken as a Director to make himself/herself aware of any relevant
audit information (as defined) and to ensure that the statutory
auditors are aware of such information.
Statutory compliance statement
The Directors acknowledge that they are responsible for securing the
Company’s compliance with the Company’s “relevant obligations” within
the meaning of Section 225 of the Companies Act 2014 (described
below as “Relevant Obligations”).
The Directors confirm that they have:
b. Drawn up a compliance policy statement setting out the
Company’s policies (that are, in the opinion of the Directors,
appropriate to the Company) in respect of the Company’s
compliance with its Relevant Obligations;
c. Put in place appropriate arrangements or structures that, in
the opinion of the Directors, provide a reasonable assurance of
compliance in all material respects with the Company’s Relevant
Obligations; and
d. During the financial year to which this report relates, conducted a
review of the arrangements or structures that the Directors have
put in place to ensure material compliance with the Company’s
Relevant Obligations.
Notice of Annual General Meeting and special business
Notice of the Annual General Meeting, together with details of special
business to be considered at the meeting, is set out in a separate
circular to be sent to shareholders and will also be available on the
Group’s website, www.kenmareresources.com.
On behalf of the Board:
M. Carvill
Director
T. McCluskey
Director
4 April 2022
4 April 2022
GOVERNANCE
Kenmare Resources plc
Annual Report and Accounts 2021
127
GROUP FINANCIAL
STATEMENTS
130 Independent auditor’s report
134 Consolidated statement
of comprehensive income
135 Consolidated statement
of financial position
136 Consolidated statement
of changes in equity
137 Consolidated statement
of cash flows
138 Notes to the consolidated
financial statements
CL AUD E PILL AY
MANAGER – EN GIN EERIN G AN D M ARINE
Ken mare achieved record shipm ent s
in 2021. This was faci li tated
by improved reli abi li ty a nd
effectiveness of the trans-shipment
vessels and strengthened land-based
product l oading processes.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
director’s use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
We evaluated the directors’ assessment of the entity’s ability to
continue to adopt the going concern basis of accounting. In our
evaluation of the directors’ conclusions, we considered the inherent
risks to the Group’s and Company’s business model and analysed
how those risks might affect the Group’s and Company’s financial
resources or ability to continue operations over the going concern
period. There were no risks identified that we considered were likely to
have a material adverse effect on the Group’s and Company’s available
financial resources over this period.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group or the
Company’s ability to continue as a going concern for a period of at
least twelve months from the date when the financial statements are
authorised for issue.
In relation to the Group and the Company’s reporting on how they have
applied the UK Corporate Governance Code and the Irish Corporate
Governance Annex, we have nothing material to add or draw attention
to in relation to the directors’ statement in the financial statements
about whether the directors considered it appropriate to adopt the
going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect
to going concern are described in the relevant sections of this report.
Key audit matters: our assessment of risks
of material misstatement
Key audit matters are those matters that, in our professional judgment,
were of most significance in the audit of the financial statements and
include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by us, including those which
had the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
In arriving at our audit opinion above, the key audit matters, in
decreasing order of audit significance, were as follow:
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF KENMARE RESOURCES PLC
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Kenmare Resources plc
(‘the Company’) and its consolidated undertakings (‘the Group’) for
the year ended 31 December 2021 set out on pages 134 to 177, and
contained within the reporting package 635400ETHWP1EKJMDO16-
2021-12-31-en which comprise the Consolidated Statement of
Financial Position, Consolidated Statement of Comprehensive Income,
Consolidated Statement of Changes in Equity, Consolidated Statement
of Cash Flows, Parent Company Statement of Financial Position, Parent
Company Statement of Changes in Equity, and related notes, including
the summary of significant accounting policies set out in note 1. The
financial reporting framework that has been applied in their preparation
is Irish Law, including the Commission Delegated Regulation
2019/815 regarding the single electronic reporting format (ESEF) and
International Financial Reporting Standards (IFRS) as adopted by the
European Union and, as regards the Company financial statements,
Irish Law and FRS 101 Reduced Disclosure Framework issued in the
United Kingdom by the Financial Reporting Council.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the assets,
liabilities and financial position of the Group and Company as at
31 December 2021 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in
accordance with IFRS as adopted by the European Union;
the Company financial statements have been properly prepared in
accordance with FRS 101 Reduced Disclosure Framework issued
by the UK’s Financial Reporting Council; and
the Group and Company financial statements have been properly
prepared in accordance with the requirements of the Companies
Act 2014 and, as regards the Group financial statements, Article 4
of the IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (Ireland) (ISAs (Ireland)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor’s Responsibilities section of our report. We believe that the
audit evidence we have obtained is a sufficient and appropriate basis
for our opinion. Our audit opinion is consistent with our report to the
audit committee.
We were appointed as auditor by the directors on 14 May 2019. The
period of total uninterrupted engagement is the three years ended
31 December 2021. We have fulfilled our ethical responsibilities under,
and we remained independent of the Group in accordance with, ethical
requirements applicable in Ireland, including the Ethical Standard
issued by the Irish Auditing and Accounting Supervisory Authority
(IAASA) as applied to public interest entities. No non-audit services
prohibited by that standard were provided.
130 Kenmare Resources plc
Annual Report and Accounts 2021
FINANCIAL STATEMENTS
Group key audit matter
Impairment of property, plant, and equipment $954.6m (2020: $958.5m)
Refer to page 141 (accounting policy) and pages 152 to 153 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
The Directors have developed an
impairment assessment model
which they use to determine if
the net present value of future
cash flows will be sufficient to
recover the Group’s carrying value
of Property, Plant & Equipment
(‘PP&E’), principally the Group’s
mine in Mozambique. Key
assumptions used in the model
include the useful life of the
mine, future sales prices, costs of
production and sustaining capital
expenditure and the discount
rate, including the country risk
premium.
There is a risk that incorrect
key inputs or inappropriate
assumptions could be included in
the impairment model leading to
an impairment charge not being
correctly identified and recognised
in the Group financial statements
Our audit procedures included:
• We gained an understanding and documented management’s process used to calculate the recoverable amount of
PP&E, in particular understanding the assumptions made, including changes in the model from prior periods.
• We tested the design and implementation of controls in place over the impairment of PP&E.
• We assessed, through discussions with management and where applicable agreed back to source documentation and
third party evidence, the key assumptions used by management for reasonableness including the useful life of the
mine, future sales prices, costs of production and sustaining capital expenditure and the discount rate, including the
determination of the applicable country risk premium.
• We compared key inputs to external industry specific and general economic data sources including the discount rate
and inflation rate applied in the impairment model.
• We considered the appropriateness of the country risk premium used in the weighted average cost of capital
calculation by assessing how the Group determined the country risk premium and confirming that the approach taken
in this regard was consistent with prior periods.
• We performed sensitivity analysis by changing certain assumptions including the discount rate, sales prices and costs,
and their impact on the carrying value of the assets.
• We engaged an internal KPMG valuation specialist to review the Group’s key assumptions in determining the weighted
average cost of capital which is applied in the impairment model.
• We considered the gap between the market capitalisation of the Group and its consolidated net asset position and its
impact on the carrying value of PP&E.
• We assessed the appropriateness of the disclosures set out in the financial statements with respect to their compliance
with the requirements of the relevant accounting standards.
Based on evidence obtained, we found that management’s key assumptions and key inputs were reasonable. We found the
disclosures to be adequate in providing an understanding of the basis of impairment.
Revenue recognition $455.9m (2020: $243.7m)
Refer to page 139 (accounting policy) and pages 147 to 148 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
Our audit procedures included:
• We assessed the appropriateness of the allocation of contract revenue to multiple element deliverables and tested the
operating effectiveness of related controls.
• We tested the design and implementation of controls in place over the recognition of revenue and manual journals
posted to revenue line by key management personnel.
• We assessed, on a sample basis, whether sales transactions either side of the balance sheet date as well as credit notes
issued after year end are recognised in the correct period by performing cut-off procedures. We assessed if revenue has
been recorded correctly through the review of shipment terms, shipment dates bills of lading and letters of credit.
• We examined any new significant contractual arrangements entered into and inquire whether terms have changed with
any significant existing customers, where there could be an impact on the timing of revenue recognition.
• We assessed the adequacy of the Group’s disclosures in respect of the relevant accounting standards.
Based on the procedures performed, we did not identify any material misstatements. We found the disclosures in respect of
revenue to be appropriate.
The Group sells products under a
variety of contractual terms with
multiple element deliverables.
Revenue is recognised when the
control is transferred to customers
which is generally when mineral
products have been delivered
in line with the terms of the
individual customer contracts.
There is a risk of fraud at year
end that revenue has not been
recorded in the correct period
in the consolidated financial
statements. There is a risk that it
has been misstated intentionally
for performance targets or in
error through the recording of a
sale intentionally in the incorrect
period, specifically at year end.
Company key audit matter
Investment in subsidiaries $801.1m (2020: $798.4m)
Refer to page 172 (accounting policy) and page 175 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
The investment in subsidiary
undertakings is carried by
Kenmare Resources plc Company
only at cost less impairment. There
is a risk in respect of the carrying
value of these investments
if future cash flows and
performance of these subsidiaries
is not sufficient to support the
Company’s investment.
Our audit procedures included:
• We obtained and documented the process for impairment considerations and tested the design and implementation of
the relevant controls therein.
• We considered management’s assessment of impairment indicators.
• We compared the carrying value of investments to the net assets of the subsidiary financial statements.
• We considered the audit work performed in respect of the subsidiaries, including the judgements and assumptions used
in determining the valuation of Property, Plant & Equipment.
• We reviewed the disclosures in the Company financial statements.
Based on the procedures performed, we found management’s assessment of the carrying value of the investment in
subsidiary undertakings to be appropriate. We found the disclosures to be adequate in providing an understanding of the
basis of impairment.
Kenmare Resources plc
Annual Report and Accounts 2021
131
Disclosures of principal risks and longer-term viability
Based on the knowledge we acquired during our financial statements
audit, we have nothing material to add or draw attention to in
relation to:
the Principal Risks disclosures describing these risks and
explaining how they are being managed and mitigated;
the directors’ confirmation within the Viability Statement on page
124 that they have carried out a robust assessment of the principal
risks facing the Group, including those that would threaten its
business model, future performance, solvency and liquidity; and
the directors’ explanation in the Viability Statement of how they
have assessed the prospects of the Group, over what period
they have done so and why they considered that period to be
appropriate, and their statement as to whether they have a
reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the period
of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Other corporate governance disclosures
We are required to address the following items and report to you in the
following circumstances:
•
•
•
•
Fair, balanced and understandable: if we have identified material
inconsistencies between the knowledge we acquired during our
financial statements audit and the directors’ statement that they
consider that the Annual Report and financial statements taken
as a whole is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s
position and performance, business model and strategy;
Report of the Audit & Risk Committee: if the section of the Annual
Report describing the work of the Audit Committee does not
appropriately address matters communicated by us to the Audit &
Risk Committee;
Statement of compliance with UK Corporate Governance Code:
if the directors’ statement does not properly disclose a departure
from provisions of the UK Corporate Governance Code specified
by the Listing Rules of Euronext Dublin and the UK Listing
Authority for our review; and
If the directors’ statement relating to Going Concern required
under the Listing Rules of Euronext Dublin and the UK Listing
Authority set out on page 124 is materially inconsistent with our
audit knowledge.
We have nothing to report in these respects.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF KENMARE RESOURCES PLC
Our application of materiality and an overview of the
scope of our audit
Materiality for the group financial statements as a whole was set at
$9.4m (2020: $9.0m), determined with reference to a benchmark of
net assets ((of which it represents 1% (2020: 1%)). Materiality for the
Company financial statements as a whole was set at $8 million (2020:
$5.8 million), determined with reference to a benchmark of net assets
((of which it represents approximately 1% (2020: 1%)). We concluded
that net assets was the most appropriate benchmark as it best reflects
the operations of the Group and Company.
•
•
We reported to the Audit and Risk Committee any corrected or
uncorrected identified misstatements exceeding $0.47m for the Group
and Company financial statements (2020: $0.45m), in addition to
other identified misstatements that warranted reporting on qualitative
grounds.
•
We applied materiality to assist us in determining the overall audit
strategy, what risks were significant risks of misstatement and key
audit matters, and the audit procedures to be performed in response.
The Group’s principal activity, its mining operation in Mozambique, is
carried out through two components. These components were subject
to full scope audits for Group audit purposes, using materiality levels
of $3m each (2020: $3m). The Group team instructed our component
auditor in Mozambique as to the significant areas to be addressed,
including the relevant risks detailed above, and the information to be
reported.
Taken together, the Company and the mine components accounted
for 100% of Group revenue (2020: 100%) and 97% of Group net assets
(2020: 98%).
Other information
The Directors are responsible for the preparation of the other
information presented in the Annual Report together with the financial
statements. The other information comprises the information included
in the Directors’ Report and the non-financial statements included
on the company’s website at www.Kenmareresources.com and the
Business Overview, Strategic Report and Governance sections of the
Annual Report, as well as the Directors’ Responsibility Statement,
Shareholder profile, Glossary – alternative performance measures,
Glossary – terms, and General information.
The financial statements and our auditor’s report thereon do not
comprise part of the other information. Our opinion on the financial
statements does not cover the other information and, accordingly, we
do not express an audit opinion or, except as explicitly stated below,
any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work, the
information therein is materially misstated or inconsistent with the
financial statements or our audit knowledge. Based solely on that work
we have not identified material misstatements in the other information.
Based solely on our work on the other information undertaken during
the course of the audit, we report that, in those parts of the directors’
report specified for our consideration:
•
•
we have not identified material misstatements in the directors’
report; and
in our opinion, the information given in the directors’ report is
consistent with the financial statements; and in our opinion,
the directors’ report has been prepared in accordance with the
Companies Act 2014.
132 Kenmare Resources plc
Annual Report and Accounts 2021
In addition as required by the Companies Act 2014, we report, in
relation to information given in the Corporate Governance Statement
on pages 80 to 91, that:
•
•
•
based on the work undertaken for our audit, in our opinion, the
description of the main features of internal control and risk
management systems in relation to the financial reporting process,
and information relating to voting rights and other matters
required by the European Communities (Takeover Bids (Directive
2004/EC) Regulations 2006 and specified for our consideration, is
consistent with the financial statements and has been prepared in
accordance with the Act;
based on our knowledge and understanding of the Company and
its environment obtained in the course of our audit, we have not
identified any material misstatements in that information; and
the Corporate Governance Statement contains the information
required by the European Union (Disclosure of Non-Financial and
Diversity Information by certain large undertakings and groups)
Regulations 2017.
We also report that, based on work undertaken for our audit, the
information required by the Act is contained in the Corporate
Governance Statement.
Our opinions on other matters prescribed by the
Companies Act 2014 are unmodified
We have obtained all the information and explanations which we
consider necessary for the purpose of our audit.
In our opinion, the accounting records of the Company were sufficient
to permit the financial statements to be readily and properly audited
and the financial statements are in agreement with the accounting
records.
We have nothing to report on other matters on which we
are required to report by exception
The Companies Act 2014 requires us to report to you if, in our opinion:
•
•
•
the disclosures of directors’ remuneration and transactions
required by Sections 305 to 312 of the Act are not made;
the Company has not provided the information required by Section
1110N in relation to its remuneration report for the financial year
31 December 2021; and
the Company has not provided the information required by section
5(2) to (7) of the European Union (Disclosure of Non-Financial and
Diversity Information by certain large undertakings and groups)
Regulations 2017 for the year ended for the financial year 31
December 2021 as required by the European Union (Disclosure
of Non-Financial and Diversity Information by certain large
undertakings and groups) (amendment) Regulations 2018.
We have nothing to report in this regard.
The Listing Rules of Euronext Dublin and the UK Listing Authority
require us to review:
•
•
•
the Directors’ Statement, set out on page 124, in relation to going
concern and longer-term viability;
the part of the Corporate Governance Statement on pages 80 to 91
relating to the Company’s compliance with the provisions of the UK
Corporate Governance Code and the Irish Corporate Governance
Annex specified for our review; and
certain elements of disclosures in the report to shareholders by the
Board of Directors’ remuneration committee.
We have nothing to report in this regard.
FINANCIAL STATEMENTS
Respective responsibilities and restrictions on use
Directors’ responsibilities
As explained more fully in their statement set out on page 125,
the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error; assessing the Group
and Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and using the going
concern basis of accounting unless they either intend to liquidate the
Group or the Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue our opinion in an auditor’s
report. Reasonable assurance is a high level of assurance, but does
not guarantee that an audit conducted in accordance with ISAs
(Ireland) will always detect a material misstatement when it exists.
Misstatements can arise from fraud, other irregularities or error and
are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of the financial statements. The risk of not detecting
a material misstatement resulting from fraud or other irregularities is
higher than for one resulting from error, as they may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of
internal control and may involve any area of law and regulation and not
just those directly affecting the financial statements.
A fuller description of our responsibilities is provided on IAASA’s
website at http://www.iaasa.ie/Publications/Auditing-standards/
International-Standards-on-Auditing-for-use-in-Ire/Description-of-the-
auditor-s-responsibilities-for-audit.pdf.
The purpose of our audit work and to whom we owe our
responsibilities
Our report is made solely to the Company’s members, as a body, in
accordance with Section 391 of the Companies Act 2014. Our audit
work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company and the Company’s members, as a body, for our audit work,
for our report, or for the opinions we have formed.
Keith Watt
J and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
1 Stokes Place
St. Stephen’s Green
Dublin 2
4 April 2022
Kenmare Resources plc
Annual Report and Accounts 2021
133
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
Revenue
Cost of sales
Gross profit
Other operating costs
Operating profit
Finance income
Finance costs
Foreign exchange loss
Profit before tax
Income tax expense
Profit for the financial year and total comprehensive income for the financial year
Attributable to equity holders
Profit per share: basic
Profit per share: diluted
The accompanying notes form part of these financial statements.
Notes
2
4
5
8
9
10
11
11
2021
$’000
455,944
(244,986)
210,958
(57,977)
152,981
265
(12,053)
(3,897)
137,296
(8,770)
128,526
128,526
2020
$’000
243,746
(179,103)
64,643
(30,250)
34,393
642
(11,301)
(980)
22,754
(6,015)
16,739
16,739
$ per share
$ per share
1.18
1.16
0.15
0.15
134 Kenmare Resources plc
Annual Report and Accounts 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
FINANCIAL STATEMENTS
Assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Equity
Capital and reserves attributable to the
Company’s equity holders
Called-up share capital
Share premium
Other reserves
Retained earnings
Total equity
Liabilities
Non-current liabilities
Bank loans
Lease liabilities
Provisions
Current liabilities
Bank loans
Lease liabilities
Trade and other payables
Current tax liabilities
Provisions
Total liabilities
Total equity and liabilities
The accompanying notes form part of these financial statements.
On behalf of the Board:
M. Carvill
Director
4 April 2022
T. McCluskey
Director
4 April 2022
Notes
2021
$’000
2020
$’000
13
14
15
16
17
18
19
20
21
22
23
14
24
23
14
25
26
24
954,558
2,136
–
956,694
60,219
74,747
69,057
204,023
1,160,717
104
545,950
230,539
154,050
930,643
74,757
971
38,999
114,727
73,342
1,207
32,768
4,808
3,222
115,347
230,074
1,160,717
958,508
3,220
202
961,930
63,670
29,915
87,244
180,829
1,142,759
120
545,950
231,350
123,083
900,503
144,554
2,028
40,430
187,012
1,217
1,360
50,122
1,631
914
55,244
242,256
1,142,759
Kenmare Resources plc
Annual Report and Accounts 2021
135
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
Balance at 1 January 2020
Total comprehensive income for the year
Profit for the financial year
Total comprehensive income for the year
Transactions with owners of the Company
Share-based payments
Unvested and expired share-based payments
(Note 31)
Shares issued
Deferred shares cancelled
Dividends paid (Note 22)
Total contributions and distributions
Balance at 1 January 2021
Total comprehensive income for the year
Profit for the financial year
Total comprehensive income for the year
Transactions with owners of the Company
Share-based payments
Unvested and expired share-based payments
(Note 31)
Share buy back (Note 19)
Share buy back transaction costs (Note 22)
Dividends paid (Note 22)
Total contributions and distributions
Balance at 31 December 2021
Called-Up
Share
Capital
$’000
215,046
–
–
–
–
–
(214,926)
–
(214,926)
120
–
–
–
–
(16)
–
–
(16)
104
Share
Premium
$’000
545,729
–
–
–
–
221
–
–
221
545,950
–
–
–
–
–
–
–
–
545,950
Retained
Earnings
$’000
Undenominated
Capital
$’000
Share-Based
Payment
Reserve
$’000
Total
$’000
93,851
11,336
25,866
891,828
16,739
16,739
–
21,087
–
–
(8,594)
12,493
123,083
128,526
128,526
–
1,964
(81,589)
(1,540)
(16,394)
(97,559)
154,050
–
–
–
–
–
214,926
–
214,926
226,262
–
–
–
–
16
–
–
16
226,278
–
–
16,739
16,739
530
530
(21,087)
(221)
–
–
(20,778)
5,088
–
–
–
–
–
(8,594)
(8,064)
900,503
128,526
128,526
1,137
1,137
(1,964)
–
–
–
(827)
4,261
–
(81,589)
(1,540)
(16,394)
(98,386)
930,643
136 Kenmare Resources plc
Annual Report and Accounts 2021
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
Cash flows from operating activities
Profit for the financial year after tax
Adjustment for:
Foreign exchange movement
Share-based payments
Finance income
Finance costs
Income tax expense
Depreciation
Change in:
Provisions
Inventories
Trade and other receivables
Trade and other payables
Cost of equity-settled share-based payments
Cash generated from operating activities
Income tax paid
Interest received
Interest paid
Factoring and other fees
Debt commitments fees paid
Net cash from operating activities
Investing activities
Additions to property, plant and equipment
Net cash used in investing activities
Financing activities
Dividends paid
Share buy back
Share buy back transaction costs
Drawdown of debt
Repayment of debt
Payment of lease liabilities
Net cash generated (used in)/from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
FINANCIAL STATEMENTS
Notes
2021
$’000
2020
$’000
128,526
16,739
3,897
3,420
(265)
12,053
8,770
63,136
219,537
2,372
3,451
(44,832)
(15,681)
(2,283)
162,564
(6,284)
265
(7,147)
(1,431)
(161)
147,806
(60,342)
(60,342)
(16,394)
(81,589)
(1,540)
20,000
(20,000)
(1,449)
(100,972)
(13,508)
87,244
(4,679)
69,057
980
1,759
(642)
11,301
6,015
42,294
78,446
614
(11,824)
10,536
10,675
(1,229)
87,218
(8,498)
642
(7,474)
(720)
(317)
70,851
(139,347)
(139,347)
(8,594)
–
–
82,742
–
(1,065)
73,083
4,587
81,177
1,480
87,244
8
9
10
13, 14
24
16
17
25
9
9
13
22
19
22
23
23
14
18
Kenmare Resources plc
Annual Report and Accounts 2021
137
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
1. Statement of accounting policies
Kenmare Resources plc (the “Company”) is domiciled in the Republic of Ireland. The Company’s registered address is Styne House, Hatch Street
Upper, Dublin 2. The Company has a premium listing on the Main Market of the London Stock Exchange and a secondary listing on Euronext
Dublin. These consolidated financial statements comprise the Company and its subsidiary undertakings (the “Group”). The principal activity of the
Group is the operation and further development of the Moma Titanium Minerals Mine in Mozambique.
The significant accounting policies adopted by the Group are set out below.
Adoption of new and revised standards
Standards adopted in the current financial year
The following new and revised standards, all of which are effective for accounting periods beginning on or after 1 January 2021, have been adopted
in the current financial year.
•
•
Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
COVID-19-Related Rent Concessions (Amendment to IFRS 16)
None of the new and revised standards and interpretations listed above have a material effect on the Group’s financial statements.
Standards to be adopted in future accounting periods
At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in these
financial statements were in issue but not yet effective. The Group will apply the relevant standards from their effective dates. The standards are
mandatory for future accounting periods but are not yet effective and have not been early-adopted by the Group.
•
•
•
•
•
•
•
•
•
Onerous Contracts – Cost of Fulfilling a Contract (Amendment to IAS 37) effective 1 January 2022
Annual Improvements to IFRS Standards 2018–2020 effective 1 January 2022
Property, Plant and Equipment: Proceeds before Intended Use (Amendment to IAS 16) effective 1 January 2022
Reference to the Conceptual Framework (Amendments to IFRS 3) effective 1 January 2022
Classification of Liabilities as Current or Non-current (Amendment to IAS 1) effective 1 January 2023
IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts effective for accounting periods on or after 1 January 2023
Accounting Policies, Changes in Accounting Estimates and Errors: definition (Amendments to IAS 8) effective 1 January 2023
Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) effective 1 January 2023
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements effective
1 January 2023
The Directors do not expect that the adoption of the Standards and Interpretations listed above will have a material impact on the financial
statements of the Group in future periods.
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) adopted by the European
Union and therefore the Group financial statements comply with Article 4 of the IAS Regulation. The financial statements have also been prepared
in accordance with the Companies Act 2014.
Going concern
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have or will have
adequate resources to continue in operational existence for the foreseeable future. Based on the Group’s cash flow forecast, liquidity and solvency
position the Directors have a reasonable expectation that the Group has adequate resources for the foreseeable future and, therefore, they
continue to adopt the going concern basis of accounting in preparing the financial statements.
The Group forecast has been prepared by management with best estimates of production, pricing and cost assumptions over the period. Key
assumptions upon which the Group forecast is based include a mine plan covering production using the Namalope, Nataka, Pilivili and Mualadi
reserves and resources as set out in the unaudited mineral reserves and resources table on page 37. Specific resource material is included only
where there is a high degree of confidence in its economic extraction. Production levels for the purpose of the forecast are approximately 1.2
million tonnes per annum of ilmenite plus co-products, zircon, concentrates and rutile, over the next twelve months. Assumptions for product sales
prices are based on contract prices as stipulated in marketing agreements with customers or, where contract prices are based on market prices
or production is not presently contracted, prices are forecast taking into account independent titanium mineral sands expertise and management
expectations. Operating costs are based on approved budget costs for 2022, taking into account the current running costs of the Mine and
escalated by 2% per annum thereafter. Capital costs are based on the capital plans and include escalation at 2% per annum.
Sensitivity analysis is applied to the assumptions above to test the robustness of the cash flow forecasts for changes in market prices, shipments
and operating and capital cost assumptions. Changes in these assumptions affect the level of sales and profitability of the Group and the amount
of capital required to deliver the projected production levels. As a result of this assessment, the Board has a reasonable expectation that the Group
will be able to continue in operation and meet its liabilities as they fall due over the next 12 months.
138 Kenmare Resources plc
Annual Report and Accounts 2021
FINANCIAL STATEMENTS
1. Statement of accounting policies CONTINUED
Basis of accounting
The financial statements are presented in US Dollars under the historical cost convention except for certain trade receivables and share-based
payments, which are recorded at fair value.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company, its subsidiaries and its subsidiaries branches.
Subsidiaries are entities controlled by the Group. The Group ‘controls’ an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are
included in the consolidated financial statements from the date on which control commences until the date on which control ceases.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the
elements of control listed above.
The results of subsidiaries acquired or disposed of during the financial year are included in the consolidated statement of comprehensive income
from the date the Company gains control until the date when the Company ceases to control the subsidiary.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between the members of the Group are
eliminated on consolidation.
When the Group loses control of a subsidiary, the gain or loss on disposal recognised in profit or loss is calculated as the difference between (i)
the aggregate of the fair value of the consideration received and the fair value of any retained interest, and (ii) the previous carrying amount
of the assets, less liabilities of the subsidiary. All amounts previously recognised in other comprehensive income in relation to that subsidiary
are accounted for as if the Group had directly disposed of the related assets and liabilities of the subsidiary (i.e. reclassified to profit or loss or
transferred to another category of equity as required by applicable IFRS). The fair value of any investment retained in the former subsidiary at the
date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9 Financial Instruments or, when
applicable, the costs on initial recognition of an investment in an associate or a joint venture.
Determination of ore reserve estimates
The Group estimates its ore reserves and mineral resources based on information compiled by a Competent Person as defined in accordance with
the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 Edition (the “JORC Code”). Ore reserves and
mineral resources determined in this way are used in the calculation of depreciation, amortisation and impairment charges, the assessment of life
of mine and for forecasting the timing of the payment of close-down costs, restoration costs and clean-up costs. In assessing the life of a mine for
accounting purposes, mineral resources are taken into account only where there is a high degree of confidence of economic extraction. There are
numerous uncertainties inherent in estimating ore reserves and mineral resources and assumptions that are valid at the time of estimation may
change significantly when new information becomes available. Changes in the forecast prices of final products, production costs or recovery rates
may change the economic status of ore reserves and mineral resources and may ultimately result in the reserves being revised.
Accounting for climate change
Management have considered the impact of climate change on amounts reported within the financial statements, including the potential financial
impact of the physical and transitional risks identified in the Strategic Climate Report in accordance with the recommendations of the Taskforce
on Climate-related Financial Disclosures. Assumptions in respect of climate related matters have been made on a number of key estimates and
judgements including:
•
•
•
the estimate of future cash flows used in the determining the recoverable amount of the Moma Titanium Minerals Mine cash-generating unit;
the mine closure provision and mine rehabilitation provision; and
the useful lives of property, plant and equipment.
These assumptions did not have a material impact on the financial reporting judgements and estimates, nor are they expected to have a significant
impact on the Group’s going concern or viability assessment.
Whilst the Group has set ambitions to be Net Zero by 2040, the financial impact is still being assessed as the Group considers how it will work
towards meeting these targets. Management continues to monitor future uncertainty around climate change risks and are continually developing
the Group’s assessment of the impact that climate change has on the amounts recognised in the financial statements. It is, therefore, likely that the
future carrying amounts of assets or liabilities may change as the Group’s judgments and estimates evolve as the Group responds to its climate
change targets.
Revenue recognition
Revenue is measured based on the consideration specified in a contract with a customer and represents amounts receivable for mineral products
provided in the normal course of business, net of discounts and related sales taxes. The Group recognises revenue when the Company transfers
control of mineral products to a customer. Control of mineral products passes from the Group to customers on delivery. Typically, delivery takes
place when the product is loaded on the ocean-going vessel chartered by either the customer or the Group, with most sales being made on either
a “free on board” (FOB), “cost, insurance and freight” (CIF), or a “cost and freight” (CFR) basis. For FOB sales the customer is responsible for the
cost of shipping and handling. For CIF and CFR sales amounts billed to customers in respect of shipping and handling are classed as revenue
where the Group is responsible for shipping and handling. All shipping and handling costs incurred by the Group are recognised as operating costs.
If the Group is acting solely as an agent for a customer in respect of shipping and handling, amounts billed to customers for shipping and handling
are offset against the relevant costs.
Kenmare Resources plc
Annual Report and Accounts 2021
139
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
1. Statement of accounting policies CONTINUED
The Group has a mixture of long-term contracts and spot contracts with customers for the sale of mineral products ilmenite, zircon, concentrates
and rutile. Contracts stipulate price and/or quantity commitments. Long-term contracts range for periods from one to three years. Spot contracts
are in respect of one-off sales. The performance obligations in relation to the sale of mineral products are similar under all contracts and stipulate
that the Group deliver the specified product to the customer.
Finance income
Finance income represents deposit interest earned. Deposit interest is accrued on a time basis by reference to the principal outstanding and at the
effective interest rate applicable.
Finance costs
Finance costs consist of interest on bank borrowings, interest on lease liabilities, trade receivable facilities fees, debt commitment fees and the
unwinding of the mine closure provision. The accounting policies applicable for these finance costs are set out in borrowing costs, leases, financial
assets and provisions. Debt commitment fees are recognised in the period to which they relate for undrawn facilities.
Retirement benefit costs
Payments to defined contribution retirement schemes are charged as an expense as they fall due.
Foreign currency
The individual financial statements of each Group entity are prepared in their functional currency, which in each case is US Dollars. The
presentation currency for the consolidated financial statements is also US Dollars.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency are recorded
at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are
retranslated at rates prevailing on such reporting date.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the statement of
comprehensive income for the financial year in foreign exchange gain/loss and are not part of the operating profit or loss.
Borrowing costs
All borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a
substantial period of time to get ready for their intended use, are added to the cost of those assets until such time as the assets are substantially
ready for their intended use.
Taxation
The tax expense represents the sum of the current tax and deferred tax.
Current tax payable is based on the best estimate of the tax amount expected to be paid and reflects uncertainty related to income taxes, if any.
Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expenses that
are taxable or deductible in other financial years and it further excludes items that are never taxable or deductible. The Group’s liability for current
tax is calculated using the tax rates that have been enacted or substantively enacted at the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the statement of
financial position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against deductible temporary differences which can be utilised.
Deferred tax liabilities are not recognised for taxable temporary differences arising on investments in subsidiary undertakings, if the Group is able
to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax is measured at the tax rates that are expected to apply in the period when the liability is settled or the asset is released and reflects
uncertainty related to income taxes, if any. Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to
items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and
when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and tax liabilities on a
net basis.
Operating profit/loss
Operating profit or loss is stated after charging all costs arising from continuing operations, other than those permitted to be capitalised, but before
finance income, finance costs, foreign exchange gain or loss and taxation.
140 Kenmare Resources plc
Annual Report and Accounts 2021
FINANCIAL STATEMENTS
1. Statement of accounting policies CONTINUED
Property, plant and equipment
The cost of property, plant and equipment comprises any costs directly attributable to bringing an asset to the location and condition necessary
for it to be capable of operating in the manner intended by management and the estimated closure costs associated with the asset. This includes
the cost of moving plant and associated infrastructure to the orebodies under the Group’s mining concessions which form part of the Group’s life
of mine plan.
Construction in progress expenditures for the construction and commissioning of property, plant and equipment are deferred until the facilities are
operational, at which point the costs are transferred to property, plant and equipment and depreciated at the applicable rates.
Property, plant and equipment are depreciated over their useful life on a straight-line basis, or over the remaining life of the Mine if shorter, or on a
units of production basis. The major categories of property, plant and equipment are depreciated as follows:
Plant and equipment
Development expenditure
Units of production basis
Units of production basis
Other assets
Vessels
Buildings and airstrip
Mobile equipment
Fixtures and equipment
Five to twenty five years
Twenty years
Three to five years
Three to ten years
Units of production depreciation is calculated using the quantity of heavy mineral concentrate extracted from the Mine for processing in the period
as a percentage of the total quantity of heavy mineral concentrate planned to be extracted in current and future periods based on the mining
reserve. The mining reserve is updated on an annual basis for results of drilling programmes carried out, mining activity during the year, and other
relevant considerations. The unit of production depreciation rate is adjusted as a result of this update and applied prospectively.
Capital spares consist of critical plant spares with estimated useful lives greater than one year and are included in property, plant and equipment.
Capital spares are stated at cost less accumulated depreciation.
Residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. Changes to the estimated residual values or
useful lives are accounted for prospectively.
Development expenditure
Project development costs for a mine, including finance costs and lender and advisor fees incurred during the period before such mine is capable
of operating at production levels in the manner intended by management are deferred and included in property, plant and equipment. In addition,
expenses including depreciation net of revenue earned during commissioning of the Mine in the period before it is capable of operating in the
manner intended by management are deferred. These costs include an allocation of costs, including share-based payments, as determined by
management and incurred by Group companies. Interest on borrowings relating to the Mine construction and development projects are capitalised
until the point when the activities that enable the Mine to operate in its intended manner are complete. Once the Mine is operating in the manner
intended by management, the related costs are written off over the life of the estimated ore reserve of such mine on a unit of production basis.
Where the Mine project is terminated or impairment of value has occurred, related costs are written off immediately.
Development expenditure is depreciated on a unit of production basis over its useful life, or the remaining life of the Mine, if shorter.
Exploration and evaluation expenditure
Exploration and evaluation expenditure activity involves the search for mineral resources, the determination of technical feasibility and the
assessment of commercial viability of an identified resource. Exploration and evaluation expenditure is charged to the statement of comprehensive
income as incurred, except where the existence of a commercially viable mineral deposit has been established and it is expected that the deposit
will be mined. Capitalised exploration and evaluation expenditure considered to be tangible is recognised as a component of property, plant and
equipment at cost less impairment charges. Until such time an asset is available for use, it is not depreciated. All capitalised exploration and
evaluation expenditure is monitored for indications of impairment as part of development expenditure. To the extent that capitalised expenditure is
not expected to be recovered, it is charged to the statement of comprehensive income.
Leases
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost
(being the present value of the lease liabilities), and subsequently at cost less accumulated depreciation and impairment losses, and adjusted for
certain remeasurements of the lease liability. Right-of-use assets are depreciated over their lease term.
The lease liability is initially measured at the present value of the future lease payments, discounted using the Group’s incremental borrowing rate.
The Group has applied judgement to determine the discount rate.
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It is remeasured
when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the amount expected to be
payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is reasonably
certain to be exercised or a termination option is reasonably certain not to be exercised.
Kenmare Resources plc
Annual Report and Accounts 2021
141
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
1. Statement of accounting policies CONTINUED
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is
recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group has applied judgement to determine the lease term for some lease contracts that include renewal options. The assessment of whether
the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right-
of-use assets recognised.
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term leases including
heavy mobile rental at the Mine. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over
the lease term.
Impairment of non-current assets
At each reporting date, the Group reviews the carrying amounts of its non-current assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value less costs to sell is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As the fair value for
the Mine is difficult to determine, the Group uses its value in use in estimating the recoverable amount. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of the asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset
(or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate
of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset (or cash-generating unit) in prior financial years. A reversal of an impairment loss is recognised
as income immediately.
Inventories
Product inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour costs and overheads,
including depreciation, incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average
method. Net realisable value represents the estimated selling price less all estimated costs necessary to make the sale. Quantities are assessed
primarily through surveys and assays.
Consumable spares are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average method and comprises
the purchase price and related costs incurred in bringing the inventories to their present location and condition. Consumable spares identified as
obsolete are recognised as an expense immediately.
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or
issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added
to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Financial assets
The financial assets of the Group consist of cash and cash equivalents and trade receivables.
142 Kenmare Resources plc
Annual Report and Accounts 2021
FINANCIAL STATEMENTS
1. Statement of accounting policies CONTINUED
Classification of financial assets
Cash and cash equivalents comprise cash on hand, demand deposits and other short-term highly liquid investments that are readily convertible to
a known amount of cash and are subject to an insignificant risk of change in value. Cash and cash equivalents are initially measured at fair value
and are subsequently measured at amortised cost. They are held by the Group to collect deposit interest and to meet the liquidity requirements of
the Group.
The Group has a trade finance facility with Absa Bank for three of the Group’s customers. In accordance with this facility, the bank purchases 80%
of the receivable without recourse and therefore assumes the credit risk. Derecognition of the trade receivables and the receipt of cash occurs
when the customer’s invoices are factored by Absa Bank.
The Group has a trade facility with Barclays Bank for customers which it sells to under letter of credit terms. Under this facility, Barclays Bank
confirms the letter of credit from the issuing bank and therefore assumes the credit risk. Barclays Bank can also discount these letters of credit
thereby providing early payment of receivables to the Group. Derecognition of the trade receivables and the receipt of cash occurs when the
customer’s invoices are discounted by Barclays Bank.
These facilities assist the Group in managing its liquidity for funding of operations. Trade receivables which are not factored are initially measured
at fair value and subsequently measured at amortised cost as they are held by the Group in order to collect receipts under the credit terms of
the sales contracts i.e. solely payment of principal and interest (SPPI). Trade receivables which are factored or letters of credit which are always
confirmed and discounted are initially measured at fair value and subsequently measured at fair value through profit or loss (FVTPL). Trade
receivables or letters or credit where it is not known at initial recognition if they will be factored or confirmed and discounted as the case may be
are classified as fair value through other comprehensive income (FVOCI). This is because their cash flows are generated through a combination of
collection and sales (by factoring or confirming and discounting letters of credit).
Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost. For financial
assets, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset. Interest income is
recognised in profit or loss and is included in the “finance income” line item.
Equity instruments
The Group does not hold any equity financial assets.
Foreign exchange gains and losses
The carrying amount of financial assets that are denominated in a foreign currency is determined in that foreign currency and translated at the
spot rate at the end of each reporting period. For financial assets measured at amortised cost, exchange differences are recognised in profit or loss
in the “foreign exchange gains and losses” line. All trade receivables are denominated in US Dollars and so there are no foreign exchange gains or
losses to be determined at the end of the reporting periods.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on trade receivables that are not measured at fair value through profit or
loss. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the
trade receivable. When determining whether the credit risk of a trade receivable has increased the Group considers credit risk ratings where
available, the Group’s historical credit loss experience, adjusted for factors that are specific to the customers, general economic conditions and an
assessment of both the current as well as the forecast conditions at the reporting date. Sales to certain customers are undertaken on a letter of
credit basis thereby reducing the credit risk of these customers.
The Group considers a trade receivable to be in default when there is information indicating that the debtor is in severe financial difficulty and
there is no realistic prospect of recovery, e.g. when the debtor has been placed in liquidation or has entered into bankruptcy proceedings. The
Group considers a trade receivable to be credit impaired when there is evidence that the customer is in significant financial difficulty and the debt
is more than 90 days past due.
Financial liabilities and equity
The financial liabilities of the Group consist of bank borrowings, leases and trade payables. The equity of the Group consists of share capital issued
by the Company.
Classification of issued debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual
arrangements and the definitions of a financial liability and an equity instrument.
Kenmare Resources plc
Annual Report and Accounts 2021
143
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
1. Statement of accounting policies CONTINUED
Issued equity
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity
instruments issued by the Company are recognised at the proceeds received, net of direct issue costs. The only equity instrument of the Company
are ordinary shares.
Repurchase of the Company’s own equity instruments are recognised and deducted directly in equity. No gain or loss is recognised in profit or loss
on the purchase, sale, issue or cancellation of the Company’s own equity instruments.
Financial liabilities
The financial liabilities of the Group are initially measured at fair value and subsequently measured at amortised cost using the effective interest
method.
Financial liabilities measured subsequently at amortised cost
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating the interest expense over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees, transaction costs
and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost
of a financial liability.
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the
foreign exchange gains and losses are determined based on the amortised cost of the instruments. These foreign exchange gains and losses are
recognised in profit or loss in the “foreign exchange gains and losses” line.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. The difference
between the carrying amount of the financial liability derecognised and the consideration paid is recognised in profit or loss.
When the Group exchanges with an existing lender one debt instrument for another with substantially different terms, such exchange is accounted
for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Group accounts for substantial
modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability.
It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees
paid net of any fees received and discounted using the original effective rate is at least 10% different from the discounted present value of the
remaining cash flows of the original financial liability. If the modification is not substantial, the difference between the carrying amount of the
liability before the modification and the present value of the cash flows after modification is recognised in profit or loss as the modification gain or
loss within other gains and losses.
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates
(IBORs) with alternative nearly risk-free rates (referred to as “IBOR reform”). The Group has exposure to IBORs on its financial instruments that will
be reformed as part of these market-wide initiatives. The Group’s main IBOR exposure at the reporting date is US LIBOR, which is administered by
ICE Benchmark Administration (IBA). The alternative reference rate for US LIBOR is the US Secured Overnight Financing Rate (SOFR).
On 5 March 2021, IBA stated that it will cease the publication of (i) the overnight and one, three, six and twelve months USD LIBOR settings
immediately following the LIBOR publication on Friday 30 June 2023, and (ii) all other LIBOR settings, including the one week and two months
USD LIBOR settings, immediately following the LIBOR publication on Friday 31 December 2021. The Group plans to modify contractual terms for
purposes of migrating from USD LIBOR to SOFR prior to the discontinuance of the administration and publication of the relevant LIBOR rates
by IBA.
Derivative financial instruments
The Group has not entered into any derivative financial instruments during the financial year.
Dividends
Dividends are recognised as a liability in the Company’s financial statements in the period in which the dividends are approved by the Company’s
shareholders.
144 Kenmare Resources plc
Annual Report and Accounts 2021
FINANCIAL STATEMENTS
1. Statement of accounting policies CONTINUED
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group
will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration to settle the present obligation at the reporting date, taking into
account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised
as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Contingent liabilities are recognised when the Group has a possible obligation and the existence of which will only be confirmed by uncertain
future events that are not wholly within the control of the Group.
Mine closure provision
The Mine closure provision represents the Directors’ best estimate of the Group’s liability for close-down, dismantling and restoration of the mining
and processing site, excluding reclamation of areas disturbed by mining activities, which is covered under the Mine rehabilitation provision. A
corresponding amount equal to the provision is recognised as part of property, plant and equipment and depreciated over its estimated useful
life. The costs are estimated on the basis of a formal closure plan and are subject to regular review. The Mine closure provision is determined as
the net present value of such estimated costs discounted at a risk-free rate. The Group uses rates as provided by the US Treasury extrapolated to
the duration of the Mine life. This is deemed the best estimate to reflect the current market assessment of the time value of money on a risk-free
basis. Risks specific to the liability are included in the cost estimate. Changes in the expected costs or estimated timing of costs are recorded by an
adjustment to the provision and a corresponding adjustment to property, plant and equipment. The unwinding of the discount on the Mine closure
provision is recognised as a finance cost.
Mine rehabilitation provision
The Mine rehabilitation provision represents the Directors’ best estimate of the liability for reclaiming areas disturbed by mining activities.
Reclamation costs are recognised in each period in the statement of comprehensive income based on the area disturbed in such period.
Share-based payments
The Group makes share awards to certain employees and consultants. In the case of the Executive Directors and certain employees, the Kenmare
Restricted Share Plan (KRSP) awards made prior to 2020 vest, subject to continued employment, 60% on the third anniversary of grant date,
20% on fourth anniversary and 20% on fifth anniversary. The Executive Directors and certain employees’ KRSP awards made in 2020 and
thereafter vest, subject to continued employment and to the Remuneration Committee’s assessment against a discretionary underpin, on the
third anniversary of grant. For other Group employees, awards under the KRSP vest, subject to continued employment, on the third anniversary of
award.
The share price used to determine the award levels will normally be the share price shortly before the date of grant. The fair value determined at
the grant date is based on the share price and is recognised as an expense with a corresponding increase in equity over the vesting period of the
awards. The amount recognised as an expense is adjusted to reflect the value of awards which are expected to be met at the vesting date.
Where a share-based payment is directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use, its fair value is added to the cost of those assets until such time as
the assets are substantially ready for their intended use.
Segmental reporting
Information on the operations of the Moma Titanium Minerals Mine in Mozambique is reported by the Executive Committee to the Group’s Board
for the purposes of resource allocation and assessment of segment performance. The principal categories for disaggregating revenue are by
product type and by country of the customer’s location. The product types are ilmenite, zircon, rutile and concentrates. Concentrates includes
secondary zircon and mineral sands concentrates.
Critical accounting judgements and key sources of estimation uncertainty
Critical judgements in applying the Group’s accounting policies
In the process of applying the Group’s accounting policies, the Directors have made the following judgements that have the most significant effect
on the amounts recognised in the financial statements (apart from those involving estimations, which are dealt with below).
Property, plant and equipment
The recovery of property, plant and equipment is dependent upon the successful operation of the Mine. The realisation of cash flow forecast
assumptions would result in the recovery of such amounts. During the financial year, the Group carried out an impairment review of property, plant
and equipment. In performing the impairment review, a significant level of judgement is required in determining the key assumptions which have a
significant impact on the impairment model. The assumptions are set out in Note 13. As a result of the review, no impairment provision is required
in the financial year.
Kenmare Resources plc
Annual Report and Accounts 2021
145
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
1. Statement of accounting policies CONTINUED
Key sources of estimation uncertainty
The preparation of financial statements requires the Directors to make estimates and assumptions that affect the amounts reported for assets and
liabilities as at the reporting date. The nature of estimation means the actual outcomes could differ from those estimates. The main areas subject
to estimation uncertainty are detailed below.
Provisions
Mine closure and mine rehabilitation provision
The Mine closure provision represents the Directors’ best estimate of the Group’s liability for close-down, dismantling and restoration of the mining
and processing site, excluding reclamation of areas disturbed by mining activities, which is covered under the Mine rehabilitation provision. The
costs are estimated on the basis of a formal closure plan and are subject to regular review. The Mine closure provision is estimated based on the
net present value at the risk-free rate of estimated future Mine closure costs. Mine closure costs are a normal consequence of mining, and the
majority of such costs are incurred at the end of the life of mine.
The Mine rehabilitation provision represents the Directors’ best estimate of the Group’s liability for reclaiming areas disturbed by mining activities.
Reclamation costs are recognised in each period based on the area disturbed in the period and an estimated cost of rehabilitation per hectare,
which is reviewed regularly against actual rehabilitation cost per hectare. Actual rehabilitation expenditure is incurred approximately 12 months
after the area has been disturbed.
There is significant estimation uncertainty in the calculation of the mine closure and mine rehabilitation provision and cost estimates can vary in
response to many factors including:
•
•
•
•
•
•
•
Changes to the relevant legal or local/national government requirements and any other commitments made to stakeholders;
Additional remediation requirements identified during the rehabilitation;
The emergence of new restoration techniques;
The impact of climate change;
Change in the expected closure date;
Change in the discount rate; and
The effects of inflation.
The quantitative inputs and sensitivity information relating to the mine closure and mine rehabilitation provision are detailed in Note 24.
Tax provision
The Group, like other businesses operating in Mozambique, is subject to tax audits by the Mozambican Tax Authorities. These audits may review
a range of matters including corporate income tax, indirect taxes and transaction related issues, and can take a number of years to complete. The
Mozambican Tax Authority conducted an audit of the tax obligations of KMML Mozambique Branch in relation to the years 2015 to 2017. The
scope of the audit included both income taxes and indirect taxes. The Group is liaising with the Tax Authority to address matters raised during
the audit.
In assessing whether these claims should be provided for in the financial statements, management has considered them in the context of
Mozambican laws and applicable contracts established with the Government of Mozambique and the Group. Management has applied judgement
in assessing the likely outcome of the claims and has estimated the financial impact based on external tax and legal advice.
A provision of $2.3 million (2020: $nil) is included in the financial statements in relation to a potential indirect tax liability. As the matter is still
outstanding, it is possible that on conclusion the outcome may differ from management’s estimates. Other tax matters raised during the audit
are likewise still outstanding. No provision has been made in these financial statements in relation to the other tax matters as the Group does not
consider that there is any material future probable loss.
Units of production depreciation
Units of production depreciation is calculated using the quantity of heavy mineral concentrates extracted from the Mine for processing in the
period as a percentage of the total quantity of heavy mineral concentrates planned to be extracted in current and future periods based on the
mining reserve as detailed in the unaudited mineral reserves and resources table on page 37.
The Group estimates its ore reserves and mineral resources based on information compiled by a Competent Person as defined in accordance
with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2012 Edition (the “JORC Code”). There are
numerous uncertainties inherent in estimating ore reserves, and assumptions that are valid at the time of estimation may change significantly
when new information becomes available. Changes in the forecast prices of final products, production costs or recovery rates may change the
economic status of reserves and may ultimately result in the reserves being revised.
146 Kenmare Resources plc
Annual Report and Accounts 2021
2. Revenue
Sale of mineral products
FINANCIAL STATEMENTS
2021
$’000
2020
$’000
455,944
243,746
During the financial year, the Group sold 1,285,300 tonnes (2020: 853,100 tonnes) of finished products ilmenite, rutile, zircon and concentrates to
customers at a sales value of $455.9 million (2020: $243.7 million). The principal categories for disaggregating revenue are by product type and by
country of the customer’s location. The product types are ilmenite, zircon, rutile and concentrates. Concentrates includes secondary zircon and
mineral sands concentrates.
Revenue from major products
Ilmenite
Zircon
Concentrates
Rutile
Total
2021
$’000
359,135
87,372
5,529
3,908
455,944
2020
$’000
175,587
45,708
16,320
6,131
243,746
Geographical information
In the following table, revenue is disaggregated by primary geographical market. The Group allocates revenue from external customers to
individual countries and discloses revenues in each country where revenues represent 10% or more of the Group’s total revenue. Where total
disclosed revenue disaggregated by country constitutes less than 75% of total Group revenue, additional disclosures are made on a region basis
until at least 75% of the Group’s disaggregated revenue is disclosed. There were no individual countries within Europe or the Rest of the World with
revenues amounting to greater than $46 million during the year.
Revenue from external customers
China
Europe
USA
Rest of the World
Total
2021
$’000
222,351
81,754
44,312
107,527
455,944
2020
$’000
107,824
61,697
19,955
54,270
243,746
Kenmare Resources plc
Annual Report and Accounts 2021
147
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
2. Revenue CONTINUED
Information about major customers
2021
$’000
Revenue from external customers
Largest customer
Second largest customer
Third largest customer
Fourth largest customer
Total
65,500
62,285
50,642
42,029
220,456
2020
$’000
40,299
32,979
30,179
24,725
128,182
All Group revenues from external customers are generated by the Moma Titanium Minerals Mine in Mozambique, the non-current assets of which
are $952.2 million (2020: $959.7 million). Sales to and from Ireland were $nil (2020: $nil) in the year.
3. Segment reporting
Information on the operations of the Moma Titanium Minerals Mine in Mozambique is reported to the Group’s Board for the purposes of resource
allocation and assessment of segment performance. Information regarding the Group’s operating segment is reported below.
Segment revenues and results
Moma Titanium Minerals Mine
Revenue
Cost of sales
Gross profit
Other operating costs
Segment operating profit
Other corporate operating costs
Group operating profit
Finance income
Finance expenses
Foreign exchange loss
Profit before tax
Income tax expense
Profit for the financial year
Segment assets
Moma Titanium Minerals Mine assets
Corporate assets
Total assets
Segment liabilities
Moma Titanium Minerals Mine liabilities
Corporate liabilities
Total liabilities
Other segment information
Depreciation
Moma Titanium Minerals Mine
Corporate
Total
Additions to non-current assets
Moma Titanium Minerals Mine
Corporate
Total
2021
$’000
2020
$’000
455,944
(244,986)
210,958
(44,596)
166,362
(13,381)
152,981
265
(12,053)
(3,897)
137,296
(8,770)
128,526
1,153,919
6,798
1,160,717
225,853
4,221
230,074
62,841
295
63,136
60,342
–
60,342
243,746
(179,103)
64,643
(24,441)
40,202
(5,809)
34,393
642
(11,301)
(980)
22,754
(6,015)
16,739
1,101,808
40,951
1,142,759
236,695
5,561
242,256
41,958
336
42,294
141,466
–
141,466
Corporate assets consist of the Company’s and other subsidiary undertakings’ property, plant and equipment including right-of-use assets, cash
and cash equivalents and prepayments at the reporting date. Corporate liabilities consist of trade and other payables at the reporting date.
148 Kenmare Resources plc
Annual Report and Accounts 2021
4. Cost of sales
Opening stock of mineral products
Production costs
Depreciation
Closing stock of mineral products
Total
FINANCIAL STATEMENTS
2021
$’000
31,373
179,214
56,426
(22,027)
244,986
2020
$’000
26,493
146,431
37,552
(31,373)
179,103
Mineral products consist of finished products and heavy mineral concentrate as detailed in Note 16. Mineral stock movement in the year was a
decrease of $9.3 million (2020: $4.9 million decrease). Included in production costs are $0.4 million (2020: $0.1 million) share-based payments
relating to staff of the mine.
5. Other operating costs
Distribution costs
Freight and demurrage costs
Administration costs
Total
2021
$’000
11,631
37,248
9,098
57,977
2020
$’000
9,820
14,185
6,245
30,250
Distribution costs of $11.6 million (2020: $9.8 million) represent the cost of running the Mine’s finished product storage, jetty and marine fleet.
Included in distribution costs is depreciation of $6.4 million (2020: $4.4 million). Freight costs of $35.4 million (2020: $12.2 million) arise from
sales to customers on a CIF or CFR basis. Demurrage costs were $1.8 million (2020: $2.0 million) during the financial year. Administration costs
of $9.1 million (2020: $6.2 million) include depreciation of $0.3 million (2020: $0.3 million) and a share-based payment expense of $3.0 million
(2020: $1.7 million).
6. Profit for the financial year
The profit for the financial year has been arrived at after charging/(crediting) items detailed below.
Staff costs
Repairs and maintenance
Power and fuel
Freight and demurrage
Other production and operating costs
Movement of mineral products inventory
Depreciation of property, plant and equipment and right-of-use assets
Finance income
Finance costs
Foreign exchange loss
Total
2021
$’000
46,712
43,208
30,400
37,248
91,605
(9,346)
63,136
(265)
12,053
3,897
318,648
2020
$’000
40,518
37,927
27,414
14,185
51,895
(4,880)
42,294
(642)
11,301
980
220,992
Kenmare Resources plc
Annual Report and Accounts 2021
149
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
7. Auditor’s remuneration
The analysis of the auditor’s remuneration is as follows:
2021
$’000
2020
$’000
Audit fees
Audit of the Company’s financial statements
Audit of the Company’s subsidiary undertakings
Total audit fee
Non-audit fees
Other assurance services
Taxation compliance services
Other non-audit services
Total non-audit fees
Total fees
15
151
166
61
15
16
92
258
$94,500 (2020: $94,500) of the audit fee was paid to KPMG Dublin and $163,500 (2020: $151,100) of the fee was paid to KPMG Maputo.
8. Finance income
Interest on bank deposits
9. Finance costs
Interest on bank borrowings
Interest on lease liabilities
Factoring and other fees
Commitment and other fees
Unwinding of discount on mine closure provision
Total
2021
$’000
265
2021
$’000
9,475
239
1,431
161
747
12,053
15
149
164
61
10
11
82
246
2020
$’000
642
2020
$’000
9,288
312
720
317
664
11,301
All interest has been expensed in the financial year. The Group has classified factoring and other fees associated with the Absa Bank and Barclay’s
Bank trade facilities in net cash from operating activities in the Consolidated Statement of Cashflows. In 2020, these fees were included in the
movement in trade and other receivables.
10. Income tax expense
Corporation tax
Deferred tax
Total
Reconciliation of effective tax rate
Profit before tax
Profit before tax multiplied by the applicable tax rate (12.5%)
Non-deductible expenses
Differences in effective tax rates on overseas earnings
Recognition of deferred tax asset
Total
2021
$’000
8,770
–
8,770
137,296
17,162
331
(8,723)
–
8,770
2020
$’000
5,748
267
6,015
22,754
2,844
315
2,589
267
6,015
During the year, Kenmare Moma Mining Limited – Mozambique Branch had taxable profits of $16.2 million (2020: $16.4 million), resulting in an
income tax expense of $5.7 million (2020: $5.7 million) being recognised. The income tax rate applicable to taxable profits of KMML Mozambique
Branch is 35% (2020: 35%).
Kenmare Moma Mining Limited – Mozambique Branch has elected, and the fiscal regime applicable to mining allows for, the option to deduct, as
an allowable deduction, depreciation of exploration and development expense and capital expenditure over the life of mine. Tax losses may be
carried forward for three years. There are no tax losses carried forward at 31 December 2021.
During the year, Kenmare Resources plc had taxable profits of $8.5 million (2020: $4.2 million), resulting in an income tax expense of $3.1 million.
150 Kenmare Resources plc
Annual Report and Accounts 2021
FINANCIAL STATEMENTS
11. Earnings per share
The calculation of the basic and diluted earnings per share attributable to the ordinary equity holders of the Company is based on the
following data:
Profit for the financial year attributable to equity holders of the Company
Weighted average number of issued ordinary shares for
the purpose of basic earnings per share
Effect of dilutive potential ordinary shares:
Share awards
Weighted average number of ordinary shares for
the purposes of diluted earnings per share
Earnings per share: basic
Earnings per share: diluted
2021
$’000
128,526
2020
$’000
16,739
2021
Number of
shares
2020
Number of
shares
108,843,459
109,709,003
2,185,857
1,993,422
111,029,316
111,702,425
$ per share
$ per share
1.18
1.16
0.15
0.15
The denominator for the purposes of calculating both basic and diluted earnings per share has been adjusted to reflect shares acquired during
the year.
12. Employee numbers and benefits
The average number of persons employed by the Group (including Executive Directors) in 2021 was 1,551 (2020: 1,499) and is analysed below:
Management and administration
Operations
The aggregate payroll costs incurred in respect of these employees comprised:
Wages and salaries
Share-based payments
Social insurance costs
Retirement benefit costs
2021
Number
331
1,220
1,551
2021
$’000
40,092
3,420
2,597
603
46,712
2020
Number
246
1,253
1,499
2020
$’000
35,903
1,759
2,287
569
40,518
Included in the payroll cost above are Executive and Non-Executive Director emoluments (inclusive of share-based payments) of $3.5 million
(2020: $3.3 million).
Kenmare Resources plc
Annual Report and Accounts 2021
151
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
13. Property, plant and equipment
Plant and
Equipment
$’000
Development
Expenditure
$’000
Construction
In Progress
$’000
Other
Assets
$’000
Cost
At 1 January 2020
Additions during the financial year
Transfer from construction in progress
Disposals
Adjustment to mine closure cost
At 31 December 2020
Additions during the financial year
Transfer from construction in progress
Disposals
Adjustment to mine closure cost
At 31 December 2021
Accumulated depreciation
At 1 January 2020
Charge for the financial year
Disposals
At 31 December 2020
Charge for the financial year
Disposals
At 31 December 2021
Carrying amount
At 31 December 2021
At 31 December 2020
814,258
1,831
171,004
(2,209)
10,972
995,856
784
29,586
(6,557)
(2,240)
1,017,429
208,506
25,992
(2,057)
232,441
44,229
(6,557)
270,113
747,316
763,415
250,326
–
(355)
–
–
249,971
–
8,201
–
–
258,172
130,626
4,527
–
135,153
6,336
–
141,489
116,683
114,818
88,170
139,635
(175,389)
–
–
52,416
59,558
(50,544)
–
–
61,430
–
–
–
–
–
–
–
61,430
52,416
67,249
–
4,740
(8,875)
–
63,114
–
12,757
(11,440)
–
64,431
33,143
10,688
(8,576)
35,255
11,487
(11,440)
35,302
29,129
27,859
Total
$’000
1,220,003
141,466
–
(11,084)
10,972
1,361,357
60,342
–
(17,997)
(2,240)
1,401,462
372,275
41,207
(10,633)
402,849
62,052
(17,997)
446,904
954,558
958,508
In 2021, the Group changed the classification of right of use assets in order to discloses separately from property, plant and equipment as detailed
in Note 14.
An adjustment to the mine closure cost of $2.2 million (2020: $11.0 million) was made during the year as a result of an update in the discount rate
as detailed in Note 24.
At each reporting date, the Group assesses whether there is any indication that property, plant and equipment may be impaired. The Group
considers the relationship between its market capitalisation and its book value, among other factors, when reviewing for indicators for impairment.
As at 31 December 2021, the market capitalisation of the Group was below the book value of net assets, which is considered an indicator of
impairment of assets. The Group carried out an impairment review of property, plant and equipment as at 31 December 2021. As a result of the
review, and given the performance and outlook of the Group, no impairment provision was recognised in the current financial year. No impairment
was recognised in the prior financial year. Given the historic volatility in product pricing and sensitivities of the forecast to the discount rate and
to a lesser extent operating costs, the impairment loss of $64.8 million, which was recognised in the consolidated statement of comprehensive
income in 2014, was not reversed.
The cash-generating unit for the purpose of impairment testing is the Moma Titanium Minerals Mine. The basis on which the Mine is assessed is
its value in use. The cash flow forecast employed for the value-in-use computation is from a life of mine financial model. The recoverable amount
obtained from the financial model represents the present value of the future discounted pre-tax, pre-finance cash flows discounted at 10.5%
(2020: 10.0%).
152 Kenmare Resources plc
Annual Report and Accounts 2021
FINANCIAL STATEMENTS
13. Property, plant and equipment CONTINUED
Key assumptions include the following:
•
•
•
•
•
The discount rate is based on the Group’s weighted average cost of capital. This rate is a best estimate of the current market assessment
of the time value of money and the risks specific to the Mine, taking into consideration country risk, currency risk and price risk. The factors
making up the cost of equity, cost of debt and capital structure have changed from the prior year review (in particular the risk-free rate)
resulting in a discount rate of 10.5% (2020: 10.0%). The Group’s estimation of the country risk premium included in the discount rate has
remained unchanged from the prior year. The Group does not consider it appropriate to apply the full current country risk premium for
Mozambique to the calculation of the Group’s weighted average cost of capital as it believes the specific circumstances which have resulted
in the risk premium increase over the past number of years are not relevant to the specific circumstances of the Moma Mine. Hence, country
risk premium applicable to the calculation of the cost of equity has been adjusted accordingly. Using a discount rate of 10.5%, the recoverable
amount is greater than the carrying amount by $384.0 million (2020: $260.2 million). The discount rate is a significant factor in determining
the recoverable amount. A 5.8% increase in the discount rate to 16.3% reduces the recoverable amount by $384.0 million. The increase in the
recoverable amount from the prior year is a result of increased cash flows over the life of mine due to the factors detailed below partially offset
by an increase in the discount rate from 10.0% to 10.5%.
A mine plan is based on the Namalope, Nataka, Pilivili and Mualadi proved probable reserves and resources. Specific resource material is
included only where there is a high degree of confidence in its economic extraction. The Mine life assumption of 40 years has not changed
from the prior year review. Average annual production is approximately 1.2 million tonnes (2020: 1.2 million tonnes) of ilmenite and co-products
zircon, rutile and concentrates over the life of the Mine and remains unchanged from the prior year review. This mine plan does not include
investment in additional mining capacity. Certain minimum stocks of final and intermediate products are assumed to be maintained at
period ends.
Product sales prices are based on contract prices as stipulated in marketing agreements with customers, or where contracts are based on
market prices or production is not currently contracted, prices are forecast by the Group taking into account independent titanium mineral
sands expertise provided by TiPMC Solutions and management expectations including general inflation of 2% per annum. Forecast prices
provided by TiPMC Solutions have been reviewed and found to be consistent with other external sources of information. Average forecast
product sales prices have increased over the life of mine from the prior year-end review as a result of revised forecast pricing. A 12% reduction
in average sales prices over the life of mine reduces the recoverable amount by $384.0 million.
Operating costs are based on approved budget costs for 2022 taking into account the current running costs of the Mine and estimated
forecast inflation for 2022. From 2023 onwards, operating costs are escalated by 2% per annum. Average forecast operating costs have
increased from the prior year-end review as a result of increased production and inflation. A 14% increase in operating costs over the life of
mine reduces the recoverable amount by $384.0 million.
Capital costs are based on a life of mine capital plan including inflation at 2% per annum from 2022. Average forecast capital costs have
increased from the prior year-end review based on updated sustaining and development capital plans required to maintain the existing plant
over the life of mine. The forecast takes into account reasonable cost increases and therefore a sensitivity to this assumption, which would
give rise to a reduction in the recoverable amount has not been applied.
Kenmare Resources plc
Annual Report and Accounts 2021
153
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
14. Right-of-use assets and lease liabilities
Plant and
Equipment
$’000
Land and
Buildings
$’000
At 1 January 2020
Depreciation expense
At 31 December 2020
Depreciation expense
At 31 December 2021
2,491
(831)
1,660
(830)
830
1,816
(256)
1,560
(254)
1,306
Total
$’000
4,307
(1,087)
3,220
(1,084)
2,136
On 1 January 2019, the Group recognised lease liabilities of $5.0 million in respect of right-of-use assets being its head office at Styne House,
Dublin and electricity generators at the Mine. The Styne House lease has a term of 10 years commencing August 2017 and rental payments are
fixed for five years. This lease obligation is denominated in Euros.
The lease for the electricity generators was renewed in November 2017 for a five-year period and rental payments are fixed for the five years. This
lease obligation is denominated in US Dollars.
In February 2019, the Group recognised a lease liability of $0.4 million for its Mozambican country office in Maputo. The lease has a seven-year
term commencing February 2019 and rental payments are fixed for seven years. This lease obligation is denominated in US Dollars. The Group has
discounted lease payments using its incremental borrowing rates. The weighted average rate applied is 7%.
At each reporting date, the Company assesses whether there is any indication that right-of-use assets may be impaired. No impairment indicators
were identified as at 31 December 2021 or 31 December 2020.
Set out below are the carrying amounts of lease liabilities at each reporting date:
Current
Non-current
Total
The consolidated income statement includes the following amounts relating to leases:
Depreciation expense
Interest expense on lease liabilities
Total
15. Deferred tax asset
Deferred tax asset
2021
$’000
1,207
971
2,178
2021
$’000
1,084
239
1,323
2021
$’000
–
2020
$’000
1,360
2,028
3,388
2020
$’000
1,087
312
1,399
2020
$’000
202
At the reporting date, Kenmare Resources plc had estimated unutilised tax losses of $nil (2020: $1.6 million) available for offset against future
profits. Kenmare Moma Mining Limited – Mozambique Branch has no unused tax losses. A deferred tax asset of $nil (2020: $0.2 million) has been
recognised in respect of these losses.
154 Kenmare Resources plc
Annual Report and Accounts 2021
16. Inventories
Mineral products
Consumable spares
FINANCIAL STATEMENTS
2021
$’000
22,027
38,192
60,219
2020
$’000
31,373
32,297
63,670
At 31 December 2021, total final product stocks were 100,200 tonnes (2020: 145,500 tonnes). Closing stock of heavy mineral concentrate was
11,500 tonnes (2020: 50,200 tonnes).
Net realisable value is determined with reference to forecast prices of finished products expected to be achieved. There is no guarantee that
these prices will be achieved in the future, particularly in weak product markets. During the financial year, there was a write-down of $0.5 million
(2020: $0.4 million) to mineral products to value them at net realisable value.
17. Trade and other receivables
Trade receivables
VAT receivable
Prepayments
18. Cash and cash equivalents
Cash and cash equivalents
2021
$’000
66,204
790
7,753
74,747
2021
$’000
69,057
2020
$’000
23,112
–
6,803
29,915
2020
$’000
87,244
Cash and cash equivalents comprise cash balances held for the purposes of meeting short-term cash commitments and investments which are
readily convertible to a known amount of cash and are subject to an insignificant risk of change in value. Where investments are categorised as
cash equivalents, the related balances have a maturity of three months or less from the date of investment.
19. Called-up share capital
Authorised share capital
181,000,000 ordinary shares of €0.001 each
Allotted, called up and fully paid
Opening balance
109,736,382 (2020: 109,657,480) ordinary shares of €0.001 each
Nil (2019: 2,781,905,503) deferred shares of €0.059995 each
Total called-up share capital
Issued during the year
Nil (2020: 78,902) ordinary shares of €0.001 each
Acquired and cancelled
14,814,412 (2020: Nil) ordinary shares of €0.001 each
Nil (2020: 2,781,905,503) deferred shares of €0.059995 each
Closing balance
94,921,970 (2020: 109,736,382) ordinary shares of €0.001 each
Total called-up share capital
No ordinary shares were issued during the year (2020: 78,902).
2021
€’000
181
181
2021
$’000
120
–
120
–
(16)
–
104
104
2020
€’000
181
181
2020
$’000
120
214,926
215,046
–
–
(214,926)
120
120
Kenmare Resources plc
Annual Report and Accounts 2021
155
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
19. Called-up share capital CONTINUED
On 10 December 2021, under the authority granted at the Company’s extraordinary General Meeting held on 9 December 2021, and in accordance
with Section 105(1) and Section 106(1) of the Companies Act 2014 and article 47 and article 48 of the Articles of Association, the Company
completed a tender offer buy back of 14,814,412 ordinary shares of €0.001 each in the capital of the Company representing 13.5% of the then
called-up share capital of the Company for a total cash consideration of $81.6 million. All ordinary shares acquired by the Company were
subsequently cancelled. Transaction costs associated with the transaction amounted to $1.5 million and were accounted for as a deduction from
retained earnings.
On 10 March 2020, the Company acquired and cancelled all of the 2,781,905,503 deferred shares of €0.059995 each in the capital of the Company
in issue by transfer otherwise than for valuable consideration in accordance with Section 102(1)(a) and Section 106(1) of the Companies Act 2014
and Article 3(b) of the Articles of Association of the Company. At the Annual General Meeting of the Company held on 13 May 2020, all of the
unissued deferred shares of €0.059995 each in the capital of the Company were cancelled.
20. Share premium
Opening balance
Shares issued during the year
Closing balance
There were no additions to share premium during the year (2020: $0.2 million).
21. Other reserves
Balance at 1 January 2020
Recognition of share-based payments
Cost of equity-settled share-based payments
Shares issued during the year
Unvested and expired share-based payments
Deferred shares cancelled
Balance at 1 January 2021
Recognition of share-based payments
Cost of equity-settled share-based payments
Unvested and expired share-based payments
Share buy back (Note 19)
Balance at 31 December 2021
2021
$’000
545,950
–
545,950
2020
$’000
545,729
221
545,950
Undenominated
Capital
$’000
Share-Based
Payment
Reserve
$’000
11,336
–
–
–
–
214,926
226,262
–
–
–
16
226,278
25,866
1,759
(1,229)
(221)
(21,087)
–
5,088
3,420
(2,283)
(1,964)
–
4,261
Total
$’000
37,202
1,759
(1,229)
(221)
(21,087)
214,926
231,350
3,420
(2,283)
(1,964)
16
230,539
Share-based payment reserve
The share-based payment reserve arises on the grant of shares under the Group share-based payment schemes as detailed in Note 31.
Undenominated capital
Undenominated capital consists of the capital conversion reserve fund and the capital redemption reserve fund. The movement in undenominated
capital during the year relates to the share buy back as detailed in Note 19.
Capital conversion reserve fund
The capital conversion reserve fund totalling $0.8 million arose from the renominalisation of the Company’s share capital from Irish Punts to Euros.
Capital redemption reserve fund
The capital redemption reserve represents the nominal value of share capital repurchased. At 31 December 2021, the reserve balance stands at
$225.5 million (2020: $225.5 million).
156 Kenmare Resources plc
Annual Report and Accounts 2021
22. Retained earnings
Opening balance
Profit for the financial year attributable to equity holders of the Parent
Share buy back (Note 19)
Share buy back transaction costs (Note 19)
Unvested and expired share-based payments
Dividends paid
Closing balance
FINANCIAL STATEMENTS
2021
$’000
123,083
128,526
(81,589)
(1,540)
1,964
(16,394)
154,050
2020
$’000
93,851
16,739
–
–
21,087
(8,594)
123,083
Retained earnings comprise the accumulated profit and losses in the current and prior financial years net of dividends, share buy backs and related
costs paid and funding of market purchases of the Company’s shares by the employee benefit trust and after adjustments relating to share-based
payment reserves.
In May 2021, the Company paid a final 2020 dividend of $8.4 million representing USc7.69 per share (2020: USc5.52). In October 2021, the
Company paid a 2021 interim dividend of USc7.29 (H1 2020: USc2.31) per ordinary share, totalling $8.0 million.
23. Bank loans
Borrowings
The borrowings are repayable as follows:
Less than one year
Between two and five years
Transaction costs
Total carrying amount
2021
$’000
148,099
73,342
78,572
151,914
(3,815)
148,099
2020
$’000
145,771
1,217
150,000
151,217
(5,446)
145,771
Borrowings
On 11 December 2019, the Group entered into debt facilities with Absa Bank Limited (acting through its Corporate and Investment Banking
Division) (“Absa”), The Emerging Africa Infrastructure Fund (part of the Private Infrastructure Development Group) (“EAIF”), Nedbank Limited
(acting through its Nedbank Corporate and Investment Banking division) (“Nedbank”), Rand Merchant Bank and Standard Bank Group
(“Standard Bank”).
The debt facilities comprise a $110 million Term Loan Facility and a $40 million Revolving Credit Facility that share common terms and a common
security package. The finance documentation also provides for a Mine Closure Guarantee Facility (provided by either the existing lenders or
other finance providers) of up to $40 million, with the provider(s) of such a facility sharing in the common security package. The potential total
aggregate principal amount of indebtedness secured under the finance documentation is therefore $190 million. The transaction costs for
arrangement of the debt facilities amounted to $6.5 million.
The Term Loan Facility has a final maturity date of 11 March 2025. Interest is at LIBOR plus 5.40% per annum. Repayment is in seven equal
semi-annual instalments, beginning 11 March 2022.
The Revolving Credit Facility has a final maturity date of 11 December 2022 extendable by up to 24 months at the lenders’ discretion. Interest
is at LIBOR plus 5.00% per annum.
During the period, the Group entered into a Mine Closure Guarantee Facility with Absa Bank Mozambique SA for $11.4 million. This guarantee
shares the security package with the Term Loan Facility and Revolving Credit Facility on a pro rata and pari passu basis.
The security package consists of (a) security over the Group’s bank accounts (subject to certain exceptions), (b) pledges of the shares of
Kenmare Moma Processing (Mauritius) Limited and Kenmare Moma Mining (Mauritius) Limited (the “Project Companies”), (c) security over
intercompany loans, and (d) Mozambican law security interests over certain rights and agreements with Mozambican authorities, including over
the Implementation Agreement, the Mineral Licensing Contract and the Mining Licence.
The carrying amount of the secured bank accounts of the Group was $66.9 million as at 31 December 2021 (2020: $87.0 million). The shares of
the Project Companies and intercompany loans are not included in the consolidated statement of financial position as they are eliminated on
consolidation. They, therefore, do not have a carrying amount but, upon enforcement of the pledges on behalf of the lender group, the shares in
the Project Companies would cease to be owned or controlled by the Group. The secured rights and agreements do not have a carrying amount.
They are, however, necessary for the Project Companies to operate the Mine in Mozambique.
Kenmare Resources plc
Annual Report and Accounts 2021
157
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
23. Bank loans CONTINUED
The finance documents contain a number of representations, covenants and events of default on customary terms, the breach of which could
lead to the secured parties under the finance documentation accelerating the outstanding loans and taking other enforcement steps, such as the
enforcement of some or all of the security interests, which could lead, in extremis, with the Group losing its interest in the Mine. The most salient of
the relevant terms that could lead to acceleration of the loans and/or enforcement of security are the financial covenants.
At 31 December 2021, total debt of $148.1 million (2020: $145.8 million) was recognised by the Group, being the drawdown of $150.0 million before
unamortised transaction costs of $3.8 million (2020: $5.4 million) plus interest amortised of $2.0 million (2020: $1.2 million).
Reconciliation of movements of debt to cash flows arising from financing activities
Bank loans
Balance at 1 January
Cash movements
Loan interest paid
Principal paid
Loan drawn down
Transaction costs
Non-cash movements
Loan interest accrued
Balance at 31 December
2021
$’000
2020
$’000
145,771
60,903
(7,147)
(20,000)
20,000
–
9,475
148,099
(7,162)
–
82,742
–
9,288
145,771
Covenants
All covenants have been complied with during the year. The key financial covenants are detailed below:
Interest Coverage Ratio
Net Debt to EBITDA
Debt Service Coverage Ratio
Liquidity
Reserve Tail Ratio
As at
31 December
2021
As at
31 December
2020
21.8:1
0.38:1
22.3:1
$69,057,000
78%
9.75:1
Not less than
0.83:1 Not greater than
Not less than
11.55:1
Not less than
$87,244,000
Not less than
79%
Covenant
4.00:1
2.00:1
1.20:1
$15,000,000
30%
The definition of the covenants under the debt facilities are set out below:
•
•
•
•
•
Interest Coverage Ratio is defined as the ratio of EBITDA to Net Interest Cost.
Net Debt is defined as total financial indebtedness excluding leases less consolidated cash and cash equivalents.
The Debt Service Coverage Ratio is the ratio of cash and cash equivalents at the beginning of a reporting period plus available facilities plus
cash generated in the period to debt repayments in the period.
Liquidity is defined as consolidated cash and cash equivalents plus undrawn amounts of the Revolving Credit Facility.
Reserve Tail Ratio means the reserve tail ratio, expressed as a percentage of the termination date reserves (estimated remaining reserves in
March 2025) divided by the initial reserves (estimated reserves in December 2019).
24. Provisions
Mine closure provision
Mine rehabilitation provision
Other provisions
Current
Non-current
158 Kenmare Resources plc
Annual Report and Accounts 2021
2021
$’000
35,959
3,998
2,264
42,221
3,222
38,999
42,221
2020
$’000
37,451
3,893
–
41,344
914
40,430
41,344
24. Provisions CONTINUED
At 1 January 2020
Increase in provision during the financial year
Provision utilised during the financial year
Unwinding of the discount
At 1 January 2021
(Decrease)/Increase in provision during the financial year
Provision utilised during the financial year
Unwinding of the discount
At 31 December 2021
FINANCIAL STATEMENTS
Mine
Closure
Provision
$’000
Mine
Rehabilitation
Provision
$’000
Other
Provisions
25,815
10,972
–
664
37,451
(2,239)
–
747
35,959
3,279
1,406
(792)
–
3,893
470
(365)
–
3,998
–
–
–
–
–
2,264
–
–
2,264
Total
$’000
29,094
12,378
(792)
664
41,344
495
(365)
747
42,221
The Mine closure provision represents the Directors’ best estimate of the Project Companies’ liability for close-down, dismantling and restoration of
the mining and processing site. A corresponding amount equal to the provision is recognised as part of property, plant and equipment. The costs
are estimated on the basis of a formal closure plan, are subject to regular review and are estimated based on the net present value of estimated
future cost. Mine closure costs are a normal consequence of mining, and the majority of close-down and restoration expenditure is incurred at the
end of the life of the Mine. The unwinding of the discount is recognised as a finance cost and $0.7 million (2020: $0.7 million) has been recognised
in the statement of comprehensive income for the financial year.
The main assumptions used in the calculation of the estimated future costs include:
•
•
•
•
a discount rate of 2.9% (2020: 2.0%);
an inflation rate of 2% (2020: 2%);
an estimated life of mine of 40 years (2020: 40 years). It is assumed that all licences and permits required to operate will be renewed or
extended during the life of mine; and
an estimated closure cost of $34.1 million (2020: $34.1 million) and an estimated post-closure monitoring provision of $3.9 million
(2020: $3.9 million).
The life of mine plan is based on the Namalope, Nataka, Pilivili and Mualadi reserves and resources as set out in the reserve and resources table.
Specific resource material is included only where there is a high degree of confidence in its economic extraction. The Mine closure provision has
decreased by $2.2 million to reflect a change in the discount rate from 2.0% to 2.9%.
The discount rate is a significant factor in determining the Mine closure provision. The discount rate increased to 2.9% (2020: 2.0%) as a result
of movements in the US Treasury rates. Thirty-year US Treasury yields are the longest period for which yields are quoted. A 40-year rate to align
with the estimated life of mine has been calculated by taking the average of the increase in yield from 10 to 20 years and the increase in yield from
20 to 30 years and adding this average to the 30-year treasury rate to arrive at an estimated extrapolated rate for 40 years. This discount rate
is deemed to provide the best estimate of the current market assessment of risk-free time value of the money. Risks specific to the liability are
included in the cost estimate. A reasonable possible increase of 1% in the estimated discount rate results in the Mine closure provision decreasing
to $24.0 million. A 1% decrease in the estimated discount rate results in the Mine closure provision increasing to $54.0 million.
The Mine rehabilitation provision represents the Directors’ best estimate of the Company’s liability for rehabilitating areas disturbed by mining
activities. Rehabilitation costs are recognised based on the area disturbed and estimated cost of rehabilitation per hectare, which is reviewed
regularly against actual rehabilitation cost per hectare. Actual rehabilitation expenditure is incurred approximately 12 months after the area has
been disturbed. During the financial year, there was a release of $0.4 million (2020: $0.8 million) to reflect the actual mine rehabilitation costs
incurred, and an addition to the provision of $0.5 million (2020: $1.4 million) for areas newly disturbed.
Other provisions comprise an amount of $2.3 million (2020: $nil) in relation to a potential indirect tax liability. As the matter is still outstanding, it is
possible that on conclusion the final outcome may differ from management’s estimate.
25. Trade and other payables
Trade payables
Accruals
2021
$’000
7,186
25,582
32,768
2020
$’000
24,352
25,770
50,122
Included in accruals at the financial year end is an amount of $1.6 million (2020: $1.0 million) for payroll and social insurance taxes.
Kenmare Resources plc
Annual Report and Accounts 2021
159
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
26. Current tax liabilities
Current tax liabilities
Refer to Note 10 for further information on the Group’s tax expense.
27. Financial instruments
Carrying
amount
$’000
2021
Fair value
$’000
37,086
37,086
Level 2
14,539
14,539
Level 2
14,579
69,057
135,261
14,579
69,057
135,261
Level 2
Level 2
Carrying
amount
$’000
6,202
8,871
8,039
87,244
110,356
Financial assets at fair value through
profit and loss
Trade receivables
Financial assets at fair value through OCI
Trade receivables
Financial assets not measured
at fair value
Trade receivables
Cash and cash equivalents
Financial liabilities not measured
at fair value
Bank loans
2021
$’000
4,808
2020
$’000
1,631
2020
Fair value
$’000
6,202
Level 2
8,871
Level 2
8,039
87,244
110,356
Level 2
Level 2
148,099
148,827
Level 2
145,771
146,247
Level 2
The carrying amounts and fair values of financial assets and financial liabilities including their levels in fair value hierarchy are detailed above.
The table does not include fair value information for other receivables, prepayments, trade payables and accruals as these are not measured at
fair value as the carrying amount is a reasonable approximation of their fair value. Trade receivables which are factored through the Absa Bank
facility or letters of credit which are always confirmed and discounted through the Barclays Bank facility are initially measured at fair value and
subsequently measured at fair value through profit or loss (FVTPL). Trade receivables or letters or credit where it is not known at initial recognition
if they will be factored are classified as fair value through other comprehensive income (FVOCI). The Group derecognises the original receivable to
which the arrangement applies when payment is received from the bank as the terms of the arrangement are non-recourse. The payment to the
bank by the Group’s customers are considered non-cash transactions. Trade receivables not measured at fair value are receivables whose payment
is received under the sale contract credit terms.
The valuation technique used in measuring Level 2 fair values is discounted cash flows, which considers the expected receipts or payments
discounted using adjusted market discount rates or where these rates are not available estimated discount rates.
The Group has exposure to credit risk, liquidity risk and market risk arising from financial instruments.
Risk management framework
The Board is ultimately responsible for risk management within the Group. It has delegated responsibility for the monitoring of the effectiveness of
the Group’s risk management and internal control systems to the Audit & Risk Committee. The Board and Audit & Risk Committee receive reports
from executive management on the key risks to the business and the steps being taken to mitigate such risks. The Audit & Risk Committee is
assisted in its role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the
results of which are reported to the Audit & Risk Committee.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or a counterparty to a financial instrument fails to meet it contractual obligations,
and arises principally from the Group’s trade receivables from customers. The carrying amount of financial assets represents the maximum credit
exposure.
Trade receivables
The Group’s exposure to credit risk is influenced by the individual circumstances of each customer. The Group also considers the factors that may
influence the credit risk of its customer base, including the default risk associated with the industry and country in which customers operate.
Before entering into sales contracts with new customers, the Group uses an external credit scoring system to assess the potential customer’s
credit quality and defines credit limits by customer. Limits attributed to customers are reviewed regularly during the year.
The Group’s customers have been transacting with the Group for a significant number of years, and no customers’ balances have been written
off or are credit impaired at the financial year end. In monitoring customer credit risk, customers are reviewed individually and the Group has not
identified any factors that would merit reducing exposure to any particular customer. The Group does not require collateral in respect of trade
receivables.
160 Kenmare Resources plc
Annual Report and Accounts 2021
27. Financial instruments CONTINUED
The exposure to credit risk for trade receivables by geographic region was as follows:
China
Europe
USA
Rest of the World
Total
At 31 December 2021, $41.3 million (2020: $7.2 million) is due from the Group’s three largest customers.
A summary of the Group’s exposure to credit risk for trade receivables is as follows:
External credit ratings at least Baa3 (Moody’s)
External credit ratings Ba3 to Ba1 (Moody’s)
Other
Total gross carrying amount
Loss allowance
FINANCIAL STATEMENTS
2021
$’000
36,836
15,410
8,547
5,411
66,204
2021
$’000
37,535
19,051
10,042
66,628
(424)
66,204
2020
$’000
8,625
7,180
1,583
5,724
23,112
2020
$’000
11,249
1,595
10,467
23,311
(199)
23,112
The following table provides ageing information relevant to the exposure to credit risk for trade receivables from individual customers. No balances
were considered credit impaired at 31 December 2021 or 31 December 2020.
2021
2020
More than
90 days
past due
$’000
71
15
Current
$’000
66,133
23,097
Total
$’000
66,204
23,112
Expected credit loss assessment of trade receivables
For trade receivables measured at fair value through OCI and trade receivables measured at amortised cost, the Group allocates to each customer
a credit risk grade based on data that is determined to be predictive of the risk of loss (including but not limited to external ratings, financial
statements and available market information about customers) and applying experienced credit judgement.
The following table provides information about the exposure to credit risk and expected credit losses as at 31 December 2021.
Equivalent to Moody’s credit rating
Baa3 to AAA
Ba3 to Ba1
Other
Weight average
loss rate
0.30%
1.30%
1.75%
Gross
carrying
amount
$’000
25
19,051
10,042
29,118
Impairment
loss allowance
$’000 Credit impaired
–
248
176
424
No
No
No
The following table provides information about the exposure to credit risk and expected credit losses as at 31 December 2020.
Equivalent to Moody’s credit rating
Baa3 to AAA
Ba3 to Ba1
Other
Weight average
loss rate
0.35%
0.77%
1.40%
Gross
carrying
amount
$’000
2,595
1,571
12,744
16,910
Impairment
loss allowance
$’000
Credit impaired
9
12
178
199
No
No
No
Kenmare Resources plc
Annual Report and Accounts 2021
161
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
27. Financial instruments CONTINUED
The movement in expected credit losses in respect of trade receivables where measured at amortised cost or fair value through other
comprehensive income during the year was as follows:
Balance at 1 January
Net remeasurement of loss allowance
Balance at 31 December
2021
$’000
199
225
424
2020
$’000
215
(16)
199
Cash and cash equivalents
The credit risk on cash and cash equivalents is limited because funds available to subsidiaries are deposited with banks with high credit ratings
assigned by international credit rating agencies. For deposits in excess of $50 million the Group requires that the institution has an A- (S&P)/A3
(Moody’s) long-term rating. For deposits in excess of $15 million, the Group requires that the institution has a BB- (S&P)/Ba3 (Moody’s) long-term
rating.
At 31 December 2021 and 2020 cash was deposited with the following banks:
Barclays Bank plc
FirstRand Bank Limited
Nedbank Limited
HSBC Bank plc
Absa Bank Limited
2021
Long-term credit rating
2020
Long-term credit rating
$ million
S&P
Moody’s
$ million
S&P
Moody’s
60.8
5.1
–
0.8
2.0
A Positive
A-1 Stable
BBB- Stable Ba2 Negative
BB- Stable Ba2 Negative
A1 Stable
A+ Stable
BBB– Stable Ba2 Negative
60.0
15.0
10.0
1.7
–
A Negative
BBB- Stable
BB- Stable
A+ Stable
BBB- Stable
A-1 Stable
Ba2 Negative
Ba2 Negative
A1 Stable
Ba2 Negative
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled
in cash payments. The Group’s objective when managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when they
are due.
The Group monitors mine payment forecasts, both operating and capital, which assist it in monitoring cash flow requirements and optimising
its cash return on investments. The Group aims to maintain the level of its cash and cash equivalents at an amount in excess of expected cash
outflows on financial liabilities. The Group monitors the level of expected cash inflows on trade receivables together with expected cash outflows
on trade and other payables.
The Group has a trade finance facility with Absa Bank for three of the Group’s largest customers. In accordance with this facility, the bank
purchases 80% of the receivable without recourse. The facility is for a maximum amount of $30 million with limits on the maximum amount that
can be factored for each of the customers named in the facility. During the period, no trade receivables were factored under this agreement. At
the year end, trade receivables amounting to $14.5 million (2020: $8.9 million) may be factored under this facility and are therefore included in
trade receivables as at 31 December 2021. The cost of this facility for the period, which amounted to $0.2 million (2020: $0.2 million), is included in
finance costs in the statement of comprehensive income and in net cash from operating activities in the statement of consolidated cash flows.
The Group has a trade facility with Barclays Bank for customers which it sells to under letter of credit terms. Under this facility, Barclays Bank
confirms the letter of credit from the issuing bank and therefore assumes the credit risk. Barclays Bank can also discount these letters of credit
thereby providing early payment of receivables to the Group. There is no limit under the Barclays Bank facility. During the period, trade receivables
of $224.4 million (2020: $88.3 million) were discounted under this facility. At the year end, there were $37.1 million (2020: $6.2 million) of trade
receivables which may be discounted under this facility. The cost of this facility for the period, which amounted to $0.1 million (2020: $0.1 million),
is included in finance costs in the statement of comprehensive income and in net cash from operating activities in the statement of consolidated
cash flows.
The table below summarises the maturity profile of the Group’s financial liabilities at 31 December 2021 based on the gross contractual
undiscounted payments:
Financial liabilities
Bank loans
Lease liabilities
Trade and other payables
162 Kenmare Resources plc
Annual Report and Accounts 2021
Less than
one year
$’000
79,136
1,207
32,768
113,111
Between
two and five
years
$’000
85,195
1,317
–
86,512
More than
five years
$’000
–
160
–
160
Total
$’000
164,331
2,684
32,768
199,783
FINANCIAL STATEMENTS
27. Financial instruments CONTINUED
The table below summarises the maturity profile of the Group’s financial liabilities at 31 December 2020 based on the gross contractual
undiscounted payments:
Financial liabilities
Bank loans
Lease liabilities
Trade and other payables
Less than
one year
$’000
7,149
1,359
50,122
58,630
Between
two and five
years
$’000
164,330
2,251
–
166,581
More than
five years
$’000
–
434
–
434
Total
$’000
171,479
4,044
50,122
225,645
As disclosed in Note 23, the Group has bank loans that contain loan covenants. A future breach of covenant may require the Group to repay the
loan earlier than indicated in the above table. Under the loan agreement, the covenants are monitored on a regular basis by Group finance and
regularly reported to management and the lenders to ensure compliance with the agreement.
Risk concentration
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or
have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or
other conditions. Concentrations indicate the relative sensitivity of the Group’s performance to developments affecting a particular industry.
The Group evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and
industries and operate in largely independent markets. Details of concentration of revenue are included in Note 2.
Market risk
Market risk is risk that changes in market prices for foreign exchange rates and interest rates will affect the Group’s income statement. The
objective of market risk management is to manage and control market risk exposures while optimising returns.
Currency risk
The Group is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which sales,
purchases, receivables and borrowings are denominated and the respective functional currencies of Group companies. The functional currency of
all Group entities is US Dollars. The presentational currency of the Group is US Dollars. Sales and bank loans are denominated in US Dollars, which
significantly reduces the exposure of the Group to foreign currency risk. Payable transactions are denominated in Mozambican Metical, South
African Rand, Euro, Sterling, Australian Dollar and Renminbi.
The Group’s risk management policy is to match the estimated foreign currency exposure in respect of forecast purchases over the following three
to six months at any point in time to the extent that funds are available to do so.
Exposure to currency risk
The Group’s exposure to currency risk as at 31 December 2021 is as follows.
Trade and other receivables
Cash and cash equivalents
Bank loans
Leases
Trade and other payables
Net exposure
US Dollar
$’000
69,408
64,831
(151,914)
(650)
(14,283)
(32,608)
Mozambican
Metical
$’000
South African
Rand
$’000
2,717
1,030
–
–
(14,082)
(10,335)
1,275
2,337
–
–
(1,905)
1,707
The Group’s exposure to currency risk as at 31 December 2020 is as follows.
Trade and other receivables
Cash and cash equivalents
Bank loans
Leases
Trade and other payables
Net exposure
US Dollar
$’000
28,059
81,969
(151,217)
(2,217)
(31,185)
(74,591)
Mozambican
Metical
$’000
South African
Rand
$’000
–
130
–
–
(8,371)
(8,241)
444
4,406
–
–
(8,186)
(3,336)
Euro
$’000
928
479
–
(1,528)
(2,395)
(2,516)
Euro
$’000
740
441
–
(1,815)
(712)
(1,346)
Sterling
$’000
Australian
Dollar
$’000
Renminbi
$’000
55
338
–
–
(35)
358
Sterling
$’000
38
256
–
–
(62)
232
364
6
–
–
(68)
302
Australian
Dollar
$’000
634
21
–
–
(1,606)
(951)
–
36
–
–
–
36
Renminbi
$’000
–
21
–
–
–
21
Kenmare Resources plc
Annual Report and Accounts 2021
163
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
27. Financial instruments CONTINUED
Sensitivity analysis
A reasonably possible strengthening or weakening of the Mozambique Metical, South African Rand, Euro, Sterling, Australian Dollar and Renminbi
by 1% against US Dollar would have affected profit or loss by the amounts shown below. The analysis assumes that all other variables remain
constant.
Profit or loss
31 December 2021
Strengthening
Weakening
31 December 2020
Strengthening
Weakening
Mozambican
Metical
$’000
South African
Rand
$’000
Euro
$’000
Sterling
$’000
Australian
Dollar
$’000
Renminbi
$’000
(103)
103
(82)
82
17
(17)
(33)
33
(25)
25
(13)
13
4
(4)
2
2
3
(3)
(9)
9
–
–
–
–
Interest rate risk
The loan facilities are arranged at variable rates and expose the Group to cash flow interest rate risk. Variable rates are based on six-month LIBOR.
The borrowing rate at financial year end was 5.8% (2020: 5.8%). The interest rate profile of the Group’s loan balances at the financial year end was
as follows:
Variable rate debt
2021
$’000
151,914
2020
$’000
151,217
Under the assumption that all other variables remain constant, a reasonable possible change of 1% in the six-month LIBOR rate results in a
$1.5 million (2020: $1.5 million) change in finance costs for the financial year.
The above sensitivity analyses are estimates of the impact of market risks assuming the specified change occurs. Actual results in the future may
differ materially from these results due to developments in the global financial markets, which may cause fluctuations in interest rates to vary from
the assumptions made above and therefore should not be considered a projection of likely future events.
Interest rate benchmark reform
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates
(IBORs) with alternative nearly risk-free rates (referred to as “IBOR reform”). The Group has exposure to IBORs on its financial instruments that will
be reformed as part of these market-wide initiatives. The Group’s main IBOR exposure at the reporting date is US LIBOR, which is administered by
ICE Benchmark Administration (IBA). The alternative reference rate for US LIBOR is the US Secured Overnight Financing Rate (SOFR).
On 5 March 2021, IBA stated that it will cease the publication of (i) the overnight and one, three, six and twelve months USD LIBOR settings
immediately following the LIBOR publication on Friday 30 June 2023, and (ii) all other LIBOR settings, including the one week and two months
USD LIBOR settings, immediately following the LIBOR publication on Friday 31 December 2021. IBA stated that it will not have access to input data
necessary to calculate LIBOR settings on a representative basis after those dates. The UK Financial Conduct Authority (FCA) issued a separate
announcement confirming that IBA had notified the FCA of its intent to cease providing all LIBOR settings. The FCA confirmed that all 35 LIBOR
settings will either cease to be provided by any administrator or will no longer be representative as of the dates set out by IBA.
The Group anticipates that IBOR reform will impact its operational and risk management processes. The main risk to which the Group is exposed
as a result of IBOR reform is in the amendment to the Senior Facility Agreement with negotiation with the lender group to reflect the migration
from USD LIBOR to SOFR, updating contractual terms and revising operational controls related to the migration. Financial risk is predominantly
limited to interest rate risk.
The Audit & Risk Committee monitors, while the Executive and senior management manages, the migration to alternative rates. Such management
includes evaluation of the extent to which contracts reference IBOR, whether such contracts will need to be amended as a result of IBOR reform
and how to manage communication about IBOR reform to counterparties.
The Group plans to amend contractual terms for purposes of migrating from USD LIBOR to SOFR prior to the discontinuance of the administration
and publication of the relevant LIBOR rates by IBA.
The carrying amount of financial liabilities with unreformed contracts at 31 December 2021 was $148.1 million (31 December 2020: $145.8 million).
164 Kenmare Resources plc
Annual Report and Accounts 2021
FINANCIAL STATEMENTS
28. Capital management
The Group’s capital management objective is to ensure that entities in the Group will be able to continue as a going concern while maximising the
return to shareholders through the optimisation of the debt and equity balances.
The principal activity of the Group is the operation of the Mine. The Group therefore manages its capital to ensure existing operations are
adequately funded and, based on planned mine production levels, that the Mine will continue to achieve positive cash flows allowing returns to
shareholders.
At 31 December 2021, the Group had total debt facilities in place of $150 million (2020: $150 million), details of which are set out in Note 23.
The Board periodically reviews the capital structure of the Group, including the cost of capital and the risks associated with each class of capital.
The Group manages and, if necessary, adjusts its capital structure taking account of the underlying economic conditions. Any material adjustments
to the Group’s capital structure in terms of the relative proportions of debt and equity are approved by the Board. The Group is not subject to any
externally imposed capital requirements.
The definition of capital/capital structure of the Group consists of debt (which includes bank borrowings as disclosed in Note 23 and leases as
disclosed in Note 14) and equity attributable to equity holders of the Company, comprising issued capital, reserves, retained profits and other
reserves as disclosed in Notes 19 to 22.
29. Capital commitments
Contracts for future expenditure authorised by the Board:
Capital authorised and contracted
Capital authorised and not contracted
2021
$’000
18,921
6,370
2020
$’000
25,921
4,300
Capital authorised and contracted represents the amount authorised and contracted at 31 December of the relevant financial year to be spent on
mine operations-related approved capital projects.
Capital authorised not contracted represents the amount not contracted but authorised at 31 December of the relevant financial year to be spent
on mine operations-related approved capital projects.
30. Retirement benefit plans
The Company contributes to a Company pension plan or individual pension schemes on behalf of certain employees. Contributions to the schemes
are charged in the period in which they are payable to the scheme.
Contributions
2021
$’000
603
2020
$’000
569
Kenmare Resources plc
Annual Report and Accounts 2021
165
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
31. Share-based payments
The Group, under its incentive plan known as the Kenmare Restricted Share Plan (KRSP), awards annually long-term share awards to staff. Share
awards under the KRSP vest, subject to continued employment on the third anniversary or, in the case of awards to Executive Directors and
certain other staff prior to 2020, on each of the third, fourth and fifth anniversaries of award. Awards made to the Executive Directors and certain
other staff following approval of the 2020 Remuneration Policy, vest subject to continued employment and to the Remuneration Committee’s
assessment against a discretionary underpin, on the third anniversary of grant. Vested shares are then subject to a further two-year holding period.
Outstanding at the beginning of the financial year
Issued during the financial year
Exercised during the financial year
Lapsed
Outstanding at the end of the financial year
Exercisable at the end of the financial year
Number of
shares
2021
2,040,151
692,879
(418,997)
(29,604)
2,284,429
56,980
Number of
shares
2020
1,528,376
895,551
(374,618)
(9,158)
2,040,151
15,744
In 2021, options in respect of 692,879 shares were granted to employees under the 2021 KRSP award. The estimated fair value of the shares
awarded is $3.0 million. In 2020, options in respect of 895,551 shares were granted to employees under the 2020 KRSP award. The estimated fair
value of the shares awarded is $2.2 million. The fair value is determined using the share price on the date of the award.
During the financial year, the Group recognised a share-based payment expense of $3.4 million (2020: $1.6 million) as a result of the KRSP awards.
The Company previously made share awards to certain employees under a share option scheme. The last award under the share option scheme
was made in 2014. During the financial year, 11,500 share options exercisable under the scheme lapsed. As at 31 December 2021, no further options
were outstanding under this scheme.
32. Related party transactions
Remuneration of key management personnel
The remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categories
specified in IAS 24 Related Party Disclosures.
Short-term employee benefits
Post-employment benefits
Share-based payments
Total benefits
2021
$’000
2,571
110
–
2,681
2020
$’000
2,465
103
–
2,568
Further information about the remuneration of individual Directors and payments to former Directors is provided in the Directors’ annual report on
remuneration on pages 106 to 117 and is deemed to be incorporated in this note to the financial statements.
166 Kenmare Resources plc
Annual Report and Accounts 2021
FINANCIAL STATEMENTS
33. Contingent liabilities
The Group, like other businesses operating in Mozambique, is subject to tax audits by the Mozambican Tax Authorities. These audits may review
a range of matters including corporate income tax, indirect taxes and transaction related issues, and can take a number of years to complete. The
Mozambican Tax Authority conducted an audit of the tax obligations of the Branch in relation to the years 2015 to 2017. The Group is liaising with
the Tax Authority to address matters raised during the audit. It is not possible to estimate with certainty the timing of any future resolution or
possible outcomes.
A provision of $2.3 million (2020: $nil) is included in the financial statements in relation to a potential indirect tax liability. As the matter is still
outstanding, it is possible that on conclusion the outcome may differ from management’s estimates. Other tax matters raised during the audit
are likewise still outstanding. No provision has been made in these financial statements in relation to the other tax matters as the Group does not
consider that there is any material future probable loss.
34. Kenmare Resources plc
Kenmare Resources Public Company Limited is a public limited company. The place of registration is Ireland and the registered office address is
Styne House, Hatch Street Upper, Dublin 2. The registered number is 37550.
35. Events after the statement of financial position date
Proposed dividend
On 22 March 2022, the Board proposed a final dividend of USc25.42 per share. This proposed dividend is subject to approval by the shareholders
at the Annual General Meeting. These financial statements do not reflect this dividend.
36. Approval of financial statements
The financial statements were approved by the Board on 4 April 2022.
Kenmare Resources plc
Annual Report and Accounts 2021
167
COMPANY
FINANCIAL
STATEMENTS
170 Parent Company statement of
financial position
171 Parent Company statement of
changes in equity
172 Notes to the Parent Company
financial statements
LINO A LFREDO
REH ABILI TATI ON ASSI STANT
In 202 1, Kenmare rehabili tated 198 h ect ares
of m ined land as par t of our prog ressive
re habilitation p rogramme. We al so pl anted over
52 ,0 00 casuarina t rees duri ng the year.
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
Notes
2021
$’000
2020
$’000
2
3
4
5
6
7
8
9
9
9
3
10
10
3
12
11
599
1,086
–
801,098
802,783
79,302
583
7,284
87,169
899,952
104
545,950
230,539
51,716
828,309
882
54,106
54,988
1,169
274
2,752
2,460
6,655
61,643
899,952
696
1,284
202
798,370
800,552
25,255
342
36,692
62,289
862,841
120
545,950
231,350
27,028
804,448
1,139
53,106
54,245
1,486
274
–
2,388
4,148
58,393
862,841
Assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Deferred tax asset
Investments in subsidiaries
Current assets
Amounts due from subsidiary undertakings
Trade and other receivables
Cash and cash equivalents
Total assets
Equity
Capital and reserves attributable to the
Company’s equity holders
Called-up share capital
Share premium
Other reserves
Retained earnings
Total equity
Non-current liabilities
Lease liabilities
Amounts due to subsidiary undertakings
Current liabilities
Amounts due to subsidiary undertakings
Lease liabilities
Current tax liabilities
Trade and other payables
Total liabilities
Total equity and liabilities
The accompanying notes form part of these financial statements.
On behalf of the Board:
M. Carvill
Director
4 April 2022
T. McCluskey
Director
4 April 2022
170 Kenmare Resources plc
Annual Report and Accounts 2021
FINANCIAL STATEMENTS
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
Balance at 1 January 2020
Total comprehensive income for the year
Profit for the financial year
Total comprehensive income for the year
Transactions with owners of the Company
Share-based payments
Unvested and expired share-based payments
Shares issued
Deferred shares cancelled
Dividends paid
Total contributions and distributions
Balance at 1 January 2021
Total comprehensive income for the year
Profit for the financial year
Total comprehensive income for the year
Transactions with owners of the Company
Share-based payments
Unvested and expired share-based payments
Share buy back
Share buy back transaction costs
Dividends paid
Total contributions and distributions
Balance at 31 December 2021
Called-Up
Share
Capital
$’000
215,046
–
–
–
–
–
(214,926)
–
(214,926)
120
–
–
–
–
(16)
–
–
(16)
104
Share
Premium
$’000
545,729
–
–
–
–
221
–
–
221
545,950
–
–
–
–
–
–
–
–
545,950
Retained
Earnings
$’000
Undenominated
Capital
$’000
Share-Based
Payment
Reserve
$’000
Total
$’000
13,355
11,336
25,866
811,332
1,180
1,180
–
21,087
–
–
(8,594)
12,493
27,028
122,247
122,247
–
1,964
(81,589)
(1,540)
(16,394)
(97,559)
51,716
–
–
–
–
–
214,926
–
214,926
226,262
–
–
–
–
16
–
–
16
226,278
–
–
530
(21,087)
(221)
–
–
(20,778)
5,088
–
–
1,137
(1,964)
–
–
–
(827)
4,261
1,180
1,180
530
–
–
–
(8,594)
(8,064)
804,448
122,247
122,247
1,137
–
(81,589)
(1,540)
(16,394)
(98,386)
828,309
Kenmare Resources plc
Annual Report and Accounts 2021
171
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
1. Statement of accounting policies
The Company Financial Statements of Kenmare Resources plc (the “Company”) are prepared on a going concern basis under the historical cost
convention, in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (‘FRS 101’) and the Companies Act 2014.
The Company meets the definition of a qualifying entity under Financial Reporting Standard (FRS) 100 issued by the Financial Reporting Council
(FRC). Accordingly, in the year ended 31 December 2021, the Company transitioned from reporting under International Financial Reporting
Standards adopted by the European Union (IFRS) to FRS 101 Reduced Disclosure Framework as issued by the FRC. The transition was not
considered to have had a material effect on the financial statements.
In preparing these Financial Statements, the Company applies the recognition, measurement and disclosure requirements of International Financial
Reporting Standards as adopted by the EU (Adopted IFRSs), but makes amendments where necessary in order to comply with the Companies Act
2014 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.
The Company has taken advantage of the following disclosure exemptions under FRS 101:
•
•
•
•
•
•
A cash flow statement and related notes;
Comparative period reconciliations for tangible fixed assets and share capital;
Disclosures in respect of transactions with wholly owned subsidiaries;
Disclosures in respect of capital management;
The effects of new but not yet effective IFRS; and
Disclosures in respect of the compensation of key management personnel.
As the consolidated financial statements of the Group are prepared in accordance with IFRS as adopted by the EU and include the equivalent
disclosures, the Company has also taken the exemptions under FRS 101 available in respect of the following disclosures:
•
•
•
•
Certain disclosures required by IFRS 2 Share-Based Payments;
Certain disclosures required by IFRS 13 Fair Value Measurement;
The disclosures required by IFRS 7 Financial Instruments: Disclosures; and
Certain disclosures required by IFRS 16 Leases.
In accordance with Section 304(2) of the Companies Act 2014, the Company is availing of the exemption from presenting its individual statement
of comprehensive income to the Annual General Meeting and from filing it with the Companies Registration Office. The Company’s profit for the
financial year determined in accordance with IFRS is $122.2 million (2020: $1.2 million). The profit consists of marketing and management services
fee income and income from shares in Group undertakings less administration and other costs.
The financial statements have been prepared in US Dollars and are rounded to the nearest million.
The principal accounting policies adopted are the same as those set out for the Group financial statements except as noted below. The accounting
policies have, unless otherwise stated, been applied consistently to all periods presented in these financial statements.
Accounting policies applying only to the Company financial statements
Investments in subsidiaries
Investments in subsidiary undertakings are accounted for under IAS 27 Separate Financial Statements. Investments in subsidiaries are recognised
at cost less impairment.
Equity-settled share-based payments granted by the Company to employees of subsidiary companies are accounted for as an increase or
decrease in the carrying value of the investment in subsidiary companies and the share based payment reserve.
Impairment of investments in subsidiaries
At each reporting date, the Company reviews the carrying amounts of its investments in subsidiaries to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the
Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value less costs to sell is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of the asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset
(or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate
of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset (or cash-generating unit) in prior financial years. A reversal of an impairment loss is recognised
as income immediately.
172 Kenmare Resources plc
Annual Report and Accounts 2021
FINANCIAL STATEMENTS
1. Statement of accounting policies CONTINUED
Amounts due from subsidiary undertakings
Amounts due from subsidiaries comprise of loans and borrowings and other receivables. All loans and borrowings are initially recorded at fair value,
net of transaction costs and allowances for expected credit losses. Loans and borrowings are subsequently stated at amortised cost. Interest
income is recognised using the effective interest method calculated by applying the effective interest rate to the gross carrying amount of a
financial asset. Interest income is recognised in profit or loss and is included in the “finance income” line item.
Other receivables due from subsidiaries are initially recognised at their transaction value and subsequently carried at amortised cost, net of
allowance for expected credit loss.
Impairment of amounts due from subsidiary undertakings
The Company recognises a loss allowance for expected credit losses on financial assets. The amount of expected credit losses is updated at each
reporting date to reflect changes in credit risk since initial recognition of the financial asset. When determining whether the credit risk of a financial
asset has increased the Company considers credit risk ratings where available, the Company’s historical credit loss experience, adjusted for factors
that are specific to the counterparts, general economic conditions and an assessment of both the current as well as the forecast conditions at the
reporting date.
The Company considers a financial asset to be in default when there is information indicating that the debtor is in severe financial difficulty and
there is no realistic prospect of recovery, e.g. when the debtor has been placed in liquidation or has entered into bankruptcy proceedings. The
Company considers a financial asset to be credit-impaired when there is evidence that the debtor is in significant financial difficulty and the debt is
more than 90 days past due.
Amounts due to subsidiary undertakings
Amounts due to subsidiary undertakings are initially measured at fair value and subsequently measured at amortised cost using the effective
interest rate method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees,
transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period,
to the amortised cost of a financial liability. The Company derecognises financial liabilities when, and only when, the Company’s obligations are
discharged, cancelled or have expired.
Critical judgements in applying the Company’s accounting policies
In the process of applying the Company’s accounting policies, the Directors have made the following judgements that have the most significant
effect on the amounts recognised in the financial statements.
Impairment of non-current assets
Where there are indicators of impairment of non-current assets, the Company performs impairment tests based on fair value less costs to sell
or a value-in-use calculation. The fair value less costs to sell calculation is based on available data from binding sales transactions in an arm’s
length transaction on similar assets or observable market prices less incremental costs for disposing of the asset. The value-in-use calculation is
based on a discounted cash flow model. The cash flows are derived from the budget and do not include restructuring activities that are not yet
committed to or significant future financial assets that will enhance performance of the financial assets being tested. The value-in-use calculation
is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash flows and the growth rate used
for extrapolation purposes. Additionally, in some instances the Company obtains a third-party valuation of a financial asset and relies on this source
if the valuation is current.
2. Property, plant and equipment
Cost
At 1 January 2021
At 31 December 2021
Accumulated depreciation
At 1 January 2021
Charge for the financial year
At 31 December 2021
Carrying amount
At 31 December 2021
At 1 January 2021
Fixtures and
Fittings
$’000
Motor
Vehicles
$’000
934
934
238
97
335
599
696
131
131
131
–
131
–
–
Total
$’000
1,065
1,065
369
97
466
599
696
At each reporting date, the Company assesses whether there is any indication that property, plant and equipment may be impaired. No impairment
indicators were identified as at 31 December 2021.
Kenmare Resources plc
Annual Report and Accounts 2021
173
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS CONTINUED
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
3. Right-of-use assets
At 1 January 2020
Depreciation expense
At 31 December 2020
Depreciation expense
At 31 December 2021
Land &
Buildings
$’000
1,485
(201)
1,284
(198)
1,086
On 1 January 2019, the Group recognised lease liabilities of $5.0 million in respect of right-of-use assets being its head office at Styne House,
Dublin. The Styne House lease has a term of 10 years commencing August 2017 and rental payments are fixed for five years. This lease obligation
is denominated in Euros.
At each reporting date, the Company assesses whether there is any indication that right of use assets may be impaired. No impairment indicators
were identified as at 31 December 2021 or 31 December 2020.
Set out below are the carrying amounts of lease liabilities at each reporting date:
Current
Non-current
Total
The income statement includes the following amounts relating to leases:
Depreciation expense
Interest expense on lease liabilities
Total
4. Deferred tax asset
Deferred tax asset
2021
$’000
274
882
1,156
2021
$’000
198
99
297
2021
$’000
–
2020
$’000
274
1,139
1,413
2020
$’000
201
110
311
2020
$’000
202
At the reporting date, the Company had estimated unutilised tax losses of $nil (2020: $1.6 million) available for offset against future profits. A
deferred tax asset of $nil (2020: $0.2 million) has been recognised in respect of these losses.
5. Investments in subsidiaries
Opening balance
Capital contribution
Share awards
Closing balance
2021
$’000
798,370
2,320
408
801,098
2020
$’000
798,293
–
77
798,370
The investment balance of $801.1 million (2020: $798.4 million) comprises an investment in Kenmare Moma Mining (Mauritius) Limited and
Kenmare Moma Processing (Mauritius) Limited, collectively known as “the Project Companies”, in the amount of $794.9 million, initial investments
of less than $500 in the other subsidiary undertakings of the Company and share awards of $6.1 million (2020: $5.9 million) relating to staff of
subsidiary undertakings.
On 29 October 2021, the Company’s subsidiary Kenmare Moma Processing (Mauritius) Limited distributed by way of return of capital an amount of
$100 million to its shareholders, the Company and Congolone Heavy Minerals Limited. The return of capital was settled by way of an intercompany
loan payable of $100 million, documented under an intercompany loan agreement entered into by the Company, Congolone Heavy Minerals
Limited and Kenmare Moma Processing (Mauritius) Limited. The loan may be repaid by Kenmare Moma Processing (Mauritius) Limited in whole or
in part at any time and shall be repaid in full no later than 29 April 2022. The interest on the loan is 0.36% per annum. As at 31 December 2021, the
outstanding principle on the loan was $50 million.
174 Kenmare Resources plc
Annual Report and Accounts 2021
FINANCIAL STATEMENTS
5. Investments in subsidiaries CONTINUED
The terms of the loan, specifically the below market interest rate, were considered favourable to Kenmare Moma Processing (Mauritius) Limited
resulting in the Company recognising an additional investment in Kenmare Moma Processing (Mauritius) Limited in the amount of $1.3 million,
representing the difference between the loan amount and its fair value discounted at a market rate of interest of 5%.
The Company has provided three other loans to the Project Companies at rates considered favourable to the borrowers. As a result, the Company
recognised a capital contribution amounting to $1.0 million (2020: $nil) representing the difference between the loan amounts and their fair value
discounted at a market rate of interest of 5%.
On 21 June 2021, the Company’s subsidiary Kenmare Moma Mining (Mauritius) Limited declared a dividend in the amount of $20 million payable to
its shareholders. The dividend was paid in full on 6 October 2021.
The subsidiary undertakings of the Company as at 31 December 2021 are as follows:
Kenmare Minerals Limited
Kenmare C.I. Limited
Congolone Heavy Minerals Limited
Kenmare Moma Mining (Mauritius) Limited
Kenmare Moma Processing (Mauritius)
Mozambique Minerals Limited
Place of
Incorporation
Ireland
Jersey
Jersey
Mauritius
Mauritius
Jersey
Place of
Operation
Ireland
Jersey
Mozambique
Mozambique
Mozambique
Mozambique
Percentage
Ownership
100%
100%
100%
100%
100%
100%
Each of the subsidiary undertakings has issued ordinary shares only. The activities of the above subsidiary undertakings are mining, mineral
exploration, management and development.
The registered office of the Irish company is Styne House, Hatch Street Upper, Dublin 2, D02 DY27. The registered office of the Jersey companies
is Zedra Trust Company (Jersey) Limited, 50 La Colomberie, St. Helier, Jersey. The registered office of the Mauritian companies is 10th Floor,
Standard Chartered Tower, 19 Cybercity, Ebene, Mauritius.
The Company carried out an impairment review of investments in subsidiary undertakings as at 31 December 2021. As a result of the review, two
indicators of impairment were identified in the Company’s investment in Kenmare Moma Processing (Mauritius) Limited and one indicator of
impairment was identified in the Company’s investment in Kenmare Moma Mining (Mauritius) Limited. In accordance with IAS 36, management
calculated the recoverable amount of both investments, which, for the purposes of the impairment test were considered collectively to form
part of a cash-generating unit, namely the Moma Titanium Minerals Mine. As a result of the impairment review, management concluded that the
recoverable amount of the cash-generating unit exceeded the carrying amount and as such no impairment loss was recorded.
6. Amounts due from subsidiary undertakings
Loans and borrowings
Other payables
Closing balance
2021
$’000
76,289
3,013
79,302
2020
$’000
13,000
12,255
25,255
Under the terms of a management services agreement and marketing services agreement between the Company and the Project Companies,
the Company earned $7.5 million (2020: $6.8 million) in respect of management services provided during the year to both Project Companies and
$12.6 million (2020: $6.9 million) in respect of marketing services provided during the year to Kenmare Moma Processing (Mauritius) Limited. The
collective amount outstanding at the year-end date in relation to these services is $3.0 million (2020: $12.2 million).
During the year, the Project Companies drew down three unsecured loans, repaid one loan and refinanced one loan as set out below. Interest
accrued amounted to $0.3 million at 31 December 2021.
Interest at 0.61%, repayable on 6 May 2022
Interest at 0.61%, repayable on 4 June 2022*
Interest at 0.61%, repayable on 8 June 2022
Interest at 0.36%, repayable on 29 April 2022
Interest at 0.21%, repaid on 28 February 2021
2021
$’000
8,014
10,026
10,026
50,000
–
2020
$’000
–
10,000
–
–
3,000
* This loan was refinanced during the year and the original repayment date was extended to 4 June 2022
The carrying amount due from subsidiary undertakings represents the maximum credit exposure. Amounts due from subsidiary undertakings are
current (i.e. not overdue). The expected credit losses provided against amounts due from subsidiary undertakings is $1.1 million (2020: $0.1 million).
Kenmare Resources plc
Annual Report and Accounts 2021
175
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS CONTINUED
7. Trade and other receivables
Prepayments
8. Cash and cash equivalents
Cash at bank and in hand
2021
$’000
583
2021
$’000
7,284
2020
$’000
342
2020
$’000
36,692
9. Share capital, share premium and other reserves
Relevant disclosures on the Company’s share capital, share premium and other reserves are given in Notes 19, 20 and 21 to the consolidated
financial statements.
10. Amounts due to subsidiary undertakings
Loans and borrowings
Other payables
Closing balance
Non-current
Current
Closing balance
2021
$’000
36,636
18,639
55,275
54,106
1,169
55,275
2020
$’000
36,636
17,956
54,592
53,106
1,486
54,592
Loan amounts owed to subsidiary undertakings consist of an amount due to Kenmare C.I. Ltd of $36.6 million (2020: $36.6 million) at the period
end as a result of a Novation and Subscription Deed entered into in 2019. In addition, other payables include an amount of $17.4 million (2020:
$16.5 million) due to Kenmare C.I. Ltd as a result of subsequent inter-group funding. The amounts due to Kenmare C.I. Limited are interest free and
unsecured. Kenmare C.I. Ltd does not intend to demand repayment of the amounts due within one year from the year end.
During the year, costs of $1.5 million (2020: U$1.1 million) were recharged to the Company by Kenmare C.I. Limited under a group cost agreement.
The amount due to Kenmare C.I. Ltd under the group cost agreement is $0.8 million (2020: $1.1 million) at the year end.
During the year costs of $0.4 million (2020: $0.4 million) were recharged to the Company by its subsidiary, Mozambique Minerals Limited under a
group cost agreement. The amount due to Mozambique Minerals Ltd is $0.4 million (2020: $0.4 million) at the year end.
2021
$’000
99
2,361
2,460
2021
$’000
2,752
2020
$’000
93
2,295
2,388
2020
$’000
–
11. Trade and other payables
Trade payables
Accruals
12. Tax liabilities
Tax liabilities
176 Kenmare Resources plc
Annual Report and Accounts 2021
13. Dividends
The dividends paid in respect of ordinary share capital were as follows:
Dividends
FINANCIAL STATEMENTS
2021
$’000
16,394
2020
$’000
8,594
In May 2021, the Company paid a final 2020 dividend of $8.4 million representing USc7.69 per share (2020: USc5.52). In October 2021, the
Company paid a 2021 interim dividend of USc7.29 (H1 2020: USc2.31) per ordinary share, totalling $8.0 million.
14. Events after the statement of financial position
Proposed dividend
On 22 March 2022, the Board proposed a final dividend of USc25.42 per share. This proposed dividend is subject to approval by the shareholders
at the Annual General Meeting. These financial statements do not reflect this dividend.
15. Approval of financial statements
The financial statements were approved by the Board on 4 April 2022.
Kenmare Resources plc
Annual Report and Accounts 2021
177
OTHER
INFORMATION
180 Shareholder profile
181 Glossary – alternative
performance measures
183 Glossary – terms
IBC General information
PRISCI LL A NEL
MIN ERAL SEPARATION P L ANT M ANAGE R
In 2021, empl oyees at the Moma
Mine received over 2 1,100 hours of
training, including a programme
for site leadersh ip to fur ther
develo p their mentorship sk ill s.
SHAREHOLDER PROFILE
BASED ON THE REGISTER AS AT 31 MARCH 2022
Size of holdings
1–1,000
1,001–5,000
5,001–25,000
25,001–100,000
100,001–250,000
250,001–500,000
500,001–750,000
Over 750,000
Total
Geographic distribution of holdings
Republic of Ireland
Northern Ireland and Great Britain
Other
Total
No. of
shareholders
No. of
shares held
3,759
60
16
1
1
–
–
1
3,838
206,962
118,020
167,668
42,179
143,318
–
–
94,243,823
94,921,970
No. of
shareholders
No. of
shares held
1,460
2,259
119
3,838
323,612
94,564,007
34,351
94,921,970
180 Kenmare Resources plc
Annual Report and Accounts 2021
OTHER INFORMATION
GLOSSARY – ALTERNATIVE PERFORMANCE MEASURES
Certain financial measures set out in the Annual Report to 31 December 2021 are not defined under International Financial Reporting Standards
(IFRS), but represent additional measures used by the Board to assess performance and for reporting both internally and to shareholders and
other external users. Presentation of these Alternative Performance Measures (APMs) provides useful supplemental information which, when
viewed in conjunction with the Group’s IFRS financial information, allows for a more meaningful understanding of the underlying financial and
operating performance of the Group.
These non-IFRS measures should not be considered as an alternative to financial measures as defined under IFRSs. Descriptions of the APMs
included in this report, as well as their relevance for the Group, are disclosed below.
Description
Revenue excluding freight
Operating profit/loss before depreciation
and amortisation
Percentage of EBITDA to Revenue (FOB) Provides a group margin for the earnings and performance of
Relevance
Eliminates the effects of freight to provide the product price
Eliminates the effects of financing, tax and depreciation to allow
assessment of the earnings and performance of the Group
APM
Revenue (FOB)
EBITDA
EBITDA margin
Capital costs
Cash operating cost per tonne of
finished product produced
Cash operating cost per tonne of
ilmenite net of co-products
Net cash/debt
Additions to property, plant and
equipment in the period
Total costs less freight and other
non-cash costs, including inventory
movements and the indirect tax
provision, divided by final product
production (tonnes)
Cash operating costs less FOB revenue
of zircon, rutile and mineral sands
concentrates, divided by ilmenite
production (tonnes)
Bank loans before transaction costs, loan
amendment fees and expenses net of
cash and cash equivalents
ROCE
Return on capital employed
Shareholder returns
Dividends and share buy backs
Revenue
Revenue
Freight
Revenue (FOB)
EBITDA
Operating profit
Depreciation
EBITDA
EBITDA margin
EBITDA
Revenue (FOB)
EBITDA margin (%)
the Group
Provides the amount spent by the Company on additions to
property, plant and equipment in the period
Eliminates the non-cash impact on costs to identify the actual cash
outlay for production and, as production levels increase or decrease,
highlights operational performance by providing a comparable cash
cost per tonne of product produced over time
Eliminates the non-cash impact on costs to identify the actual cash
outlay for production and, as production levels increase or decrease,
highlights operational performance by providing a comparable cash
cost per tonne of ilmenite produced over time
Measures the amount the Group would have to raise through
refinancing, asset sale or equity issue if its debt were to fall due
immediately, and aids in developing an understanding of the
leveraging of the Group
ROCE measures how efficiently we generate profits from investment
in our portfolio of assets.
Shareholder returns comprise the 2021 interim dividend, the
proposed 2021 final dividend to be approved by shareholders at the
AGM and the share buy back.
2017
$m
208.3
(5.4)
202.9
2017
$m
28.5
32.0
60.5
2017
$’m
60.5
202.9
30
2018
$m
262.2
(16.3)
245.9
2018
$m
62.9
30.4
93.3
2018
$’m
93.3
245.9
38
2019
$m
270.9
(15.4)
255.5
2019
$m
59.2
33.4
92.6
2019
$’m
92.6
255.5
36
2020
$m
243.7
(12.2)
231.5
2020
$m
34.4
42.3
76.7
2020
$’m
76.7
231.5
33
2021
$m
455.9
(35.4)
420.5
2021
$m
153.0
63.1
216.1
2021
$’m
216.1
420.5
51
Kenmare Resources plc
Annual Report and Accounts 2021
181
GLOSSARY – ALTERNATIVE PERFORMANCE MEASURES CONTINUED
Cash operating cost per tonne of finished product
Cost of sales
Other operating costs
Total operating costs
Freight charges
Total operating costs less freight
Non-cash costs
Depreciation and amortisation
Share-based payments
Mineral product inventory movements
Indirect tax provision
Total cash operating costs
Final product production tonnes
Cash operating cost per tonne of finished product
Cash operating cost per tonne of ilmenite
Total cash operating costs
Less FOB revenue from co-products zircon,
rutile and mineral sands concentrate
Total cash costs less co-product revenue
Ilmenite product production tonnes
Cash operating cost per tonne of ilmenite
Net cash/debt
Bank debt
Transaction costs
Gross debt
Cash and cash equivalents
Net cash/(debt)
Return on Capital Employed
EBIT
Total Equity and Non-Current Liabilities
ROCE
2017
$’m
156.6
23.2
179.8
(5.5)
174.3
(32.0)
(1.0)
0.3
0.0
141.6
1,081,300
$131
2017
$’m
141.6
(50.4)
91.2
998,200
$91
2017
$’m
(102.9)
–
(102.9)
68.8
(34.1)
2017
$’m
28,465
895,937
3%
2018
$’m
168.3
31.0
199.3
(16.3)
183.0
(30.4)
(1.4)
0.1
0.0
151.3
1,043,300
$145
2018
$’m
151.3
(75.1)
76.2
958,500
$79
2018
$’m
(83.5)
–
(83.5)
97.0
13.5
2018
$’m
62,936
932,699
7%
2019
$’m
178.4
33.3
211.7
(15.4)
196.3
(33.4)
(1.8)
(4.5)
0.0
156.6
988,300
$158
2019
$’m
156.6
(84.5)
72.1
892,900
$81
2019
$’m
(60.9)
(6.6)
(67.5)
81.2
13.7
2019
$’m
59,223
984,006
6%
2020
$’m
179.1
30.3
209.4
(12.2)
197.2
(42.3)
(1.8)
4.9
0.0
158.0
840,500
$188
2020
$’m
158.0
(63.2)
94.8
756,000
$125
2020
$’m
(145.8)
(5.4)
(151.2)
87.2
(64.0)
2020
$’m
34,393
1,087,515
3%
2021
$’m
245.0
58.0
303.0
(35.4)
267.6
(63.1)
(3.5)
(9.3)
(2.0)
189.7
1,228,500
$154
2021
$’m
189.7
(85.8)
103.9
1,119,400
$93
2021
$’m
(148.1)
(3.8)
(151.9)
69.1
(82.8)
2021
$’m
152,981
1,045,370
15%
182 Kenmare Resources plc
Annual Report and Accounts 2021
OTHER INFORMATION
GLOSSARY – TERMS
Term
AI
AGM
CIF
CFR
The Company or Parent
Company
DFS
EdM
EGM
EPCM
FOB
Free Cash Flow
Gender diversity
GHG emissions
Group or Kenmare
HMC
Description
All injuries. Provides the number of injuries at the Mine in the year
Annual general meeting
The seller delivers when the goods pass the ship’s rail in the port of shipment. Seller must pay the cost and freight necessary
to bring goods to named port of destination. Risk of loss and damage are the same as CFR. Seller also has to procure marine
insurance against buyer’s risk of loss/damage during the carriage. Seller must clear the goods for export. This term can only be
used for sea transport.
This term means the seller delivers when the goods pass the ship’s rail in port of shipment. Seller must pay the costs and freight
necessary to bring the goods to the named port of destination, but the risks of loss or damage, as well as any additional costs due
to events occurring after the time of delivery, are transferred from seller to buyer. Seller must clear goods for export. This term can
only be used for sea transport.
Kenmare Resources plc.
Definitive feasibility studies are the most detailed and will determine definitively whether to proceed with the project. A definitive
feasibility study will be the basis for capital appropriation, and will provide the budget figures for the project. Detailed feasibility
studies require a significant amount of formal engineering work and are accurate to within approximately 10–15%.
Electricidade de Moçambique.
Extraordinary general meeting
Engineering, Procurement and Construction Management.
Free on Board means that the seller delivers when the goods pass the ship’s rail at the named port of shipment. This means the
buyer has to bear all costs and risks to the goods from that point. The seller must clear the goods for export. This term can only
be used for sea transport.
Free Cash Flow is the cash generated by the Group in a reporting period before distributions to shareholders.
Percentage of females in the workforce at the Moma Mine. We recognise the benefits to our business of supporting diversity,
equity, and inclusion for long-term sustainable success. Increased gender diversity has been an important metric at the Mine.
Scope 1 & 2 Greenhouse Gas emissions. We acknowledge the human contribution to climate change and aim to reduce emissions
from our already low carbon intensity operations.
Kenmare Resources plc and its subsidiary undertakings.
Heavy mineral concentrate extracted from mineral sands deposits and which include ilmenite, zircon, rutile and other heavy
minerals and silica.
KMML Mozambique Branch Mozambique branch of Kenmare Moma Mining (Mauritius) Limited (KMML).
KMPL Mozambique Branch Mozambique branch of Kenmare Moma Processing (Mauritius) Limited (KMPL).
KRSP
Lenders
Kenmare Restricted Share Plan
Absa Bank Limited (acting through its Corporate and Investment Banking Division) (“Absa”), The Emerging Africa Infrastructure
Fund (part of the Private Infrastructure Development Group (“PIDG”)) (“EAIF”), Nedbank Limited (acting through its Nedbank
Corporate and Investment Banking division) (“Nedbank”), Rand Merchant Bank and Standard Bank Group (“Standard Bank”).
Lost time injury. Measures the number of injuries at the mine that result in time lost from work.
Lost time injury frequency rate. Measures the number of injuries causing lost time per 200,000 man hours worked on site
Finished products shipped to customers during the period. Provides a measure of finished products shipped to customers
LTI
LTIFR
Marketing – finished
products shipped
Mining – HMC produced
Moma, Moma Mine or
the Mine
Mine Closure Guarantee
Facility
MTA
MSP
Mtpa
NOSA
OIA
Ordinary Shares
PFS
PM
Processing – finished
products produced
Project Companies
Projecto Oitenta
Revolving Credit Facility
RUPs
TCFD
Heavy mineral concentrate extracted from mineral sands deposits and which include ilmenite, zircon, rutile, concentrates and
other heavy minerals and silica. Provides a measure of heavy mineral concentrate extracted from the Mine
The Moma Titanium Minerals Mine consisting of a heavy mineral sands, processing facilities and associated infrastructure, which
mine is located in the north east coast of Mozambique under licence to the Project Companies.
$40 million debt facility dated 11 December 2019 between the Lenders and KMML Mozambique Branch and KMPL Mozambique
Branch.
Mozambique Ministry of Land and Environment.
Mineral Separation Plant.
Million tonnes per annum.
National Occupational Safety Association
Oman Investment Authority formerly the State General Reserve Fund of the Sultanate of Oman.
Ordinary shares of €0.001 each in the capital of the Company.
A feasibility study is an evaluation of a proposed mining project to determine whether the mineral resource can be mined
economically. Pre-feasibility study is used to determine whether to proceed with a detailed feasibility study and to determine
areas within the project that require more attention. Pre-feasibility studies are done by factoring known unit costs and by
estimating gross dimensions or quantities once conceptual or preliminary engineering and mine design has been completed.
Atmospheric particulate matter – also known as particulate matter (PM) or particulates – are microscopic solid or liquid matter
suspended in the Earth’s atmosphere.
Finished products produced by the mineral separation process. Provides a measure of finished products produced from the
processing plants
Kenmare Moma Mining (Mauritius) Limited and Kenmare Moma Processing (Mauritius) Limited, wholly owned subsidiary
undertakings of Kenmare Resources plc, which are incorporated in Mauritius.
A utilisation improvement programme aimed at increasing operating times throughout the mine and processing plants to 80%.
$40 million debt facility dated 11 December 2019 between the Lenders and KMML Mozambique Branch and KMPL Mozambique
Branch.
Rotary uninterruptible power supply
Task Force on Climate Related Financial Disclosures
Kenmare Resources plc
Annual Report and Accounts 2021
183
GLOSSARY – TERMS CONTINUED
Term
Tender Offer
Term Loan Facility
THM
UK
WCP
WCP A
WCP B
WCP C
WHIMS
Description
The invitation by the Company to eligible shareholders to tender Ordinary Shares for purchase on-market by Peel Hunt LLP on
the terms and subject to the conditions set out in the circular dated 16 November 2021.
$110 million debt facility dated 11 December 2019 between the Lenders and KMML Mozambique Branch and KMPL Mozambique
Branch.
Total heavy minerals in the ore of which ilmenite (typically 82%), rutile (typically 2.0%) and zircon (typically 5.5%) total
approximately 90%.
United Kingdom
Wet Concentrator Plant.
The original WCP which started production in 2007.
The second WCP which started production in 2013.
The third WCP which started production in 2020.
Wet High Intensity Magnetic Separation Plant.
184 Kenmare Resources plc
Annual Report and Accounts 2021
GENERAL INFORMATION
Company Secretary
Chelita Healy
Registered office
Kenmare Resources plc
Styne House
Hatch Street Upper
Dublin 2
D02 DY27
Registered number
37550
Independent auditor
KPMG
Chartered Accountants, Statutory
Audit Firm
1 Stokes Place
St. Stephen’s Green
Dublin 2
D02 DE03
Solicitors
McCann FitzGerald
Riverside One
Sir John Rogerson’s Quay
Dublin 2
D02 X576
Bankers
AIB Bank plc
140 Lower Drumcondra Road
Dublin 9
D09 YY61
Barclays Capital
1 Churchill Place
London
E14 5HP
FirstRand Bank Limited
Austin Friars House
2-6 Austin Friars
London
EC2N 2HD
HSBC
PO Box 14
27 Halkett Street
St Helier
Jersey
JE4 8NJ
Nedbank Limited
7th Floor
12 Arthur Street
London
EC4R 9AB
Absa Bank Limited
15 Troye Street
Johannesburg
South Africa
Registrar
Computershare Investor Services
(Ireland) Limited
3100 Lake Drive
Citywest Business Campus
Dublin 24
D24 AK82
Website
www.kenmareresources.com
The production of this report supports the work of the Woodland Trust, the UK’s leading
woodland conservation charity. Each tree planted will grow into a vital carbon store, helping
to reduce environmental impact as well as creating natural havens for wildlife and people.
Kenmare Resources plc
4th Floor
Styne House
Hatch Street Upper
Dublin 2
Ireland
T: +353 1 671 0411
F: +353 1 671 0810
E: info@kenmareresources.com
www.kenmareresources.com
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