Kenmare Resources Aktie

Good afternoon, and welcome to the Kenmare Resources plc Q1 2026 Production Update. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to Managing Director, Tom Hickey. Good afternoon to you.

Thanks very much, and thanks, everybody, for joining us today for our Q1 2026 production update. I'm joined by my colleagues, Cillian Murphy, who's Head of Marketing; Ben Baxter, COO, who's coming to us from Moma; Katherine Sutton, who's Head Investor Relations; and off camera, I've got James McCullough, CFO as well. And while we may have spoken to you all comparatively recently following our full year results at the end of March, I think we do have some interesting and useful updates today, and we felt that it will be useful to just skip over them and take any questions people might have.

So we finished Q1 2026 a number of weeks ago. We've had some -- a good solid quarter in terms of shipments. And I think shipments is our big objective for 2026. It's a priority in terms of how we want to run the business. It's a priority in terms of managing our cash flow through what is, as we hear later and you may have heard already quite a difficult period in the market. And it reflects the fact that we do have had at the end of 2026, quite high inventory levels.

So 2026 from an operational perspective, very strong in shipments, well on track for our 1.1 million target. A little bit softer from a production perspective. As we'll hear from Ben, the completion and debottlenecking of our WCP A upgrade project, which was a huge focus last year, took up quite a bit of time in Q1, but I think we're nearly there now.

And Ben will update you on where we are with our dredges, where we are with our feed prep unit and the punch list of tasks and issues that we were addressing during Q1 and how that leaves us set for the remainder of the year. But I think on balance, we're very comfortable where we are. While Q1 was a little slower from a production perspective and by consequence, a little slower from an ilmenite production perspective, and we're still on track for our annual guidance.

Moving on to markets, which I think have been an important focus for us over the last while, following highs and highs and pricing of -- Slide 4, sorry, highs and highs in pricing in '21, '22, '23. We have seen weaker markets, and we did comment over the course of last year on oversupply in the market for most of the feedstocks that we produce. Certainly, we've seen maybe a few interesting evolutions in that area.

The ilmenite market did continue to be weak, and ilmenite, you may recall, is about 70% of our revenue. Pricing was softer as we expected, but we're certainly seeing the responses that people put in place to the current weaker market and oversupply, limiting production, managing production and indeed, some unplanned production disruptions start to take effect, start to tighten the market, not quite seeing it in price yet, but there are some interesting emerging themes, which Cillian will touch on.

The market is not just about price. It's also about transportation and logistics. And as you can imagine, we are seeing an impact on freight rates, in particular, from the war in Iran, but limited so far. And we are seeing some impact on shipping schedules, challenges in logistics, people without access to their normal ports. Nothing as you can see, that impacted our trajectory in Q1 in terms of shipping, but certainly something that we do need to keep an eye on, and we try to -- need to support specific customers on.

I mentioned that the feedstock market has seen some interesting developments in Q1. I think towards the back of 2025, we commented that zircon, which is our second biggest revenue contributor at about 20%, 25%. Zircon prices began to stable in Q4 2025. And following on from that, we've actually started to book higher prices for zircon products in the second quarter of 2026. And the industry commentators are certainly somewhat more optimistic about the trajectory for zircon prices over the remainder of '26 into '27 and beyond.

And finally, on the marketing side, you may have recall us speaking about a customer who was in financial distress in Q3 2025, couldn't take some volumes and hadn't paid us. Those were shipments to 2 plants. One of those plants has now been sold, and we've recovered $4.6 million of the $9.3 million that was outstanding. The second plant is very well advanced in the sale process. We're engaged with the potential new acquirers, and we'd be very hopeful for strong recovery there. So while there has been a delay on receipts, we're comfortable that we'll recover a significant proportion of those outstandings.

And finally, I think the biggest focus certainly from shareholders over recent months has been on the progress of our Implementation Agreement renegotiations in Mozambique. The Implementation Agreement, you may recall, is the agreement that covers our processing and export activities, doesn't impact on our mining at all. We had a really useful meeting in late February with the Minister for Mineral Resources and Energy, the Minister for Economy, the Head of the Tax Department and some presidential advisers. And I think that really reenergized the process following a period of less activity over year-end on the holiday period in Mozambique.

At that meeting, we vow to each other to do everything we could to get the agreement renewal agreed by towards the end of March. I think while we all recognize that will be a challenge, the objective was really to inject momentum proceedings. I think we succeeded in doing that. Both sides have been engaged. The engagements are constructive, and we are making progress, and we'd be hopeful that we'll see that progress realized in a near-term outcome before too long.

Now I should stress, there's no mandated time line here. We're still operating under our legacy terms while we negotiate. But certainly, there seems to be energy for this. And hopefully, we can capitalize on that to conclude the negotiations before too long.

So that's just -- there are the highlights. Maybe I'll just hand over to my colleagues now to dive a little bit deeper on some of the things that I've touched on, and I'll hand over to Ben Baxter to talk through operations.

Good afternoon, everybody. So maybe I'll just first of all start with safety and recall that we had a really good quarter. We had no lost time injuries during the quarter, and that was a good response to the end of 2024 -- 2025 when we had 2 injuries. So that we've set the year off on the right note on that front.

On mining, we were behind on the production of heavy mineral concentrate, down by 30%. And this was on the back of the lower volumes from the debottlenecking processes that took place through the quarter at WCP A. And I'll talk more about the WCP A project on the next slide.

We also saw grades starting to fall, and those grades are expected to fall as we finish the life in Namalope for WCP A and also start -- we'll be preparing ourselves into the transition to Nataka. The other element of that was that we had reduced dry mining in Q1 this year compared to Q1 last year. We are expecting to see throughputs -- sorry, grades improving and also throughputs through the rest of this quarter, and that's coming as we continue to do the debottlenecking of WCP A.

The effect of that into finished products was clear. All of the finished products of ilmenite, zircon and rutile were down relative to the HMC production as well though. And those additional reductions came as a result of some inefficiencies in the mineral separation plant. We incurred lower recoveries, and that was on the back of the fact that we had up and down feed into the plant as a result of the WCP A debottlenecking, but also we took the decision during the quarter to reprocess a former tailings stockpile. That tailings stockpile contains historical amounts of valuable heavy minerals and -- but we don't have a clear and full knowledge of the grades that enter the plant on any time.

And so hence, the plant setup was quite difficult when grades on the feed were fluctuating from day to day. The impact of all of that was more spillage. Thankfully, we were able to retain that spillage. It hasn't gone to tailings, and we will be retreating some of that spillage through the second quarter and catching up on some of those losses.

On the concentrate side, you see a significant improvement in concentrate production, up 400%, and that's because of the introduction of our new product called ZrTi. This is a product that's been introduced in the latter half of last year and we were able to make appreciable amounts during the quarter. The idea of that is that we also can improve our shipping through the rest of this year.

In addition to the reprocessing of those previous stockpiles, we were also able to dry some of the ilmenite -- sorry, some of the ZrTi, and that increases the shipping rates as well so that the material flows easily onto the conveyor and on to the ship -- through the ship loader and onto the customer vessels. That was very useful to help with the shipping rates, and that's supporting our main KPI of the year, which is to ship more than 1.1 million tonnes.

That -- and that drying process helped with one of the last shipments during the year. It's important to note that the ZrTi production that we did make was more than in the whole of last year. So this has become a meaningful part of the operating routine and will do for the rest of this year.

On shipments themselves, we were 10% down year-on-year. This is due to the balancing effect of demand and also for all of our finished product -- for particularly the ilmenite finished products, but also that the loading of ZrTi certainly at the beginning of the year was slower relative to our other products.

Nevertheless, we were successful to debottleneck -- to draw down the stocks of our finished products by about 99,000 tonnes, and that's in line with the value over volume approach where we are looking at making the right products, we're looking at converting intermediate stocks and making sure that we operate with maximum efficiency. So after all of that, we finished the end of the quarter on track to achieve the production guidance and the sales guidance or shipments guidance, should I call it, for the year.

On the next slide, we -- I'm going to just talk through the progress that we've been making on WCP A, and it's an encouraging quarter. We have all the major works complete. And the project is now essentially complete. It has transitioned to becoming an operation. And it's -- we don't have large project teams on the plant anymore. We are now fully running it with our operating crews.

The bulk of the spend is done, and we are on track to reach the nameplate capacity. We have, though, had some rectifications required along the way. However, thankfully and usefully, there are no fatal flaws in any of the process that we've been through. So we're comfortable that we are on the right journey to get to the nameplate capacity. It's just been taking a bit longer to get consistency. Those consistencies, though, are improving, and we've made some good progress through the quarter.

Firstly, improving utilizations through the solutions around dredge winch breaks that we altered the software, and we implemented cooling features to those brakes, and that's been successful and the winch breaks are no longer impacting on the utilization of the equipment. We also had an improved capacity brought to the plant by improving the tailings pump gearboxes that we now get greater throughputs out of the tailings, out of the back of the plant, and that means that that's no longer a bottleneck.

Through the -- some of you may recall that during Q4, we struggled with the outside densification of the slimes that gets produced by the plant. And this is now -- and we've had a stable quarter on that front. So we are comfortable around the densification paddock and the Tailings Storage Facility. And so that has had a good successful time.

And then lastly, during the quarter, we had a walkway turnover due to instability from the additional mass of material traveling over that walkway. And that -- those -- effects of that were rectified and those walkways are now -- have a long-term stability rectification in place. All of that's good progress, but we've been achieving more through into Q2 as well. And the dredge feed delivery has been improved on one of the dredges. And that is now in the process of being rectified on the second dredge as well. That should be completed during this month.

And then we've also been looking at how to debottleneck the amount of flow that passes from the dredge to the feed preparation part and desliming part of the new plant. This has been -- involves us building some additional equipment on the plant. It's low cost and as we've said before, is covered in the contingency of the project. And that is currently near complete at the moment. And so over the coming weeks, we expect that the debottlenecking of the plant will have been completed, and we'll be able to achieve our nameplate capacity.

And so I'm going to pass over now to Cillian to talk through the market.

Thanks, Ben. So I'm going to start with Q1, and Q1 was a bit softer for the titanium feedstock market again, really as the inventory overhang in the market continued to weigh on ilmenite pricing. As Tom mentioned earlier, this was exacerbated a bit for Kenmare as some customers were, affected by conflict in the Middle East and we saw some cancellations and postponements and that resulted in us being forced into the spot market at late notice, which probably harmed prices further. Outside of that, plus I suppose the higher freight, we haven't seen an impact from the conflict in the Middle East on underlying demand yet.

And on the other hand, what we have seen is that higher sulfur and sulfuric acid prices as a result of the war in the Middle East is supporting chloride pigment. And we've seen record chloride pigment production in China in Q1 and that alongside record titanium metal production in China in Q1, showing a recovery of demand for our products.

That, coupled with the supply curtailments that we saw in the second half of last year and unplanned ones into the first half of this year, really means that we're starting to work through the inventory overhang in the industry and seeing a tighter market. And that's flowing through to our order book for Q2. We're seeing a strong order book for our online sales and supported by both demand in the West and in China. And we're seeing that continue into Q3 at the moment with the sales that we can see.

Zircon, similar story, but a bit brighter. I think the supply curtailments have been a bit heavier on the zircon side. So while demand has been relatively steady, the reduction of supply is supporting the market. We saw it stabilize in the second half of last year towards quarter 4. And now we're seeing prices start to increase in the second quarter. And we have achieved price increases on some products. So we expect when we go to the market for all our zircon products that we'll see good traction there.

Finally, I think our new product, ZrTi was mentioned. We saw a big increase in sales in ZrTi in the first quarter, which was really encouraging to see for a new product. And that's continuing through really Q2 and through the rest of the year where we see that there is a new and really robust demand for that product. And with that, I'll probably pass back to you, Tom.

Thanks, Cillian. And look, I think this is a bit of a quick counter through what was a very interesting and active quarter for us and continues on many of the themes you've heard us speak about over recent months. But I suppose as we draw back from that, it's important to think about why we're doing what we're doing and the particular characteristics of Moma. Like Moma is a world-class asset. It's going to be around for decades and decades to come through a number of cycles. And our job is to make sure that we're positioned to navigate through those cycles with a favorable cost profile with good operational practices, and we can adapt to the ups and downs that come over that sort of period of time.

And certainly, the investment in WCP A and how it positions us for moving to Nataka is something that we're very excited about and very comfortable with. And as Ben said, the CapEx is behind us. The plant is operational. The punch list of items that we need to work through to get it up to consistently nameplate capacity is pretty much done. And I think that will see the plant well set for years and years to come.

And that will enable us to continue to generate operating cash flow to -- I suppose on those themes, some of the initiatives we spoke about in terms of reducing CapEx and managing our OpEx, I mean, we're very much on track with those initiatives in Q1 2026. We have and I see it coming through in some of the questions. We have, again, while addressing short-term issues, we have a decent position in terms of diesel stocks. We have about 90 days, albeit we are exposed to higher pricing, but we certainly have access.

And we're constantly reviewing what needs to change, what could change and how we can serve our customers better through this period of geopolitical uncertainty. But our customers are loyal. Our customers are continuing to work with us. Many of the customers we had 15 years ago are still the same customers. And even when plants change hands as they did with the customer who went into administration in Q3, even when plants change hands, we continue to work with the new owners, and we expect we will continue to work with the new owners of both those plants that have recently changed hands.

And so look, I think that's a very important characteristic of Kenmare, the stability that our contractual relationships give us and the stability that our customer relationships give us because of our long life, because of our quality. And look, I suppose while a very good partnership with our customers, we also have had for the last 20 years, a good partnership with the Mozambican government and with the population in and around the mine at Moma.

And while the Implementation Agreement has taken quite some time to get concluded, we've been reassured throughout that process that the partnership that we have is valued by the Mozambicans as well. They regard Kenmare and the President said this to me directly, Kenmare as a case study in how international investors and governments can work together in a beneficial manner. And we'd be hopeful that, that sentiment, which is easy to say, but that sentiment will be followed through on with the continued progress on the Implementation Agreement.

I think we recognize that the future has to be different to the past for Mozambique. We've made what we regard as a very fair and favorable offer. And along with that comes significant investment in the asset and in the community, which we really are anxious to embark on. So hopefully, we can get to a point where that's behind us before too long.

Happy to take any questions that people might have. And thanks for taking the time to listen to us today.

Fantastic. [Operator Instructions] I would like to remind you that recording of this presentation along with a copy of the slides and the published Q&A can be accessed by investor dashboard. And Katherine, at this point, if I may now hand over to you to chair the Q&A, and I'll pick up from Tom at the end. Thank you.

Thanks. So first question, the ongoing war is putting pressure on sulfate pigment producers' margins. How is this impacting Kenmare's pricing and volumes? And there's actually a second part to the same question, which is, chloride pigment producers seem to be relatively less affected. How is Kenmare adjusting the sales strategy in response?

Cillian, do you want to take that?

Yes, I can take that. So maybe I brushed over with that in the presentation, but it's correct in the question. The high sulfur, sulfuric acid prices are really harming sulfate pigment producers, particularly in China, but all over. And we are seeing a reaction to that. At the moment, that reaction is increasing pigment prices in China and for export. So rather than they can still get the volumes of sulfur, sulfuric acid, but they are increasing price.

And how does that affect Kenmare? Kenmare for years has been targeting the chloride pigment market more so. Our Kenmare ilmenite is very good for beneficiation, so chloride slag and synthetic rutile, which is a key feedstock into the chloride pigment market. So that is a positive for us. I think that's one of the reasons we saw record chloride pigment production in China in quarter 1. We expect that to continue. So it is boosting the demand for our products. But I think while there still is an inventory overhang, we haven't seen it come through in pricing yet.

Next question. How are you managing diesel reserves in the current environment? And there's 3 sub-questions to that. One, do you have any long-term fuel supply agreements in place? Would it be feasible to directly import diesel in collaboration with the Omani government? And is there room for a further increase in electricity usage in the MSP?

Ben, do you want to take that?

Yes. Thanks. So on the supply agreements, what we -- we do have a long-term agreement with the state fuel provider, Petromoc, and it's the situation that in Mozambique, all fuel imports come through Petromoc. On site, we operate with 2 large vessels in our fuel farm, and that's got about -- they have about 3 months of supply currently at this time.

We also operate with another 3 months of supply reserved for us in Nacala port. So that's the main way in which we are managing the fuel and how that will go forward. I'm not really aware that we have the opportunity to collaborate with the Omani government to take fuel or do an agreement with them. So I think that's something that we would take away and have a think about unless my colleagues have got a view on that.

But then maybe to answer the third part around the electricity usage in the mineral separation plant. So we have done feasibility studies for the preheating of air into our dryers, which are diesel driven, but the preheating of air to be done using electricity. So that is a project that has a decarbonization benefit for the business and would reduce diesel consumption. However, at this point in time, it has been noneconomic to deliver that project at this point.

So hasn't been pursued and is not likely to be pursued in the current quarter based on conservation of liquidity. But if the price of diesel was to increase, that business case would obviously change. So it's certainly something that is on our radar and something that we are closely watching.

Next question. Chinese artisanal miners appear to be more exposed under the current conditions. Is there any evidence of accelerated supply rationalization so far?

Maybe I'll start that, and Cillian, you can jump in. Look, I suppose the challenge with the artisanal miners that are around us in Mozambique and other territories is they're not under single ownership. They're independent entities with their own licenses and their own operating plans. I think it is fair to say, though, as the question implies that they typically don't use [Main's] electricity in the way that we do, which is renewable. They typically use diesel as their principal energy source and by consequence, will be exposed to all the movements in the diesel price over the next short while.

And I suppose the other point to emphasize is that while we export finished materials to world markets, they typically export heavy mineral concentrate that has lower levels of valuable materials plus waste matters. So effectively, per tonne of material transported, they have less value. So certainly, there are challenges here. We haven't immediately seen any impacts. But equally, these challenges from a geopolitical perspective and diesel perspective, in particular, are very recent vintage. So I think it would take a while to work through.

I mean I think in a wider sense, it's our view that at current prices, 20%, 25% of the industry cost curve is underwater, that there are a number of producers of all types not making money. And that is what's provoking some of the supply responses that Cillian spoke about. So I think pains us to say it and it's a little bit of a cliche, but the best cure for low prices is low prices.

Cillian, anything I missed there in relation to the artisanal miners?

No, I think that mostly covers it. I think it is an advantage that we are less -- use less diesel per tonne of product at the moment. And we do see that anecdotally in China. We've heard of rooftop prices, which mostly comes from Sierra Leone or concentrates containing rutile trying to push prices up. We believe that's on the back of the higher diesel costs they're incurring. So we are hearing anecdotally of that coming through, but it's nothinegative meaningful yet on the pricing.

What's roughly the anticipated impact of higher oil prices on the cash cost of production?

I can talk to that one. Hi, everyone. Look, so last year, we consumed around 18 million liters of diesel at a price of probably just short of $1 per liter. This year, with less dry mining, as Ben mentioned, we'll probably consume a bit less, so maybe around 15 million liters, thereabouts. And so look, last year, that would have made up somewhere between 7% and 8% of our operating cost base in cash terms.

And look, we would expect that diesel prices will rise. It's unclear yet to what extent that will be. But hopefully, those numbers give you something to work with in terms of what the impact might be on our overall cost base.

Next question. A few fuel distributors in Mozambique have reportedly been unable to secure inventory due to U.S. dollar liquidity constraints. Does Kenmare have alternative procurement channels to secure fuel without going through the domestic Mozambican market?

I think we've broadly covered that, I suppose, just to say that the U.S. dollar constraints don't impact on us in this particular regard in the same way as they do on others and that our relationship is directly with the state distributor. So I think we're comfortable for now with our positioning.

The question of engaging with our shareholders or others in Oman, look, I think that's -- we don't buy directly from refineries. We don't have the relevant licensing or permissions to do that. And I suspect it would take quite some time to put ourselves in a position to do that. So we'll continue to work through the channels that we're currently working through and have been for many years. And as James said, try and economize wherever we can on our usage of diesel in any event from a cost perspective.

Next question. Where can I follow live or daily prices of ilmenite and rutile? What's the best source and price link to your products?

Do you want to touch on this one, Cillian? It's a difficult question to answer.

Yes. I think, look, it's an issue with the market that is very opaque. So no one source is really that accurate in looking at Kenmare or any others. They're trying to find averages or picking a particular product at any time. But there are sources like Asian metals, which look at products into China, ferroalloy again into China less frequently, but more of a global look, people [indiscernible]. So we would be forced to use a combination of all because no one is really focusing on any singular product that's trying to take averages or trying to take one product going into a certain region. So it needs to be with an overall look at those 3 being the best.

That was the final question. Back to you, Tom.

Okay. Thank you, everybody, for taking the time to listen to us today. Hopefully, we've managed to answer your questions. If not, please feel free to get in touch. You can see the contact details there on the back slide of the presentation. Our next formal update will likely be our AGM in early May, which is normally just an update presentation plus obviously the reservations. And so thank you for taking the time, and have a good afternoon.

That's great. Thank you, Tom, and the rest of the team for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to...

Good morning, ladies and gentlemen, and welcome to the Kenmare Resources plc Investor Presentation. [Operator Instructions] Before we begin, we would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful.

And I'd now like to hand you over to the executive management team from Kenmare Resources plc. Tom, good morning, sir.

Thank you very much, Jake, and thank you all for taking the time to join us today. I'm joined by James McCullough, CFO; Ben Baxter, our COO; Cillian Murphy, our General Manager of Marketing and Katharine Sutton, our Head of IR. So hopefully, we can cover all your questions and requests today. Look, we put out our final results today. I mean, I think it's clear that from the results and the commentary that these are uncertain and volatile times in our markets and geopolitically, we're seeing some of the impacts of that.

They're reflected in the numbers and the commentary. And I suppose against that background, it is important to control what we can, and we have a very strong focus over the course of this year on our liquidity and our balance sheet. And I suppose that's because we operate in a very -- we're operating a very long-term project. The Moma mine is a world-class asset. It's got 100 years of mineral resources. While our business can be cyclical, we need to think about the long term. We think about that in terms of our investments, such as the WCP A investment that took up a lot of our attention and time in 2025, and we continue to work on in '26.

Our partnerships, such as those with our communities and the government in Mozambique, and I'll talk about our agreement with the government in Mozambique shortly and our customers and serving our customers as we move through the ups and downs of the market is very important to us. Many of our customers have been with us for 20 years plus. So all of those circumstances mean that we're important to Mozambique. We're important to our customers. We try and do business properly. We were happy to join the FTSE4Good Index in June 2025. We believe that we're an important player in the titanium minerals market.

And while -- the market for ilmenite has been weak over recent years or falling over recent years. The market for Zircon, while it fell in '25, we are seeing some signs of stabilization, and Cillian will talk a little bit about that later. And indeed, one of the industry commentators, [indiscernible] commented last week that because of some of the curtailments and management efforts that companies are putting in, there should be a supply deficit for ilmenite this year, albeit it will be met by inventories. We're 6% of global supply. We're an important player. And just a reminder that titanium is on the critical minerals list for Europe, the U.K. and the U.S. Looking back at '25, we had a very significant investment in our WCP A project, and that's reflected in our CapEx. It's reflected in our elevated net debt.

And Ben will give us an overview on recent progress on WCPA when we speak shortly. If we can move to the next slide. I talked about our position in the market. And look, I think our position in the market and our importance to Mozambique is built on a number of foundations. A good relationship with the community, which served us very well in late '24 and early '25 when there was significant disturbance in Mozambique, and it really supported our license to operate. We've invested over $25 million into the community, into health, into small business, into education, into infrastructure. And you can see that those of you who've been to Moma can see those signs on the ground. We also aim to operate safely. We had our lowest ever all injury frequency rate in 2025.

We conducted a development project over nearly 5 years without a single lost time injury, and that was a phenomenal achievement by that team, which at one point numbered over 500 people. And we're focused and the investments we're making are to ensure we can operate consistently and at a low cost for the next decades to come, and that's why we take such a long-term focus. Having said that, in the short term, day-to-day, week-to-week, year-to-year, we need to allocate our capital efficiently. And I think as you've heard us say over the course of the last number of discussions and calls, over 2025, our net debt elevated significantly following our -- due to our capital program, ilmenite pricing was a shade weaker. And as a consequence, we're very focused on managing our costs, managing our cash, managing our balance sheet.

Regrettably, we undertook a retrenchment of 15% of our colleagues at site. We highlighted in our guidance our efforts to manage our OpEx and reduce our OpEx in 2026. We're deferring where safe to do so, nonessential CapEx. Our CapEx in '26 will be 70% lower than it was in 2025. And unfortunately, it also means that we've had to pause our dividend. We regret this. We appreciate it's important for our shareholders, both institutional and retail. It's a key focus for us to restore it as soon as possible. But our first priority is to the business, to the balance sheet to stability and to try to navigate the current challenging circumstances that our markets and the wider world finds itself in.

And I think that's what caused us to make that call. And as we go through the presentation, you'll hear quite a bit about our value over volume strategy. It's already in action. We've already started selling down some of the stocks we held at year-end. We've already shipped more of our ZrTi product in the first 3 months than we did in all of last year. So we're taking the necessary self-help measures that we can to protect our business and ensure we're well positioned for any recovery. If we move to the next slide. Just to talk a little bit about the implementation agreement.

Many of you will have joined us last week when we put out an announcement about the status of the implementation agreement and in particular, a move by the tax authorities to impose a 2.5% royalty on us, prematurely in our view because we hadn't completed negotiations around the full agreement. It's worth recalling, however, that, that 2.5% is consistent with a proposal that Kenmare made last year. So this wasn't an additional cost to us, and it is accrued in our financial statements. It was more the consequences of what additional or further implementation might impose that cause us the announcement. I should say that there's been no other moves towards implementation. Discussions with the government are ongoing.

The President, indeed, both on the 2 occasions I met him last year and when he was in Brussels last week with the EU spoke positively about Kenmare, positively about our contribution to the country, positively about their intention to renew the license. And indeed, while with the EU and while facing quite direct questioning on this issue, commented that he expected the issues to be resolved soon without reference to arbitration. That would certainly be our hope, too. We've made progress since our meeting in February. We've made progress over recent weeks.

We believe both sides are still focused on a negotiated outcome. And obviously, the -- as we go through those discussions, there are some adjustments and amendments to proposals that are as are normal in an ongoing negotiation. And while we have energy and focus on it, we very much would like to conclude it because obviously, this has been going on for quite some time. And that in itself creates concern, creates uncertainty and creates challenges for all our stakeholders, whether they be shareholders, lenders or government themselves.

Look, we've talked quite a bit about what our remedies are should we not reach an agreement. Arbitration is still on the table if we can't reach agreement, but we're very much focused on avoiding that, very much focused on harnessing the energy that we've generated over the last couple of weeks and hopefully getting to an agreement, but we're still not there.

So with that, I'll hand over to James, who will run through the financial performance of '25 and some of the wider themes that will have been reflected in the numbers overnight.

Thanks, Tom, and good morning, everyone. Thanks very much for joining. Look, starting off just looking at pricing. So you'll see the sort of the downward trend in pricing of recent years continued into 2025, ilmenite pricing was down 6% on average and Zircon pricing down 15% on average, which led to a 6% reduction in our average price received was a slight improvement in product mix. We sold a little bit more Zircon last year than the year before. As that translates through to revenue, our sales volumes declined by 13% go through some of the rationale for that shortly, but that was mainly in the ilmenite space.

So we were down 17% on ilmenite volumes. Zircon, the higher-value product was roughly flat year-on-year. But the combination of those lower ilmenite sales and lower prices contributed to a 20% drop in revenue versus 2024. That feeds through then to EBITDA. And look, our unit costs increased by 11% during the year, and there was also some other sort of noncash items, provision for sales to a customer who didn't -- who was in financial distress last year and some other noncash items. And that contributed to EBITDA of $58 million in the year versus $157 million the year before. Looking and then ultimately resulting in a loss after tax of $24 million.

Looking through on CapEx, a big year for Kenmare on CapEx. So the $205 million was split between development CapEx around $156 million and sustaining at $49 million. $156 million was on the WCP A project. And the $49 million sustaining was a relatively high year for sustaining capital. That included around $8 million on dry dock of one of our transshipment vessels as well as costs related to the SMO, the selected mining operation and some electrical installations. So a reasonably big year for sustaining capital. Look, the impairment charge for the year, $301 million, just over the $300 million that we had guided back in January. This is majorly market-driven and driven by sort of weakening price outlook as we shared at the time. There's also been some adjustments to costs.

And Tom referenced some of the sort of anticipated changes in the IA terms that are reflected in that number as well. But the vast majority of that number is really related to weakening pricing expectations versus where we were last year. Net debt, look, that CapEx peak and the weak market contributes to net debt of $159 million. There was around $49 million of cash that offset around $206 million or $205 million of total debt, including accrued interest. We expect net debt probably to stay around these sorts of levels for the year, given the weak pricing outlook. we did, as disclosed previously, secure a waiver with the lender for our covenant levels, so from 2x to 3x. So we're comfortably within that level for 2025.

And as discussed in the -- or as disclosed in the statement this morning, we're in ongoing discussions with the lender group around appropriate covenant levels for 2026. I'll touch on that again shortly. As Tom mentioned, we've made the tough call to pause the dividend for 2026 or 2025 full year rather. Next slide, please. Just looking briefly at the income statement, and you can see the drop in revenue as discussed and cost of sales broadly flat. Net finance costs, I suppose, and tax are probably the key things to touch on here. The finance costs are obviously higher given the higher debt that we're carrying. And look, the tax in the income statement relates to tax that we pay at our mining company, [ KMML ] where our profits are based on a cost-plus basis. So notwithstanding the loss at the company level, there's still a tax charge at the sub level. And just the chart on the right gives some indication there of the product mix change, 2025 versus the prior year.

So you can see a slight increase in Zircon content and a decrease in ilmenite and that's what's given a little bit of support from a mix perspective. So, just a little bit deeper dive on some of the individual line items. So on the revenue side, shipments were down 13% in 2025 versus '24. The main contributors to that were the dry dock for one of our transshipment vessels, which took one of those out of action in the middle of the year. That was anticipated and weather was worse than anticipated, particularly in H1. And then we had a customer who wasn't able to take its volumes in Q4. So that all contributed to a 13% drop in shipments. As I said, that was really in the ilmenite space that we felt that. That's contributed to higher inventories. So I'll touch on that when we get to the balance sheet, but we are actively working those inventories down at the moment.

And then pricing, as I mentioned, ilmenite pricing average of $276 per tonne, so that's down 6% year-on-year and Zircon down to $1,173, down 15%. But with that slightly higher Zircon content, the average price was down 6% to $338 per tonne. Looking at the cost side. So cost of sales broadly flat, a little bit down at the top of the chart. Administration expenses were up. There's a couple of things just to note in there. One is that the charge this year for 2025 includes that provision for sales to the company that went into financial distress as well as some other noncash items. And the comparator year, the [ $6.2 million ] there was reduced by the proceeds of an insurance claim of around $3.3 million. So adjusting for those things, kind of it was broadly flat year-on-year.

Looking at the total cash operating cost line, again, pretty flat year-on-year. In terms of direct costs, we saw an increase in labor costs of around $6 million a year, driven by -- part of that was the retrenchment program that Tom mentioned, but also higher wage rates and some other factors feeding through there. That was offset largely by lower fuel costs, so lower consumption of fuel and lower fuel prices. And there were some minor adjustments in -- or minor changes year-on-year in the other areas, but broadly sort of flat in terms of direct costs. Indirect costs were up slightly. The IFZ royalty that we've been paying. So historically, that's been at 1% in 2024 rather it was at 1%. We've been accruing at 2.5% as we disclosed previously, in light of our expectation that, that is the royalty that will be applied when the IA agreement is finalized.

And that contributed around $4.9 million to indirect costs. There were some other areas of indirect costs where we managed to make some savings to keep indirect costs up around $3 million. And looking at that at a unit level, obviously, the lower production volumes, 10% lower production volumes year-on-year notwithstanding the flat cost at an absolute level led to an 11% increase at the unit cost level. And then adjusting for co-product revenue and looking at it just on an ilmenite unit cost basis, there was a larger increase, up 32%, and that's really driven by both the lower co-product pricing, but also the lower ilmenite production. So look, at the total level, we have at least addressed the rising trend of costs over recent years.

I think we've started to see some of the actions that we're taking on costs coming through, and we've guided for 2026 an approximate 10% reduction in costs. We look just at the cash bridge, really sort of seeing capital -- CapEx and dividends being funded by operating cash flow plus working capital and obviously, the debt facility that we have. And CapEx really is the main feature here, $205 million last year. Our guidance for this year in total is $60 million. So expect to see that orange bar shrinking very rapidly. That $60 million is split between kind of -- or rather development CapEx of $30 million and sustaining capital of $30 million, and that development CapEx is very much sort of front-end weighted. We've made sort of good inroads in that through Q1.

So kind of obviously continuing to focus on sustaining capital and where we can optimize that as well. End of the year, as I said earlier, with a net debt position of $159 million. If we move just on to the balance sheet. You'll see the reduction in PP&E, property, plant and equipment. That reflects the impairment, obviously, CapEx spend as well. So the CapEx additions, less depreciation, less impairment ultimately reducing or resulting in that reduction to $877 million. Inventory is very flat and inventory volumes were actually up about 20% year-on-year in terms of finished product, but the value of those tonnes was down about 20%. And so overall, a flat inventory line. Trade and receivables down considerably from last year. Again, there's kind of a portion of that that's related to price. Volumes in terms of sales included in receivables dropped from around 205,000 tonnes down to 109,000 tonnes.

So part of that is related just to lower volumes overall. And then the value of each of those tonnes dropped from sort of $455 a tonne down to $399, so resulting in that outflow from receivables. And then in the creditors and provision line, look, the increase there from 2024 is mainly related to CapEx accruals and payables. So closing cash balance of around $49 million. The net current assets piece in there is quite important, net current asset position when you take account of the receivables and the inventory, we're in a strong position from that perspective. So more than $150 million of net current assets. The covenant levels touched on that earlier. So we secured with the lender group a covenant reset for net debt to EBITDA from 2x to 3x for 2025.

And look, we're in discussions with lenders at the moment on what appropriate levels for 2026 will be. As we've said previously, we are very closely engaged with our lenders. They have been very constructive and supportive to date, and we have no reason to think that's going to change. But with the uncertainties that Tom referenced in terms of what's happening with the IA as well as what's happening in the market, it does lead to some uncertainties in terms of the financial projections for the business over the course of the next 12 months. We don't know yet to what extent the terms of the internal resolution will be imposed. And depending on whether there is any further imposition of that, that could have an impact on our financial position during the year. That's reflected in our going concern statement, which is included in the release, the prelims released today.

The going concern statement reflects that through a statement of material uncertainty, which is really recognizing what we, as management has disclosed and the auditor understanding that to say that subject to the outcome of those discussions on the IA, as well as other general risks around market and geopolitics, et cetera, that we're facing and other companies are facing, subject to successful outcomes on these things and the going concern statement is signed off. Moving on just to the final slide in that pack. The -- look, Tom has already referenced the pause in the dividend, a very sort of tough decision to cut the dividend, not taken lightly. Obviously, in the context of the levers that we have to manage liquidity, this is one. We pulled many, and we pulled this one reluctantly. We do have confidence in the long-term cash-generating capability of the business. And as Tom says, we'll look to resume that as and when we can do so.

I'll pass back over to Ben.

Good morning, everybody. I'm going to take us through the operations update, and I'll start off with explaining some of the meaningful achievements that we had during the year around sustainability. Firstly, on health and safety, it was a very good year. Overall, we've reduced our lost time injury frequency rate by 30% over the past 3 years. And in fact, in 2025, this was our best ever year around all injury frequency rates. And as Tom referenced, that is remarkable, particularly in light of the fact that we had a development project with more than 500 contractor workers on site at one point, and that whole project was delivered without any lost time injuries.

On communities, we have now 80% completed the development of a hospital, a regional hospital to support the clinics, which we have 3 clinics that we have in and around the mining areas. And we're also now seeing the benefits of the Titan -- the Topuito Technical College, which is now delivering graduates that are available for recruitment into the business. On the environment side, a major initiative for the year was to focus on recycling and composting and more than 60% of the waste that we generate at the mine was recycled. This is expected to continue to improve through 2026. And that's giving us a lot of advantages, not only from an environmental perspective, but also the capital profile means that we don't -- we will not need to extend our landfills in the years to come.

Organic waste is being successfully taken through to the rehabilitation process as well. We remain a trusted business in Mozambique. We have, again, remained the most transparent extractive industry in Mozambique and also we entered the FTSE4Good Index in June of last year. Moving on to the production side. 2025 was largely impacted by the WCP A upgrade, and that meant that HMC production was 15% down year-on-year due to the lower mining rates. The good side of the mining side was that we introduced the selective mining operation, and that was commissioned through the first half of the year and delivered very well in the second half of the year and met its 50,000 tonne heavy mineral concentrate [ call ]. And we see that positively and developing SMOs this year for the future as well.

On to finished products. The ilmenite and Rutile were impacted particularly by the heavy mineral concentrate production being down, and we achieved a revised guidance level on those products. However, on Zircon, we were able to maintain our original guidance level, and this came because of very good recoveries in the mineral separation plant as well as the drawdown of some intermediate stocks. And then particularly on good news around guidance was that we materially exceeded the guidance on concentrates after we successfully introduced a new product called ZrTi into our sales mix.

And this material has been well received by the market, and I'll talk some more about that in a few moments. The ability to draw more from the HMC that we had and the stockpiles meant that whilst the HMC process was 16% down, the actual finished products was only 10% down year-on-year. If we look at shipments, as James mentioned, we were 13% down year-on-year due to poor weather conditions in the first half of the year. And then our Peg transshipment vessel was required to go for its 5-yearly classification recertification process in the dry dock, and that took place between June and September.

This meant that we had finished product stocks rising in the second half of the year, and that means that we start this year with a guidance level of exceeding more than 1.1 million tonnes of shipping, which was a 15% increase expected this year compared to last. Maybe to discuss a little bit of the year-to-date 2026 performance and our value over volume strategy is being prioritized. The first area of that is the destocking of the finished products that we have. And year-to-date, our shipping is consistent with that run rate of 1.1 million tonnes. And so we are unlocking the value of those finished product stockpiles. Some customers, though, are struggling to coordinate both their shipments due to the market or to the geopolitical volatility that we're experiencing.

And this is where the flexibility of ZrTi is helping us we're able to sell more of that material and offset the effect of the -- of that volatility. And in fact, as Tom mentioned, our ZrTi sales so far this year are in excess of all of what we did last year in 2025. The other aspect of value over volume is around focusing on the product mix to extract the higher-value products. And with production being lower due to the WCP A commissioning process and at a time when ilmenite markets are weak, we've been focusing on getting the most zircon products out that we can. This is helping us to offset that weaker ilmenite pricing environment. And so during the year -- so far this year, we've been reprocessing former tailings and intermediate stocks to increase the high-value, high-margin Zircon products.

On the ilmenite side of the business, we have spare capacity. And so we've been using that time in the ilmenite circuits to dry ZrTi. This means -- this allows us to ship more of it because the loading rates traditionally so far with ZrTi have been slower than on other products because the material is stored outside and is moist. By drying it, we can get the efficiencies up and get more ZrTi transhipped. And that means that overall, we're on track to achieve our 2026 guidance on all of the metrics. I'll move now on to the capital projects update, and that's on Slide 20. And really, the year has been -- was about WCP A upgrade. And right now, we're focused on consistent delivery at WCP A. You'll recall that the majority of the plant at WCP A has been replaced. And so we have new high-capacity dredges, a new feed preparation unit, including desliming and the tail storage facility that's fully in place.

And all the major construction and installation work is now complete and is fully handed over to the operations team. This means that now what's happened over the -- since that commissioning started in Q4 last year, we have experienced some commissioning challenges, and that took place last year, and we've had some that rolled off into the first quarter of this year. However, what we can say now is that WCP A is regularly operating at the nameplate of 3,500 tonnes an hour. There have been a set of low-cost rectifications completed using the budget, the existing budget for the project and the contingencies therein.

And we now expect to see consistency in the short term. Things that have been taking place are around Winch brakes. We've had software changes, cooling improvements. We've done pumping improvements, both in the desliming circuit, which will be taking effect at the next planned maintenance in April. And on the tailings side, pump upgrades of gearboxes, particularly to increase the capacity of removing the tails to the tail storage facilities and of course, tail features. On the outside, the densification challenges that we had previously discussed have been resolved, and we've had a stable outside slimes management situation throughout Q1 with no impact on production.

We did have a walkway event during the first quarter of this year, where we lost some production time due to the turning of one of the walkways. This -- this work, we decided to do some long-term fixes on that rather than a temporary fix. And so we did lose some production time, but the stability of those ways has now been rectified and that sets us up well for the future. On to Slide 21 and to look at the project costings. The project is materially derisked now. And yes, we spent more than 80% of the project capital during 2025. The budget remains $341 million, and we're inside of that with unallocated contingency.

And as I said, all of the rectification measures that have been undertaken through this commissioning process have been captured within that capital cost estimate. By the end of the year 2025, we'd spent $270 million cash with $12 million incurred. And that $12 million is included in the $30 million that we expect to spend in 2026. The tail of the project is in total is $70 million. So $30 million of that this year, $40 million of it thereafter. And it's quite a tail because it reflects the fact that we will only purchase the infrastructure requirements for Nataka ore body at the time when we need them down the track. And so this tail is quite long.

As I said before, though, the project is fully -- the project team is fully demobilized -- all the further works will be handled internally by our in-house projects team. And so the main project is essentially now being closed and it's being closed on budget. The effect overall on CapEx, as you see, as we come off that large spend of last year, it was $205 million all in, including sustaining CapEx last year. So $205 million is being reduced to $60 million this year. And so you'll see that the intensity of our capital spend is significantly rolling off.

And with that, I'm going to pass over to Cillian, who's going to give us the market update.

Thanks, Ben. Good morning, everyone. So I'll start on Slide 23. And look, what you can see clearly is that 2025 was a challenging year in our product markets. While demand for Kenmare's products and our volumes remain relatively robust, the overall market did weaken really for a combination of reasons. On the demand side, we saw slow markets -- slow housing markets in really major economies and no recovery there. And on the supply side, we saw the continued growth of concentrates and supply in China domestic material, which led to an oversupply, particularly on ilmenite, but across all the markets.

This flowed through to a 6% decrease in our average price received that you can see in the graph on the top left. Through 2025 and really in the second half of 2025, we started to see a supply response, and this has had an initial impact on zircon. So towards the end of the year, we did see zircon prices stabling and I'll talk more towards what we're seeing in early '26 on that one. I think James touched on one of our customers entering financial distress. So I think on a positive note, we have seen good progress towards recovering some of the value. We had 2 shipments outstanding, but the shipments hadn't been touched and we retained title.

So we've now, I think, received payment for one of those shipments, which for a value of $4.6 million, and we're in the process of arranging to retake control of the second stockpile, which again has not been touched. Move to Slide 20 -- Slide 24, please. So just going a bit more into the detail of what we saw in 2025, particularly in the ilmenite market. It was a continuation of the shift we see towards China in our markets, both on the supply and on the demand side. So on the supply side, we're seeing it in 2 places. We're seeing concentrates produced in Africa, Australia shipped into China for -- to produce finished products there. And we're also seeing ilmenite produced out of iron ore mines in China, both growing and both remaining mostly captive in China, but impacting the global market. So we're seeing strong growth there. I think on a positive side, we have seen a response from the Western producers. I mentioned on the Zircon, but all of those mines carry with it ilmenite as well and Kenmare is doing similar, too.

And then we've seen unplanned curtailments to as a result of a couple of disruptions to operations, and that is having an impact on the market. On the demand side, I suppose the structural shifts, really, you can see it in the graph on the bottom right. pigment growth in China is the pigment production growth in China is the green columns, and it's growing significantly faster or it's growing and the orange is depleting. So we're seeing that shift towards China. And when we look at where the new capacity is still being built, it's still in China at the moment. So we expect that to continue. But that's not necessarily a negative thing because chloride is taking larger market share there and that domestic ilmenite can't be used there. So it's a big market for Kenmare and chloride is taking a bigger market share, which is a positive for Kenmare.

Finally, if we look to '25 and an outlook for the year 2026. I think the market has started the year on a soft footing, and we expect, I think, prices in '26 to be lower than '25, particularly on the ilmenite side. And we've seen that in Q1, a significant decrease compared to what we saw in the second half of last year. That's partially a result of cancellations or postponements to shipments that we saw in the first quarter, which resulted in us having to go to the spot market with late notice and therefore, didn't achieve the same prices we were expecting.

Despite that, we did find markets for that. We continue to see strong demand for our products. And I think the 2 graphs show why chloride pigment continues to grow. Last year was a record, and we've seen more capacity being added already this year. And titanium metals continues to be a strong part where we actually grew our sales there on a percentage basis despite slight pullback in overall demand there last year, and we see that continuing this year, too. On the Zircon, I think we are starting to see the impact of, I think, controlled responses from producers and outages as a result of production issues. We have seen the prices stabilize since the second half of last year, particularly Q4.

And now we are seeing price increases announced in Q2 for our Zircon products. We've already agreed a price increase on one of our products for Q2. So that's a more positive outlook there. Finally, to touch on ZrTi, I think Ben mentioned it, we are seeing a strong market for that. In Q1, we sold more than we sold full year last year, and we are seeing strong inquiries for Q2 already. This is linked to the high TiO2 ilmenite that's contained in it, but also the rare earths that are contained in that product as well. So that's leading to, I think an encouraging outlook for that product. With that, I'll pass it back to you, Tom Hick.

Thanks very much, Cillian. And maybe just to summarize quickly, I mean, obviously, we've gone through quite a lot of detail today and kind of highlighted the actions we're taking to address where the market is now and position ourselves for the future. Our guidance reflects that, too. As James Cillian said, we're on track from -- in our shipments in the first quarter to achieve the guidance level. We're working hard to control our operating costs and manage our day-to-day exposures and optimize our balance sheet.

We're seeing some positive developments around ZrTi demand, which I think we kind of anticipated last year, and we're already seeing it in Q1 this year. And Cillian just touched on where the zircon market is early days, but certainly some green shoots there, too. If we move to the next slide. I mean, I probably talked to this at the outset, but it bears repeating. Like many in the industry, Kenmare is taking all the self-help measures that it can to ensure that it retains financial flexibility that it retains a strong balance sheet, that it achieves its objectives to sell down inventory, that it keeps positive customer demand. and relationships and that it can adjust to whatever the recent volatility throws at us.

For example, we have one customer in the Middle East who has challenges accessing their port at the moment. We'd like to make sure we can supply them, and we'll try and be flexible to ensure we do that. But there probably will be 1 or 2 surprises arising from the current geopolitical uncertainty, and we're trying to position ourselves to adapt to that. Reducing operating costs. We're managing our CapEx. We regrettably undertook a retrenchment and equally regrettably have had to suspend the dividend, albeit hopefully not for too long. We're working very hard to make sure that we can operate -- that we're operating in a stable manner, in an orderly fashion and making the best use of the resources that we have. And I suppose why are we doing that? If we go to the next slide, because we've got a world-class asset. We've got something that's going to be here producing into the global TiO2 market for decades to come.

And our investments are intended to support Kenmare to do that. Our investments are intended to support Kenmare to do it in a cost-effective manner. And while the best cure for low prices is low prices, we are seeing -- starting to see some producer stress. We are seeing some curtailments, some voluntary, some unfortunately involuntary. And hopefully, we'll start to see the effects of all that pain reflected in a more stable market before too long. Gratifyingly, our customer base has stayed stable.

The demand for our product is strong because of the quality and diversity of them. And Cillian and his team are working hard to make sure that we're taking advantage of all the shipping opportunities that are available to sell down our stocks. We're working hard with our local community to maintain our license to operate, and I think that's been one of the things that distinguishes Kenmare. And as we have been for quite some time, we're working with the government to try and ensure a positive and negotiated outcome to the implementation agreement. Just to stress that while we have had some announcements on that in recent weeks, and we are making some progress, there is no firm time line for that. So we can't give a specific time line, but we do hope like the President that we can do it quite soon.

So with that, we will turn over to Q&A. Katharine will run us through the Q&A, and thanks for your time and attention.

[Operator Instructions]

I just like to remind you that a recording of this presentation, along with a copy of the slides and published Q&A can be accessed via your investor do. As you can see, guys, we have received a number of questions throughout your presentation, and thank you to all of those on the call for taking the time to submit their questions. But Katharine, at this stage, if I may just hand over to you to chair the Q&A with the team. And if I pick up from you at the end, that would be great. Thank you.

Thanks, Jake. So the first question comes from Colin Grant of Davy. What percentage of global ilmenite production has now come off stream following production cuts and other issues experienced by producers? And how do you expect this to evolve in 2026?

Think maybe, Cillian, if you want to talk to what you're seeing in the market in terms of reactions or behaviors to manage production, and we can take it from there.

Yes. Thanks, Colin. I think probably at the moment, it's somewhere in the 5% to 10% range. That has come off and we're towards the upper end of that. And look, I don't think we see any of that supply coming back on in the short term. So we don't think the full impact has come through yet. We don't think the market has fully accepted all of the recent issues either. So we do think that is going to really firm up the market because it's a lot of supply coming out, and we'll see that develop through 2026. And that's, I suppose, aligned with what we're seeing in Zircon.

Next question also from Colin Grant of Davy. What do you believe is the cash flow breakeven ilmenite price for the market in aggregate today? And how has this grown over the last several years given inflation?

James, do you want to chat through that? I mean it's obviously a movable feast, and it depends on the actions of others as much as ours, but it's probably worth just talking through what we've done.

Well, so I think the question specifically is around what's the breakeven price for the market. And North of here, I think Colin would be clear based on the amount of capacity that we're seeing coming out of the market. Look, I know TZMI is sort of the author of record in this space. I think their latest cost curve, which is based on 2024, which show the sort of the last 20% of that being up north of [ $250 ] per tonne certainly. And if I look at that cost curve, and again, this is based on old prices or old costs rather, which have probably gone up. Certainly, a good chunk of the market would be underwater at the moment. How has that gone over recent years? I think it's -- I think the cost curve has steepened a bit. And if I look back over historical versions of that, the right-hand, 20% of the cost curve probably still in that range of high 200s into low 300s. But more in the middle of the cost curve, probably increasing as well to get an overall steeper cost curve and reflecting, I suppose, just cost escalations.

We now have a few questions from Richard Hatch of Berenberg. First question, you could have paid a very modest dividend rather than fully halting dividends. Are you paying dividends under your debt covenants or other covenants?

Maybe it's a big step to pause the dividend. I think we do have distributable reserves. So technically, it would be possible for us to pay a dividend, but I think we're very conscious that with the level of uncertainty out there at the moment around market pricing, around the implementation agreement, albeit we're making progress and around what the impacts of the current geopolitical environment are and for how long we might be feeling them, we felt that it was necessary for us to be pulling every lever to preserve cash and to manage our liquidity.

And so the -- and look, to be frank, we're also, as James will run through, we're talking very regularly to our lenders about what the best path forward is. We got a covenant waiver for 2025. And certainly, their opinions are important to us for 2026 as well. What I'll say on before handing over to James is we do want to resume dividends as soon as possible. It has been something that we've been very committed to and very proud of in the last 5 or 6 years. So this is -- while we recognize it's a big decision, it is one we took with reluctance.

Yes. Thanks, Tom. Richard. Yes, I think Tom has covered most of it. Look, the very specific answer to your specific question is, yes, there are distribution covenants within the RCF that we have. And like all parts of an agreement, they're subject to discussion and subject to waivers and consents and that sort of thing. So it's not as black and white as just it's written down, so it can't happen. But I think in the context of where we are with already having had covenant relaxation into the year-end and all the other levers that Tom has talked about, I think it was prudent to take this approach.

Next question from Richard Hatch. I back out a concentrate price of around $230 a tonne. Is that a fair assumption to use for 2026?

Cillian, do you want to touch on that?

Not sure I fully understand the question. If that's a question towards what price you think the concentrate producers are shipping to China or...

Our concentrate revenues as a whole, I think it's less.

Okay. So when we talk about concentrate, so there are a few different things in there. ZrTi will become dominant just purely because of the volumes of it. So I think that would be in the right ballpark for ZrTi, but the other -- those 2 concentrate products we produce will be higher than that.

Next question from Richard Hatch. Can you comment on the scale of artisanal mining by Moma and how this is impacting the broader market?

Maybe I'll start that and Cillian, you can jump in because the impact of concentrate mining in Mozambique and elsewhere is something that we spent a lot of time looking at. Those of you who visited site in recent years or indeed in recent weeks will have just seen with your own eyes the many plants that are there. And we know that the aggregate concentrate production in Mozambique is equal to or potentially marginally even ahead of what Kenmare are doing. I think the point is more the trends of that production and what type of ore they can mine and by consequence, how long that production will stay on for. Cillian, anything else you want to add?

No, I think you're exactly right on scale. I think when we look at last year, Mozambique as a whole in terms of finished TM product, it was probably very similar to Kenmare and how it's impacting on the market. It's because there's no MSPs with their operations, it's all in China. It's all in the spot market and it's sitting there. So that's what I suppose is weighing particularly on price at the moment. So they do have an outweighted impact on the pricing in the market at the moment.

Next question from Richard Hatch. Slide 13 says $10 million of PP&E accruals for 2025. So is cash CapEx for 2026, $70 million, $60 million plus $10 million?

Again, Richard, No. So the guidance on debt CapEx of $30 million includes the rollover of actually $12 million from 2025. So the new spend to be incurred is closer to $20 million on the DevEx side. Sustaining capital of $30 million, so total cash capital guidance of $60 million for the year.

Can you guide us on the cost of your covenant amendment, i.e., the fee you have to pay to your lenders?

Yes. So look, we've had one covenant amendment so far, and there's been no fee. And the lenders, while we do get on well with them and are very constructive, they do take their pound of flesh. We pay them a not insignificant amount in terms of interest and other fees. But remains to be seen as we continue the discussions over the course of this year, what that might come out at. But to date, it's been immaterial.

Next question from Richard Hatch. Can you give a steer on year-to-date moves down in ilmenite prices and what kind of price increase you're expecting in Zircon in Q2?

Yes. So I don't think we can fully guide on the ilmenite price, but I think it's linked to the last question I answered on concentrate and the fact that we've had those cancellations and postponements of shipments has led us more into that spot market. That spot market is at lower price than -- I suppose that spot market in China is at lower prices than the Western market. So it's kind of the double effect there. But there would be a bigger move than we would have seen from H2 to H1 last year with some context. And then on Zircon, there's price increase announcements being put out in the range of 5% to 10%, but we see different in different markets, but closer to the 5% range.

Final question from Richard Hatch now. What is your understanding of global stock/inventories of ilmenite?

Yes [indiscernible] I think I talked exactly about that last week.

Yes. I think we don't think ilmenite inventories are high throughout the world as a whole, but they are -- there are stocks of either HMC or ilmenite in China, I think, would be where we could see some stocks. And when you look at the impact of the reductions in supply, whether intentional or not, we think that would -- like I suppose, [indiscernible] might talk to it and we would agree that it would take down the majority of those stocks through the year. So we don't see it with a lot of our customers, but where we do see it, we think it will come down significantly as a result of these stoppages this year.

Next question. What is the outlook for the pricing of ilmenite over the next 1 to 5 years?

Yes. I can start that and maybe Tom jump in when you add. But I think we said '26, we expect to be lower. I think maybe to the question James answered earlier about costs, we think a large portion, 25%, 30% of the market of the supply in the market is at or below cost at the moment, which we don't think is sustainable. So we don't see the current prices as sustainable. And as a result, we are seeing a supply response at the moment. I think that points really to that. So we would expect to see improvement in prices as a result of that.

And then on the demand side, I think we do expect to see a demand pull. We haven't seen growth from the major economies, major housing markets in 4, 5 years at this stage. We don't think that can continue for the next 1 to 5 years in that period. And India continues to be a strong growth market. Metal continues to be a really good market for Kenmare, but also for the market as a whole. It's growing very strongly. So we do see reasons for demand pull. We don't think supply can continue at these levels. So we would expect to see prices increase following, I think, a weaker '26.

Yes. Maybe the only thing I'd add to that, thank you, Cillian, is if prices are too low for existing producers, then they're certainly too low for new projects as well. I mean we're nowhere near incentive pricing for new projects. So the prospect of material incremental supply from non-Chinese projects is certainly likely lessened. And look at one point we perhaps didn't make earlier on the artisanal mining in response to Richard's question is, it's very clear from the nature of the equipment and the nature of the processes that they use that they can only mine the simplest, least complicated free flowing sands, which is not every ore body. And at some point, I don't think it will fall off a cliff, but I think at some point, that production will top out, start to stabilize and fall as those simple ore bodies are exhausted.

Next question. In the event that there is a need to go to arbitration, how long will that process take? And is the arbitration immediately binding? Or is there an appeal process? In essence, in a worst-case scenario, over what period of time could the uncertainty over the implementation agreement continue until the final resolution is reached?

Thanks. I'll take that. Look, if there is an ETO arbitration, as we said, we hope there isn't, but we have to be open to the possibility. The arbitration process itself could take up to 2 years. It would take a couple of months to constitute the arbitral panel. And at that point in time, we could apply for what's called interim measures, which effectively, if granted, would bring us back to the status quo of operating under the old terms, and that would be our application. And then you would go through the arbitral process in the normal course. And look, we think this will be a conventional commercial dispute. We certainly at no point in any of our discussions with the Mozambican authorities would have we discussed anything other than continuing to operate in the normal course.

So when we get to the arbitral outcome, the parties have agreed that arbitration is the route that they will use for dispute settlement that arbitration will be in Washington under ICSID rules and the outcomes will be binding. And so obviously, we believe because of what our agreement says that we have a very strong right to renewal on the same terms. We voluntarily offered significantly better terms. We believe the government is aware of that position, and we're hopeful that arbitration is a consideration, but no more than that. But that's likely what would happen if we do have to go that route.

Next question. You say ZrTi is higher value and you imply those concentrates contain REEs, rare earth elements. Is that true? And is that rare earth element monazite?

Cillian, do you want to touch on that?

Yes. So on the monazite, yes, it is true. So this product contains small amounts of monazite. It's a low concentration, but we get value for it. And monazite is about 60% rare earth elements contained within the monazite. So you separate out that monazite, leach it and then you get your rare earth concentrates effectively. So ZrTi is sold gaining value from those rare earths. But just to say, it's not higher value. It's not a higher-priced product just to correct that.

Yes. But maybe the thing to say is it's a value to us because previously, it was a waste stream, which we didn't sell at all generate revenue from and have to incur cost to dispose of. So that's probably what we talk about as high value. It's margin enhancement that we haven't previously pursued.

That was the final question. So handing back to you, Tom.

Thanks very much, everybody. Thanks for your time. We appreciate it's been quite a long call. If you have any follow-up questions, please feel free to contact the team. We will be doing our Q1 production update mid- to late April and look forward to seeing many of you over the coming days as part of our road show. If anybody would like a meeting, please reach out. But thank you, and good day to everyone.

Perfect, guys. That's great. And thank you for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback. On behalf of the management team of Kenmare Resources plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.

Good afternoon, ladies and gentlemen, and welcome to the Kenmare Resources plc Investor Presentation. [Operator Instructions] Before we begin, we would like to submit the following poll. If you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from Kenmare Resources plc. Tom, good afternoon, sir.

Thank you very much, and thank you all for joining us today, taking time out from watching Donald Trump and Davos. I didn't think I'd be clashing with him, but I am glad to draw some sort of an audience at least. So hopefully, we can give you a good update on our Q4 performance and 2026 guidance that we released this morning.

Just as a quick reminder, and I'd encourage you to read the disclaimer that is included in the presentation. But just as a quick reminder of who Kenmare is and what we do, Kenmare is the owner and operator of the Moma Titanium Minerals Mine in Mozambique. We've been in Mozambique for nearly 40 years. We've been producing in Moma for just over 18 years. And Moma is a unique resource. We have close to 100 years of mineral resources at the current production rate.

So when we make investments, when we think about the business, we always think about it with the long term. And I suppose if you're thinking about the long term, you have to be thinking about the communities and stakeholders that are around your mine and make sure that they respect you as a good neighbor, a good corporate citizen and somebody who attempts to leave a better environment and a better economy than you discovered a number of years ago.

And certainly, Kenmare makes a very significant contribution to the local and national economy in Mozambique, and we're about 6% of Mozambique's GDP and the biggest employer in the Nampula province where we work.

And that plus our low carbon footprint and strong attention to sustainability means that we became a constituent of the FTSE4Good Index last year, which I think was very pleasing for us. And it's, I suppose, part of the foundation of our long-term tenure in Mozambique. And many of you may know that we've been working with the Mozambican government to extend one of our most important agreements, the Implementation Agreement over the course of 2025. And hopefully, we'll get that done in 2026.

From the Momo mine, we produce titanium minerals, ilmenite and rutile, which are key materials in the manufacture of paints, paper, plastic and titanium metal. We're the biggest vendor of ilmenite in the world into open markets, and we're about 6% of global supply. And I suppose as we hear a lot about rare earths critical minerals, titanium is on the critical minerals for Europe, the U.K. and the U.S. I think that is very good for us in the long term.

I think in the more recent short term, the market into which we sell our products has been a little weaker over recent years than it was post COVID in '21 and '22, and that creates challenges for us and other producers. And today's announcement is very much about how we're reacting to those challenges and adjusting our business to reflect a lower pricing environment.

Finally, with a long-term asset such as Moma, you need significant investment to operate it effectively and efficiently. And 2025 for us has been very much about a significant capital program to upgrade our largest producing plant, our largest operating plant WCP A to move to a new ore body called Nataka.

Ben will talk later about Nataka. It's over 70% of our reserves. In essence, it's the future of the company. So we're investing to make sure that we can operate efficiently and profitably there for many years to come.

We move on to the next slide now, please. So Kenmare's position in the market is based on a very clear strategy and a strategy that, first of all, makes responsible operation and a committed and capable workforce as a firm plank of it.

And keeping that workforce safe is very important to us. We've had one of our best years ever for safety. It's a big emphasis for us, not just in operations, but in the development project where we undertook most of our capital investment last year. 97% of our staff are Mozambican. And we only had 3 lost time injuries last year, of which 2 were comparatively minor.

Aside from our own staff, as I mentioned, the community is important to us, and we've invested north of $23 million into community -- excuse me, $25 million into community initiatives since 2004, economic development, health, sanitation, infrastructure. All of these elements are -- and the environment, of course, are all important to us to gaining the respect, trust and support of the local community for our work.

We're very much focused on maintaining a low-cost industry position, being successful in maintaining our operations profitably even in the down parts of the cycle for the products we produce. And of course, over almost 100-year life, we'll see a number of those cycles. So being effective and efficient and having the playbooks to work our way through those cycles is important for us.

And I think one of the things we talked about in today's release is how we're changing our approach a little bit in 2026, not so much focusing on just production as we would have in previous years and setting targets for production, but setting really targets for shipments, sales, revenue, cash, the things that will effectively maintain the business and allow us to maintain our investments.

And of course, making investments, making efficient investments, utilizing our cash flows always and providing returns to shareholders, that's really what we're about. Kenmare has returned nearly $300 million or over $300 million to shareholders since 2019. And over the next 5, 10 years, we expect to return a lot more. But of course, when prices are lower, dividends will naturally be lower, too. And we'll need to just pay careful attention to our tax -- our cash positions in 2026.

So with that, I'll move on to the next slide, if you don't mind. I've talked a little bit about our sustainability goals, I've talked a lot about how important our workforce is to us. We spent a lot of time over the last couple of years on an initiative called Trabalho Seguro, which came literally from the shop floor or the plant floor in Moma.

It's a greeting. It's a wish for safe work. It's a way to support your colleagues, and it's been very, very successful with our lowest ever all injury frequency rate in 2025. And with the 97% Mozambican population, we try and -- our Mozambican workforce, we try and recruit as many people as possible from the region or the nation, and that will continue.

KMAD, I touched on a little bit earlier. We consistently invest on in livelihoods, healthcare. Our most recent projects are a new district hospital, nearly 80% complete. And a lot of work goes into ensuring that the students coming out of the local schools and technical colleges will now or in later be suitable for employment by KMAD. So that's a big investment for us.

On a day-to-day basis, making sure that we manage our waste properly, that we respect the local environment, recycle as much as we can. A big source of success in '26 -- '25, we're now over 60% of waste recycling, a big uptick and means that the existing landfill we have will last much longer.

And being a trusted business in the community is very important to us. We consistently won for each of the last 5 years, the prize for most transparent company in Mozambique. When I met the President twice in 2025, he commended Kenmare on its social programs, its commitment to transparency and the quality of the jobs that it creates. And I think they are the foundations of what we do and hopefully will continue to do.

So with that, I'll now hand over to Ben, who will talk a little bit more through the day-to-day operations and capital projects that we undertook in '25.

Thanks, Tom. Let me first start by giving an introduction to the Kenmare's operations. We are a low-cost bulk mining operation, and we're mining up to [ 50 ] million tonnes per annum of materials. We've been operating, as Tom said, since 2007 and so far have made more than 15 million tonnes of final products.

The plants that we operate are dredge mining operations. And each of the 3 units that we have are 3 ponds that we have, have floating Wet Concentrator Plants. These are cost efficient because we literally put the processing operations right next to the mine as opposed to having to transport ore for long distances. We also have a Selective Mining Operation, which is a new unit that was commissioned in 2025 and successfully delivered its expected production during the year.

The concentrates that the mines produce are transported to a mineral separation plant, and that's a place where a factory environment where we separate ilmenite, rutile and zircon and a monazite concentrate. And that's all done with physical separation methods and no chemicals.

In terms of then those products, they are then transported. The mine is adjacent to the coast. So we have a short conveyor routing to our own jetty and then we transship on to customer vessels parked right off the coast line of the mine.

In terms of our environmental impact, we have -- most of our electricity is coming from hydroelectricity from the Cahora Bassa Dam. And we operate -- because the mine is a moving mine, moving laterally, we're constantly rehabilitating the ground that has already been mined. And last year, planted more than 200,000 trees as part of that rehabilitation process. And as I said, there are no toxic chemicals used in the mining or processing of the minerals that we produce.

Moving to the next slide, maybe to talk a little bit more now about the 2025 production performance. The mine was impacted by the delivery of the WCP A upgrade, which Tom alluded to earlier on. This caused us to be 15% down year-on-year on our heavy mineral concentrate production.

And that was a conscious decision was made not to try and counter the shortfalls by mining using higher-cost supplementary mining operations. That meant that shortfall in heavy mineral concentrate rolled into a roughly equivalent shortfall in ilmenite production, although the ilmenite production, we did attain our revised guidance.

The good news I'd say about our production was that we saw a significant improvement in the zircon production, and we were able to achieve our original guidance level by the processing of some intermediate stockpiles and also materially better recoveries that were seen in the mineral separation plant during the year.

And then on the concentrate side of things, we particularly beat our original guidance very much significantly due to the fact that we were able to produce a new product called ZrTi. This is a product that is made up of previous stockpiles of material that were previously not valuable. We retained them available and have translated those into production. And we now have a new product that we are able to sell, and that will be continuing into 2026 and beyond.

In terms of shipments, we were down on shipments largely due to poor weather in the first half of the year. And then one of our transshipment vessels was on its 5-yearly compulsory dry docking during the second half of the year. That meant that we were down on overall shipping. That's a major focus for us going forward into 2026, and we're expecting to produce -- or to ship, should I say, more than 15% increase on 2025 in the current year, and that's largely because we have both the vessels available this year.

On to the next slide, please. So Tom discussed that we've been doing our WCP A upgrade project. And the idea of this project is to secure the long-term future of the business. Our largest plant, WCP A, has been pretty much renewed, and we're matching the largest plant with the largest ore body of the future.

This ore body represents more than 70% of the mineral resources that the mine has, and we expect that this new mine to operate for -- in excess of 20 years with this equipment that we've just -- we're in the process of implementing.

The cost of that project is $341 million. And by the end of the year, it was more than 80% spent and the project is now essentially derisked. We are now in the commissioning process. The new equipment comprises 2 new dredges, you can see in the photograph there. Also a new slimes handling facility, which is parked just behind the dredges there. And then on a future photograph in this presentation, you'll see the tailings storage facility, which is the way that we will manage our long-term slimes handling.

On to the next slide. Just to walk through the commissioning, the -- all of the major construction is now complete. The installation is done, and the plant is in use. We're going through the final stages of the commissioning and ramp-up, and the operation has been handed over to the operations team to run.

The progress has been positive. It has been slightly later. Some parts took longer than we anticipated to do. But the remedial measures that we discussed in announcements during Q4 have been working well, such as the tails handling facility and the new tail storage facility. That's now working according to expectations. And the dredge solutions that we've come up with are not impacting our ability to produce.

Additional debottlenecking is still required, however, and process optimizations are underway. We expect those to continue through Q1. We are busy implementing low-cost solutions to some of the things that we've found as we've put the -- each part of the new operation together. The integration of that has revealed that there are some improvements required, and we expect those improvements to be completed during the current quarter.

And so with that, I'm going to pass over and Tom is going to take the marketing presentation.

Thanks very much, Ben. So as you can see, a lot of work going on in Momo over 2025 and on into 2026 to prepare ourselves for our long-term future. And I suppose we've got a long-term future selling products that are in daily use worldwide and very correlated to global economic growth.

I touched earlier on our markets, which have been weaker in 2025 than in previous years. I'd like to draw quite a distinction between demand and supply. Certainly, from Kenmare's perspective and even globally, demand for all the products was stable. And we could certainly sell as much as we produce and maybe even more. We completely sold out indeed of zircon and rutile towards the end of the year, and I'll talk a little bit about those later on.

But what we've seen in recent years is that increasing supply of -- production of ilmenite in China and production of ilmenite derived from concentrates from other countries in China has been impacting supply and creating a period of oversupply and impacting prices as well.

And companies have to respond to this imbalance between supply and demand. Some are managing their supply or reducing their production or selling from stockpiles. And some of the measures that Kenmare announced today, focusing on shipments rather than production is a response to that and a way of managing our own costs during the period.

We are, however, seeing that the demand for the particular types of ilmenite that Kenmare produces, and we have 3 ilmenite products plus ZrTi, which contains ilmenite. We are seeing the demand for ilmenite suitable for beneficiation, which includes some of our product suite and is an area we focus keenly on, has continued to grow and is very strong. So we're well positioned in the stronger parts of the market. It's just that the overall market is oversupplied, and that is impacting on pricing.

We're hearing -- we're seeing similar factors in the zircon market, there is -- because mineral sands and mined typically will produce a range of ilmenite, zircon and rutile in different proportions. If ilmenite is oversupplied, then zircon will be slightly -- will have similar characteristics.

And the market was subdued, but what we have seen is that, that stabilized towards the end of the year. Producers and indeed, significant producers took measures to take supply out of the market and the market has reacted well to that. And we effectively sold our zircon inventories down to zero at the end of the year. And towards the end of the year, we started to see prices stabilize.

So overall, while pricing is weaker, we're still seeing demand for our products in the segments in which we target. We have a strong order book for the first quarter of 2026. We signed a number of new sales contracts last year, and we are seeing strong demand.

But we do need to be more cautious on what future pricing might look like. And our assumptions and our expectations of when the price might recover and what levels it might reach are probably more conservative than they have been in the past. And that impacts on our financial statements, it impacts on our accounts, and James will talk a little bit about that over the next number of slides. Thank you.

Thanks, Tom, and good afternoon, everyone. I might just point out at the outset that this is not a typical financial announcement or release, focuses on production. So there is limited financial information on this. And what we do share is unaudited at this stage. So our full year results, which will be published in March, we will have our final information.

And look, Ben touched a little bit already on the development CapEx. So look, we've -- to date on the project, $341 million total budget. We've incurred about $280 million of that so far, so over 80%. In 2025, about $168 million was incurred. $12 million of that will actually be spent in cash terms in 2026. So it's just the timing of payments into 2026. So the cash spend on the development project last year was around $156 million.

We expect about $30 million of development CapEx this year in 2026. That's including that $12 million rolled over. So that's a significant step down as we come to the end of the WCP A project in terms of our development CapEx.

And on sustaining CapEx, look, we don't publish our sustaining CapEx number for 2025 today. We're comfortable that it's within our guidance that was issued, which is around $50 million for 2025. And we're issuing guidance for 2026 of around $30 million of sustaining capital.

Looking at the financial outcomes that I can share with you today, we ended 2025 with around $48.5 million or $48.6 million in cash and net debt of just under $159 million. So clearly elevated from this time last year as a result of that significant capital spend.

We're not disclosing or sharing our full year EBITDA number today. As I said, that will be in March, but we did share in the announcement that we have agreed with our lender group for a revolving credit facility, a relaxation of the net debt-to-EBITDA covenant from 2x where it has been set at the outset to 3x. And we consider that to be a fairly safe level for us to be on site of at the end of 2025.

We'll stay in very close contact with our banks through this period of relatively elevated net debt and obviously keep them abreast of how things are looking and any expectations we might have around our future financial performances.

As we disclosed last year, we made a shipment to a customer in September. That customer subsequently went into administration. They had $9.3 million outstanding unpaid to us. That remains the case.

However, there has been some progress. We understand that there's 2 plants in question here. We understand that there are sales processes underway for both of those, one at an advanced stage. And we'll continue to stay in close contact both with the existing owners and once available with the potential purchasers to ensure that we can recover that.

In terms of impairment, so look, we took an impairment at the half year of $100 million. For the full year, that's going to increase to up to $300 million, so somewhere between $250 million and $300 million, we think. That's really driven by a weaker expectation for pricing mainly in the medium term, to a lesser extent in the long term.

And for us, this is a mechanical sort of event. We maintain a financial model that we look at, at the end of every reporting period, and we compare that to our asset carrying value, compare the value that the model suggests for our assets against our asset carrying value. And if the model is suggesting a lower value, we take an impairment charge accordingly.

So look, the pricing, as it has gone, indicates that we'll be looking at up to $300 million of impairment. That's a noncash charge. It doesn't impact our continuing operations. Obviously, the market value is quite distinct from the book value. It doesn't influence our ability to pay creditors and our debt covenants or anything around dividends.

And one other impact of that weaker pricing outlook is also around the carrying value of some of our ilmenite stocks. So typically, your -- well, always your inventory is carried at either the lesser of production cost or its net realizable value. We're now in a situation where, in some cases, our ilmenite net realizable value is below its cost of production, and we expect that to lead to an expense of around $15 million in our preliminary results.

If you go to the next slide, please. Just looking at the capital spend profile, so as indicated, the vast majority now of our capital spend on the WCP A project is behind us. In cash terms, around $270 million already spent with $70 million outstanding. And of that $70 million, about $30 million will be spent in 2026 and then the remaining $40 million over the 2027 to 2032 period. We expect to continue to fund this from our existing cash resources and operating cash flow and obviously, the existing debt facilities that we have in place.

So with that, I think probably handing back to Tom on that.

Yes. Thanks very much, James. And what I will do is just maybe begin to wrap up, firstly, by giving you a quick run through our 2026 guidance.

And look, we, as I said at the outset, probably changed the most important area of emphasis for our guidance this year away from production and just tonnes for the sake of tonnes. And we have high inventories of finished products, and it's far better for us, far more financially efficient to sell those down as much as we can and manage our production to help us achieve those objectives.

So rather than production ranges for tonnes, we're just saying basically that it will be more than 800,000 and as much more as it needs to be to achieve our shipment objectives. And those shipment objectives of 1.1 million tonnes of finished products are pretty much 15% ahead of what we did in 2025, albeit as Ben said, we had a dry dock in '25 and some maintenance on our transship vessels. So a big move, and that should allow us to make a big drawdown of our finished product inventory and effectively turn that historic investment in stock into cash.

As part of our adjustment to a period of lower pricing, we've looked hard at our operating costs. We've unfortunately had to undertake a retrenchment program at site for up to 15% of personnel, and that's not something we ever do likely, but many valued colleagues will be leaving the business or have already left the business. But it's necessary to react to and maintain competitive through these more difficult periods.

But we're seeing the positive effect of that in 2026 with the operating costs significantly lower between $215 million and $225 million at that 800,000 tonne level of production. And as James said, a lot less CapEx. I mean, we really have the back broken of the WCP A upgrade CapEx. 2026 CapEx will be less than 20% of last year's number, which was north of $150 million.

So we really have effectively finished that project, and now we're on to completion, as Ben said, of commissioning and infrastructure and other elements necessary as we move to Nataka when we work there. And we're also working hard to make sure that whatever we spend this year, we really need to spend this year. If anything can be postponed, if anything can be deferred, we'll certainly do so, but not at the cost of safety, not at the cost of our team.

If we move on to the next slide, please. So just in summary, moment is a really -- it's a world-class asset. We 20 years almost experience of producing there. We've learned a lot. We're moving to the biggest ore body. We'll be there for a long time, and we've invested to make sure that we operate well there.

The businesses over the last number of years and despite the challenges in 2025, has consistently generated operating cash flow, and that has enabled us to make the investments we've made. And the upgrade of WCP A has been designed and executed to ensure that remains the case.

I think, as James said, between our operating cash flows, our lenders who understand cycles and are supportive and the value of our inventories, we have multiple sources for funding our programs. But just recall, our capital expenditure this year is a fraction of last year's.

All of these investments plus the quality of Moma's ore body means that Kenmare is not just important to Mozambique, it's important to the worldwide titanium feedstocks market. We're nearly 6% of that. We have 25 customers operating in 15 countries. And when people start buying from us, they keep buying from us. They very, very rarely move away. And the customers we had on day 1 are still our customers today, and we've got a strong order book.

And all of those factors enable us to invest not just in our assets, but also in the community also to satisfy our obligations to the Mozambican government and commit to perhaps even increasing those obligations to increase royalties under our implementation agreement.

And as I said, I met the President twice last year. It was a very good meetings on both occasions. And we'd love to see that agreement move towards a conclusion this year, but I should stress, there's no formal timeline for that.

So as James and Ben said, we'll -- this is effectively a summary of '25 and '26 outlook ahead of our results, which will be published at the end of March. Thanks for taking the time to speak with us today. Very happy to take any questions that anybody may have on this, what we spoke about or indeed any other aspect of our business. Thank you.

Thanks, Tom. We've received a number of questions, so I'll now take you through them. The first question is, it's good to see reduced CapEx in 2026 compared to 2025, but do you have any other big projects on the horizon?

So maybe I'll take that one, and James, correct me if I'm wrong. But Kenmare has had quite a lot of CapEx in the last 5 years between the move of WCP B in 2020, '21 and the WCP A upgrade. But this is the last big nondiscretionary CapEx investment that Kenmare needs to undertake. The moves of WCP B and WCP C to Nataka will be significantly cheaper because neither of them require material upgrades.

And most of the money that we're putting into WCP A is new equipment, new dredges, new capability to mine, which the other plants don't need. So no, from now on, apart from sustaining CapEx and occasional minor projects, we have no multi-hundred million dollar obligatory investments. And cash flow generation or free cash flow generation should be stronger as the market recovers.

Next question is, how long will excess inventory in the global system take to work through, i.e., when might pricing start to recover?

God, if I knew that. Well, look, what we've seen is that this oversupply and the excess inventory has arisen over the last couple of years and probably in response to strong pricing in 2021 and 2022. And the greatest cure for weaker pricing is probably weaker pricing.

We do know people are suffering, we do know people are adjusting their production or indeed in some cases, ceasing production to adjust to save money and adjust to these new realities. And look, we're starting to see that be quite a widespread pattern. And generally, that's a precursor to recovery.

But the new sources of supply and in particular, the concentrates, which are going from a number of countries into China, are probably 10% to 15% of world supply. So they didn't arise overnight and they won't disappear overnight. But we have seen similar kind of patterns back in 2012, '13, '14 and that those sources of supply gradually decline. So we're hoping the same will be the case here.

So it's important to say that we are expecting and the independent forecasters are forecasting a recovery, but just the assumptions at the moment are that might be a little more delayed than we might have expected. I think previously, we would have expected it to be happening around now.

James, anything I wanted to -- you want to add to that?

No, not a lot. Look, it's very difficult to know exactly how fast things are coming out of the market. I just would note commentary from Rio Tinto this morning saying that they estimate around 5% of global supply came out of the market. And if you look at TZMI, the industry commentator, their latest cost curve, which looks back to sort of 2024, would indicate that at current pricing, probably somewhere in the region of 10% of the global feedstock supply that they monitor would be really struggling to make money just on a direct cash operating cost basis at these sort of price levels. So I think that's talking to the fact that there is supply coming out and that can only last for so long.

Next question is on a similar theme. Are current prices low enough to deter more production capacity increases globally?

Maybe I'll start that and my colleagues can jump in. Look, I think we -- they're certainly low enough to deter existing producers from expanding and to force or cause existing producers to adjust their plans and day-to-day activities in response.

And I think aside from those concentrate projects, which are reasonably widespread in a number of countries, albeit individually modest in scale, but aside from those, there's been no real new significant investments in mining capacity over the last number of years and maybe even some of the projects that we thought would come on stream haven't come on stream and even the ones that have been less successful in terms of their operating outputs than might have been anticipated.

So I think we are seeing certainly a slowdown in people's investment. We're certainly not at the price that it would incentivize significant investments in new mining capacity. So I think people are being rational in how they're adjusting to it. It's certainly not suggesting that meaningful sources of new supply are imminent.

Next question. Can you please set out why the parliamentary process is taking so long to progress the renewal of the Implementation Agreement? Is parliamentary business being taken up with matters? Or does the Prime Minister or cabinet disagree with the President on the renewal? Or is it something else entirely?

So look, the renewal needs to be ratified by the Council of Ministers. And we know that it was considered by the Council of Ministers over the course of last year. And their sentiment towards, it was very favorable, but they felt that the royalties proposed at that time needed to be a little higher.

And we've made a revised proposal, royalties of 2.5% to 3.5%, ascending over the next number of years, which against the previous 1%; plus a significant level of investment in our assets and indeed even in the community over the 20-year renewal period.

And so we haven't had a formal decision on that implemented by the Council of Ministers. It may have been discussed, but that's the organ that will need to approve it. And I suppose we've highlighted to the President when we've met them and indeed to his colleagues, the ministers whenever we've met them, which has been regularly. But firstly, under the agreement, Kenmare is entitled to renewal on the same terms. So it's entirely voluntary on our part to propose an increase, but it's entirely realistic because we got a good deal back in 2004.

We recognize that times are different now. We recognize that the state needs a better return on the project, and we're prepared to provide it. So in my meetings with the President, I think it was really good to get the second one. There's a lot to address another part of the question, there's a lot going on in Mozambique at the moment. Many of you may have seen some coverage of what have been quite severe floods in recent days and weeks.

And while they haven't impinged materially on Moma, they certainly have caused a lot of challenges elsewhere in the country and indeed, unfortunately, quite a number of deaths.

So between that and adjustments to the health budget caused by changing priorities of USAID, ongoing negotiations and preparations for the resumption of work on LNG projects in the north, where there's also been, as many of you may be aware, some Islamic insurgency, again, hundreds of kilometers from Kenmare, but still a consideration for the government; the government has had a lot to deal with.

And certainly, there are times when Kenmare's agreement is not at the forefront of their minds, but it's certainly not because we aren't reminded of it. So look, I think we have to be persistent, we have to be commercial, and we have to be available. And we bid all those things for our negotiations with the government. We received great support from the diplomatic community. And hopefully, 2026 is when we see it all come together.

I should stress, though, and indeed the President did stress this; that we've continued to operate under our old terms. I mean his words to me were, if we didn't want to renew this agreement, why do we keep letting you operate under your old terms? We are committed to Kenmare as committed as Kenmare is to the country. The words are great. We haven't seen the actions yet. Hopefully, in '26, we will.

Next question on a similar theme. Does the value of Kenmare go to zero if the IA is not renewed by the Mozambique government?

No, not at all. No, no. So a couple of things here. One, the implementation agreement doesn't cover our mining operations. It only covers our processing export operations.

Two, obviously, we've made significant investments in the business, and those investments are behind us now. So even in the event that fiscal terms were worse, and let's remember that we have a right to stable terms, even if they were, we still generate significant cash flow.

And three, there are terms that a new entrant would subscribe to if they were to come in now into mineral sands are a 6% royalty plus corporation tax plus some other regulations. But at the end of the 20-year renewal period, Kenmare's royalty payments won't be far off 5% anyway. So there's -- for sure, that will be worse than we currently have, but certainly wouldn't be ruinous.

Next question. You guide for net debt to remain elevated this year. Should we interpret that to mean that the nominal net debt will be flat year-on-year? Or do you hope for it to be lower by year-end compared to the start of the year?

James?

I can take that. So look, if I talk in net debt terms rather than the actual -- whatever the amount of debt that we have drawn on a particular day is. First thing I'd say is that given the lumpy nature of our shipments and the relatively high value of each of those shipments, I mean, you can have shipments that are worth $5 million, $10 million, sometimes even more.

The timing of those receipts obviously is a big sort of driver of what your cash position is on a given day, and therefore, your net debt position is. So it's a little bit of a noisy signal, I would say, just to begin with.

In terms of our expectations over the year, I think potential for it to come down a little bit. But I'd say the sort of level that we closed the year at, I'd expect it to trend relatively kind of flat with some of that noise with some ups and downs over the course of the year.

And another one for James. What's the rationale for the $300 million asset impairment?

Yes. So look, the primary driver there really is the pricing outlook. And as I said earlier, particularly sort of the next 2 to 3 years, more than the next kind of 5 years plus just as a result of that oversupply situation that Tom mentioned, and that's driving sort of downgrades in the pricing that we expect to achieve ourselves through our marketing department and the conversations that we're having and our insights into the market, but also the pricing expectations that independent commentators like TZMI and [ TMC ] have.

So certainly, that is the driver of the downwards move. That's offset to an extent by what we are doing on the cost side. So the cost savings, both in terms of operating cost and capital reductions and deferrals are actually sort of pulls back, if you like, or reduces the extent of the impairment and where we end up is that value of somewhere up to 300 million.

That's the final question. So handing back to you, Tom.

Thanks very much. Thank you, everybody, for your time and your interest in Kenmare. Thanks for the questions. I think I covered most of the important elements that we disclosed in the announcement today. Please, we'll have another private investor session following our results at the end of March. I think that have been released on the 26th of March. Is that right? And we look forward to speaking to you again then.

Obviously, if you have any questions in the intervening period at any time, please feel free to get in touch with us at [email protected]. We're always happy to hear from investors and always happy to address any questions or concerns you may have. Thank you very much, and have a good afternoon.

Perfect, guys. That's great. If I may just jump back in there. Thank you very much indeed for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This may take a few moments to complete, but I'm sure it'll be greatly valued by the company.

On behalf of management team of Kenmare Resources plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon

Good afternoon, and welcome to the Kenmare Resources Plc Q3 production update. [Operator Instructions]. Before we begin, I'd like to submit the following poll.

And I'd now like to hand you to the Managing Director, Tom Hickey. Good afternoon to you sir.

Thanks very much, Alexander. Thank you all for joining us today and taking the time to get an update on Kenmare Resources. We issued our Q3 production update yesterday, giving the market an update on our performance this year, and I suppose the key elements of our investment case as it is today.

And today, I'm joined James McCullough, our Chief Financial Officer; Ben Baxter, our Chief Operating Officer, who hopefully will help me guide you through the story. And together, we can address any questions you have. Just as an introduction to Kenmare, just moving to the next slide. Kenmare operates the Moma Titanium Minerals Mine in Mozambique. This is a pretty unique and world-class resource. We have -- we've been in Mozambique for over 40 years. We have over 100 years of mineral resources at our current production rate. And we've been in production for nearly 18 years.

So we're a really important part of the country, about 6% of GDP of the titanium minerals sector, we're about 6%, 7% of that and indeed one of the few significant independent businesses in that market. And a very important part of the locality. We're the biggest industrial employer in and around the Nampula province. We employ over 1,700 people.

And we work hard to make sure that we keep all those stakeholders balanced. We work hard to make sure that we're a good contributor to the local and national economy. And I think the investments we've made in the region and our general attitude to sustainability and being a good neighbor and also the fact that we use substantially only renewable energy sources in our activities has allowed us to be included in the FTSE4Good Index, which is, I suppose, a good indication of Kenmare's approach to its business and how we take a long-term view.

Within the titanium minerals market, we produce ilmenite and rutile and zircon is also a co-product. Ilmenite and rutile are principally used in the manufacture of paints, plastic and titanium metal. zircon is used in ceramics. These are all heavy mineral sands, and we extract them via dredge mining, process them and sell them to end markets to third-party customers, all from our own site.

Titanium and titanium minerals are on the critical minerals list for Europe, the U.K. and the U.S. So less impacted by tariffs than many other projects you may look at, at the moment. In fact, the only impact of tariffs on our business has been a beneficial one, whereby the EU has imposed tariffs on certain Chinese products, which has protected on some of our European customers.

And finally, Moma, having been around for many years, has had a significant capital investment, north of $1.5 billion, although obviously, that's significantly greater than our market cap today. And we're currently in the middle of a very significant capital investment that Ben will talk about. Our Wet Concentrator Plant A, which is our biggest mining plant is moving to Nataka, which is our biggest ore body. Nataka is 70% of our reserves. It's the future of the company, and we'd like to take you through what our plans to operate in it are today.

So just moving on to touch on the mineral sands. Mineral sands are, I suppose, what you would call a quality of life product. They're essential to modern life. They're all around you. Every paint, piece of paint, plastic, paper, even in food, clothing, anything that requires whiteness or opacity, you'll find ilmenite in particular, as part of it. It's nonrecyclable. So there's a constant renewed market for products.

And it has been historically very correlated with global economic growth. And you can see on the bottom right of that slide, a very stark difference between the consumption per capita in North America and Western Europe, more developed first world economies and the emerging markets of Central Europe, Asia Pacific, China, excluding China and Japan and the Middle East and Africa. And in reality, that increasing urbanization, progressive prosperity, these are opportunities for us, for our products in that as people become more prosperous, they use more of more pigment, they consume more titanium minerals. They paint their houses more often, and that creates that demand that we talk about.

Clearly, some of the global conflicts in recent years and indeed perhaps some of the challenges faced by the Chinese real estate industry have impacted demand in recent years, but they've also impacted investment in new projects. And we certainly, after a short interval, foresee a shortage of supply over the coming years, maybe not -- certainly not this year and maybe not next year, but certainly emerging because we're certainly nowhere near incentive prices for new projects to be built at the moment.

I've touched earlier on zircon, which is used in ceramics, same factors apply to it. And we also have a small degree of rare earth elements, including the mineral monazite, which is used in a lot of applications relevant to the energy transition, including magnets for wind turbines. So look, I think while you might hear much about titanium minerals or mineral sands, they are ubiquitous. You use them every day, you can't recycle them. And we see a significant and sustained growth opportunity in that market.

Next slide, please. I talked earlier about our sustainability. Our strategy has been very much to be a good neighbor. We have 97% Mozambicans in our workforce of 1,700. Our general manager is Mozambican, many of our senior leaders are Mozambican. And that gives us a very authentic presence in the region where we operate around Moma as does the investment that we've made in community initiatives in education, in sanitation, in small business, in infrastructure since 2004.

And these are the things that stand us in good stead with the community in the past and hopefully lot many years into the future. But in addition to that, we strive to operate safely. We've had an exceptional, touch wood, lost time injury frequency rate over the last 12 to 18 months, and that's the product of a relentless focus on safety at site and an initiative that we call Trabalho Seguro, which is Work Safe, which is central to what we do every day.

We are focused on obviously operating efficiently with a 30% EBITDA margin in the first half of 2025, a 40% EBITDA margin last year. This is a very cash-generative business, and that enables us to meet our reinvestment obligations and has enabled us to make significant shareholder returns in the last couple of years. We've paid out north of EUR 300 million in shareholder distributions between dividends and buybacks since 2019.

And I think that's something our shareholders place a high value on. And it helps us to attract and retain investors. Many of our biggest investors have been with us for many, many years. So -- and just finally, for my introduction, I've talked a little bit on the, next slide, please. I've talked a little bit about our sustainability efforts. And these extend to our workforce, to the community, to the environment and to the -- how we operate as the most significant business in and around Moma.

And I probably touched on all of these, but maybe one of the central planks of our approach is the Kenmare Moma Development Association, KMAD, that we established long before we earned any money from the project in 2004, which supports livelihoods, health care, education and access to clean water and sanitation. Interestingly enough, some of the children that we would have helped back in 2004 to 2010 with their education and indeed ultimately sponsorship to university are now coming back to us to work as employees.

And obviously, what that means is that the value that's generated by the mine stays near the mine. populations can increase, people can have better standards of living, and that supports the environment and supports Kenmare's activities on a day-to-day basis.

So with that, I'll hand over to James McCullough, our CFO, who will talk to some of the specifics of our financial performance, shareholder returns, and we'll move on from there to talk about our investments.

Great. Thanks, Tom, and good afternoon, good morning, everybody. Thank you very much for joining us. And look, this Q3 update is not a financial update. Our next financial update will be our full year results, which will go out in March next year. So really kind of just looking back and reviewing how we went in the first half of this year.

And if we look at the top line, our average price in the first half of this year was just a touch up on where it was last year. As Tom mentioned, we sell a number of different products, ilmenite, titanium dioxide product, as well as zircon are the 2 main ones. Zircon is higher value than ilmenite. What we're seeing is probably a downward trend in individual prices as we're sort of at that part of the market or rather at that stage in the cycle.

But actually, our average price received, we had more of that higher value zircon in than we had ilmenite, and that gave us a sort of a favorable product mix, which gave us a higher average price received and that played through into a slightly higher revenue in the first half this year versus first half of 2024. Our costs in the first half this year were a little bit higher than they were in the first half of 2024.

A couple of reasons for that. We had some natural cost inflation at the mine itself. And we have -- as I'm sure some of you will be aware, we're in discussions on the implementation agreement, which is one of the foundational agreements that we have with the government of Mozambique, and that is likely to result in a higher royalty payment that we will be making to Mozambique, and we've accrued for that through the first half of the year as well. So that contributed to higher costs there.

And finally, one of the other drivers of the cost increases were additional advisory fees associated with a takeover bid for the company earlier in the year. So that all sort of played through into higher costs, which meant that in spite of sort of fairly flat revenue, we had slightly lower profitability. Looking at some of the other highlights financially, we declared a $0.10 per share dividend. So that was -- in fact, that was paid out earlier this week.

The major capital project that Tom mentioned, the WCP A upgrade and that Ben will talk through shortly is still on budget of $341 million, and we're progressing through that well. So very, very happy that, that is still on budget, and we still have some contingency within that figure. And as we do progress through that, our net debt number has increased as one might expect.

So we've moved from $25 million net debt at the end of 2024, up to about $85 million at the end of the first half. So that's sort of a quick snapshot on the financials. And then if we just move through to the next slide, please. And just looking back historically, as Tom said, it is a very cash-generative business. I mean we had an EBITDA margin of, I think, 28% in the first half.

And Kenmare over the years since 2019 has distributed north of $300 million in total through dividends of around $190 million and buybacks of about $113 million. And that corresponds to somewhere in the region of GBP 2.30 or GBP 2.40 per share. So has been very positive from that perspective and the $0.10 per share that we paid out this week supports that.

Look, I think that's about it on the financials for now, but happy to pass over to Ben, maybe is it?

Good afternoon, everybody. I'm going to talk you through the operational side of the business. So on to the next slide. Thanks, Katharine. So as Tom mentioned in his intro, we're a globally significant titanium minerals mine. And we use a bulk mining method of dredging largely because it's a low-cost form of mining.

The operation has been established since 2007, and it has consistently been making more than 1 million tonnes per annum of ilmenite. This year, it's slightly down. We're guiding between 930 and 960 kilotonnes of ilmenite, and that's largely because of the project, which I'll come to talk to in a few moments. We operate with 3 dredging operations in their own mining ponds.

They feed a wet -- each of them feeds a wet concentrator to produce a product called heavy mineral concentrate. We then take that concentrate to a processing facility and separate the valuable heavy minerals from within the concentrate into their constituent parts of ilmenite, rutile, zircon and a monazite containing concentrate called MSC.

The -- those products are stored on site and then using our own dedicated port facility, which is about 2 kilometers away from the processing facility, we're able to easily transship to customer vessels, which more off the coast of where the mine is in Northern Mozambique. The mine itself is -- has a very low environmental footprint. Our electricity is largely coming from hydrogenerated power, the Cahora Bassa Dam in Mozambique.

And after the mining process has taken place, we progressively rehabilitate the land and hand it back to the local communities for subsistence agriculture and for forestry. The other notable part of our mining process is that it is only a physical process. There are no chemicals involved. And so our environmental footprint or potential for contamination of the environment is very, very low.

If I move on to the production and outcomes of the past quarter. The quarter was really impacted by 2 main features. Firstly, our production from the mine was down, and this was a knock-on effect of the fact that we are -- during this quarter, we were undertaking the partial closure of operations to allow the shutdown and the upgrade of the plants WCP A. And I'm going to talk a bit more about that on the next slides.

This meant that the heavy mineral concentrate production was down 16% year-on-year, and this had a knock-on effect into the final products. The second impact was that we have 2 transshipment vessels, which we use for transporting final product onto those customer vessels. And every 5 years, one of the -- each of those vessels needs to go for a dry dock to maintain its class certification.

And during the whole of Q3, 1 of the 2 vessels was out of service in a dry dock, getting that certification. And so that had a knock-on effect on our ability to make sales. And so shipments were down 25%. One of the things that's worth making note of in previous releases, we talked about using a third transshipment vessel, which would be rented in to help offset that loss of vessel, but also to take advantage of destocking some of our working capital.

And whilst that decision has been not made to proceed as of yet due to the reduced short-term demand that we've seen for ilmenite products. However, we will maintain that under consideration moving into next year. Maybe I can talk on to the next slide and give a bit more detail about the project that has been taking much of our time. So WCP A is our largest production plant. It delivers about 50% of the mining capacity. And yet it is coming to the end of its life in the current ore zone, which is now depleted.

And in order to move into a new area, we needed to upgrade this plant and prepare it for life in its next location. That location is called Nataka. It's a large ore body, representing 71% of the 9 billion tonnes of ore that Kenmare has. Now that 9 billion tonnes at current production rates represents about -- more than 100 years of resource base.

And so it's very good for us to be putting our largest plant into the largest ore body and securing the future of production at Moma into the long term. The upgrade is an upgrade of lots of new equipment, particularly focusing on managing the higher rate -- higher amounts of slimes in the ore body. The slimes is essentially clay-sized minerals, which historically have made it harder to recover heavy minerals and therefore -- and then also to get the mining rates that one would require.

And so what we have been doing is purchasing new dredges, which are currently going into commissioning, also a new plant for desliming and then methods of managing the slimes, which will be done with the tails storage facility. That -- the outcome of that is higher recoveries, higher feed rates and lower because with the dredges being high-capacity units, they can mine on a lower dollar per tonne rate, and that will also allow us to eliminate the dry mining, which we've been using over the past few years to supplement the capacity at that plant.

The project capital is $341 million on that project, and it's more than 80% complete by the end of this year. We are now just going through the process of the commissioning. And on the slide that's now in front of you, we give a sort of a time line of the progress we've made. Back in the end of -- in July, we had the delivery of the dredges arriving at Moma, and they were landed from the sea on to the beach and brought to the new mining plant area, and a staging pond.

And in the bottom photograph on the left, you can see those dredges are preparing already in a floated pond with a new desliming facility in place. We since used the old dredges to break through and mine and then connected that new equipment onto the older concentrator plant, which is the only part of that process that remains. We also have completed the tail storage facility in -- by September. And in the first part of October, have started heavy mineral concentrate production again, and we are currently in the ramp-up process as each of the component -- new pieces of component work are being commissioned.

And that commissioning process is expected to take place over the coming quarter. And by the end of this year, we expect to have ramped up production to the capacity levels of the new plant. On the next slide, thanks, Katharine. Just to look at the capital spend. By the end of the year, the project will be substantially derisked. We have currently -- or by the end of the year, 80% of the capital of this $341 million project will have been spent.

And already, in fact, we are seeing that the capital spend is now -- has peaked in the past and will fall from here on. The higher capacity dredges will also have a positive effect on our operating costs going forward since the dry mining will cease by the end of the year.

And in terms of the project funding, it's worth just reminding that we're funding this $341 million project through existing cash resources, our debt facility, which at the half year was -- still had $70 million undrawn. We have operating cash flow in the meantime and good shipments expected in the second half of this year and also operating factoring and trade facilities to manage those receivables as required.

With that, I shall pass on to Tom, who's going to give us an update on the market.

Thanks very much, Ben. And hopefully, gave you some good insight into what an exciting project we have at Nataka and how successfully we've been navigating our way through it. And what I'd like to do now is just give you an update on our markets.

I think Kenmare has had a couple of very good years between 2022 and '24. And I think we recognize that when prices are strong, you get new entrants into the market. I think we also, as I said at the outset, can have periods where demand is slightly weaker. While over the long term, demand will certainly correlate to economic growth. If you have interruptions as perhaps we've had with Chinese economic performance and indeed conflict in certain areas plus tariffs, that can lead to temporarily weaker demand.

And we are seeing a little bit of that at the moment. I mean, from Kenmare's perspective, we have very strong partnerships with our customers. Many of our customers have been with us since our first day of production. And indeed, we added new customers in the first half of this year. It's been our experience that we can sell everything we produce. If you think of somebody setting up a slag plant or a pigment plant, any sort of -- or a metal plant, any sort of major industrial facility. It's a complex operation.

They want certainty, consistency, availability and quality in the materials and inputs that go into that and Kenmare provides all those things. Having said all that, we can't avoid the ups and downs of a cyclical industry and particularly pricing, which will be weaker when there is an excess of supply, which we temporarily have at the moment.

And we're seeing China being a very important part of that market with the significant processing capacity that China has, utilizing a lot of raw materials as opposed to the finished products that Kenmare produces, and that is creating a degree of oversupply. We're seeing, of course, people respond to that, adjust their outputs, adjust their business plans and a couple of plants outside China have curtailed or suspended output in response to those conditions, including one of our customers.

And you may have seen in our Q3 update yesterday, one of our customers has indicated it won't be able to take its remaining volume for the remainder of this year. And indeed, at the point, they indicated that owed us just over $9 million. And this is an unusual experience for us. Kenmare has never had a bad debt. And we work well with our customers through challenges that they have had.

And I think we are continuing to engage with that customer to understand how and when we can recover the amounts owing and we still retain title to the materials until we're paid those amounts. And again, let's just remember, for a plant that is operating or that hopes to be sold, Kenmare's supply is a vital part of the business -- of the business plan. The wider titanium market, the metal market, it was relatively stable in Q3. This is an area that's grown very fast in recent years.

While it represents less than 10% of the global market for titanium minerals, for Kenmare, it's over 20% of our sales, again, for all the reasons that Kenmare's product and behaviors, quality and availability is valued by customers, none more so than in the metal space. So there the titanium minerals. Zircon is kind of similar. A lot of the uses of zircon are similarly driven to those for ilmenite and rutile. The market is a little bit subdued.

And we are seeing a little bit of substitution or some lower quality products come in. The demand for our high-grade product is stable, albeit pricing is a bit weaker. And we expect to end 2025 with very low inventories of zircon. We'll sell pretty much everything we produce. And that's important because zircon is a much higher value product than ilmenite circuit 4x as valuable on a per tonne basis.

So clearly, we're motivated to sell as much of that as possible, and we have the quality customers that enable us to do that. Next slide. I've touched on this point a little bit over the introduction and indeed in the last slide. But we are seeing Chinese domestic production and Chinese domestic participation in the market creating price pressure.

That price pressure coming out of the Chinese sulfate ilmenite market, which is not a market we actively target, but it is one we sell to occasionally, does impact wider pricing internationally. And around us in Mozambique, there are a number of Chinese producers who have entered production in the last couple of years.

Their operations are far less sophisticated from a capital or operating perspective than Kenmare's. And there's a benefit of that. Of course, it's low cost. The drawback of that is that they can't mine all the materials that we can mine. They can't mine more complex ore bodies like Nataka, as Ben mentioned. And thus, they're limited in their life. And we expect that as quickly as those producers arrive over a number of years, they may well disappear not immediately, but steadily over the next few years.

And indeed, we've seen that sort of pattern play out in previous cycles. So for an established producer like Kenmare, this is obviously a concern. It's something we need to be aware of. It's something we need to be focused on. But the best response is for us to do our own business as efficiently and in a low-cost manner as we can and recognize the fact that this also means that no new mines of any significant scale are being built and that in time will create a supply problem.

So look, I think we're seeing all the classic behaviors you would expect in a market where prices are challenged. We're seeing people continuing to produce, albeit very close to breakeven or indeed perhaps even below. We're seeing some people curtail production, indeed some of our peers are doing that. And Kenmare is -- we have strong relationships. We'll work our way through it, and we do expect to see recovery, if not within the next 6 months or maybe 12, certainly as we enter late next year and into 2027.

Next slide, please. So look, in summary, I think Kenmare is a very high-quality business with a world-class asset, but we're operating in a market which is currently slightly challenged, and that's reflected in our short-term performance and in our short-term pricing. We've successfully come most of the way through a very significant development project.

And I think it's a credit to the team led by Ben that we've done that safely. We've done it within the budget we indicated at the start of it. And to date, we've achieved substantially all the objectives that we had pretty much on time. And most of the risk of it is behind us, but obviously, commissioning is still something we need to go through between now and the end of the year.

We're still operating within our guidance for 2025, albeit towards the lower end of the ilmenite guidance, partly because of some of the slight delays in our -- the shut for the Nataka project, the WCP A upgrade project. But all in all, to date, 2025 has been a pretty good year, a pretty solid year in terms of operational delivery.

We have tasks in the fourth quarter, hopefully, to sell the material that will not now be taken by the customer that is in financial distress to maintain our focus on achieving our guidance and executing the commissioning phase of the WCP A project well and to continue to manage our financial position and our financial resources to give it the best outcome.

So to finalize -- in summary, look, I think Kenmare's purpose is to transform resources into opportunity for all. We've done that for nearly 20 years in Mozambique. We've done it with a very good partnership with the Mozambican community and the Mozambican government. We have an implementation agreement that we have been renegotiating with the government that hopefully will allow us to do that for many years to come.

But that negotiation has been elongated. It is taking time. It is a concern. We have made a proposal to government that we believe is fair and gives the Mozambican state a significantly greater return in the future, which I think they deserve. We got a good deal at the start. And we recognize that we have to make our contribution to the future of the nation because we'll be there for a long time. We've got a long-term production profile, over 100 years of mineral resources.

We've got a good position in the industry. We're competitive. We're working our Nataka upgrade project and transition project to remain competitive and to maintain our low-cost profile. And our market-leading position with our customers and as an independent participant, non-vertically integrated makes us pretty much unique.

So those combination of circumstances, the quality assets, the good relationships, the low-cost position and our commitment to operating properly in country and investing for the long term in the communities stand us in good stead. We have things to do over the remainder of this year related to the development relating to our own production, relating to our operations in the market and relating to finalizing our implementation agreement, and we're focused on achieving all those things.

So listen, thank you very much for taking the time to listen to us. Very happy to take any questions that anybody may have. And I'll hand back to Katharine, who I think has been gathering some of the questions.

Thank you very much, Tom. Yes, we've had a number of questions submitted, and I'll now read through them. So the first question is, with prices still soft, what is your view on ilmenite and zircon pricing into 2026? And how are margins being protected?

So maybe I've touched on that a little bit already. I mean I think that we have seen pricing trend down a little bit in 2025. We expect the remainder of the year to be no different. And however, prices have to a large degree, stabilized. So we hope and certainly from what we can see in our discussions with our customers, we may be close to the bottom of the cycle of pricing.

And we believe that there will be some recovery, but it may not be in the very, very short term, I suspect towards the back end of next year. Kenmare is doing lots of things. I mean, operating efficiently, managing our costs, making sure that our investments are value for money, but also improving our margins.

One of the things that we've done this year that actually has been greeted enthusiastically in the market is to sell a product that we call ZrTi, which was previously a tailings or waste product. There are a number of customers who are highly motivated to take that product because it still contains ilmenite zircon and rutile and our concentrates.

They have the cost base and the processing capacity to process it many times to recover those. And that enables us to turn what was previously a cost into hopefully a sustainable future revenue stream. So there's no single big answer to that, but there's lots of things that we're doing to make sure that we're competitive and that we're making the best margin.

Okay. The next question is, the implementation agreement is a key overhang on the stock. Can you speak about whether this issue is unique to Kenmare? Or is there a wider intervention as play by the government of Mozambique to assert more control or raise taxes on the entire resources sector in Mozambique?

Look, that's a good question. And while I touched on Park a bit earlier, I don't think I covered all of those points. Look, I think we -- not just in Mozambique, but I think if you look across Africa in general, governments are focused on a number of things. They're focused on the maximum local content. And I think Kenmare achieves that both with our 97% Mozambican workforce, but also with the north of $100 million that we spend with Mozambican suppliers.

They're focused on the best value-added or beneficiation. And again, Kenmare achieves that. We're the only mineral sands miner in Mozambique, refining or processing our materials to finished products sales and selling to third parties on world markets directly from Mozambique. And they're focused on increasing the return they get from projects through taxes, royalties and other means. And look, I think as I said at the outset, we had a good deal at start when we to get the project moving.

We do believe that Mozambique deserves a better share in the proceeds from Moma, and we've offered them a proposal that would bring them up to in time up to 4x on a percentage basis, what they've had for the last 20 years. So we believe that we're in a good position to satisfy -- help Mozambique satisfy all those objectives. But I think we are only one company, and I know that Mozambique has been -- is certainly considering how it deals with new entrants to the mining industry.

They're upgrading their mining code. We wouldn't be subject to it because of our own regulations, which were put in place many years ago. And they're very focused on securing investment in natural resources projects in the hydrocarbon space with ENI and with Total. And look, these investments and the international companies that make them will be central to Mozambique's recovery and increasing prosperity. So of course, they're a high priority.

Can you speak to the security situation in Cabo Delgado and whether there are any associated concerns for Kenmare's operations in the country?

Sure. Maybe I'll let Ben speak to that a little bit if he doesn't mind. It is -- we've been in Mozambique for nearly 40 years. So I think we're well placed to give a balanced view.

Yes. So the situation in Cabo Delgado is something that we obviously watch very closely and carefully. But I'm happy to say that it has not impacted Kenmare in any way. The distances of where the activities in Cabo Delgado take place are at least 500 to 800 kilometers away and that's a long way in the north of Mozambique, where roads are very poor and accesses takes a long time to get to.

So I'm happy to say that that's not -- we have not incurred issues around that. But probably more holistically, it's something that we watch very carefully. And also, we spend a lot of time talking to shareholders about it because it's got that macroeconomic concern.

Okay. Next question. How should we think about annual CapEx following the completion of the WCP A project?

Sounds like one for the CFO, James.

Happy to take it. Yes. So look, at the end of this year, we'll have probably in the region of $60 million left on the WCP A project. So look, substantially all behind us, but still quite a significant investment over the next few years. That actually spreads out all the way through to sort of 2031, 2032, though, as we move into Nataka and we build the sort of associated infrastructure that's required to sustain mining there.

There's no major development CapEx on the horizon. There will be some project CapEx, little bits and pieces here and there. If you think about sustaining and improvement CapEx, I think this year, we've guided at around $50 million. The improvement CapEx in that is what we call the SMOs, the selective mining operations, which are kind of small modular plants that are a little bit more nimble than the large dredge mining operations that we have and can go into pockets of high-grade resources.

And we're looking to expand that capacity over time. Probably this year, at $50 million, there's probably $30 million to $35 million of -- maybe a little bit more of sustaining and then some spend on the SMOs. And I think most years, if you think about sustaining capital and improving capital, it's going to be in that sort of range. It could be as low as $30 million if we don't have kind of improvement capital to spend.

If we have opportunities or if there are lumpy elements of sustaining capital, it could get up into the mid-40s or even a little higher again. So I think that's probably the right range to think about, highly opportunity dependent as we see opportunities for deploying more capacity like the SMOs, we'll take them. Equally, some of the sustaining capital work that we do is a little bit lumpy. And so some years will be lower, some years will be higher.

And a related question, post the completion of the WCP A project and the resulting step change in free cash flow, should shareholders expect a step up in distributions? Or would Kenmare consider using its financial strength to support M&A activity?

Look, happy to take that, Tom, unless...

I'll finish it, James, you can start it.

I think it will probably be a little bit of -- well, look, I don't know if it will be a bit of both. Certainly, in the first instance, obviously, after WCP A project, and we will have taken on quite a lot of debt. There'll be some emphasis on bringing the balance sheet back to a more neutral position.

So that will be a priority. The shareholder returns, as I said earlier, we've got a history of paying out good shareholder returns, and that will certainly still be on the agenda. M&A will be largely opportunistic where we see opportunities that are value enhancing, we're certainly not averse to them.

I think the Moma asset is a really unique asset in this industry and to be able to match that is quite challenging. But equally, there's appeals around building out a more diverse portfolio as well. So we'll sort of balance our activity in that space based on the opportunities that are presented.

Yes, I think that's fair. I mean, I think we recognize that as the question suggests, the future is different from the past in terms of obligatory CapEx and big multi-hundred million dollar investments. And so we have a lot more discretion as to how we manage our cash flow, and we need to give our shareholders and the investors some insight into how we think about that. I think we'll continue to pay normal dividends based on profitability.

We may occasionally do special dividends if pricing is strong, which hopefully will be in due course. And I suppose we always have to balance the opportunistic M&A that James spoke about there with the fact that our own shares represent a pretty good investment, too. And the biggest buyer of Kenmare shares in the last 5 years has been Kenmare. We bought back 15% of the register because we believe in the long-term value of the business.

And I think our shareholders are -- want to understand that we think about the business the way they do as well. So -- and look, I think James is absolutely right. Our first priority will be stabilization, de-gearing and proving that we can operate well and attack it. Then we lift our head, think about the one next.

Next question. It looks as if monazite concentrate production capacity has increased. Are there plans to increase it further?

Ben?

Certainly, the production of our monazite-rich product has improved. A lot of it is down to the way we've been processing elsewhere. So as we do better at making better zircon products and we're better able to separate away the monazite content. So we've done better over the last few years at improving that.

To make a more concentrated product is quite a costly affair. And as of now, we haven't got an export facility that's capable of taking it in a more concentrated form. So at this point, we're quite happy with the -- that we're sort of in the sweet spot for that product. But if markets change, we may down the line, improve that product further.

Kenmare was subject to a takeover bid earlier this year, but you terminated offer discussions. Can you tell us how the Board reached that decision?

Sure. Look, I think -- and James mentioned the costs and so on. I think the takeover approach is a very interesting period. I think it's certainly shown a value for the market and for shareholders on the fundamental value of Kenmare. -- and it certainly piqued the interest of nonholders in meeting us to understand what our plans are and to form their own view on that. The approach we had from my predecessor, Michael Carvill and Oryx Global Investors was a very credible one.

These are people who know mining, and Michael knows Moma like nobody else. So we had to take it seriously. And when they came at a price that was a significant premium to the price on the day before and indeed a significant premium to where we are today, our Board felt the obligation to grant them due diligence to give them the chance to get that price up a little bit and to get a price that we could recommend to shareholders based on our engagement with shareholders about what they expected.

And that diligence and indeed, their financing and other arrangements took a number of months, as you'd expect, because to be honest, the announcement was premature. It came pursuant to a media leak. And to be honest, they were a little bit unfortunate. During that time, you had Liberation Day. And during that time, the U.S. dollar depreciated significantly against sterling. Let's remember that Moma and Kenmare is a dollar business.

Our shares are quoted in sterling and any deal price would have to have been in sterling. And basically, the GBP 5.30 that they proposed got significantly more expensive during that time. And on a constant dollar basis, it was only worth GBP 4.90. So they weren't going to be in a position to sustain and they advised us of this, and we mentioned this to the market to sustain the initial price they'd approached us with. And they still had some diligence to do.

And I think the Board was of the view that even if they did come with a valuation that was significantly below GBP 5, so that wouldn't be attractive to shareholders. And on that basis, we terminated the discussions. It doesn't mean that they can't come back. It doesn't mean that the long-term value at moment is in any way diminished.

It doesn't mean that we don't -- we and the shareholders don't believe that in a couple of years' time when the CapEx has passed and hopefully, our implementation agreement is concluded and pricing is better, that an approach might not be made at a substantially better price. But it was a seemingly logical decision to make at the time. And I think we spoke to probably 70% of our share register in the days afterwards, and they all supported that decision without much debate.

And just a follow-up question. Do you think the consortium might come back with another offer or that any other players might make a bid?

Look, the consortium are welcome to come back. And while nominally, they have to walk away for 6 months, I think our Board is very clear, and we said to shareholders, if somebody knocks on the door and they've got a proposition for the company that we think shareholders would like to hear, we're very open to that. So I can't speak for Oryx or Michael, but I know that they recognize the value in the business.

As to other parties, you can never discount an opportunistic bid. But equally, I think there is some flux in the titanium minerals market at the moment with probably the biggest player, Rio Tinto, contemplating a strategic review of their own presence in the space. And I suspect that's something that people will be looking at. Your anybody who is interested in the sector will be looking at. So never say never, but I think it's probably not as obvious a time as people might expect for a further approach.

Thanks, Tom. That's all the questions we have for now. So if you'd like to make some closing remarks.

Cool. Thank you very much, everybody. Hopefully, this has given you a good insight into the company. You see our contact details, Katharine's contact details and the Investor Relations functions contact details there. We're always happy to hear from current or prospective investors to answer any questions and to engage on anything you want to know about the company.

And we obviously make regular announcements. I would also advise you or suggest that you keep an eye on our website where we have really outstanding updates on the WCP A project development progress, which shows you not quite on a daily, but certainly on a weekly basis, what's happening and it makes -- gives you a good perspective on the amount of work that we've done this year, how much less risky the future is than the past of that project and what our plans for the future are. So thank you very much, and I really appreciate you all spending the time with us today.

That's great. Well, thank you all for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This going to take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Kenmare Resources Plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.

Good afternoon, and welcome to the latest Yellowstone Advisory Webinar with Kenmare Resources, who released their half year results on the 20th of August. We're delighted to have with us today Tom Hickey, the Managing Director; James McCullough, the Chief Financial Officer and Ben Baxter, the Chief Operations Officer.

And while we're waiting for everyone to arrive, please could you respond to the polling on your screen, and I'll just go through a few admin points. The format today is a presentation of the half year results, take approximately 30 minutes, and then we're going to hand over to Q&A. [Operator Instructions] And then following the meeting, you'll be redirected to a short survey, and it would be really appreciated if you could just spend a few moments completing that.

I think most people have completed the poll now, so I'm going to share those results. We've got about 2/3 of the attendees are shareholders and 1/3 nonholders at the moment so a mixture in the audience today. I think that's all the admin points catered for. So I'm now going to hand over to Tom Hickey, the Managing Director, to start today's presentation.

Thanks, Alex, and thank you all for joining us today. What I'd like to do is run through the presentation we've been sharing with our institutional investors over the last few days since we issued our first half results. And maybe we're going to the intro slide. Alex, for those of you not familiar with Kenmare or for whom this is your first time meeting with us, Kenmare is the world's largest ilmenite supplier. We operate the Moma Titanium Minerals Mine in Mozambique. We've been in Mozambique in one form or another for nearly 40 years, but we've been producing at Moma for almost 20 at this point. But I think what distinguishes Moma is apart from the quality of the resource, it's the mine life.

We have over 100 years of mineral resources at our current production rate. And I suppose when you are going to be producing for that long, when you are going to be in and around the community and a nation for that long, you do want to make sure that you behave properly and that you make contribution over and above just what you mine. And we do make a lot of a contribution to the local and national economy. We're about 6% of Mozambique GDP, and our social investment programs have transformed the lives of those in and around the mine from an education perspective, health, infrastructure and economic development.

The materials we produce titanium -- ilmenite, rutile and zircon are key raw materials in the manufacture of paints, paper, plastic and titanium metal. In this portion of the market, we're about 6% of global supply. And titanium is on the critical minerals list for Europe, the U.K. and the U.S. So very much at the forefront of people's minds when they're thinking about security of supply and energy transition. And over the last 20 years, Kenmare has invested just over $1.5 billion in the facilities at Moma. We're in the middle of quite a significant CapEx program that Ben, our COO, will tell you about later, but so far so good on that. We're coming to a critical point, but still operating within the original budget. We move on to the next slide, please, Alex.

And look, I think -- if I think about the half year, it was quite a dynamic period. While the operations themselves were quite stable, with thankfully, very safe operations and no injuries. We're not changing any of our production or cost guidance. We did, however, have weaker product markets, which drove an impairment charge, and James will run through that, and I'll run through a little bit later how we feel about the markets at the moment. We also had a possible offer, an approach from a private equity firm called Oryx, supported by our Founding Managing Director, Michael Carvill, who are considering an offer for the business at a price of in or around GBP 5.30. We had about 3 months of kind of back and forth on that diligence and engagement until ultimately the offer discussions terminated in late June.

But I think it has certainly shown a light on the company and reminded people about the business and the value inherent in the business. And certainly, we're seeing that in this roadshow, we're getting significantly more meetings and more meetings from nonholders. The capital project, WCP A -- you can go back, Alex. WCP A is our largest mining plant, and we're preparing it to move to Nataka, which is an ore body, which represents 80% of our -- excuse me, 70% of our reserves, effectively the future of the business. And at the end of the half year, we had about 60% of the capital cost incurred. But in reality, at the end of this year, assuming all goes to plan, the most significant risks and the biggest portion of this investment will be behind us.

Many of you will have seen the videos and images on LinkedIn of the dredges that recently arrived at Moma, and I would urge you to review that part of our website because we're regularly updating the detail there. And finally, Mozambique. Mozambique was a tricky enough operating environment for the nation towards the back end of '24 and early '25. There was a general election or a presidential election, which prompted quite a bit of social unrest. And while it didn't impact directly on our operations or the safety of our people, it did impact on the ability to do business in the normal course day-to-day in and around Moma and certainly required us to be more vigilant as regards to security and spend more costs on that.

And finally, there's an implementation agreement -- a significant agreement that regulates how we operate with the government in Mozambique, in particular, how our processing and mining operations operate. This agreement was signed 20 years ago and came up for renewal at the end of December 2024. That was right in the middle of the disruption and challenge period that I mentioned for Mozambique, and you can imagine that its renewal was not at the forefront of government's minds at the time. Under this agreement, Kenmare has the automatic right to renew at the existing terms, but we recognize that we got good terms back in 2002. We recognize that the terms that were required to get the project going are not necessarily the ones that represent the best return and the fairest balance for Kenmare and the government going forward.

So we proposed an increased return for government from this project. It went to the Council of Ministers in March, and they approved all aspects of the renewal except the royalty rate, which we increased from 1% to 2.5%. Since then, we've been engaged in a variety of discussions and negotiations with government in Mozambique. This is a complex agreement that requires lots of parties in Mozambique to be aligned, the tax authorities, the environmental authorities, it's mining, the mining regulator, indeed right up to the President. And so making sure that all those parties understand the agreement, understand our rights and understand what we're proposing has been very important.

Over the last few months, I've met the Minister for Mineral Resources and Energy, the Minister for Economy and even the President. And they've all reassured us that Kenmare is exactly the sort of project and exactly the sort of company that they want to have in Mozambique that they are focused on renewing this agreement, but we haven't quite got there yet. We did improve our proposal to government from 2.5%, ultimately rising to 3.5% over the 20-year period. And those discussions are ongoing. There was some press in Mozambique last week or the week before, which seems to suggest that an agreement had been reached, but I was a government spokesperson getting a little bit ahead of themselves and we are still in negotiations.

We would be hopeful of concluding it before too long, but there is no formalized or required timetable. But naturally, so as the agreement has expired in December last year, we're keen to put it behind us, and I'm sure the government are too. And that's the main focus of our operations as regards to that agreement right now. So I'll hand you over now to James McCullough, our CFO, who will talk you through the results that we reported last week, and I suppose the key moving parts in the numbers.

Thank you, Tom, and good afternoon, everyone. Thank you for joining the call. Just looking at some of the key points across the results, first of all, starting with revenue at the top line. Solid revenue, slight uptick. So Tom mentioned some price declines. However, the product mix, slightly higher content or zircon balance relative to ilmenite supported a slight uptick in average pricing, combined with a slight increase in shipments, which gave us just a small uplift in total revenue half-on-half. At the EBITDA level, we saw relatively -- or relatively higher costs this half versus last year. That was a combination of costs at the mine, so direct cost at the mine, along with various one-offs and indirect costs, which I'll go through shortly, that contributed to reduced profitability, but still solid EBITDA at $47 million with a margin of 30%.

Looking at the CapEx side, we are now happily through our peak CapEx on the WCP A project. So H1 was actually the peak half for CapEx in that project. We spent $95 million over the half, 60% of total project CapEx was spent by the end of the half. And that CapEx profile will now decline over H2 and subsequent halves. So we'll spend about $70 million in H2, and that will tail off into 2026. Importantly, we're still on target for a total capital budget of $341 million for that project. Tom mentioned and we flagged in July an impairment. So we took an impairment with these results of just over $100 million, primarily driven by a lower pricing outlook as well as costs associated with the implementation agreement renewal that Tom mentioned.

The impairment is noncash, doesn't affect our operations and it has no dividend impact or impact to the dividend that we've declared. So we've declared a dividend of $0.10 per share, which will bring total shareholder returns from Kenmare since 2019 to over $300 million. Looking forward to H2, we've got a degree of optimism, a stronger outlook. We expect, and Ben will talk through, bringing on our third transshipment vessel, which will support higher shipping volumes. We typically would see better weather in H2 as well, which contributes to better shipping volumes. And we will -- we expect to have a stronger zircon to ilmenite mix as well, which supports a stronger average price. And then some of those one-off costs that I will talk through, we wouldn't expect to be there in H2 as well, which should give us an extra boost relative to H1.

Alex, if you just go to the next slide, the summary income statement, just briefly. I've mentioned already the flat revenue, increase in costs, but still solid EBITDA at $47 million. That EBITDA -- on the next slide, Alex, thanks. That EBITDA has been enabled by good performance in quite challenging conditions. Just looking at the shipping side, shipments were slightly higher. We had a stronger Q1. Q2, we suffered a little. Weather was worse than we anticipated, and we had some maintenance. But overall, a slight uptick in terms of shipments in H1 this year versus last year, and as I said, probably a more positive outlook for H2.

And then in the market itself, we saw probably single-digit percentage declines in ilmenite and zircon, but our average price was up versus H1 2024 just through having a stronger zircon mix in our overall sales. And again, we expect that mix to continue to improve into H2. Looking at the cost side, costs were up 16% in H1 this year versus last year. And you can think of that in terms of changes and increases at the mine itself as well as things that happened away from the mine. So if we look at the mine, direct costs were up by 6% or 4% on a unit basis. The combination thereof labor, so higher -- slightly higher FTE numbers and slightly higher salaries that contributed to around $4 million of the overall increase. The overall increase at the mine was around $7 million. So $4 million of that was labor.

Overheads, production overheads was about $2 million. And then, look, Tom mentioned some of the volatility that we saw in country in Mozambique. We accordingly then had higher security costs and replacement and repair costs due to theft. That was up around $1.5 million in H1 versus H1 2024. Away from the mine then in terms of indirect and other costs, they were up around $10 million overall versus H1 '24. As Tom mentioned, we have proposed an increased royalty rate under the IA of 2.5%, which is higher than the -- sorry, 1% that we had last year. So we've accrued for that difference that contributes $2.5 million additional cost.

Our head office costs were up by about $3.5 million, and most of that was attributable to the bid process -- the possible offer process earlier in the year. And then just to note that actually H1 2024 benefited -- the costs benefited from insurance proceeds of around $3.3 million, which effectively lowered the comparator for H1 2025. If we look forward into the second half and beyond, some of those costs will remain. So the implementation agreement costs and production overheads, we think will probably be sticky. Others, we would expect to reduce or not be there. They're largely event-driven. So the head office costs, the security costs, as Tom mentioned, we're starting to see some improvement on the ground there. So we wouldn't expect our security costs to keep going up. And obviously, those insurance proceeds were one-off at the time.

Move to the next slide, please, Alex, and just look at the net debt bridge. So our net debt has increased from $25 million to $85 million. The standout item really there is the CapEx. As I mentioned, H1 is the biggest half for that project at $95 million. H2 will be around $70 million. And then by H1 next year, we're looking at around $20 million for CapEx spend. So you'll start to see that orange bar contracting significantly over the next few reporting periods. The dividend also of $15.3 million, that's the $0.17 final dividend that we declared in the interims in March. And look, that outflow has been funded through working capital, so good conversion of receivables into cash as well as through increase in our overall debt.

Moving on to the WCP A project, Alex. Thank you. So look -- as you can see, we're through the majority of the CapEx now, as I said, 60% spent about $210 million by the end of the half and the spend rate decreasing rapidly. So actually, the next 12 months spend will be about half of what we spent in the last 12 months. In terms of funding sources for this, at the end of the half, we had $45 million of cash resources and $70 million of undrawn debt capacity and then operating cash flow that we'll continue to make, supported by that stronger shipping outlook, stronger product mix and hopefully not seeing those one-off costs reoccurring.

Probably worth noting, just a slight change to our guidance in CapEx for this project. No change to the overall number of $341 million, but to the phasing. So our previous guidance issued in March was that we would have $150 million spend this year and $52 million spend next year. We're revising that to $165 million spend, so a bit more this year and $30 million next year, so a bit less next year. And really, that's a function of timing of -- or scheduling of projects and of payments. Certainly, we're in the midst of it at the moment. Ben will talk you through what we're doing, and you'll see some great videos and pictures.

But all of that, lots of labor on site, lots of kit going in, all of that sort of leads to the CapEx that we're seeing at the moment. I won't dwell on the balance sheet really kind of working capital elements, inventory up as production exceeded sales and so a good store of unrealized value there. Receivables down. We typically see a reduction in receivables in the half, as strong sales in Q4 convert into receivables and into cash. And then look, probably of note is the creditors' balance with so much spend going on, on that project. Actually, our creditors number has reduced. And that reflects to an extent, we're working with a lot of small contractors on the WCP A project, and we rely heavily on them. And in turn, they rely on us paying them promptly. So we're working very closely with our suppliers in terms of just keeping them in good shape.

But overall, net current assets north of $175 million and undrawn debt capacity at the end of the half of $70 million. And finally, just looking at the dividend. As we've mentioned, we didn't consider the impairment in calculating the dividend that we've declared. We look through the investment cycle, and we have declared $0.10 per share for the dividend, which brings total returns from Kenmare to north of $300 million since 2019, equivalent to around GBP 2.50 per share. So with that, I'll hand over to Ben, please.

Good afternoon, everybody. I'll start the operations update with some views around our safety performance in H1. It was really very satisfying situation that we went the whole of the half year without an injury -- a lost time injury. And in fact, we were able to achieve by July 7 million hours of work without a lost time injury, which is a very strong, in fact, world-class performance. Our lost time injury rate -- injury frequency rate is down at 0.03 at the end of the half, which is really very strong performance. Probably one of the most important parts to pull out of that is the way our project team has been performing.

They've actually now been working on projects for more than 4.5 years on the site without a lost time injury. And that's particularly important when you have contract workforces that come in and come out. They don't have necessarily the work culture that we promote at Kenmare and so that's a very strong result. It all comes from an initiative that we've been running over the last few years called Trabalho Seguro, meaning safe work, where we focus in very much on the authentic leadership on standards, on making sure that we plan for safe work and then how the leadership team interact with the workforce with coaching at the forefront of that.

Next slide, please, Alex, and we'll talk about the production performance. Today, we're maintaining our guidance for the year. That's the first thing to say. And that comes on the back of what I'd call a bit of a steady performance in H1. Tom mentioned that we had quite a bit of disruption outside of our control in terms of communities and new government going on. However, we managed to increase our HMC production year-on-year. And that came through mining higher grades, although at slightly less excavated ore volumes. The HMC production translated into ilmenite increasing by 1%.

And I guess where we look at that moving forward into the second half of the year is that in order to achieve guidance, we needed to strengthen that performance. And we expect that to happen by the delivery of the new high-capacity dredges, which I will talk about in a few moments and also the fact that we have a selective mining operation now fully operating at its full production output. Another key thing to note was the non-magnetic products of zircon and rutile. Both of them exceeded expectations quite significantly. In fact, our standard zircon, which is our highest quality zircon product, was a record output for an H1. And that came about because we were able to draw down intermediate stockpiles as well as achieve higher recoveries. And both those 2 products support our margins quite well.

In putting more product -- more zircon into the better products, that caused us to see a reduction in the concentrate production by 9%. And then on the shipments, we had a half which was really split. Q1 was very strong. Q2 was weak. And Q2 was weak on the basis of weather and maintenance on the 2 vessels that we have, the one vessel having gone in June to dry dock, and that's due to be returning in September. Next slide, please. Maybe to talk a little bit about the selected mining operation. This is a new capacity improvement project. It brings capital-light additional capacity to the business, flexibility to the business. We were commissioning that project through Q1. The project has cost less than $6 million and is now achieving its run rate of 300 tonnes per hour.

In the first half of the year, it was ramping up. There were a lot of learnings associated with this low capacity option. And we were able to produce 12,000 tonnes of HMC. We're now running at its expected run rate, and we expect to still deliver the expected 50,000 tonnes of heavy mineral concentrate per annum. Our confidence has been improving with the units. And to the extent where we have placed an order for a second unit, that is expected to rise up to about 1,000 tonne an hour during 2026. And we have -- obviously, we will be moving into a new area with that plant. The cost is expected to be $15 million. And I guess what that -- what the combination of those 2 SMO plants do is they offset a previous project which we had envisaged, which was to upgrade WCP B by 1,000 tonnes an hour in the future. However, the definitive feasibility study that was done on that project was significantly more capital intensive.

And we see that the SMOs are very much a low-intensity option that can bring flexibility for around about 10% of our mining capacity. Moving to the next slide, please, Alex. James mentioned the opportunity that we've seen for increasing shipments. You can see in the graph on the bottom right there that our inventory of finished products has been increasing over the last few halves. And with the Peg transshipment vessel in its dry dock and with a future Bronagh J dry dock in 2 years, we wanted to make sure that we have the capacity to draw down those stocks and increase the sales, which are available to us. Bronagh J has started this half extremely well. But as I said, the Peg is still in dry dock. And so we've been investigating how to bring in a rented third vessel to help with that reduction.

Weather is usually better in the second half of this year. And so what we see -- we expect to see with a third vessel is increased sales in the second half with the returning Peg in September, hopefully, this third vessel coming in, in September and the Bronagh J continuing to operate well. The actual amount that we can draw down those stocks this year is still to be determined. It rather depends on the ability -- on the combination of the weather and then how 3 vessels interact, but we expect that -- on the basis that we expect that volumes will come down on our stocks, we will continue to contract that vessel most likely to bring them down to a normalized level of somewhere between 150,000 and 200,000 tonnes.

We'll give some more detail on how that's going at our Q3 announcement, which is in the middle of October. Okay. Next slide. This is -- I'll just hold on this -- maybe you can just hold on that slide a second, please, Alex, because it sort of is very much a status update of where we are today with our capital projects. What you see on this photograph is over the top is the existing mining pond of WCP A. And in the center is what we call the staging pond, which has the 2 new dredges floating and the new feed preparation unit, which will do the desliming of our future ore bodies sitting at 98% -- 95% complete floating in the pond. This is photographs less than a week old and shows that we are really -- most of the investment in this project is now done to get the project up and running at the new capacity levels and with the new desliming equipment in place.

The next phase is -- and which starts this week is to break the -- sorry, just go back a second, Alex -- is just to break the berm and join the staging pond to the mining pond. And then over the next 4 weeks or so, we will be swapping out each of the units. So the 2 new dredges will be -- will replace existing dredges and the feed prep unit will replace the back part of the existing plant. That process will take about 3 to 4 weeks. And by the end of September, we expect to be commissioning the new plant and moving on towards Nataka. On the next slide, probably is really good to show you one of the key milestones that has just taken place during July and into early August, and that's the landing and movement of the 2 new dredges.

So these 2 dredges were manufactured in Holland. They were delivered -- they were ex-works early June and traveled using a semisubmersible ship to offshore Moma. We then offloaded the dredges on barges onto a dedicated purpose-built beachhead and that beachhead, we then in good weather, landed the dredges using self-propelled modular transporters and drove those dredges off the barge along a purpose-built road to the staging pond where you see them in the bottom right-hand corner there prior to the flooding. If you would like to look at the -- there is a video and photographic footage of the process on our website at the link at the bottom there, and it's really quite good to see the progress that's been made there and they're updated frequently.

With those new dredges, we expect to be able to deliver a new capacity of 3,500 tonnes an hour. In the past, we've been limited by the amount of slimes in the ore body. Going forward, the desliming plant will remove that slimes and allow the spirals to be used for their full capacity. And we expect that to take place, as I said, over the coming month or so. And hence, the derisking of this project is really largely complete in 4 to 6 weeks' time.

Next slide, please. The -- this is really the time line, as I've explained the left-hand side, but let's maybe talk about the tailings storage facility, which will be commissioned in the middle of September. And after that pause of production of 3 to 4 weeks for the new equipment, we start the ramp-up in end of Q3, early Q4 and expect to be fully commissioned by the end of the year with WCP A operating at its new higher capacity. And with that, I'll pass over to Tom to deliver the market update.

Thanks very much, Ben. Look, I think in my introductory remarks, I talked about the quality of Kenmare's resource, the life we will have in our mine. And in addition to that, the ilmenite or the products we produce are low impurity. So we're very attractive to people, to customers who themselves have long-term projects and who need a constant mix of quality materials and who are looking to source it over multiple years. Many of our customers have been with us since we started production, and we expect them to be with us for many years to come. And that supports our demand. That allied to the fact that we focus our efforts, we focus our marketing team's efforts on the segments of the market that are fastest growing, and they are beneficiation of pigment production and titanium metals.

In the first half, certainly and over the last number of years, we've consistently seen Chinese pigment production reach new records every year. China has a significant amount of processing capacity. Not all pigment plants are fully utilized, and they consequently have high demand for material. That's driving demand for Kenmare's material. Similarly, the titanium metal space, a lot of consistent expansion in that space. And although it only represents 5%, 6% of the overall titanium minerals market, it's north of 20% of r Kenmare's market, Kenmare's sales. So it's something where we feel we have a particular advantage and where we forged some very good relationships.

We're also seeing on the demand side, the fact that the EU in the first half last year placed tariffs. There's that word again, on Chinese pigment imports into the EU, and that has certainly supported demand from our EU customers. But tariffs more generally have limited impact on us because all of our materials, as I said earlier, are designated as critical minerals and so are tariff exempt. So the tariffs that are supporting the demand are perhaps not the ones you'd expect in Western Europe.

Moving to the next slide. If the demand side is positive and certainly very positive for Kenmare’, the supply side is perhaps the area where we see more challenging conditions. China does produce ilmenite, but it produces ilmenite predominantly as a byproduct of iron ore. And that puts pressure on the domestic Chinese market for sulfate ilmenite, which is slightly lower quality than Kenmare’'s products, but that kind of impacts on the global price and kind of sets the global price. We're also seeing, because of that excess capacity, a demand for material -- concentrate material rather than the finished products we produce and Chinese concentrate producers in Africa and quite a few of them around us in Mozambique have increased significantly their supply in the last 12 months.

Now I think if we step back, we can see this as a response to very high pricing a couple of years ago. And we certainly would have seen this in prior cycles in countries like Vietnam and Cambodia -- or excuse me, in Vietnam and Indonesia, where kind of very artisanal producers using quite rudimentary equipment were able to produce high volumes of heavy minerals concentrate, but they can't mine all of the resource that we can. They can only mine the simplest, most free flowing sands. And typically, as pricing falls as it has done in the last year or 2, those producers start to come under pressure and others do as well, and you see supply correct itself. But certainly, at the moment, we're not seeing signs of that or we certainly can't rely on them.

We had expected to see an improvement in the supply-demand balance maybe over this year and into next year, and that's perhaps pushed out a little bit. And the impact of that postponement of price recovery on Kenmare is the impairment that James mentioned because of our moderated estimates for future pricing. If we move to the next slide, please, Alex. For Kenmare, as I mentioned, we sell an awful lot of our products on long-term contracts. And so we can -- we have good visibility on our volumes for the second half of the year. That's the sort of visibility that enables us to consider, as Ben and James said, taking on another transshipment vessel. And we have -- our order book is full of high-quality counterparties who are committed to taking our product.

We do expect pricing to continue to be soft, maybe a shade lighter in H2 than H1, but hopefully bottoming out at the moment. It's not just Kenmare that's focused on recovery ahead, independent commentators like TZMI and TiPMC also see that recovery, but equally like us, they share a caution as to when it will emerge. And on our other products, zircon and concentrates, it's a very similar story. Kenmare products are strong. Our relationship with our customers are strong, but the overall market is soft and the concentrates that are being produced globally and sent to China for processing also contains zircon, so that impacts on the market.

So maybe to conclude, look, I think the outlook for Kenmare is a positive one. We've maintained our guidance for 2025, both in production and costs, albeit, as James said, with that small adjustment to CapEx. We are working hard on a number of fronts to enhance our margin to increase our production resilience via SMOs and indeed a new product called ZrTi that we hope to sell our first meaningful cargo of in the second half of this year. And if I look at the next slide, please, Alex. I suppose the key characteristics of Kenmare, they're the ones I introduced at the start, one of the biggest deposits in the world, one of -- an almost unprecedented mine life, low-cost industry position even at these comparatively weaker pricing, still making significant EBITDA margin, and we would expect that margin to improve in the second half as it did in the second half of last year, well advanced in our capital program.

As Ben said, over the next 6, 8 weeks, we have most of the heavy lifting done, and then we'll be into commissioning. And by the end of the year, substantially all of the risk behind us -- will be behind us. And we put the balance sheet and the funding sources in place to achieve that. We're a preferred supplier into the markets that have -- that are the strongest. And look, we have a good long-term partnership with Mozambique. Mozambique has been good for Kenmare, and I think Kenmare has been a case study of how countries and companies can work together. And I'm hoping that, that recollection of the positive impact of the past and assessment of what we can contribute to the country in the future because it's very significant.

And certainly, these are the points I made to the President in June when I met them. We're hoping that they will lead us to a resolution of the implementation agreement, but not quite there yet. So with that, I'll hand over to questions, if that's okay, and thank you all for joining.

Thank you, Tom, James and Ben. And yes, we are now going to take questions. [Operator Instructions] so let me start off with the first question today. And that's, I appreciate that we are in a period of heightened CapEx investment. When that ends, can you give a sense of management priorities for surplus cash flow across deleveraging, shareholder distributions and M&A, if any?

Okay. Maybe I'll take that one to start with. And actually, it has been one of the elements of discussions we've had with shareholders in the last week or so. Maybe the first thing to say is that we would expect to kind of reach peak net debt towards the end of this year and probably for the first half of next year. And then that deleveraging, as you mentioned, probably starts to become really recognizable in the second half of 2026, all other things being equal.

And we've maintained our commitment to paying dividends through the capital cycle. And I think shareholders were pleased with the interim dividend last year -- last week and pleased with the reassurance that there will be a final dividend. I think that we recognize that maybe when we come out with results next year, we'll need to give some insight into capital allocation, how we'll feel about core dividends, special dividends, buybacks in the future. And M&A, not on the horizon in the short term, I mean I think it's certainly something that shareholders have mixed views about. Some of them would prefer to see us focus on Mozambique and on Moma and extract as much value from it as we can.

But equally, others recognize as do we, that we kind of suffer a discount for being a single asset, single project company, and there could be value to diversifying away from that. So I think certainly, nothing immediate, nothing significantly immediately. I think it would probably be '27 before this becomes a realistic proposition to engage with shareholders on. And then, of course, it has to be balanced against share buybacks as well. So a little bit of watch this space, certainly more insight into the long-term answer to those questions over the course of '26, but something we are actively thinking about.

Okay. Thank you. Next question brings us back to the implementation agreement. When do you hope for the implementation agreement to be signed? And what are the issues that you need to agree on?

So as perhaps I covered earlier, the biggest issue that we've had to agree on is the royalty rate that we pay on our sales. And Kenmare not just pays royalty rates on our sales, but we also pay royalty rates on some of our processing of heavy mineral concentrate. And by the end of the renewal period of the implementation agreement, which would be 20 years, we'd be paying not far off 5% of our revenue as a royalty, which isn't far away from the current level of 6% in Mozambique, if we were bound by the current laws.

So it's mostly been royalty. Most other elements of the renewal are agreed. And while there's no firm timetable for us, I think we are 8 months beyond the expiry of the agreement. And I think both ourselves and government recognize we need to get it resolved. And certainly, that was the message I gave to the President 2 months ago. So hopefully, we can turn our attention to that before too long and get it resolved, but there's no obligatory timetable.

Okay. I think you covered this in the presentation, but we'll ask it again just for clarification. Can you quantify the impact, if any, of the U.S. tariffs on Kenmare?

I mean, on a day-to-day basis in terms of tariffs on the materials we produce export -- and export, nothing on a kind of a less tangible basis. I mean, of course, tariffs are impacting on investment certainty and people's willingness to make investment decisions. And that, I would say, aligned to the ongoing softness in the Chinese property market and clearly, conflicts that are ongoing in the world probably is making people a little cautious and sitting on demand a bit.

I think if the tariff situation were stable at least, and we would see some degree of reconstruction in conflict regions, we would have a significant uptick in demand and by consequence, likely significant price response to that, but we're not quite seeing that right now.

Thank you. Back on distributions. On future distributions post Nataka, how should we think about the mix between buybacks and dividends? I would prefer to see more of a skew towards buybacks when the stock is trading on a single-digit PE multiple.

Yes, a very good point. And look, I think as we say to shareholders, the biggest buyer of Kenmare in the last 5 years is Kenmare. We bought back 15% of the stock. So buybacks are certainly always going to be part of the equation and part of how we try and mix shareholder returns. Plus we also see that you don't get credit for infinitely increasing dividends, and they become a challenge as well. So I think as we try to guide on capital allocation, it will be a maintainable dividend policy and then occasional special dividend stroke buybacks to supplement that. And we give clarity on each individual year on what our plans are.

Can you talk about the return on investment from the third transshipment vessel? Could it be material if you're stepping up capacity by, say, 50%?

Look, the third transshipment vessel is -- it's kind of an experiment. On the assumption and expectation that we're successful with the move to Nataka and increasing production above current levels, we remove mining as a bottleneck to the operation and maybe we transfer bottlenecks to processing our export. And trying to understand what our max export capacity or sales capacity could be is part of it. Secondly, we have comparatively high stocks at the moment, as James and Ben mentioned, and we would like to draw down those stocks over the -- between now and the end of 2026 and this -- maybe by 100,000 tonnes or so.

And this supplementary capacity enables us to do that. But we have like 3 ilmenite products plus zircon plus rutile plus concentrates, we do need to hold a level of stocks that enables us to respond to customer demand. So we wouldn't be drawing down stocks slightly below that 150,000, 200,000 tonnes level. So it's about giving us flexibility, helping us understand what's possible and of course, supplementing cash flow and business performance over the next while. The return on investment, because these are rented vessels, is very, very, very significant and very quick. Otherwise, we wouldn't be doing it.

Thank you, Tom. Next question here, going back to the takeover. What went wrong with the takeover bid?

What went wrong? Well, that's not a question for me. That's a question for somebody else. Look, I think the approach that we got was one at GBP 5.30 was at a level that certainly our shareholders felt was worth progressing discussions on, but progressing discussions on with a view to that level increasing. Now I would say both in Oryx and Michael's defense, so to speak, they were a little bit unlucky with the way the dollar-sterling exchange rate moved during that time. The dollar depreciated against sterling. And so a sterling-based deal became significantly more expensive in dollars. And of course, the mine produces dollars.

So I think that, that kind of impacted on their ability to pay a larger sterling number. And certainly, when they came back to us and said, look, we're going to struggle to stay at GBP 5.30. In fact, we could well be below that or substantially below it. Based on the discussions we've had with shareholders, we were of the view that, that wouldn't be acceptable. And certainly, when we went back to shareholders and said, we've terminated the discussions because we don't feel we'll reach a deal that U.S. shareholders would want to accept. They were all very much aligned with that thinking.

So look, M&A dealmaking is a tricky business. And I think one thing it did do is shine a light on the quality of the asset and maybe the upside potential over the coming years in the price. And of course, there's nobody better than Michael to know that potential and that value, but it just didn't work on this occasion.

Okay. Thank you. I've got another question here on the implementation agreement. And I think you might have covered it, but let me just ask it again just for clarity. Is it reasonable to assume that the new IA will be signed before the year-end? Or is it still a case of wait and see?

It's reasonable to assume it, but it could be wrong. I very much hope that we will get it done before then. I think I would suspect government is of the same view. But as I said, there's no firm timetable.

[Operator Instructions] We've got one outstanding question, but we certainly got time for a couple more. So if you do want to ask one, please fire away. Let me ask the question that we have outstanding, and that is, can you give me a sense of the cost base between fixed and variable? And also how much of the cost base is denominated in hard currency versus Mozambique currency?

That sounds like one for a CFO.

It certainly does, yes. Thanks for that, Alex. Look, on the fixed variable, there are very few costs that are truly variable in terms of on a dollars per tonne or that change on -- with each incremental tonne added or taken away. The ones that would come to mind would be your -- sort of your consumables, electricity for pumping, fuel for driving around trucks, that sort of thing. There's an element of, obviously, the taxes as well. So your implementation agreement is obviously sort of variable driven.

In the longer term, everything can flex. So you can -- if you're talking about over the course of a year or more, you can start to sort of think about flexing labor costs or your other costs. But I think you would be looking at, at least, 60% fixed. And then I think the other question was around currency. So labor would be the biggest driver of our local currency spend. Labor is around 30% of our total cost base. And then you've got other sort of local spend across some of the repairs and maintenance production overheads, particularly.

And you get to sort of around 30% to 40% would be in local currency versus the balance being in USD predominantly or -- look, we do obviously work closely with South African and Australian partners or contractors as well, which brings in some of those currencies. So I think if you take a -- if you're looking over the course of around 12 months, you're probably talking about 60% fixed with 30% to 40% in local currency.

Alex, that local currency has in effect been paid against the dollar for the last number of years. Now that may or may not be sustainable into the long term, but that effectively local costs have been dollar costs because of that.

Okay. Thank you. We have had a couple more questions in, and I think we've got time to ask them. So I'll ask them both -- in fact 3 now. Any leakage in the new plant and what contingencies do you have regarding this?

Ben, do you want to cover that?

Yes. Yes. So by leakage -- I'll talk about leakage maybe in terms of time and also in dollars. So the project has been expected to be commissioned by the end of Q3. And certainly, it has been expected to be constructed by the end of Q3, and we go into the ramp-up in Q4. That's fairly much on track. So that's -- we see that as being on time and no major changes there. On the cost side of things, I think James explained that we're going to spend a little bit more money this year based on timings of payments. It's important when you've got contractors who are not massive contractors, but doing a lot of work over a long period of time that you pay them very much frequently and keep them their cash flows alive because their ability to deliver the project is our success at the end.

So we have brought forward some of those payments and made sure that they are being paid promptly and hence, that readjustment on our guidance for 2025 CapEx. But the overall guidance of $341 million for the project is intact, and so no leakage, so to speak, on that front.

Thank you. Next question here. What is management shareholding in the company currently? And have you seen any material changes to your shareholder base?

I'll touch on the shareholder base one. The shareholder base actually hasn't changed that much and certainly didn't change much during the offer, maybe 1% or so. And the shareholder base has been generally quite concentrated. The top 10 shareholders are about 70% of the register. And while we have had some movement in and around within those categories, that concentration stays broadly the same. So our big shareholders, the Oman Investment Authority; M&G; JO Hambro, who increased their shareholding last week; Aegis, who our U.S. funds, increased their shareholding the week before last; Premier Miton and Aberforth are probably 50% between them.

We have actually managed to diversify the shareholder list a little bit with kind of family offices and funds who like dividends, have a long-term investment horizon, but aren't necessarily pegged against benchmark so they can take a long-term view on the project and a long-term view. And that long-term view, I think, supported how they thought about the approach this year. Management shareholding, I think, I probably forget the number of shares I own. I think it's 52,000 shares, although I have some long-term incentive plan shares vesting over the next couple of years.

And both James and myself and James, in particular, are comparatively new to the company over the last number of years and certainly haven't had the opportunity to build up huge shareholdings, although that 52,000 shares I have bought in the market. Look, we're all very well aligned with shareholders' interests through long-term incentive plans, stock vests after 3 years and you have to hold it for another 2. So I think that the alignment of our interest with shareholders is definitely there. And it is something we discuss with shareholders, management ownership and management motivation. So they don't seem to have any particular concerns in that regard.

Okay. Thank you. Next question here. As we move the dredge to new areas, is the material composition exactly identical or does it require customers' approval?

So I mean, the ore bodies -- all of the ore bodies that we mine are varying all of the time. I mean part of our marketing capability is to be able to blend the ilmenites, which come from the different areas of the ore body. So if you think about this, we have -- currently, we have 2 dry -- 3 dry mines. We have 3 wet mining processes as well with dredges feeding them. And now we have an SMO already. So it's our job to try and blend those products to receive -- to get consistent product qualities.

And then even those different -- the grades of the different products, the ratios of those change all of the time. And that's the job that our marketing department does is to manage customers' expectations and to make sure that products can be delivered on spec. Now so going forward, that situation continues and the ratios of the different products also changes. And so that's something that we understand and we expect, and we will manage accordingly over time.

Thank you, Ben. I got the last question. At what ilmenite price roughly would debt servicing become an issue?

I don't think that -- I don't think, to be honest, debt servicing is something that causes a particular anxiety. The debt covenants are set -- we haven't been anywhere near testing them and the ratios at which they kick in and the levels of those covenants are set out in the annual report. And look, I think that the other point to think about here is that the facility we have is revolving credit facility. There's no maturities on that until 2029. So there's a lot of flexibility to draw down, pay back, draw down, pay back and certainly based on our current forecasts and how we expect the net debt to evolve over the next number of months.

And of course, the risks that are behind us, a lot of the risks are behind us. That's not something that exercises us unduly. I don't know, James, sorry, I probably took the question on you, but maybe you want to answer it a little bit.

Similar thoughts, Tom. Nothing really to add. I think we had $47 million of EBITDA in the first half and interest costs of around $4 million, plenty to cover. And as you say, no repayments until 2029. So -- and plus, I think, look, worth noting the banks that we have that RCF with Absa, Standard, RMB are very sort of familiar with the industry, and we've got very close relationships with them. So we're in constant communication with them and work with them well.

Great. Well, that is, as I said, all the questions. That brings us to the end of today's webinar. And as you leave in a minute, you'll be asked to complete a short survey. I'd be really appreciated if you could spend a couple of minutes completing that. But before you leave, I'm just going to hand back to Tom just to say a few concluding remarks.

Thanks very much, Alex. And listen, thanks, everybody, for joining us and taking the time to spend an hour with us. And hopefully, you found the story interesting and useful. Look, I would urge you to keep an eye on the website, keep an eye on our updates. There's a lot happening over the next 6, 8 weeks within the development project that Ben spoke about. And every single event that happens is reducing risk and bringing us a day closer to that commissioning and getting going into the next phase of Kenmare's life because Nataka is 70% of our reserves. All our mining plants will end up there.

We've worked really hard to prepare ourselves to mine there to understand how it might be different from what we have and to invest to make sure that we can achieve that effectively and at the right cost level. And I think that we'll start to see the fruits of all those investments and all that effort over the next short while. And hopefully, we will also see finalization of the implementation agreement. I think those 2 factors bring us into a very interesting period in the company's life. So thanks for joining us and look forward to speaking to you again maybe in March next year on the other side of all this.

Wonderful. Thank you, Tom. Thank you, James. Thank you, Ben, and thank you to everyone for attending, and hope to see you all soon.

Thanks, Alex. Thanks a lot.

Thanks, Alex. Thanks, everyone.

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kenmare Resources plc H1 2025 Results. [Operator Instructions]

I would now like to turn the call over to Tom Hickey, Managing Director. Please go ahead.

Thank you very much, and welcome, everybody. Thanks for taking the time to join us on our interim results conference call. With me here, I have James McCullough, our CFO; Ben Baxter, our COO, and we'll bring you through today's presentation. Maybe just as an intro, many of you are familiar with Kenmare. I mean, we're one of the largest players in the titanium mineral space. We operate the Moma mine in Mozambique. We have done -- been there for nearly 40 years and producing for nearly 20. And we're very focused on being there for many, many decades to come and being a good citizen while we're there. And I think we were particularly pleased in the first half of the year to become a constituent of the FTSE4Good Index for the first time. So just an interesting mark of how we try to do our work.

Looking at the specifics of the first half of the year. I think from an operational perspective, despite some challenges on the ground in Mozambique that I'll touch on a little later, our operations were stable and consistent and safe. We had no lost time injuries in the first half of the year in our operations or in our development projects. We're on track to achieve our 2025 production and operating cost guidance. But we are seeing, and we'll talk about a little later, maybe slightly weaker markets in the short to medium term. We expected it this year, but the outlook is probably a little bit more moderate than we expected, and we can see that reflected in the results through an impairment loss that James will take you through.

One of the big signposts for this year is our capital project. As I said, we have a multi-decade mine life. We've been investing to move towards our biggest ore body in Nataka for the last number of years. It's a $340 million investment to upgrade our WCP A plant, which is our largest mining plant, to bring 2 new very powerful dredges to Moma and to invest in the infrastructure necessary to mine at Nataka. And I think we've been very pleased with progress on that project in the first half of the year. We spent just under $100 million. The budget still remains $341 million. We successfully brought the 2 new dredges from the Netherlands to land at Moma, and they're currently sitting in the staging pond, which is being filled with water even as we speak.

And as we've said in the past, every day that we successfully deliver elements of this project, it's being derisked. By the end of this year, most of the core elements of the project should be delivered, and I think that will be a big important signpost for us, and Ben will take us through project progress on that a little later. I think all of those things, the operations, the progress of the capital program make us optimistic about the future and helped us declare an interim dividend of $0.10 a share. And I suppose are evidence of our commitment to keep paying dividends throughout this capital investment cycle. It was a busy half year in other ways, however, as well. We had a possible offer approach from a consortium of Oryx Global Partners and my predecessor CEO, Michael Carvill, people who understand the space very well and obviously, Michael, who understands the company like no other.

It was a serious approach. And I think it was -- while we were in an offer period for just over 3 months, ultimately, the company terminated discussions. And I think it was an interesting time in that it gave us the ability to engage with our shareholders to understand how we thought about value of Kenmare now and in the future. And it shone a light on the fundamental value of the business. I mean, ultimately, I think investor sentiment was that an approach at a time when markets are a bit weaker when one of our key agreements that I'll touch on it in a few moments, remains outstanding, and we're in the middle of a capital program might not be the best way to recognize full value of the business. But I think certainly, none of us are wedded to Kenmare remaining independent. There certainly -- we're open to any approaches that might come in the future, and I suppose it is part of life as a public company.

I think I suppose the final element of the first half, which was, as I said, quite a busy period is Mozambique itself. Mozambique had challenges in the first -- towards the back end of last year and the first quarter of this year arising from disruption and civil unrest associated with the presidential election and transition to a new government. That was reflected on the ground with damage to government property, widespread protest and I suppose a disappearance or a reduction in day-to-day administration governance and security activities. And we do see that reflected a little bit in the first half of the year. It did cause us some extra costs. It did cause us some disruption. Thankfully, that's all quietened down now.

We're back to very much normal operations, and we were able to get through that period safely. But I think what that process also did was it kind of interrupted the ongoing negotiations we have had about our implementation agreement. Many of you will know this implementation agreement is one of our foundation agreements. It covers how we operate our processing and export activities and the fiscal terms associated with that. It's not -- it doesn't impact on our day-to-day mining activities. And that agreement nominally expired at the end of December last year, 21st of December, albeit we have been continuing to operate in the normal course in accordance with the legacy terms with the government support.

And look, I think we've been engaged in this renewal process for not far off 3 years now. We've engaged with a wide range of government stakeholders because this is an agreement that cuts across a number of different government departments. It covers fiscal terms. It covers a mining project and so quite a few people are interested. And of course, during that time, we've also had a change of government and a change of ministers, and we've had to, I suppose, resume and reintroduce people to the project.

At the outset, I should say that the agreement as drafted back in 20 years ago contains an automatic right of renewal for Kenmare. But we recognize that times are different now. We recognize that the incentives that were necessary to get the project going aren't appropriate for the future and the government needs a better return from the project. And we have voluntarily proposed a significantly improved return for Mozambique from Kenmare.

In March, we proposed that the royalty, which was previously 1% would go to 2.5% and that we would apply withholding taxes on services from outside the country. Council of Ministers felt that, that wasn't sufficient, but we understand that, that approved substantially all other parts of the renewal at that point in time. And look, I should stress that during all our discussions with stakeholders in country, they stressed that they regard Kenmare as a good corporate citizen. We fulfilled every obligation we made when we launched the project. We employ over 1,700 people. We have excellent social programs.

We're in the presence where exactly the sort of company that Mozambique wants to have operating in the country. So we're very hopeful that we will conclude an agreement, but the process has become elongated. Following that Council of Ministers, we proposed a phased increase in the royalty rate up to a maximum of 3.5% and withholding taxes previously. And certainly, we would have been very hopeful when myself and my colleague, Gareth Clifton, had the good fortune to meet with the President at the end of June. We had a positive meeting there. And I suppose we stressed to the President the importance of this agreement for Kenmare. The fact that this -- our objectives for the next 20 years are very much aligned with the country's objectives. We want investment. We want improved prosperity. We want continued social programs for the people in and around our mines.

We want a clear platform to make the investments that we're undertaking to do. And I think it's important for Kenmare. I think it's important for the country. We'd like to see that agreement concluded and resolved as soon as possible. We were a little bit concerned last week to see a suggestion by a government spokesperson that the agreement had been concluded. That's certainly not our position. And obviously, we had to dispel that notion. And we're very hopeful that we'll be able to conclude everything in the short term. But I think we can't be certain that that's the case and hence, the note of caution that we have in the statement today. So this is something that there's a lot of attention on Kenmare and we know in the investment community, and you should be assured that we're giving it the attention it deserves.

That's, I suppose, the intro for me. What I'll do now is hand over to James McCullough, who will take you through the financial results for the first half. Thanks, James.

Thanks, Tom, and good morning, everyone.

Look, just looking at key focus areas across the financial results. I'll start off with revenue on the top line. As Tom mentioned, slight price declines in the half, but we had a supportive sales mix. So we had more zircon in the mix this year versus H1 last year and a slight increase in shipments. So that led to a slight uptick on the revenue side. On costs, we saw some price or cost escalation rather at the mine. Costs at the mine were up around 7% or 6%. And then we had a number of one-offs, which together reduced profitability. We still kind of achieved solid EBITDA of $47 million at a margin of 30%.

Looking through on the CapEx side. So we're now happily through the peak CapEx on the WCP A program. H1 was the peak half for CapEx in that program. So we spent around $95 million. 60% of the project CapEx is now spent around $210 million. H2 CapEx will be $70 million, which is still quite high, but tailing off. And from 2026 on, it will tail off fairly substantially. And as Tom mentioned, still on track with a budget of $341 million. As we flagged in July, we have taken an impairment in these results of just over $100 million. That's primarily relating to a lower pricing outlook as well as costs associated with the implementation agreement renewal terms that we proposed that Tom just outlined.

The impairment is noncash. It doesn't affect operations in any way, and it doesn't affect our thinking on the dividend. And we have declared a dividend of $0.10 per share, which will bring total shareholder returns from Kenmare since 2019 to north of $300 million. And look, I suppose a reasonably good outlook rather on H2. Shipment volumes, we expect to tick up both through better weather, but also the bringing on board or we're looking to bring on board a third transshipment vessel for the remainder of the year. Product mix in the second half should be more zircon weighted and some of the exceptional costs that I'll go through shortly, we hope not to see again in H2.

Moving on to the summary income statement. You can see some of these factors playing out. So flat revenue, cost increase, but still solid EBITDA at the bottom line there of $47 million. That EBITDA has been enabled by good performance in challenging conditions. So looking at shipments, firstly, shipments were up by 2% versus H1 last year. A stronger Q1, a good -- a solid Q1. Q2 was a little weaker as weather was worse than expectations, and we had some maintenance activity. But the outlook for shipping with that third vessel is strong and weather typically is better in the second half. Looking at the market itself, the prices for the individual products were down slightly, and we would expect a continued sort of modest decrease as we go into the second half. But as I said, we'll look at probably a product mix, so higher zircon and rutile content to support the average prices that we received.

On the cost side, so the costs were up 16%. That's $17 million in total. I can think about that in terms of changes and increases at the mine itself as well as things that happened away from the mine. So at the mine, direct costs were up 6% or 4% on a unit cost basis. Main drivers there were labor where we had slightly higher FTE numbers and salaries and bonuses payable on 2024 performance. So labor was up around $4 million overheads. We had increased production overhead costs of around $2 million. And then some of the issues that Tom mentioned earlier around security, we had around an additional $1.5 million this year versus last year in terms of security costs and the of replacement and repairs associated with theft.

Moving away from the mine and to sort of indirect and other costs, which were up $10 million year-on-year. The implementation agreement royalty, which we have accrued from the beginning of January, so about 2.5% versus 1% previously. That's an accrual of around $2.5 million. And then we had head office costs were up by about $3 million, the bulk of which was related to legal and advisory fees associated with that possible offer earlier in the year. And then look, we had $3.3 million in insurance proceeds that came in, in 2024, which makes the comparison -- the year-on-year comparison more difficult from a 25% perspective.

Some of these costs will remain as we go through H2 and beyond. So the implementation agreement, for example, that will stay at 2.5% and some of those production overheads will be sticky. Others will reduce. So the costs associated with the possible offer were obviously very event related. As Tom said, the security conditions are ameliorating at the mine. So we would hope to see some reduction in the cost there and the insurance proceeds, obviously, were a one-off. So we kind of have a positive outlook on costs coming into the second half. Looking at net debt. So net debt has increased from $25 million to $85 million over the half. The standout item really is the CapEx.

So H1, as I said, is the biggest half for CapEx in the WCP A project. H2 will be around $70 million, so $25 million lower and then into H1 '26, it will probably be around $20 million. So you'll start to see that orange bar shrinking fairly dramatically over the next few releases. And then also on the outflows, we had the $0.17 final dividend payout. And all of this funded through operating cash flow, a good contribution from working capital as we converted receivables from sales at the end of last year into cash, offset slightly by lower creditors and higher inventory. If we take a look at the profile for CapEx in WCP A, substantially derisked at this stage. The majority of CapEx is now spent. We're up at around 60% or around $210 million was spent by the end of the first half. And the spend rate will decrease rapidly. So in the next 12 months from the end of the first half, we will have about half as much to spend as we had in the previous -- in the previous 12 months.

Funding sources for this, we had $45 million cash at hand and $70 million of undrawn debt capacity at the end of the half and then operating cash flow into the second half, supported by the higher shipping performance that we're anticipating, stronger product mix and a leveling off of some of those higher standard costs that I've just spoken about. Worth noting here maybe that we are updating guidance for the development project capital phasing. The total budget remains at $341 million, but we're moving from $150 million anticipated spend in 2025 up to $165 million with a reduction in 2026 spend from $52 million down to $30 million. And that's really reflecting phasing of the project and phasing of payments.

We are making good progress. You'll see a lot of pictures from Ben. There's an awful lot of work going on there at the moment. And of course, this all translates to costs going out the door. So all of that has to be paid for. Look, I went dwell on the balance sheet. Some just run through the working capital elements. Inventory up as production exceeded sales. So a good store of unrealized value there. Cash contribution from receivable reduction as we saw those strong sales in Q4 convert into cash. And then just to mention on the creditors side, the creditors number is down versus December. And if you think about that in the context of the project that we're doing and the amount that we're spending there, really, we've got a lot of contractors working on that project. Some of them are small contractors who are -- we are depending on them for the delivery of the project, and they, in turn, are depending on us for prompt payment. So we're paying them promptly to keep the project derisked.

Overall, though, on the balance sheet, we've got net current assets of north of $175 million and $70 million of undrawn debt capacity, as I said, at the end of the first half. And then finally, on the dividend, I already mentioned that we are committed to sort of keep paying dividends through the investment cycle. We haven't considered the impairment in estimating the dividend, and we have declared $0.10 per share, which brings total returns since 2019 to over $300 million or around $2.50 per share.

With that, I think I will hand over to Ben.

Thanks, James. Good morning, everybody.

I'll start, as usual, with a discussion of our safety performance on Slide 17. I'm delighted to say that we were injury-free during the first half of the year, and that was extending a continuation from 2024. That brought down our lost time injury frequency rate to 0.03 injuries per 200,000 man hours worked. The milestone of 7 million hours without an injury was reached in July. Unfortunately, then we had an injury just in the beginning of the second half. But perhaps the most impressive part of our safety record at the moment is with the development projects, the WCP A project is now exceeding 2 million hours without an accident. And the last one, in fact, was in January 2021.

And if you think about contractor workforces, transient workers coming in and coming out to deliver services to the project, it's very difficult to get the safety culture going there. So it's really a very strong performance. And the Trabalho Seguro program that we're operating for safety is really the main driver of our improved performance over the last few years, where we're focusing on leadership, focusing on standards and planning for safety and making sure that leaders spend a lot of time in the field coaching. So a really good performance on that side of things.

On to the next Slide 18, and the production outcomes. We're maintaining our guidance today after what I would call a steady first half of the year. Heavy mineral concentrate production was up 2%, and that knocked on into a 1% increase in ilmenite production. The increase came with additional grades but partially offsetting a reduction in the ore volumes. That was largely due to the fact that WCP B was mining harder material or at least we took the opportunity to mine harder material, knowing that the grades of that material were higher. The outlook looking forward is that we expect those excavated ore volumes to increase in the second half of this year. That's once the 2 new high-capacity dredges are commissioned into -- at the end of Q3 and also with the improved performance of the selected mining operation, which is now up and running and producing to expectation. And that will offset the 3- to 4-week delay or downtime for WCP A expected in September whilst we complete the project.

As I said, ilmenite production was up 1%, slightly down because of some lower recoveries in Q2. But the main thing I'd draw your attention to was the co-product production, which was 28 -- primary zircon was up 28% and actually was a record H1 performance for zircon production. Rutile was equally -- was also very strong at 20% above the previous year. And this came about because we were able to draw down some intermediate stockpiles, but also the circuits were operating at high recoveries, and we were translating zircon feed into more valuable primary products.

The net effect of that was that the concentrate production, which is obviously lower value products was down 9%, and that was also due to some maintenance in the circuits there. Shipments were up 2%. It was a half of 2 halves, if you like. We had a very good Q1 and then a poor Q2. Q2 impacted by not only worse weather than expected, but also some maintenance on both vessels. And in fact, the Peg transshipment vessel went to dry dock in early June.

Moving on to Slide 19 and to update you on our selective mining operation. This is a capital-light project that we've implemented to get additional production capacity. The project has been progressively commissioned through the first half of the year and is now running at 300 tonnes an hour and delivering to expectation in terms of its heavy mineral concentrate production. It was ramped up through the first half and produced 12,000 tonnes of heavy mineral concentrate, but that was back weighted. And looking forward, we still expect to produce 50,000 tonnes of heavy mineral concentrate in the full year.

Our confidence, I guess, is shown in the SMO because we've engaged to build a second SMO, SMO 2, and that will incorporate some of the design upgrades and learnings from the first unit, which is now running. So we expect this second unit will have some boosted reliability and also we've learned how to increase some of the throughputs as well. SMO 2 will be commissioned through the first half of 2026. And we'll see a rising capacity through that period to get up to 1,000 tonnes an hour. We expect the cost of that to be in the order of $15 million. And I guess what we see from the combination of the 2 units is that we have a capital-efficient alternative to the previously planned [ WCP ] upgrade. And so hence, we see the opportunity to improve margins in that regard.

To highlight James' comments around the increased shipments, we see the opportunity to increase shipments. And you can see from the graph at the bottom on Slide 20 that inventories have been accumulating. In -- whilst H2 has started well, Bronagh J is running well at the moment and delivering to her capacity. The Peg vessel is out at the moment, undergoing a dry docking for class certification, but she is due back on site in early September, and that project is on track. And weather is normally better through the second half of the year than in the first half. So despite those 3 things, we see the opportunity is there to further draw down stocks with the securing of a third transshipment vessel.

We intend to rent this and through -- hopefully, through the second half of this year, accelerate the drawdown of those stocks. We're currently progressing that contract discussions. We've got a contractor, a vessel has been identified. We're going through the licensing and the insurance processes and making some minor modifications to our jetty to facilitate the loading. So we'll be able to -- as that all progresses over the coming month or so, we will hope to give you some more updates on the expected production -- or sorry, the expected shipments that will increase because of that project at our Q3 production update. Moving to the next slide. I'll just hold on the title slide a second because it's a photograph that shows very much where we are at the moment in the project.

The dredges, as you can see there, have been landed and are secure in the staging pond. You can see to the top of that photograph that an active mining pond is currently progressing adjacent to the staging pond. And the next step of this project will be the linking of those 2 things. The feed preparation unit is there in the center of the photograph and is essentially complete. And at the moment, you can see that the pond, the staging pond is filling with water. This is over the last couple of days. And in fact, this morning, the dredges are free floating, and we expect this afternoon that the concentrator will be free floating. So very dynamic situation, but you can see there that the project is active and is progressing along quite well.

On to Slide 22, it's good to share with you the journey that we've just been through with the new dredges. They are now, as you see, they're safely landed and in position at Moma. And this was one of the key aspects of the project, a key milestone and a key derisking milestone for our production -- for our delivery of the project overall. The dredges were manufactured in Holland and left Holland on a semisubmersible ship in early June, traveled by sea to offshore Moma. And we have a video which I'd like to share with you to show how that offloading process took place. So maybe the webcast could just play that video. Thanks.

[Presentation]

So the 2 new dredges are high-capacity dredges. They are -- their purpose is to fill the WCP A concentrator in the future to a capacity of 3,500 tonnes an hour. They are oversized, so as to ensure that, that capacity is able to be achieved all or near all of the time. And you can see from that video how large they are. They were landed onto a purpose-built beachhead onto a roadway and then using self-propelled modular transporters, we brought them into the mining pond and parked them as per the photograph at the bottom right there that as you saw earlier, that is now a completed work site and flooded ready for the linking into the main plant. Just to remind you, you can view photographs on the website at the link at the bottom of the page there, and we are actively updating that almost on a daily basis with new photographs showing the progress.

On to Slide 23. The time line is shown here. And really, I guess the headline here is we expect to be at full capacity with this operation by the year-end. We've landed the dredges, as you see on the left. We're now in the flooding process to prepare those plants to be swapped out. The next phase is really is to link the wet plant, the active wet plant, which is currently mining into the staging pond, and then we will commence a shutdown, which will, for 3 to 4 weeks, a process of changing out the pieces of equipment. Thereafter, sort of at the end of September, we expect to start commissioning process, and that process will -- is phased through the early parts of Q4 and on to -- we expect the production, as I said, to be running at full capacity by the end of the quarter.

In the meantime, I'm happy to say that the tailings storage facility is -- has been proceeding ahead of schedule and is, in fact, going to be available for receiving slimes from the middle of September. So that will be now in time for the start-up of the new operation. And so really, overall, what I'd sort of say is that the project is progressing well. I hope you can see that it's well advanced now and the derisking of the spend is really -- is well underway. And we hope the bulk of this work will be complete in Q4.

With that, I would like to pass on to Tom, who's going to do the marketing update.

Thanks very much, Ben.

And as you can hear, been a lot going on at Moma right up to today. Looking outside of Moma, the market is very much a tale of 2 elements. But on the demand side and particularly on the Kenmare demand side, we're seeing beneficiation markets, titanium metal markets being very strong. And they're supporting demand and they're supporting demand, particularly for our type of ilmenite, good quality, low impurities available on long-term contract available predictably over the next number of years, and that's encouraging for us.

We're also seeing that many of our customers in Europe are starting to see some benefits from the antidumping duties imposed on Chinese pigment producers and all our customers in the Western world are taking their contracted volumes, albeit, as we said, as James emphasized, slightly lower pricing than we saw last year. And the titanium metal market, we've talked about a lot in the last number of years as being an area which is growing rapidly and which Kenmare is growing rapidly within. And indeed, we signed 2 new agreements, supply agreements within that market segment just last month. So this is still something where we're seeing growth and opportunities for Kenmare.

If we turn over to the supply side, we are, as we said in the statement and as James alluded to, probably seeing a little bit of oversupply. We have a lot -- there's a lot of Chinese processing capacity that's not fully utilized. It's demanding supply. We're seeing Chinese domestic ilmenite production increasing at a steady rate, not directly competitive with us, but it does kind of set prices or influence price setting within the market. So it does have an influence.

And we're also seeing HMC producers from -- HMC produced by Chinese producers in Africa. Mozambique, very widespread, Nigeria, Sierra Leone. It has increased significantly in the last 12 months. It's an important part of the market servicing those processing plants in China. It's a little bit more opaque in that these are not public companies. They don't tend to report externally. And so we're working hard to understand the elements and players in that market and what that means for the trajectory of future supply. But I think what it is certainly doing is putting pressure into the ilmenite, zircon and rutile markets into China. And I suppose perversely further depressing the conditions for feedstock suppliers.

We think that people are -- some people are starting to suffer. Certainly, if prior cycles are to go by, that would be a characteristic pattern. But it's hard to call a recovery. It's hard to call an improvement. And as James said, we've been -- we've moderated our expectations for pricing recovery or improvement over in the short term, less so in the long term, I think our estimates and indeed, those of independent consultants in the long term are down less than 5%. But those factors have certainly influenced and driven the impairment that we recognized in the first half.

Going back to Kenmare, we've said throughout this year, we have a strong order book, and that hasn't changed. Long-term customers value our mine life, they value our supply. They value increasingly some of the environment and other elements of our projects. And I suppose the reasons why perhaps we're in the FTSE4Good Index. And the metal market, as I touched on, is supporting demand. We do expect pricing a little lower in the second half than the first half, small single-digit percent as oversupply persists.

We do see recovery ahead, but it's probably a little bit further out than we might previously have estimated and maybe a little slower. On the zircon side, very similar. I mean, our sales, as James said, of zircon and rutile typically increased significantly in the second half and changed the product mix value. But global demand generally is a little bit subdued where we could see reconstruction of some elements for some parts of the world where there's conflict where we see a recovery in the Chinese real estate market where the tariff situation settle down and become more predictable, perhaps we'll see that sort of recovery, but we can't call it just yet.

Our European customers are stable. Chinese demand is a little bit soft. And obviously, the HMC, the concentrates that are going into China don't just produce ilmenite, they produce zircon and rutile as well, and that is sitting on the market. So overall, a more muted price environment. From Kenmare's perspective, a good environment for demand for our products and Ben talked about our efforts to service that demand through the third transshipment vessel, but a bit early to call a price recovery. We're not seeing it yet. So just maybe lifting ahead and looking further out.

As we've said, we're keeping our guidance in terms of production and cost. We've moderated and adjusted it slightly in terms of CapEx for this year, but not the overall CapEx cost of the WCP A upgrade project. More of it's happening this year because, as James said, our contractors' ability to support us is driven by our ability and our consistency in paying them. And I think that's caused maybe slightly faster cash outflows than we might have expected at the start of the year, but similarly reduces our CapEx burden going forward and certainly for next year.

Good progress in the first half on SMO. As Ben said, well on track to deliver on objectives and good progress on finalizing a new transshipment vessel for a temporary period, but not quite there yet. And so if I look at Kenmare's purpose in life, and we did adopt a new purpose last year, transforming resources into opportunity for all. It is lived on a daily basis at Moma. We have a long-term production profile. We're investing to exploit our reserves and resources into the future and nothing has changed in that regard. We still, despite weaker pricing, have a good EBITDA margin. We're well through our WCP A upgrade and that upgrade is designed to maintain our strong position on the cost curve. Despite the significant capital investment, we still have material resources to fund that program and to make shareholder returns.

And as I said on the market side, despite the challenges that many are seeing, our customers keep coming back to us. Many of the customers -- all the customers we would have had 17, 18 years ago are still with us. We're signing new ones. We signed at least 3 new supply agreements in the first half of this year, and we have good visibility into the future on that.

And look, I think looking at Moma's place in the market in the world, we've been not far off 40 years in Mozambique, not far off 20 years producing. We're very proud of what we've achieved, and we're very excited about what we hope to achieve in the future. Clearly, we need our implementation agreement to be resolved to achieve that, and that's the message we consistently give to government. And we know government appreciates what we've done, but I suppose the government is trying to protect its interest and do the best deal for Mozambique. Hopefully, we can conclude it soon. So thanks for your time. Very happy to hand over to questions now, and I look forward to meeting many of you over the coming days and weeks.

[Operator Instructions] Your first question comes from the line of Colin Grant with Davy Capital Markets.

My question really is just to do with the implementation agreement discussions. You've noted in the press release that you gave a revised offer to the government of 3.5% on a phased basis. And well, firstly, I just want to confirm that the government rejected that offer. And then I also just want to get a sense as to whether or not there's any indication from the government as to what they're kind of holding out for, maybe it's 3.5%, but not on a phased basis, for example, just to give us some sense as to what I suppose the maximum outturn of this whole process might end up being? And finally, just on a related note, there are some withholding tax payments associated with the implementation agreement. If you could just give us a sense as to what the -- I suppose, what the quantity of those would be if it was 3.5% royalty payment each year going forward. That's great.

The easy ones, Colin, why don't you? So just on the royalty proposal that we made, you're correct. We did adjust our proposal to ministers in March to go to a max of 3.5% over the 20-year renewal period. That hasn't been rejected by the government. We've had some exchanges in relation to the renewal, but it hasn't been rejected and that remains our position. And indeed, although we're not sure of the veracity about the press speculation in Mozambique last week was not inconsistent with those figures. So that's as much as we know right now. And look, as I said, the meetings we've had with all the ministers and the President have always been cordial constructive and professional, and we hope they remain so.

There's no real interaction between the royalty rates and the withholding tax elements of the renewal. The withholding tax is just basically a tax charged on services provided into Mozambique from outside the country, and some of those are services we provide ourselves like marketing. And our estimate of what those costs will be, and James can correct me if I'm wrong here, is of the order of $3 million, $4 million a year. And that's before we think about kind of optimizing them or whether we change our behaviors to try and mitigate it. But that's our -- based on our run rate, if we did nothing, that's the kind of level we'd be talking about.

Your next question comes from the line of Richard Hatch with Berenberg.

Just sort of more of a follow-on question. So if I look at the taxes report on payments to governments from 2024, you paid $20 million to the government of Mozambique. I'm just sort of looking at the future cash flow projections of this business when the CapEx drops away and companies, the ability to generate free cash flow yields of over 20%. So do you think that the government is aware of this and is therefore pushing for a more meaningful share of the free cash flow of this business?

Look, I think, Richard, the government -- and that's step away from Kenmare for a moment, natural resources projects are important to Mozambique, and they're an important part of the mandate or the plans of the new government. And obviously, we all know that big oil and gas projects that are in progress or anticipated there and getting a share of those is a high priority. In parallel, the government is discussing and circulating plans for a new mining law, which has a regime, which includes import duties, taxes, corporation tax, royalties, et cetera, et cetera. And I suppose their aspiration is to make sure that mining interests are on a consistent basis as possible. And look, I think there -- that aspiration is a reasonable one, but it's not consistent with the regime that we have and the protections we have within our implementation agreement.

And we spent a lot of time explaining why that's the case and explaining what our agreement means, what it entitles us to and where we have flexibility to change. And I think we've obviously demonstrated the flexibility that gives them 300% plus of the return they've had in the past from our processing activities. We think that's fair, and we think it's a good balance because for sure -- I'm sure they can see like we do and you can, the cash flow generation in the future, but they'll get a good share in that to the royalty, and we do already within our mining company pay corporation tax as well. So -- and I think you have to look to the wider domestic contribution, over $100 million spent with suppliers in country and all the jobs that are associated with those suppliers in and around Moma. So we've been at pains to emphasize the broad contribution we make and what we expect to achieve in the future and how we require this agreement, not just to make our investments in Moma, but also to make the social investments that have improved the lives of everybody around the mine.

Okay. And then just one follow-up. Just in terms of the production volumes. I appreciate you're looking to try and lift the volumes up to sort of 1.1 million, 1.2 million tonnes. But just in light of a soft market, is there scope for you just to take your foot slightly off the gas in terms of that push upwards in terms of volumes to avoid putting more tonnes into a market that doesn't need them?

So at the moment, Richard, I think that the market is there for us to improve production into. At the end of the day, our goal is to try and maximize the efficiency of the Moma asset. And the way to do that is to exploit the processing capacity that we have in store. So at the moment, market is not stopping us from producing. It's up to us to try to continue to build the production in an efficient manner. Now obviously, costs are important, and we're not going to be just throwing money to make tonnes for the sake of it. We want to do it in an efficient and high-margin manner.

Your next question comes from the line of Peter Mallin-Jones with Peel Hunt.

Switching gears a little bit from the market to the third transshipment vessel. I'm just wondering, is this something we could expect to be a bit more of a permanent fixture once you've got over to Nataka and you're sort of firing on all cylinders and the 1.2 million tonnes of ilmenite plus obviously the extra byproducts. Would you sort of be thinking about needing a third transshipment vessel to ship that on a sustained basis?

I certainly think that there's scope for that. We haven't achieved it yet. We haven't delivered on it. So I -- there's a little bit of a -- let's see how it goes phase to get through and understand that the costs are as we're going to expect them to be and understand that it is an efficient way of running the business. So I think we will see a short-term drawdown. And then you're right that with one of the things that we're seeing is with the opportunity to sell a new concentrate product called ZrTi, we can significantly up the volumes that we can sell in a year. And that definitely has -- will put pressure on the 2 existing vessels. So I do see the scope further on. But whether we will actually -- this will be the right vessel to do it with, I think time will tell.

Yes. I think there's another piece to this, Peter, as well. We've talked in the past about mining being the bottleneck to the business and never being able to fill the MSP. And the dredges that we have now, as Ben said, are constructed with the objective of filling that MSP. And so the net effect of that is moving the bottleneck within the business, maybe to shipping, and we need to understand what our capacity will be in the future and what our maximum capacity is. And this is -- it's an experiment at this point. It has lots of financial benefits to us, but it's too early to call whether it becomes a permanent fixture.

[Operator Instructions] I will now turn the call back to Tom Hickey for closing remarks.

Great. Thank you very much. Thanks all for your time. And obviously, if anybody has any follow-up queries, we'd be happy to deal with them. And with that, we'll close the call. Have a good day, everybody.

Ladies and gentlemen, that concludes today's call. You can disconnect. Thank you, and have a great day.