Kenmare Resources plc (KMR) Earnings Call Transcript & Summary

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.