African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — African Rainbow Mnrls — 1H F2024 Earnings Presentation
40 slides from African Rainbow Minerals's earnings presentation, Mar 8, 2024
Slide 1: Interim results for the six months ended 31 December 2023
Interim results for the six months ended 31 December 8 March 2024 2023 We do it better
Slide 2: Executive chairman's results statement
“ Headline earnings for 1H F2024 decreased by 43% to R3.0 billion (1H F2023: R5.2 billion). We declared an interim dividend of R6.00 per share. Our financial position remains robust with net cash of R8 billion at 31 December 2023. Dr Patrice Motsepe, Executive chairman “
Slide 3: Disclaimer
Disclaimer Throughout this presentation a range of financial and non-financial measures are used to assess the company’s performance, including, but not limited to financial measures that are not defined under International Financial Reporting Standards (IFRS). These adjusted financial measures are
Slide 4: Overview of results
Overview of results Dr Patrice Motsepe Executive chairman Beeshoek Mine We do it better
Slide 5: Headline earnings
Headline earnings ARM Ferrous ARM Group (R million) 12% to 7 000 R2.8 billion 43% Increase (1H F2023: R2.5 billion) 6 000 Decrease 5 172 5 000 ARM Platinum 301 4 000 121% to (1 612) 294 2 955 R282 million loss 3 000 (1H F2023: R1.3 billion earnings) (1 200) 2 000 ARM Coal 1 000 Decrease Increase 85%
Slide 6: Six-monthly headline earnings (R million)
Six-monthly headline earnings (R million) First half (1H) 8 025 8 000 7 642 Second half (2H) 6 000 5 039 5 172 4 000 3 696 3 811 3 379 3 025 2 955 2 201 2 155 2 000 0 F2019 F2020 F2021 F2022 F2023* F2024 Total annual: 5 226 5 534 13 064 11 338 8 983 For a reconciliation between basic earnings and he
Slide 7: Dividends per share (cents)
Dividends per share (cents) 2 500 Interim dividend per share Final dividend per share 2 000 2 000 2 000 1 500 1 400 1 200 1 200 1 000 1 000 900 700 600 500 500 400 0 F2019 F2020 F2021 F2022 F2023 F2024 Total annual: 1 300 1 200 3 000 3 200 2 600 We are committed to balancing growth and dividends whi
Slide 8: Dividends received
Dividends received* Dividends received from Assmang Distributions received from ARM Coal 14% to R3 billion 87% to R153 million (1H F2023: R3.5 billion) (1H F2023: R1 144 million) Post 31 December 2023, Assmang declared a dividend of R4 billion (100% Distributions received as part settlement for loan
Slide 9: Safety and health
Safety and health Lost Time Injury Frequency Rate (LTIFR)* Total Recordable Injury Frequency Rate (TRIFR)** 14% to 0.24 19% to 0.50 (1H F2023: 0.28) (1H F2023: 0.62) * LTIFR per 200 000-man hours ** TRIFR includes the number of fatal injuries, number of lost time injuries and number of medical cases
Slide 10: Strategy: deliver competitive returns and create sustainable value
STRATEGY Owner-operator DELIVER COMPETITIVE RETURNS AND CREATE Entrepreneurial SUSTAINABLE VALUE management FOR ALL STAKEHOLDERS Operate Investing in Focus on our portfolio our employees value-enhancing of assets safely, and integrated responsibly and efficiently growth Partnering with Allocate capi
Slide 11: Segmental EBITDA split by commodity (%)
Segmental EBITDA split by commodity (%) (R million) 9 336 11 009 24 321 17 839 13 994 5 106 110% 1% 4% 3% 3% 9% Other* 1% 4% 4% 7% 90% 19% 5% 12% 14% 29% Coal (GGV) 70% 46% 46% 39% 44% Manganese 50% 80% 54% Iron Ore 30% 46% 42% 37% 36% PGMs 10% 16% 8% (3%) (4%) (3%) (10%) F2019 F2020 F2021 F2022 F20
Slide 12: EBITDA margins by commodity (%)
EBITDA margins by commodity (%) 58% Coal (GGV) 31% 51% PGMs* 16% 46% Iron ore 53% 30% Manganese alloys** (34%) 30% Manganese ore 14% 1H F2023 1H F2024 * Including Modikwa and Two Rivers mines only ** EBITDA margin includes a once-off provision of R234 million (100%) related to onerous contracts. Exc
Slide 13: Operational review
Operational review Phillip Tobias Chief executive officer Two Rivers Mine We do it better
Slide 14: Headline earnings/(loss) by division / operation (R million)
Headline earnings/(loss) by division / operation (R million) 1H F2024 1H F2023 % change ARM Ferrous 2 821 2 520 12 Iron ore division 2 782 1 663 67 Manganese division 45 861 (95) Consolidation adjustment and other (6) (4) (50) ARM Platinum (282) 1 330 (121) Two Rivers Mine 164 920 (82) Modikwa Mine
Slide 15: Production by commodity (100% basis)
Production by commodity (100% basis) Unit 1H F2024 1H F2023 % change ARM Ferrous Iron ore 000 tonnes 7 058 6 984 1 Manganese ore 000 tonnes 1 788 2 163 ( 17) Manganese alloys 000 tonnes 190 223 ( 15) ARM Platinum Two Rivers Mine 6E PGM ounces 150 956 147 288 2 Modikwa Mine 6E PGM ounces 151 754 146
Slide 16: ARM Ferrous
ARM Ferrous Khumani Mine We do it better
Slide 17: ARM Ferrous
ARM Ferrous Profit variance analysis – segment result (R million) Changes in average US Dollar Index prices (%) 23% 698 1 122 45 3 048 3 642 (708) (563) (16%) (17%) (46%) Export 44% Export 37% Export iron ore* High carbon manganese ore manganese manganese alloys 1H F2023 ZAR:US$ US$ Prices Volume Co
Slide 18: Iron ore (100% basis)
Iron ore (100% basis) Operational performance Average realised US dollar export prices increased % by 23%. unit 1H F2024 1H F2023 change Export sales volumes 000 tonnes 6 004 5 652 6 Local sales volumes 000 tonnes 1 242 1 011 23 Export sales volumes were better than volumes in Export sales lump:fine
Slide 19: Manganese ore (100% basis)
Manganese ore (100% basis) Operational performance Export sales volumes were 12% higher, driven by % rollover shipments from F2023 and better than unit 1H F2024 1H F2023 change expected performance from Transnet. Export sales volumes 000 tonnes 2 000 1 779 12 Local sales volumes* 000 tonnes 367 405
Slide 20: Manganese alloys (100% basis)
Manganese alloys (100% basis) Operational performance Average high carbon manganese alloy index prices decreased by 46%. % unit 1H F2024 1H F2023 change Sales volumes: High carbon manganese alloy production at Sakura South African operations 000 tonnes 39 46 (15) decreased by 13%, as production was
Slide 21: ARM Platinum
ARM Platinum Two Rivers Mine We do it better
Slide 22: ARM Platinum
ARM Platinum Profit variance analysis segment result* (R million) Changes in unit cash costs** (%) 6 000 5 000 3 287 336 (3 415) 4 000 3 000 PGMs: Modikwa 7% 2 000 1 000 278 (333) 167 342 22 PGMs: Two 0 7% 1H F2023 ZAR:US$ US$ Volume Cash Non-cash Mark-to- 1H F2024 Rivers Prices costs costs market a
Slide 23: PGMs (100% basis)
PGMs (100% basis) Operational performance (100% basis) Lower US dollar PGM prices, particularly palladium % (42% lower) and rhodium (70% lower), were partially unit 1H F2024 1H F2023 change offset by a weaker rand/US dollar exchange rate. 6E PGM Modikwa production volumes 151 754 146 921 3 ounces 6E
Slide 24: Nkomati Mine update
Nkomati Mine update During 1H F2024, ARM and Norilsk Nickel Africa (Pty) Ltd (NNAf) concluded a Purchase and Sale Agreement (PSA) which provides for the acquisition by ARM of NNAf's 50% participation interest in the Nkomati mine for a cash consideration of R1 million. ARM will take over NNAf's propo
Slide 25: ARM Coal
ARM Coal Goedgevonden Mine We do it better
Slide 26: ARM Coal
ARM Coal Profit variance analysis – segment result* (R million) Changes in on-mine unit production costs (%) 2 000 557 Coal: PCB (1%) 1 500 1 000 797 154 Coal: GGV (3%) 500 258 (1 067) ( 173) ( 10) 0 (4%) (3%) (2%) (1%) 0% 1H F2023 ZAR:US$ Volume US$ Prices Costs Other 1H F2024 Increase Decrease Inc
Slide 27: GGV and PCB (100% basis)
GGV and PCB (100% basis) Operational performance (100% basis) Global thermal coal prices were negatively impacted by reduced European coal demand resulting from a % milder winter and high coal stocks brought forward unit 1H F2024 1H F2023 change from the prior year. Export sales volumes Mt 6.80 5.77
Slide 28: Update on PGM growth projects
Update on PGM growth projects Two Rivers Merensky Project Construction and commissioning of the Two Rivers Merensky concentrator plant is scheduled to be completed during Q4 F2024. Capital and operating cost inflation, coupled with current PGM pricing, has necessitated deferring sections of the proj
Slide 29: ARM's key focus areas
ARM’s key focus areas Ensuring that our operations are profitable and globally competitive. Maintaining a robust balance sheet. Aligning production capacity to logistics and infrastructure constraints. Exploring value-enhancing growth opportunities. 29
Slide 30: Capital allocation
Capital allocation Tsundzukani Mhlanga Finance director Bokoni Mine We do it better
Slide 31: Capital allocation guiding principles
Capital allocation guiding principles* Invest in growth of existing businesses Dividend payments Mergers and acquisitions Debt repayment Healthy gearing levels create a flexible platform for sustainable growth Share repurchases Underpinned by metrics that measure the sustainability of value creation
Slide 32: Cash flow analysis (R million)
Cash flow analysis* (R million) 20 000 Interest Investing in and debt Shareholder Sources of funds existing business repayments returns 18 000 16 000 14 000 3 056 ( 302) 12 000 10 004 449 420 10 000 (3 093) ( 49) 55 8 111 8 000 (2 353) ( 76) 6 000 4 000 2 000 Increase Decrease 0 Balance 1 July Cash
Slide 33: Net cash and debt (R million)
Net cash and debt (R million) 31 December 2023 30 June 2023 31 December 2022 Cash and cash equivalents per statement of financial 8 128 10 021 9 837 position* Cash and cash equivalents per statement of cash 8 111 10 004 9 821 flows Overdrafts 17 17 16 Total borrowings (193) (242) (289) Long-term bor
Slide 34: Segmental capital expenditure (R million)
Segmental capital expenditure (R million) 1H F2024 1H F2023 % change ARM Ferrous 1 017 1 039 (2) Iron ore division 634 751 (16) Manganese division 426 332 28 Consolidation adjustment ( 43) (44) (2) ARM Platinum 3 060 1 715 78 Two Rivers Mine 1 894 1 332 42 Modikwa Mine 508 321 58 Bokoni Mine 658 62
Slide 35: Segmental capital expenditure (R million)
Segmental capital expenditure* (R million) 9 000 8 000 7 730 7 191 7 000 5 994 6 000 5 000 4 719 4 457 4 000 3 000 2 000 1 000 0 F2022 F2023 F2024e F2025e F2026e ARM Platinum ARM Ferrous ARM Coal * Capital expenditure includes; (i) deferred stripping, (ii) financed fleet replacement, and (iii) susta
Slide 36: Thank you
Thank you www.arm.co.za We do it better
Slide 37: Additional slides
Additional slides Black Rock Mine Modikwa Mine We do it better
Slide 38: PGM Mark-to-market adjustments
PGM Mark-to-market adjustments The sales price of PGM concentrate is determined on a provisional basis at the date of sale. Adjustments are made to the sales price based on movements in the discounted forward commodity prices up to the date of final pricing. Where there are any differences between t
Slide 39: Mark-to-market adjustments (R million)
Mark-to-market adjustments (R million) Modikwa Mine 1H F2024 1H F2023 Realised mark-to-market adjustments* (33) 41 Provisional sales value 1 464 2 369 Final sales value 1 431 2 410 Unrealised mark-to-market adjustments 6 (82) Initial provisional sales recognition 700 1 114 Period end provisional sal
Slide 40: Reconciliation to headline earnings (R million)
Reconciliation to headline earnings (R million) 1H F2024 1H F2023* F2023* Basic earnings attributable to equity holders of ARM 1 216 4 388 8 080 Attributable after-tax impairment on property, plant and equipment - Two Rivers 1 070 - - Attributable after-tax impairment on property, plant and equipmen
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