Impala Platinum Holdings Limited · JSE:IMP
Impala Platinum — Investor Presentation (May 2004)
56 slides from Impala Platinum's investor presentation, May 25, 2004
Slide 1: Merrill Lynch One-on-one meetings
Merrill Lynch One-on-one meetings 25 May 2004 Overview and strategy Keith Rumble 2 1
Slide 2: Introducing Implats; Share price performance
Introducing Implats Implats is in the business of mining, refining and marketing the platinum group metals and associated base metals Implats has extensive operations on the two most significant PGM deposits in the world: the Bushveld Complex in South Africa and the Great Dyke in Zimbabwe 3 Shar
Slide 3: Analysis of shareholding; A multi-operation company
Analysis of shareholding As at end March 2004: 6% 6% South Africa 60% USA 12% England, Scotland and Wales Europe 16% Other countries 40% held offshore (FY2002: 31%) 5 A multi-operation company 1999 2004 2% 30% 28% 72% 4% 64% Impala Barplats Impala Marula Zimplats Mimosa 69 Moz Pt 254 Moz Pt 6 3
Slide 4: Sustained production outlook; Three-pronged strategy
Sustained production outlook 000oz Track record of sustained growth 2000 1500 1000 500 0 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 Impala Growth Lonplats toll refining 7 Three-pronged strategy Mine-to-market Impala Marula Mimosa Zimplats Impala Refining Services Strategic alliances and investmen
Slide 5: Corporate structure; Refined platinum production
Corporate structure Implats 100% Mine to market Impala Refining Strategic holdings operations Services (IRS) Concentrate Impala 100% offtake Platinum agreements Lonplats** Marula 80%* Platinum Aquarius 9% 83.3% Platinum Ltd Zimplats 45% 50% Two Rivers Mimosa *20% allocated to BEE partnership **Subje
Slide 6: Metals produced; The market
Metals produced 000oz FY2004 FY2003 First half Total PGMs 2 006 3 162 Platinum *1 075 **1 673 Palladium 551 893 Rhodium 132 215 Nickel (tonnes) 8 055 14 700 * Includes 206 000 z of Western Platinum material – toll refined ** Includes 159 000oz of Western Platinum material – toll refined 11 The marke
Slide 7: Platinum price; Platinum supply and demand
Platinum price $/oz R/oz 1050 6500 6000 900 5500 750 5000 600 4500 4000 450 3500 300 3000 Jul-01 Nov-01 Mar-02 Jul-02 Nov-02 Mar-03 Jul-03 Nov-03 Mar-04 $/oz R/oz 13 Platinum supply and demand 000 oz 2004* 2003 2002 Demand Automobile 2 615 2 730 2 615 Jewellery 2 120 2 525 2 845 Industrial/investmen
Slide 8: Platinum jewellery demand; Platinum autocatalyst demand
Platinum jewellery demand 000oz 3500 3000 2500 2000 1500 1000 500 0 1994 1996 1998 2000 2002 Source: Johnson Matthey, 2004 15 Platinum autocatalyst demand 000oz 3500 3000 2500 2000 1500 1000 500 0 1994 1996 1998 2000 2002 Source: Johnson Matthey, 2004 16 8
Slide 9: Overview – platinum market; Palladium price
Overview – platinum market Price at a 24-year high in US dollars in early 2004 High and volatile prices impact on jewellery market Tighter emission legislation and further growth in diesel vehicle sales have supported demand Growth in RoW vehicle sales becoming a factor Heightened profile
Slide 10: Autocatalyst demand for palladium; Palladium supply and demand
Autocatalyst demand for palladium 7000 6000 5000 4000 3000 2000 1000 0 1994 1996 1998 2000 2002 Source: Johnson Matthey, 2004 19 Palladium supply and demand 000 oz 2004* 2003 2002 Demand Automobile 4 610 4 360 4 530 Electronics 755 800 980 Other 1 475 1 410 1 385 Total demand 6 840 6 570 6 895 Total
Slide 11: Overview – palladium market; Other markets
Overview – palladium market Fundamentals not supportive of current price levels High inventory levels Anaemic demand Speculative activity behind recent price rally 21 Other markets Rhodium Drop in rhodium price reflects a market that is adequately supplied Nickel • Rapid growth in stainles
Slide 12: Financial issues; Headline earnings profile
Financial issues David Brown 23 Headline earnings profile SA cents/share 8000 6000 4000 2000 0 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 (half year) 24 12
Slide 13: Dividend profile; Contributions to net profit
Dividend profile SA cents 7500 6000 Special dividend 4500 3000 1500 0 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 (half year) 25 Contributions to net profit For six months to December 2003: Mining operations Strategic holdings 66% 15% Implats R1 061m IRS 19% 26 13
Slide 14: Key ratios and margins; Contribution to net profit
Key ratios and margins FY2004 (Interim) FY2003 Ratios Return on equity 22 37 Return on assets 17 30 Margins Gross 31 43 Impala lease area 35 50 IRS 22 17 27 Contribution to net profit R million FY2004 % FY2003 % (Interim) Impala Platinum 643 61 2 563 75 IRS 200 19 151 4 Barplats (9) (1) (35) (1) Lon
Slide 15: Group capex; Gross cash position
Group capex* $m * This excludes any future expansions in Zimbabwe 350 300 250 200 150 100 50 0 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 Impala Barplats Marula Zimbabwe 29 Gross cash position 3500 3000 2500 2000 3,150 3,107 3,038 1500 2,325 1000 389 500 707 0 FY00 FY01 FY02 FY03 Est04 Group Cash Bar
Slide 16: Mining operations: Impala Platinum
Mining operations 31 Impala Platinum Keith Rumble and Paul Visser 32 16
Slide 17: Impala Platinum; Bushveld Complex
Impala Platinum • Comprises mining operations on the Impala lease area, Mineral Processes and Refineries • Includes 13 shaft systems and five declines • 30-year plan to produce 1M to 1.1Moz of platinum annually • Significant royalty agreement with RBN 33 Bushveld Complex 34 17
Slide 18: Implats – safety performance
Implats – safety performance Per million Implats - Fatal injury frequency rate* man hours 0.2 0.158 0.16 0.134 0.139 0.114 0.12 0.08 0.04 0 FY2001 FY2002 FY2003 FY2004 * Re-stated to include Zimbabwe operations 35 Implats – safety performance Per million Implats - Lost time injury frequency rate* ma
Slide 19: Mining plan
Mining plan Mining Plan in place to produce 1M – 1.1M oz of platinum annually for 30 years Design and planning of new shafts to maintain output well underway Good progress with mechanised mining and opencast operations 37 Impala – planned production profile 18,000 Opencast - Merensky Opencast
Slide 20: Efficiencies; New technology
Efficiencies FY2004 FY2003 FY2002 (Interim) Impala employees 27 600 28 400 27 900 Impala panel efficiencies ca/man 41 41 40 Group tonnes per employee 51 46 47 Group Pt ounce/employee 4.7 4.4 4.1 39 New technology Ultra-low profile machinery Narrow reef continuous mining machine 40 20
Slide 21: New technology; Impala Platinum
New technology • Nylon rock straps – trial at Shafts 10 and 4 41 Impala Platinum Mineral Processes Concentrator capacity of 1.1M oz of platinum Smelter capacity of 2M oz Refineries Current capacity of 1.65M oz – expansion to 2M oz of platinum underway 42 21
Slide 22: Impala Platinum capex; Marula Platinum
Impala Platinum Planned capex (Rm) FY2003 FY2004 FY2005 FY2006 Rustenburg# 1 000 1 300 1 013 1 251 Refineries 79 252 458 378 Total 1 079 1 552 1 471 1 629 # this includes mining operations and Mineral Processes (smelting and concentrating) 43 Marula Platinum Les Paton 44 22
Slide 23: Marula Platinum; Location
Marula Platinum • Greenfields project on eastern limb of Bushveld Complex • Property purchased in December 2000 45 Location 46 23
Slide 24: Marula Platinum; Original plan
Marula Platinum Resources UG2 48.6 million tonnes Merensky 45.4 million tonnes BEE participation – 20% 47 Original plan Phased approach Mine UG2 to depth of 600m Mechanised mining Two decline accesses Clapham Driekop Planned full production of 233 000 ROM tonnes per month (100 000
Slide 25: Progress against plan; Geology
Progress against plan On-reef decline development behind schedule Commissioning of surface infrastructure complete 2004 – 10 000 Pt oz in concentrate Revised mining plan established Entire UG2 orebody being considered Production – 211 000 ROM tonnes per month 140 000 Pt oz Life-of-mine
Slide 26: Mineral processing; Progress on site
Mineral processing Plant commissioned on time and within budget Overall metallurgical recovery set at 82% of ROM grades DMS plant being bypassed at present Final concentrate transported to Mineral Processes 51 Progress on site 52 26
Slide 27: Empowerment model; Zimbabwe
Empowerment model Elements of empowerment BEE Employment Social/SME Affirmative Training Ownership Equity Development Procurement Mmakau Community Business Mining Trust Interests (10%) (5%) (5%) 53 Zimbabwe 54 27
Slide 28: Working in Zimbabwe; Zimbabwe – a highly prospective area
Working in Zimbabwe Working relationship with Government Able to import fuel and capital goods Exchange rate issues Minerals legislation Indigenization programme: Zimplats Mimosa 55 Zimbabwe – a highly prospective area Expansion opportunities Musengezi in Zimbabwe Complex Great Dyk
Slide 29: Zimplats Overview
Zimplats Mike Houston and Rob Dey 57 Overview • 83.3% stake • Current production of 85 000oz Pt pa 58 29
Slide 30: Investment history; Structure
Investment history Makwiro 30% R247 million 2001 Zimplats 15% R66 million (Delta) 2001 21% R205 million (Delta) August 2002 15% R142 million (Absa) July 2003 31% R647 million (minorities) Sept 2003 Total 83.3% R1 060 million Grand total* R1 307 million * Makwiro and Zimplats Total resources: 161 mil
Slide 31: Zimplats; Expansion Phase 1
Zimplats Zimplats comprises: the Ngezi opencast operation Selous Metallurgical Complex Hartley Platinum Mine (formerly owned by BHP) Current production of 83 000oz Pt pa Underground trial mining taking place Significant expansion opportunities 61 Expansion Phase 1 Bankable feasibilit
Slide 32: Zimplats production potential; Photo gallery
Zimplats Potential Pt production (000oz) 400 Phase 3 300 Phase 2 200 Phase 1 100 Current 0 2004 2006 2008 2010 63 Photo gallery 64 32
Slide 33: Photo gallery; Mimosa Platinum
Photo gallery 65 Mimosa Platinum Les Paton and Peter Breese 66 33
Slide 34: Mimosa Platinum
Investment history (continued) Mimosa 35% R246 million (Zimasco) August 2001 15% R130 million (Zimasco) July 2002 Total 50% R376 million Total resources: 11.8 million oz of platinum = R32/oz 67 Mimosa Platinum Implats has a stake of 50% Current production of 65 000oz of Pt One of most efficien
Slide 35: Mineral Resources – based on a 1.8m cut
Mineral Reserves 69 Mineral Resources – based on a 1.8m cut Orebody Category Tonnes (M) Grade (g/t) PGM Ounces (M) element South Hill Measured 32.41 4.07 4E 4.24 Indicated 31.65 3.81 4E 3.87 Inferred 18.17 3.95 4E 2.31 Inferred (oxides) 7.19 3.81 4E 0.88 Total 89.42 3.93 4E 11.30 North Hill Inferred
Slide 36: Mimosa Platinum; Expansion opportunities
Mimosa Platinum 71 Expansion opportunities Modifications to current concentrator to increase throughput by up to 15 000 Pt oz (FY2006) Evaluation drilling underway south of current workings Feasibilty study to potentially double production will begin post-drilling 72 36
Slide 37: Impala Refining Services
Impala Refining Services David Brown and Chris McDowell 73 IRS created in July 1998 Key strategic thrust to: Leverage surface assets and expertise Reduce fixed unit costs (through economies of scale) Seek growth through strategic alliances and joint ventures Dedicated vehicle to house toll
Slide 38: Key benefits; Typical products processed via IRS
Key benefits Reduced exposure to mining risk Lower investment Exploitation of smaller deposits: Economy of scale benefits World class smelting operation State-of-the-art Precious Metals Refinery 75 Typical products processed via IRS Flotation concentrates Kroondal Marula Messina
Slide 39: Growth in platinum production from IRS; IRS revenue
Growth in platinum production from IRS 000oz 700 Lonplats 600 500 400 300 200 100 0 FY99 FY00 FY01 FY02 FY03 FY04 (first half) 77 IRS revenue R million 3500 3000 2500 2000 1500 1000 500 0 FY00 FY01 FY02 FY03 78 39
Slide 40: Contract structures; Potential growth
Contract structures Metal purchase agreements Increases market share IRS retains agreed proportion of metal value Metal purchase after an agreed processing period Toll refining agreements Refining Smelting Handling charge Agreed percentage of metal returned after an agreed processi
Slide 41: Exploration
Exploration Les Paton 81 Exploration South African Bushveld Complex North and South America, Australia and Brazil Alliance with Falconbridge Niquelandia Catete Franconia JV Zimbabwean Great Dyke 82 41
Slide 42: Strategic holdings; Location
Strategic holdings David Brown, Les Paton and Cathie Markus 83 Location 84 42
Slide 43: Lonplats; Lonplats (2)
Lonplats September 2003 – announced that Implats had entered into negotiations on sale of 27.15 stake in Lonplats May 2004 – progress report Two tranches 9% to HDSA investors for US$240.1 m (R1.68 billion) 18.1% to Lonmin for US$554.1 m (R3.9 billion) Implats and Lonmin to provide vendor
Slide 44: Benefits for Implats shareholders; Aquarius Platinum
Benefits for Implats shareholders Net purchase price of US$794m – premium of 8% to market value at the time the announcement was made Credits applied to Impala achieved at a discount of 1% Cash to flow back to shareholders Further simplification of structure 87 Aquarius Platinum 9% in Aq
Slide 45: Two Rivers; BEE and transformation
Two Rivers 45% stake with ARM (formerly Avmin) holding 55% Feasibility study completed Trial mining underway 89 BEE and transformation Cathie Markus and Humphrey Oliphant 90 45
Slide 46: BEE – the context; Pillars of empowerment
BEE – the context A reality in doing business in Southern Africa Implats aims to: Minimise costs to shareholders Maximise opportunity South Africa Minerals Act Mining Charter and Scorecard Royalty Bill Zimbabwe Draft legislation 91 Pillars of empowerment 92 46
Slide 47: Equity ownership; Training and development
Equity ownership Definition: 15% HDSA ownership in equity of attributable units of production within five years Implats (listed company) RBN 1.5% of equity Impala Lonmin deal – 9% of production Marula 20% of project Two Rivers project 12% of Implats’ stake 93 Training and development
Slide 48: Affirmative procurement; Beneficiation
Affirmative procurement Definition: Preferred supplier status to HDSAs Current level of HDSA procurement identified Commitment to progress over three years HDSA preferred supplier status and affirmative procurement principles established in January 2002 R400 million purchased from HDSA suppliers
Slide 49: Opening of Silplat facility; Silplat
Opening of Silplat facility 97 Silplat Venture partners – Silmar of Italy, SA Link, Micofin and BAE-SAAB Implats’ contribution Direct equity stake of 17.5% for R14m Platinum loan of 1 000kg over five years (equivalent to R17m) Commercial lease rate paid on outstanding portion of loan Hig
Slide 50: Human Resources; Transformation committee
Human Resources Definition: Non discrimination against migrant labour Co-operating in formulating/implementing integrated development plans Efforts to engage communities Measures to improving housing conditions and nutrition of employees Among others: Social investment initiatives through the Im
Slide 51: Board structure; ADR programme
Board structure Non-executive Chairman Peter Joubert 4 Executive directors 10 Non-executive directors Keith Rumble Daryl O’ Connor* David Brown Sifiso Dabengwa* Cathie Markus Thandi Orleyn* Les Paton Michael McMahon Vivienne Mennell Thabo Mokgatlha Mike Pleming* John Roberts* Dr Fred Roux* Lex van V
Slide 52: HIV/AIDS policy
HIV/AIDS Dr Jon Andrews 103 Implats/HIV AIDS policy Collaborative management with unions and medical services Policy provides for: Joint planning and monitoring HIV/AIDS Anonymous statistical testing Counselling, care and management of HIV/AIDS infected employees Community outreach pro
Slide 53: Prevalence levels; Levels of awareness and risk behaviour
Prevalence levels Full union co-operation De-linked pre-operative data Random anonymous surveys Indicates a levelling of 14000 50% infection levels below 12600 45% WORST CASE expectations and below 11200 40% 9800 35% reported industry levels 8400 30% 7000 25% 5600 20% BEST CASE 4200 15% 2800
Slide 54: Implats' HIV/AIDS programmes; Preventing transmission
Implats’ HIV/AIDS programmes Efforts are directed in two areas: Preventing transmission among existing and particularly new employees Managing the impact of HIV/AIDS on infected and the company And since January 2003, the delivery of ART through Impala Medical Plan 107 Preventing transmissio
Slide 55: Managing the impact on the company
Managing the impact on the company Positioned to limit impact of epidemic on operations Policies/procedures/benefits structured in line with paradigm of epidemic Independent formal review of effects of programmes, HR policies, employee benefits, manpower, training costs and initiatives to main
Slide 56: Merrill Lynch One-on-one meetings
Merrill Lynch One-on-one meetings 25 May 2004 56
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