Kenmare Resources Annual Report 2021

FY2021 Annual Report · Kenmare Resources

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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

10
12
14
16
18
20
22
26
28
30
34
38
44
50
64

74
76
78
80
92
96
98
104
106
118
123

130
134
135
136
137
138

170
171
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

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

Kenmare Resources plc Annual Report and Accounts 2021BUSINESS OVERVIEWMEETING

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

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

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

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

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

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

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.

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

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

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

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

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

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
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

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

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

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

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

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

0.0

4.47(ii)

100.0

2021

8.55

3.33

0.00

1.00

10.00

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

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

10.0

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

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)

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

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

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%

(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.

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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.

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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.

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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.

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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

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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

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

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

8
9

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

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

(21,087)
(221)
–
–
(20,778)
5,088

–
–

–
–
–
(8,594)
(8,064)
900,503

128,526
128,526

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

22
19
22
23
23
14

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.

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).

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

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

Level 2

14,539

Level 2

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.

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.

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

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

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