Industria
Report on Payments to Governments
Kenmare Resources plc
(“Kenmare” or “the Company” or “the Group”)
10 May 2024
Report on Payments to Governments
Kenmare Resources plc (LSE:KMR, ISE:KMR), one of the leading global producers of titanium minerals and zircon, which operates the Moma Titanium Minerals Mine (the "Mine" or "Moma") in northern Mozambique, announces the publication of its Report on Payments to Governments.
Introduction
This report details payments to governments made by Kenmare Resources plc (the “Company”) and its subsidiary undertakings (the “Group”) for the financial year ended 31 December 2023.
This report has been prepared in accordance with the requirements of Part 2A of the Transparency (Directive 2004/109/EC) Regulations, 2007 (as amended) (“Part 2A”), Part 26 of the Companies Act 2014 (“Part 26”) and rule DTR 4.3A of the UK Financial Conduct Authority's Disclosure Guidance and Transparency Rules (“DTR 4.3A”). Part 2A and Part 26 enact in Ireland domestic rules in line with Directive 2013/34/EU (the “EU Accounting Directive (2013)”) and apply to large Irish incorporated companies, like the Company, that are involved in the exploration, discovery, development, and extraction of minerals. DTR 4.3A imposes equivalent requirements on issuers, like the Company, admitted to trading on the London Stock Exchange that are similarly involved in the exploration, development and extraction of minerals.
About Kenmare Resources plc
Kenmare Resources plc is an Irish incorporated company with a premium listing on the London Stock Exchange and a secondary listing on Euronext Dublin. Kenmare operates the Moma Titanium Minerals Mine (the “Moma Mine”), which is located on the northern coast of Mozambique. Moma is one of the world's largest producers of minerals sands products, accounting for production of approximately 7% of global titanium feedstocks and supplying to customers operating in over 15 countries. The Group's products are key raw materials, ultimately consumed in everyday quality-of-life products such as paints, plastics, and ceramic tiles.
The Group consists of the parent company (Kenmare Resources plc) and its subsidiary undertakings. The mining operations at the Moma Mine are carried out by the Mozambique branch of Kenmare Moma Mining (Mauritius) Limited (“KMML”) and downstream processing is undertaken by the Mozambique branch of Kenmare Moma Processing (Mauritius) Limited (“KMPL”), both of which are wholly-owned subsidiary undertakings of the Company. KMML and KMPL account for 100% of the Group's turnover and 99% of the Group's total assets. Therefore, all revenues and operating costs of the Group's mining and processing operations are recorded by KMML and KMPL within the same tax jurisdiction, namely Mozambique.
The parent company, Kenmare Resources plc, conducts no direct exploration or mining activities. The Group's corporate costs are recorded by the parent company.
Scope of report
Disclosure of payments to Governments is required in respect of payments arising from the exploration, discovery, development and extraction of minerals; the payments included within this report therefore relate to the Group's mining and processing activities at the Moma Mine in Mozambique.
Groups are required to prepare a consolidated report disclosing payments made by the parent company and its subsidiary undertakings. Accordingly, this report reflects payments made by the Group companies conducting mining and processing activities, namely KMML and KMPL. The Group owns 100% of these entities and the amounts reflect 100% of the payments made by these subsidiary undertakings.
For a broader discussion of the Group's payments to governments and its contribution to its host communities, please see the Group's 2023 Sustainability Report, available on the Company's website at www.kenmareresources.com/investors/reports-and-presentations
Payments
The payments disclosed in this report are on a cash basis.
The payments made to Governments are required to be analysed into the following categories:
KMML's Mozambique branch produces one product from its mining activities, namely HMC. HMC is sold to KMPL, which processes it into finished products (ilmenite, zircon, rutile and mineral sands concentrate), which are exported worldwide to third party customers. The cash costs of mining include the costs of mine face preparation, dredging and dry mining operations, Wet Concentrator Plant operations, rehabilitation and support services.
The margin applied to the cash costs of mining is stipulated in the Mineral Licensing Contract, dated 21 January 2002. The contract is between KMML and the Ministry of Mineral Resources and Energy (MIREME) of the Republic of Mozambique, acting for and on behalf of the Government of the Republic of Mozambique, which details the terms and conditions for the exploration, development and production of heavy minerals in the areas of Moma, Congolone and Quinga. The margin is determined by dividing the prices for sale of finished products to third party customers earned by KMPL in the year by the prices earned in the prior year, adjusted for inflation and applying this factor to the prior year margin. For the fiscal year ending 31 December 2023 the margin was 58.8%.
KMPL has the benefit of operating within an Industrial Free Zone (“IFZ”) and as an IFZ company, it is exempt from corporation tax.
KMPL is subject to a revenue royalty of 1% on revenue recognised.
Government
“Government” means any national, regional or local authority of a country, and includes a department, agency or undertaking that is a subsidiary undertaking where the authority is the parent undertaking.
All payments referred to in this report are made to the Government of Mozambique or its agencies; in particular, they are made to Autoridade Tributária Unidade dos Grandes Contribuintes–Nampula, a department of the Mozambican tax authority.
Analysis by project/entity
An analysis of payments by project is required where payments are attributable to specific projects. Projects are defined as operational activities which are governed by a single contract, licence, lease, concession or similar legal agreement, and form the basis for payment liabilities with a government. Where agreements are substantially interconnected in operating and geographical terms, with substantially similar terms, those agreements should be treated as a single project. Payments may be disclosed at an entity level where payments are made in respect of obligations imposed at that entity level rather than at a project level. Payments below are disclosed at the entity level for KMML and KMPL, which between them operate the Moma Mine, which is treated as one project for purposes of this Report.
Materiality
Under Part 2A and Part 26, a payment need not be disclosed if it is a single payment of less than the equivalent of €100,000 or a series of related payments in a single year whose total is less than the equivalent of €100,000. Under DTR 4.3A, a payment need not be disclosed if it is a single payment of less than the equivalent of £86,000 or a series of related payments in a single year whose total is less than the equivalent of £86,000.
Currency and rounding
All monetary amounts in this report refer to United States dollars unless otherwise indicated. The amounts shown in this report have been rounded to the nearest $1,000.
Payments to Governments – 2023
This report for Kenmare Resources plc (registered number 37550) was approved by the Directors of the Company on 9 May 2024 and signed on their behalf by
For further information, please contact:
Kenmare Resources plc
Jeremy Dibb / Katharine Sutton / Michael Starke
Investor Relations
ir@kenmareresouces.com
Tel: +353 1 671 0411
Mob: +353 87 943 0367 / +353 87 663 0875
Murray (PR advisor)
Paul O'Kane
pokane@murraygroup.ie
Tel: +353 1 498 0300
Mob: +353 86 609 0221
About Kenmare Resources
Kenmare Resources plc is one of the world's largest producers of mineral sands products. Listed on the London Stock Exchange and the Euronext Dublin, Kenmare operates the Moma Titanium Minerals Mine in Mozambique. Moma's production accounts for approximately 7% of global titanium feedstocks and the Company supplies to customers operating in more than 15 countries. Kenmare produces raw materials that are ultimately consumed in everyday quality-of life items such as paints, plastics and ceramic tiles.
All monetary amounts refer to United States dollars unless otherwise indicated.
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