Mmg Ltd. · HKEX:1208
Mmg — FY2012 Earnings Presentation
36 slides from Mmg's earnings presentation, Mar 28, 2013
Slide 1: 2012 Annual Results
2012 ANNUAL RESULTS 28 MARCH 2013 HKEx: 1208 1
Slide 2: Important Information
Important Information The information contained in this presentation is intended solely for your personal reference and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person (whether within or outside your organisation/firm) or published, in whole or in part,
Slide 3: Highlights
Highlights Safety remains a core value – TRIFR1 3.0, a 27% improvement from 2011. Productivity improvements drove annual production records. Operating expenses well managed. Successful integration and ramp-up at Kinsevere. Board endorsement of the A$1,488 million Dugald River project. Co
Slide 4: Financial highlights
Financial highlights Foreign exchange and commodity price Underlying EBITDA1 of US$853.2m, an performance increase of 1%. Indexed, 2011=100 2012 2011 Underlying EBIT1 of US$405.6m, a decrease of 25%. 100 A$ / US$ Underlying profit1 of US$217.5m, a 100 decrease of 29%. Net cash generated from
Slide 5: EBIT variance analysis
EBIT variance analysis EBIT variance – continuing operations1 Price variance US$ million US$ million 800 Other 700 4.7m 600 Copper (82.9m) One-off 500 items (215.9m) 400 Price Zinc (149.9m) (71.7m) 300 2011 2011 EBIT Underlying 200 755.3m EBIT 539.4m 100 0 (1) Price, volume , operating cost and D&A
Slide 6: EBIT variance analysis
EBIT variance analysis EBIT variance – continuing operations1 US$ million 800 700 600 One-off 500 items TC / RC (215.9m) 36.6m 400 Price (149.9m) 300 2011 2011 EBIT Underlying 200 755.3m EBIT 539.4m 100 0 (1) Price, volume , operating cost and D&A variances exclude Kinsevere which is presented separ
Slide 7: EBIT variance analysis
EBIT variance analysis EBIT variance – continuing operations1 Volume variance US$ million US$ million 800 700 Golden Grove 2.2m 600 Rosebery Volume 18.1m 104.5m One-off 500 items TC / RC Century (215.9m) 36.6m 40.1m 400 Price (149.9m) 300 2011 2011 Sepon EBIT Underlying 44.1m 200 755.3m EBIT 539.4m
Slide 8: EBIT variance analysis
EBIT variance analysis EBIT variance – continuing operations1 Operating expense variance US$ million US$ million 800 700 Other (15.1m) 600 Volume Changes to 104.5m inventories One-off (60.5m) 500 items TC / RC Stores & (215.9m) 36.6m consumables (14.2m) Energy 400 Price Operating Contractors (10.1m)
Slide 9: Operating expense analysis
Operating expense analysis Kinsevere Operating expenses US$16.3m relating to use of back-up US$ million 1,500 generators and diesel. Kinsevere 149.2m increase Sepon 1,250 9% increase in annual copper production. Sepon 28.1m increase Century 1,000 US$5.2m relating to major pipeline works. Centu
Slide 10: EBIT variance analysis
EBIT variance analysis EBIT variance – continuing operations1 US$ million 800 700 600 Volume 104.5m One-off 500 items TC / RC (215.9m) 36.6m 400 Other Price Operating FX 35.2m (149.9m) expenses 0.2m 300 (139.1m) 2011 2011 Exploration D&A EBIT Underlying (13.3m) (68.4m) 200 755.3m EBIT 539.4m 100 0 (
Slide 11: EBIT variance analysis
EBIT variance analysis Kinsevere EBIT variance – continuing operations1 US$ million US$ million 800 Revenue 279.9 EBITDA2 131.1 700 EBIT 60.4 EBITDA margin (%) 47 600 Volume 104.5m One-off 500 items TC / RC (215.9m) 36.6m Kinsevere 60.4m 400 Other Price Operating FX 35.2m (149.9m) expenses 0.2m 300
Slide 12: EBIT variance analysis
EBIT variance analysis EBIT variance – continuing operations1 US$ million 800 700 600 Volume 104.5m One-off 500 items TC / RC (215.9m) 36.6m Kinsevere 60.4m 400 Other Price Operating FX 35.2m (149.9m) expenses 0.2m 300 (139.1m) 2011 2011 Exploration D&A 2012 EBIT Underlying (13.3m) (68.4m) Underlyin
Slide 13: Increased investments support long-term growth
Increased investments support long-term growth Outflows1 2012 Cash flow summary US$ million • Invested US$1,360.5m toward acquisitions. Other PP&E Acquisitions $74.3m $752.4m $1,360.5m • Purchase of property, plant and equipment (PP&E) and development of software of Outflows US$752.4m including US$2
Slide 14: Financial resources and liquidity
Financial resources and liquidity Repayment of borrowings Gearing ratio of 0.46. Increased net debt following Anvil 25% within one year acquisition. 23% Weighted average cost of debt as at one - two years 31 December 2012 of 2.6% (2011: 1.8%). Dugald River financing under negotiation. five y
Slide 15: Mining performance
Mining performance Highlights EBITDA1 Annual production records achieved at three of MMG’s five US$ million 2012 2011 % operating sites. Sepon 491.4 529.4 (7) Ore mined increased 13% in 2012. Operating expenses well managed amid industry-wide cost Kinsevere 131.1 - N/A pressures, particularly
Slide 16: Copper – low cost, high quality assets
Copper – low cost, high quality assets Outlook Copper inventories1 LME copper price Stocks, weeks of consumption USc / lb Solid, well understood long-term 8.0 500 demand fundamentals supported by 6.0 400 Forecast price continuing progress of developing Inventories 300 world. 4.0 200 Real supply
Slide 17: Zinc – continuing to be a major producer
Zinc – continuing to be a major producer Outlook Refined zinc surplus / (deficit)1 LME zinc price ‘000 tonnes US$ / tonne 1,250 4,000 Demand growth driven by shift to 1,000 greater galvanising. Current price 3,000 750 2,000 Global zinc supply expected to contract 500 volume 1,000 through closure
Slide 18: Our future aspirations
Our future aspirations Growth MMG copper equivalent production growth 1 Consistent and sustainable earnings growth. ‘000 tonnes Strong financial outcomes. 400 Acquisition of base metals assets. CAGR 5% Realisation of value of the project pipeline. CAGR 8% 300 Transformation Innovative grow
Slide 19: Building the next generation's global diversified mining company
Building the next generation’s global diversified mining company Solid financial performance in 2012. Productivity improvements drove annual production records. Operating expenses well managed. Successful integration and ramp-up at Kinsevere. Board endorsement of the Dugald River project.
Slide 20: Company Overview
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Slide 21: Overview of assets
Overview of assets Izok Corridor copper / lead / silver / zinc Sepon gold / copper Century Mutoshi Kinsevere lead / silver / zinc copper copper Dugald River Golden Grove lead / silver / zinc copper / gold / lead / silver / zinc Legend: Rosebery Operating assets copper / gold / lead / silver / zinc D
Slide 22: Financial dashboard
Financial dashboard Revenue by commodity Revenue by customer location 26% 35% Zinc Australia Copper 19% Europe Gold 14% Middle East 3% 49% Silver Other Asia 5% 5% 36% Lead China 8% EBITDA by operating segment Operating expenses People 11% 20% External Services 27% Century 12% Golden Grove Energy 46%
Slide 23: Sepon
Sepon Highlights Financials Strong, consistent operating performance. US$ million 2012 2011 % 86,295 tonnes copper cathode, 8% above original design Revenue 806.2 816.9 (1) nameplate capacity. Well managed costs – flat C1 costs per pound of copper EBITDA 1 491.4 529.4 (7) cathode produced comp
Slide 24: Kinsevere
Kinsevere Highlights Financials2 Successful integration following February 2012 acquisition of US$ million 2012 2011 % Anvil Mining. Revenue 279.9 - N/A Important and valuable contribution to Company performance in 2012. EBITDA 1 131.1 - N/A Achieved nameplate capacity on an annualised basis i
Slide 25: Century
Century Highlights Financials Annual MMG production record achieved despite major US$ million 2012 2011 % planned maintenance. Revenue 752.9 750.4 0 C1 costs below guidance and lower than 2011 Significant improvements in asset utilisation and throughput EBITDA 1 283.6 293.0 (3) rates. EBIT 48.
Slide 26: Rosebery
Rosebery Highlights Financials Solid operating performance with 10% increase in ore mined. US$ million 2012 2011 % Seismic event impacted production and costs in 2012. Revenue 267.5 272.5 (2) Higher contractor and consumable costs in 2012. EBITDA 1 85.7 108.6 (21) Upgrades to ground support
Slide 27: Golden Grove
Golden Grove Highlights Financials Strategic review completed focussed on improving the US$ million 2012 2011 % sustainable long-term profitability. Revenue 392.9 388.5 1 Restructure and related activities resulted in unfavourable impact to operating expenses of US$19.9m. EBITDA 1 67.9 101.6 (33
Slide 28: C1 cost performance
C1 cost performance Century C1 costs Kinsevere C1 costs USc / lb zinc USc / lb copper 200 65 175 60 55 150 50 125 2013 guidance: 140 – 170 USc / lb copper 2013 guidance: 58 – 62 USc / lb zinc 45 100 2010 2011 2012 2013F 2010 2011 2012 2013F Sepon C1 costs Sepon C1 costs USc / oz gold USc / lb copper
Slide 29: C1 cost performance (continued)
C1 cost performance (continued) Golden Grove C1 costs Golden Grove C1 costs USc / lb copper USc / lb zinc 330 50 40 2013 guidance: 45 – 55 USc / lb zinc 300 30 20 270 2013 guidance: 280 – 310 USc / lb copper 10 240 0 2010 2011 2012 2013F 2010 2011 2012 2013F Rosebery C1 costs Golden Grove zinc C1 co
Slide 30: 2013 Guidance
2013 Guidance Sepon Rosebery Copper – production 83,000 – 88,000 tonnes Zinc – production 75,000 – 80,000 tonnes Copper – C1 costs US$0.95 – US$1.05 / lb Zinc – C1 costs US$0.25 – US$0.30 / lb Gold – production 45,000 – 55,000 ounces Lead – production 20,000 – 22,000 tonnes Gold – C1 costs US$1,250
Slide 31: Development progress of our major growth projects
Development progress of our major growth projects Dugald River Board endorsement1 of the A$1,488m Dugald River project supporting MMG’s long-term zinc strategy. Two exploration declines now in excess of 4.5km. Expected annual production2 of 200,000 – 220,000 tonnes of zinc, 27,000 – 30,000 ton
Slide 32: Planned 2013 Exploration Activity
Planned 2013 Exploration Activity Mine district New discovery Project generation ~ 60% exploration expenditure ~ 30% exploration expenditure ~ 10% exploration expenditure Sepon – further drilling of both Curnamona Joint Venture Multi-commodity (copper, zinc oxide and primary gold, (copper, Sou
Slide 33: International Board and leadership team
International Board and leadership team Chairman Wang Lixin 王立新 Non-executive Director Non-executive Director CEO & Executive CFO & Executive Jiao Jian Xu Jiqing Director Director 焦健 徐基清 Andrew Michelmore David Lamont Non-executive Director Independent Independent Independent Gao Xiaoyu Non-executiv
Slide 34: Underlying income statement (continuing operations)
Underlying income statement (continuing operations) Year ended 31 December Variance 2012 2011 US$ million % Revenue 2,499.4 2,228.3 12 Underlying EBITDA 853.2 847.9 1 Underlying EBIT 405.6 539.4 (25) Net finance costs (87.7) (46.2) 90 Underlying profit before income tax 317.9 493.2 (36) Income tax e
Slide 35: Consolidated statement of financial position
Consolidated statement of financial position Year ended 31 December 2012 2011 US$ million Non-current assets 3,749.7 1,856.2 Current assets – cash and cash equivalents 102.1 1,096.5 Current assets – other 807.4 500.8 Total assets 4,659.2 3,453.5 Total equity 1,685.8 1,494.4 Non-current liabilities 2
Slide 36: Consolidated financial performance: Cash flow statement
Consolidated financial performance: Cash flow statement Year ended 31 December 2012 2011 US$ million Cash flows from continuing operations 655.3 699.7 Cash flows from discontinued operations - 100.8 Net cash generated from operating activities 655.3 800.5 Purchase of property, plant and equipment (7