Valterra Platinum Limited · JSE:VAL
Valterra Platinum — H1 2020 Earnings Presentation
55 slides from Valterra Platinum's earnings presentation, July 2020
Slide 1: Anglo American Platinum 2020 Interim Results Presentation
ANGLO AMERICAN PLATINUM 2020 Interim Results Presentation BUILDING THE BUSINESS FOR THE FUTURE, BEYOND CURRENT HEADWINDS
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT Disclaimer: This presentation has been prepared by Anglo American Anglo American Platinum’s actual results, performance or from publicly available third party sources. Platinum Limited (“Anglo American Platinum”) and comprises the achievements to differ materially from those in
Slide 3: 2020 Interim Results Agenda
2020 INTERIM RESULTS AGENDA . Supporting stakeholders Natascha Viljoen Operational performance Natascha Viljoen . Financials Craig Miller . PGM market review Natascha Viljoen 1 Positioning the business for the future Natascha Viljoen . Outlook and guidance Natascha Viljoen Interim Results July 2020
Slide 4: Resilient Business Despite Headwinds
RESILIENT BUSINESS DESPITE HEADWINDS Safety performance Health and well-being Community support - Covid-19 Fatalities Protecting livelihoods Investment in communities zero R1.2bn R55m at managed operations in unproductive labour costs to support employees Robust PGM fundamentals Strong balance sheet
Slide 5: Supporting Stakeholders
AngloAmerican PLATINUM SUPPORTING STAKEHOLDERS
Slide 6: Elimination of Fatalities Remains the Focus
ELIMINATION OF FATALITIES REMAINS THE FOCUS Fatalities & total recordable case injury frequency rate (TRCFR)(1) Fatalities in H1 2020 9 5 8 4.52 4.5 zero at own managed operations 7 4 6 6 Fatality free days 3.5 5 4 3.00 3 620 at own managed operations since 19 October 2018 3 2.50 2.5 2 2.24 2 Improv
Slide 7: Developing Our Covid-19 Response
DEVELOPING OUR COVID-19 RESPONSE SUPPORT WHERE IT IS NEEDED MOST Prevent Respond Recover Operating protocols Employee and Safe and healthy community support operations Physical & mental health Workforce & Education, healthcare community testing and livelihoods Interim Results July 2020 7
Slide 8: Supporting Communities Through Covid-19
SUPPORTING COMMUNITIES THROUGH COVID-19 24,000 100,000 77 53,000 4.6m food parcels delivered face masks donated clinics supported provided access reach – through to water education awareness campaigns Commitment to reshaping relationships with communities Interim Results July 2020 8
Slide 9: Operational Performance
PLATINUM OPERATIONAL PERFORMANCE
Slide 10: Challenging H1 | Covid-19 & ACP Headwinds
CHALLENGING H1 | COVID-19 & ACP HEADWINDS Operational performance H1 2020 production Lost PGM production PGM production decreased Impacted by Due to Covid-19 25% Covid-19 ~585,000 Refined production (2) H1 2020 refined production All-in-sustaining cost (3) PGM production decreased Impacted by AISC p
Slide 11: Mogalakwena | Operating at 100%
MOGALAKWENA | OPERATING AT 100% Total PGM Production (’000 ounces) Impact of COVID-19 (‘000 ounces) PGM production decrease 8% 8% 610 impact from COVID-19 560 COVID-19 70 losses 63 303 Production level 278 281 258 100% at the end of June 307 258 239 282 All-in-sustaining cost $(594) H1 2019 H1 202
Slide 12: Amandelbult | Operating at 50%, Ramp Up to 85%
AMANDELBULT | OPERATING AT 50%, RAMP UP TO 85% Total PGM Production (’000 ounces) 2020 Ramp-up schedule (% vs 2019) PGM production decrease 422 48% 85% 48% impact from COVID-19 75% 108 COVID-19 Production level losses 50% 99 50% 56 at the end of June, increasing to 85% by the end of 2020 51 215 21
Slide 13: Mototolo | Operating at 90%
MOTOTOLO | OPERATING AT 90% Total PGM Production (’000 ounces) Impact of COVID-19 (‘000 ounces) PGM production decrease 107 24% 24% impact from COVID-19 27 82 COVID-19 Production level losses 21 30 50 20 90% 23 at the end of June, increasing to 100% in July 50 61 All-in-sustaining cost 58 38 $(320
Slide 14: Unki | Operating at 100%
UNKI | OPERATING AT 100% Total PGM Production (’000 ounces) Impact of COVID-19 (‘000 ounces) PGM production decrease 16% 16% impact from COVID-19 96 COVID-19 16 80 losses Production level 13 53 38 31 100% 32 at the end of June 42 43 49 All-in-sustaining cost 36 $525 H1 2019 H1 2020 H1 2019 H1 2020
Slide 15: ACP Phase B Unit Repairs & Safe Ramp-up Complete
ACP PHASE B UNIT REPAIRS & SAFE RAMP-UP COMPLETE Cross section of the Anglo American Platinum Converter Plant Increased monitoring High pressure coolers freeboard section (ACP Phase B water leak) No Increased Coal dust explosion during lance ignition (ACP Phase A explosion) measurement uncontrolled
Slide 16: Refined Production Impacted by ACP Repairs
REFINED PRODUCTION IMPACTED BY ACP REPAIRS Build up in WIP inventories (3E ounces) Refined PGM production (PGM ounces) Work-in-progress build at H1 c.500,000 oz of 3E metal inventory (800) Build due 1,300 1,450 to power disruptions and ACP c.500 Refined production(2) decrease repairs 950 75 Build up
Slide 17: Financials
&S AngloAmerican PLATINUM FINANCIALS
Slide 18: Financial Performance
FINANCIAL PERFORMANCE Headline earnings per share EBITDA Headline earnings (R/share) 28.15 26.27 R13.1bn R6.9bn up 6% ROCE (%) Net cash 48% R11.3bn up from 45% H1 2019 H1 2020 R2.8bn dividend declared for H1 2020 Interim Results July 2020 18
Slide 19: EBITDA Impacted by Operational Headwinds
EBITDA IMPACTED BY OPERATIONAL HEADWINDS EBITDA (R billion) H1 2020 vs. H1 2019 2.6 (0.9) 23.7 (11.2) 9.6 3.5 3.5 Pd 6.0 Rh 108 0.6 2.0 13.1 12.4 0.1 Other Covid-19 (0.3) costs Non-productive labour (1.2) H1 2019 Price Currency Inflation + Operational Costs H1 2020 Royalties headwinds Interim Result
Slide 20: Unit Cost Impacted by Lower Production
UNIT COST IMPACTED BY LOWER PRODUCTION Unit cost per PGM ounce produced (Rand per PGM ounce) Cost savings +16% R2.0bn 1,057 12,555 2,008 11,498 (1,024) All-in sustaining unit cost $(480) 563 9,951 per platinum ounce sold against an achieved price of $857 2020 unit cost guidance per PGM ounce R11,800
Slide 21: Working Capital Impacted by Work in Progress Build
WORKING CAPITAL IMPACTED BY WORK IN PROGRESS BUILD Working capital movement (R billion) Working capital days 2.1 8.6 (0.5) 47 Days WIP balance (6.7) 6.6 R22.9bn 2019: R14.3bn 3.1 Customer prepayment R16.1bn Dec-19 Inventory Trade creditors Trade Customer H1 2020 2019: R9.4bn Debtors prepayment Inter
Slide 22: Capital Guidance Lowered but Asset Integrity Maintained
CAPITAL GUIDANCE LOWERED BUT ASSET INTEGRITY MAINTAINED Capital expenditure (Rand billion) SIB capital expenditure 5.7 – 6.5 1.6 – 2.0 R1.4bn investment in SO2 abatement & Mogalakwena HME Capitalised waste stripping R1.4bn 2.1 0.3 1.9 4.1 – 4.5 0.4 FY 2020 Capex deferments 1.8 1.4 R1.0bn H1 2019 H1
Slide 23: Cash Flow Impacted by Working Capital Build
CASH FLOW IMPACTED BY WORKING CAPITAL BUILD Net cash (Rand billion) Cash utilised R11.3bn R3.5bn after a dividend payment of R11.1bn 17.3 Liquidity headroom 11.3 R16.6bn excluding customer prepayment 6.0 H1 2020 dividend declared H1 2019 2019 H1 2020 R2.8bn R10.23 /share Interim Results July 2020 23
Slide 24: PGM Market Review
PLATINUM PGM MARKET REVIEW
Slide 25: Palladium & Rhodium Propel Basket Price Higher
PALLADIUM & RHODIUM PROPEL BASKET PRICE HIGHER Indexed market prices log scale (2 Jan 2019 = 100) USD basket price increase 800 56% realised prices H1 2020 average year-on-year 400 Rand weakened against USD 200 13% 100 Rand basket price increase 50 Jan 19 Apr 19 Jul 19 Oct 19 Jan 20 Apr 20 80% reali
Slide 26: Covid Impacted Auto Sales | But Now Recovering
COVID IMPACTED AUTO SALES | BUT NOW RECOVERING Global light duty automotive sales (million vehicles per month)(5) Automotive demand 8 Forecasts Sales return to 2019 levels 65% FY 2020 = down 14% yoy of gross 3E PGM demand 7 2019 6 Global LDV(4) sales down in H1 2020 5 4 Sale remain at current levels
Slide 27: Long-Term Automotive PGM Demand Robust
LONG-TERM AUTOMOTIVE PGM DEMAND ROBUST Global light duty automotive production outlook (million vehicles)(6) ICE(7)-based vehicle output increase 89 million 104 million 10 k PGMs in powertrain Pt Fuel Cell Electric Vehicles 65 k 9% 9m between 2019 and 2027 2m Hybrid Electric Vehicles 5m Pt Pd Rh (co
Slide 28: Other Demand | Positive Story Post-Covid
OTHER DEMAND | POSITIVE STORY POST-COVID Industrial demand Jewellery demand Investment demand of gross of gross of gross 22% 3E PGM demand 13% 3E PGM demand 6% platinum demand 2020 3E demand outlook 2020 3E demand outlook 2020 demand 3E outlook resilient weak mixed Medium-term 3E demand outlook Medi
Slide 29: 3E Metals Remain in Fundamental Deficit
3E METALS REMAIN IN FUNDAMENTAL DEFICIT Market balance 2017- 2021 forecast (‘000 ounces)(8) 2020 palladium outlook Pd (208) deficit (754) despite lower automotive demand (950) 2020 platinum outlook 187 225 Pt modest deficit due to lower mine production (265) 50 28 2020 rhodium outlook Rh (26) defici
Slide 30: Positioning the Business for the Future
POSITIONING THE BUSINESS FOR THE FUTURE
Slide 31: Building Blocks in Place
BUILDING BLOCKS IN PLACE Operational efficiency Breakthrough technology Achieve and beat world best practice - P101 Development of FutureSmartTM technology innovation Deployment of FutureSmartTM technology & innovation Bulk-ore sorting Digitalisation Coarse particle rejection Modernisation and mecha
Slide 32: Shaping the Future of Mogalakwena
SHAPING THE FUTURE OF MOGALAKWENA Optimise resource development Create trusting relationships including underground opportunities and valued partnerships Utilise downstream Shaping the Optimise mine plan and processing to maximise value mine for operational performance the future Design and build th
Slide 33: Leading the Platinum Industry's Demand Creation Efforts
LEADING THE PLATINUM INDUSTRY’S DEMAND CREATION EFFORTS INVESTMENT JEWELLERY INDUSTRIAL Developing the world’s largest fuel-cell mining truck ‘Green hydrogen’ through Hydrogen powered Mogalakwena solar PV plant electrolysis fuel-cell truck fleet Green Electricity Hydrogen Interim Results July 2020 3
Slide 34: Guidance & Conclusion
AngloAmerican PLATINUM GUIDANCE & CONCLUSION
Slide 35: 2020 Guidance | Covid-19 Headwinds Remain
2020 GUIDANCE | COVID-19 HEADWINDS REMAIN Production M&C (million ounces) Refined production (million ounces) Sales volumes (million ounces) PGMs 3.1 – 3.6 PGMs 3.1 – 3.6 PGMs 3.1 – 3.6 Pt: 1.45 – 1.65 Pt: 1.45 – 1.65 Pt: 1.45 – 1.65 Pd: 1.00 – 1.15 Pd: 1.00 – 1.15 Pd: 1.00 – 1.15 Other: 0.65 – 0.90
Slide 36: To Conclude…
TO CONCLUDE… ✓ Resilient business through significant headwinds ✓ Zero fatalities and best ever safety performance ✓ ESG strategy supporting stakeholders during COVID-19 pandemic ✓ Clean air movement underpins robust fundamentals for PGMs ✓ Strong balance sheet – c.45% release of WIP in H2 2020 ✓ In
Slide 37: Appendix
AngloAmerican PLATINUM APPENDIX
Slide 38: Operational Efficiency | Benchmark & Beyond (P101)
OPERATIONAL EFFICIENCY | BENCHMARK & BEYOND (P101) Double benching at Mogalakwena Rope shovel efficiency improvement Modernisation at Amandelbult • From 2020 - pit slope design based • Digitalisation improves control systems • Tumela 15E mechanisation – narrow on double benching reef technology • Im
Slide 39: Breakthrough | FutureSmart Mining Technology
BREAKTHROUGH | FUTURESMART MININGTM TECHNOLOGY Bulk-ore sorter – trial underway Coarse particle rejection – Q1 2021 Hydraulic Dry Stacking – H2 2021 • Sensors determine ore content prior to • Trial plant to be built at Mogalakwena • New approach to eliminate wet tailings processing allowing waste ma
Slide 40: Fast Payback Projects - High Return, High Margin
FAST PAYBACK PROJECTS - HIGH RETURN, HIGH MARGIN Base Metal Refinery - copper debottlenecking Amandelbult modernisation Copper plates at the Rustenburg Base Metal Refinery (RBMR) Winder upgrades increase hoisting capacity from 160ktpm to 230ktpm Disciplined capital allocation framework drives projec
Slide 41: Project Studies on Value Accretive Growth Options
PROJECT STUDIES ON VALUE ACCRETIVE GROWTH OPTIONS Mogalakwena expansion Der Brochen / Mototolo replacement and growth • Feasibility project study on track to complete in 2021, assessing: • Replacement of Mototolo in feasibility - maintain current ‒ Construction of third concentrator with breakthroug
Slide 42: Automotive PGM Demand Supported by Higher Loadings per Vehicle
AUTOMOTIVE PGM DEMAND SUPPORTED BY HIGHER LOADINGS PER VEHICLE Historic and forecast 3E light duty PGM loadings(9) LDV gasoline loadings increase by Light duty gasoline vehicles 4.83 Pt 3.35 4.29 40% between 2015 and 2025 due to tighter emissions legislation in China and Europe Rh 2015 2020 2025 LDV
Slide 43: Platinum Physical Investment Firm
PLATINUM PHYSICAL INVESTMENT FIRM Platinum bar and coin gross demand (‘000 ounces per quarter)(10) Platinum bar/coin demand 350 300 250 +300 koz 200 in Q1 150 100 50 - Total Platinum ETF liquidation Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 14 14 15 15 15 15 16 16 16 16 17
Slide 44: Chinese Truck Demand a Platinum Growth Area
CHINESE TRUCK DEMAND A PLATINUM GROWTH AREA Forecast platinum demand in Chinese heavy-duty trucks (‘000 ounces)(12) All Chinese heavy-duty trucks sold by 300 2023 250 Will need platinum-based catalysts, with many manufacturers already implementing standard 200 Platinum loadings per vehicle 150 ~3x h
Slide 45: Overall Outlook for 3E PGM Demand Firm
OVERALL OUTLOOK FOR 3E PGM DEMAND FIRM Short to medium term… …longer term Substitution into Electrification Commercial vehicle gasoline Hydrogen economy through fuel cell demand grows autocatalysts vehicles Platinum Global Jewellery demand Stricter emissions Industrial ‘middle class’ recovers legisl
Slide 46: 3E Primary Supply Down c.21% in 2020
3E PRIMARY SUPPLY DOWN C.21% IN 2020 3E Primary supply (’000 ounces)(13) Current production outlook expected recovery between 2020 to 2030 13,859 Impact of Covid-19 increased uncertainty Probable projects replaces depleting 2019* 2020 2025 2030 Production Probable Projects Range of uncertainty suppl
Slide 47: Earnings Sensitivities
EARNINGS SENSITIVITIES Sensitivity analysis - 2020 Impact of 10% change in price/FX Commodity / Currency 30 June spot Average realized EBITDA (Rm) Platinum ($/oz) 815 857 504 Palladium ($/oz) 1 900 2 141 1 960 Rhodium ($/oz) 8 000 8 985 1 010 Gold ($/oz) 1 773 1 631 113 Nickel ($/ton) 12 642 13 145
Slide 48: Disciplined and Value Focussed Capital Allocation
DISCIPLINED AND VALUE FOCUSSED CAPITAL ALLOCATION Capital allocation framework H1 2020 (Rbn) • Free cash flow utilised of R3.5bn 5.5 • Customer prepayment increase of R6.7bn • Other: R2.3bn • Paid dividend of R11.1bn • Base dividend R4.5bn 11.1 • Special dividend R6.6bn • H1 dividend of R2.8bn decla
Slide 49: Net Cash Flow by Mine
NET CASH FLOW BY MINE 6.7 17.3 1.1 1.9 13.7 (2.9) (0.4) 11.3 (1.3) (11.1) (R3.5bn) Investment in 100% Economic Cash tax and Net cash Cash from SIB and Economic free Project Free associates, Customer Net cash June Operation Operating free interest net interest Dividend December 2019 operations waste
Slide 50: Cost Breakdown
COST BREAKDOWN Costs reflective of AAP Own mined and Joint Venture share of production and costs at operations. Excludes all purchase of concentrate costs and volume, overhead and marketing expenses. H1 2020 COST BASE (RBN) VOLUME % PGMS (KOZ) LABOUR CONTRACTORS MATERIALS UTILITIES SUNDRIES Opencast
Slide 51: All-in Sustaining Cost (AISC)
ALL-IN SUSTAINING COST (AISC) Mogalakwena Amandebult Unki Mototolo JV mined AAP Total mined Costs (US$million) Cash operating costs 289 288 75 71 127 850 Other costs and marketing 57 55 26 12 16 170 Capitalised waste costs 85 - - - - 85 Sustaining capital 44 12 3 12 7 79 a Total Cost 474 356 104 94
Slide 52: Rand Basket Price
RAND BASKET PRICE Company Mogalakwena Amandebult Unki Mototolo JV mined POC/Other (ex-trading) (18) Net sales revenue (US$million) from platinum 105 76 17 21 38 121 378 from palladium 358 115 49 41 84 196 843 from rhodium 121 227 31 58 122 286 845 base metals & other 109 64 23 12 21 133 362 a Total
Slide 53: Simplified EBITDA per PGM Ounce
SIMPLIFIED EBITDA PER PGM OUNCE Mogalakwena Amandebult Unki Mototolo JV mined Mining POC Toll Trading Company c=axb Net revenue 11 385 7 923 1 977 2 173 4 359 27 817 12 088 392 14 866 54 770 a Rand basket per PGM ounce 33 164 34 565 34 766 31 703 35 218 33 853 29 653 32 437 b PGM ounces sold (000 ou
Slide 54: Simplified EBITDA per Platinum Ounce
SIMPLIFIED EBITDA PER PLATINUM OUNCE Mogalakwena Amandebult Unki Mototolo JV mined Mining POC Toll Trading Company c=axb Net revenue 11 385 7 923 1 977 2 173 4 359 27 817 12 088 392 14 866 54 770 a Rand basket per platinum ounce 93 370 89 998 98 813 91 145 105 973 94 311 85 934 94 130 b Rand basket
Slide 55: Foot Notes
FOOT NOTES (1) Total recordable case injury frequency rate (TRCFR) is a measure of the rate of all injuries requiring treatment above first aid per 1,000,000 hours worked (2) Refined production excluding tolling and 4E purchase of concentrate that is now tolled (3) AISC stands for all-in sustaining