Slide 1: Annual Results Presentation for the Year Ended 31 December 2023
ANNUAL RESULTS PRESENTATION FOR THE YEAR ENDED 31 DECEMBER 2023
Slide 2: Legal Notice / Disclaimer
LEGAL NOTICE/ DISCLAIMER This presentation is published solely for informational purposes and does not constitute investment, legal, tax or other advice nor is it to be relied upon in making an investment decision. Information contained herein has been taken from sources considered by Merafe Resourc
Slide 3: Agenda
AGENDA 3 5 10 KEY MARKET OPERATIONAL FEATURES REVIEW REVIEW 18 27 29 FINANCIAL DIVIDEND OUTLOOK REVIEW MERAFE RESOURCES LIMITED ANNUAL RESULTS PRESENTATION FOR THE YEAR ENDED 31 DECEMBER 2023 2
Slide 4: Key Features
KEY FEATURES MERAFE RESOURCES LIMITED ANNUAL RESULTS PRESENTATION FOR THE YEAR ENDED 31 DECEMBER 2023 3
Slide 5: Improved Financial Performance Amid Challenging Environment
IMPROVED FINANCIAL PERFORMANCE AMID CHALLENGING ENVIRONMENT HEALTH AND OPERATIONAL MARKET FINANCIAL SAFETY Lower ferrochrome and Global market Revenue up by 16% 2 fatalities chrome production uncertainty year-on-year Smelting production Increase in global Headline earnings TRIFR impr
Slide 6: Market Review
MARKET REVIEW MERAFE RESOURCES LIMITED ANNUAL RESULTS PRESENTATION FOR THE YEAR ENDED 31 DECEMBER 2023 5
Slide 7: Uptick in Stainless Steel Production and Ferrochrome Demand
UPTICK IN STAINLESS STEEL PRODUCTION AND FERROCHROME DEMAND Global stainless steel production (mt) Global ferrochrome demand (mt) 80.0 16.0 14.4 14.5 13.9 70.0 14.0 58.7 3.4 3.1 60.0 12.0 3.2 55.9 57.5 12.8 12.2 50.0 12.1 10.0 40.0 8.0 8.9 8.8 9.6 30.0 33.5 6.0 32.7 35.2 20.0 4.0 10.0 2.9 2.7 2.0 2.
Slide 8: China Remains a Key Player in Demand and Supply Dynamics
CHINA REMAINS A KEY PLAYER IN DEMAND AND SUPPLY DYNAMICS Global stainless steel production (mt) Global ferrochrome demand (mt) 3.2 3.6 2.0 2.7 7.0 8.7 10.6 11.4 21.2 21.5 3.1 22.1 23.1 4.3 3.8 4.9 FY FY FY FY 2023 2022 2023 2022 61.3 58.0 66.4 61.1 USA Western Europe Japan China Other Source for all
Slide 9: China's Ferrochrome Production Growth; Increase in Ore Imports into China
CHINA’S FERROCHROME PRODUCTION GROWTH; INCREASE IN ORE IMPORTS INTO CHINA Global ferrochrome production (mt) Chrome ore imports into China (mt) 16.0 15.1 15.4 20.0 18.3 14.3 1.3 14.0 1.3 18.0 1.2 1.2 0.6 15.0 15.0 0.6 0.7 0.7 1.4 16.0 0.4 1.3 1.1 12.0 1.3 0.9 1.6 14.0 1.0 1.6 0.6 0.4 0.5 1.5 0.3 1.0
Slide 10: Mixed Bag of Prices in 2023
MIXED BAG OF PRICES IN 2023 UG2 Merchant prices (USD/t) Ferrochrome Merchant prices European benchmark 49%–70% (USc/lb)* ferrochrome price (USc/lb) 350 140 250 300 120 200 250 100 150 200 80 150 60 100 100 40 50 50 20 0 0 - Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q
Slide 11: Operational Review
OPERATIONAL REVIEW MERAFE RESOURCES LIMITED ANNUAL RESULTS PRESENTATION FOR THE YEAR ENDED 31 DECEMBER 2023 10
Slide 12: Health and Safety of Employees Central to Operations
HEALTH AND SAFETY OF EMPLOYEES CENTRAL TO OPERATIONS Total Recordable Injury Frequency Rate (TRIFR) • Sadly, 2 fatalities in 2023 and 1 in January 2024 4.0 3.5 • TRIFR improved to 2.34 from 2.40 in 3.0 December 2023 2.5 • Safety of our employees remains a critical 3.91 2.0 focus area with the goal o
Slide 13: Eskom Update
ESKOM UPDATE • Power supply challenges led to electricity outages • Venture impacted by load curtailment from level 3 over the reporting period • Double-digit tariff increases, effective from April 2023, directly impact cost competitiveness • Renewable energy sources are being explored to mitigate p
Slide 14: Renewable Energy
RENEWABLE ENERGY Co-Generation • Alternative technologies for producing electricity from off-gas are being considered Renewable Energy • Renewable energy from solar and wind sources under consideration for use by the Venture • The development of both on-site (behind the meter) and off-site (wheeling
Slide 15: Production Scaled Back
PRODUCTION SCALED BACK Ferrochrome production (kt) • Ferrochrome production decreased to 300kt - Installed capacity utilisation of 63% 450 - 78% utilisation of available capacity 400 • Only the Lion smelter operated during the high 350 electricity demand season 300 250 • Rustenburg smelter has not o
Slide 16: Cost Pressures Unrelenting
COST PRESSURES UNRELENTING Breakdown of C3 production costs • Total production cost per tonne increased by 28% 13% year-on-year, influenced by: 12% 43% - Higher chrome ore prices FY - Higher reductants costs 2023 Chrome ore - Higher power tariffs 19% - Higher fixed costs absorbed Reductants and flux
Slide 17: Platinum Group Metals (PGMs) Operations
PLATINUM GROUP METALS (PGMs) OPERATIONS • One of the highlights in 2023 was the contribution of the Eastern PGMs processing plant and operation to the Venture • PGMs production capacity increases substantially. New PGM X plant will add to growth • Merafe’s share of revenue increases to R133 million
Slide 18: ESG
ESG • ESG compliance remains an important pillar in how we run the business • JSE Sustainability Disclosure guidance used to enhance IAR disclosures • Other avenues to enhance ESG disclosures to be explored • The Venture’s decarbonisation pathway, which uses 2019 levels as a base, is: o a 15% reduct
Slide 19: Financial Review
FINANCIAL REVIEW MERAFE RESOURCES LIMITED ANNUAL RESULTS PRESENTATION FOR THE YEAR ENDED 31 DECEMBER 2023 18
Slide 20: Revenue
REVENUE Increase in revenue year-on-year (YoY) • Total revenue increased by 16% YoY to R9 244 million • PGMs revenue increased from R100 million to R133 million • Ferrochrome revenue increased by 1% YoY to R6 885 million • Market dynamics led to higher chrome ore prices and volume sold • Chrome ore
Slide 21: Earnings
EARNINGS • Headline earnings per share HEPS and Basic EPS (cents) 66.8 of 60.1c for the year 67.0 60.1 70.1 60 56.4 56.4 • Key contributors to earnings were higher chrome prices 40 and volume sold plus a 20 weaker ZAR:USD exchange 0 rate ( 3.4) ( 0.8) (20) (40) (40.0) (60) (54.2) (80) FY 2019 FY 202
Slide 22: EBITDA
EBITDA EBITDA from the Venture variance analysis: FY 2023 vs FY 2022 (%) 2 10 (10) (4) (4) 40 (28) 100 106 EBITDA Revenue & Revenue Inflation & Foreign Standing PGMs East * Other EBITDA FY 2022 cost volumes prices cost creeps exchange charges FY 2023 effect * = Excludes the gain on acquisition of jo
Slide 23: EBITDA Reconciliation to Profit
EBITDA RECONCILIATION TO PROFIT Venture’s EBITDA reconciliation to Merafe’s profit after tax (R’m) 2 400 2 200 (76) (249) 250 38 19 (453) 2 000 1 800 (147) 1 600 2 371 1 400 1 200 1 753 1 000 800 600 Adjusted Corporate Depreciation Income from Gain on Net Current tax Deferred tax Profit after Merafe
Slide 24: Financial Performance Overview
FINANCIAL PERFORMANCE OVERVIEW Ferrochrome revenue • Impacted by lower prices 31 Dec 2023 31 Dec 2022 For the year ended R’m R’m Chrome ore revenue • Driven by higher prices, increased sales volume and a weaker ZAR:USD Ferrochrome revenue 6 885 6 795 exchange rate Chrome ore revenue 2 222 1 040 PGMs
Slide 25: Financial Position
FINANCIAL POSITION Non-current assets 31 Dec 2023 31 Dec 2022 R’m R’m Include property, plant and equipment & intangible As at assets Total non-current assets 1 479 1 170 Inventories Current assets Increase due to market dynamics and higher Inventories 1 916 2 373 production costs Trade and other re
Slide 26: Reconciliation of Cash
RECONCILIATION OF CASH Reconciliation of cash (R’m) 3 500 (53) 3 000 (618) 2 500 1 879 2 000 (825) (4) 8 1 500 1 000 1 656 1 269 500 0 Opening cash Net cash from Expansionary Sustaining Dividend Repayment of Foreign Closing cash operating capex capex payment capital portion exchange activities of le
Slide 27: Sufficient Headroom Under Facilities
SUFFICIENT HEADROOM UNDER FACILITIES Venture & Unicorn Merafe Merafe (Merafe’s share)2 head office total As at 31 December 2023 R’m R’m R’m Closing cash 959 697 1 656 Venture Interest bearing Merafe facilities debt1 total As at 31 December 2023 R’m R’m R’m Total facilities in place Unspecified 300 3
Slide 28: Dividend
DIVIDEND MERAFE RESOURCES LIMITED ANNUAL RESULTS PRESENTATION FOR THE YEAR ENDED 31 DECEMBER 2023 27
Slide 29: Dividend
DIVIDEND 1 2 3 4 This brings the The Board The full year The final dividend full year dividend has declared dividend amounts to to R1 050 million a final ordinary works out 22 cents per share amounting to cash dividend to 70% of before dividend tax 42 cents per share of R550 million headline earning
Slide 30: Outlook
OUTLOOK MERAFE RESOURCES LIMITED ANNUAL RESULTS PRESENTATION FOR THE YEAR ENDED 31 DECEMBER 2023 29
Slide 31: Outlook
OUTLOOK • 2024 is expected to be a mixed bag of challenges and opportunities • Challenges include economic slowdown, cost pressures, geopolitical tensions, ESG concerns and price volatility • Opportunities include slowing down inflation and recovery in Europe • Local risks include electricity challe
Slide 32: Thank You
THANK YOU MERAFE RESOURCES LIMITED ANNUAL RESULTS PRESENTATION FOR THE YEAR ENDED 31 DECEMBER 2023 31