Exxaro Resources Limited · JSE:EXX
Exxaro Resources — BoAML Miami Conference (May 2012)
24 slides from Exxaro Resources's conference presentation, May 2012
Slide 1: Powering possibility
Powering possibility Sipho Nkosi Chief Executive Officer
Slide 2: Strategy overview: To become a $20bn company
Strategy overview: To become a $20bn company Maximising VISION: To become a $20bn company by 2020 shareholder value Safety and development of employees 5 Strategic focus areas Portfolio Driving optimisation Operational excellence Sustainability of our environment
Slide 3: Strategy overview: Optimising Exxaro's portfolio
Strategy overview: Optimising Exxaro’s portfolio 2nd largest coal producer in South Africa Focus on a diverse commodity portfolio COAL • 41Mtpa with 32Mtpa to Eskom Export entitlement of 6.25Mtpa at RBCT 3rd largest producer globally MINERAL SANDS Tronox transaction: creation of the world’s leading
Slide 4: Delivering on strategy: Safety Always
Delivering on strategy: Safety Always LTIFR* • LTIFR has decreased to 0,20 0,39 0,36 0,33 0,21 • 48 LTIs were recorded in 2011 0,25 0,20 o 23% lower than in 2010 • 5 business units were LTI-free 2007 2008 2009 2010 2011 Reportable fatalities • Regrettably there were 3 fatalities in FY11 Increased fo
Slide 5: Delivering on strategy: Maximising shareholder value
Delivering on strategy: Maximising shareholder value Five years of continuous success + 20%* + 53%* + 49%* + 50%* R1bn MPower pay-out Revenue Operating profit HEPS Total dividend R135,102 pre-tax payout per * 5 year CAGR employee to 9,694 employees STRONG cash flow and balance sheet: Dividend profil
Slide 6: A year old moving to new heights
A 5 year old moving to new heights A diversified and world class commodity portfolio
Slide 7: Delivering on strategy: Coal remains a core focus
Delivering on strategy: Coal remains a core focus Where to? Coal timeline • Current priority is successful commissioning of Grootegeluk GMEP commissioning Medupi Expansion Project (“GMEP”) 2012 Char 2 BFS • Supply of 14.6Mtpa of powerstation coal to Eskom Moranbah BFS • Acceleration of downstream va
Slide 8: Delivering on strategy: GMEP is on time
Delivering on strategy: GMEP is on time • GMEP is on time and within budget • First coal under “take or pay” contract: 1 May 2012 • Discussions to mitigate take-or-pay impact on Eskom subject to Exxaro’s shareholder value not being impacted • New ramp-up of coal to be negotiated with Eskom • Market
Slide 9: Coal industry commentary
Coal industry commentary • Increasing demand from domestic customers Domestic • Eskom demanding higher quality power station coal product market • Challenging mining conditions at the Tied operations • Transnet remain a key catalyst to performance of sector Export steam • Good 1Q12 for exports at RB
Slide 10: Exxaro Sands
Exxaro Sands
Slide 11: Delivering on strategy: Mineral Sands shifting
Delivering on strategy: Mineral Sands shifting Where to? Mineral Sands timeline New Tronox • New Tronox transaction announced in September 2011 is on New Tronox listing track to close 2Q12 subject to regulatory and Tronox 2012 Fairbreeze construction shareholder approval 2013 Namakwa Sands co- • Cre
Slide 12: Mineral Sands market commentary
Mineral Sands market commentary • Strong demand driven by all major consumers of feedstocks (despite the global economic uncertainties) • Structural shortage of feedstocks in the short to medium term • Significant price increases implemented (industry wide & TiO2 feedstock within Exxaro) demand • As
Slide 13: Mineral Sands market commentary
Mineral Sands market commentary • Global economic uncertainty is negatively impacting demand • Recovery is anticipated during H2 2012 • Structural shortage of zircon • Substitution increasing Demands for Zircon remains • Significant price increases implemented (industry wide & within Exxaro) soft •
Slide 14: Exxaro Ferrous
Exxaro Ferrous
Slide 15: Delivering on strategy: Ferrous – operational control
Delivering on strategy: Ferrous – operational control Where to? Ferrous timeline Iron Ore AKI acquisition • Acquisition of African Iron Limited (“AKI”) completed Mayoko project review 2012 • Increased Exxaro’s exposure to iron ore AlloyStream demonstration • Operational and managerial control Mayoko
Slide 16: African Iron strategic fit into Exxaro?
African Iron strategic fit into Exxaro? High grade resource of sufficient size (121Mt JORC Resource) Significant upside potential and synergies Long life of mine at high production volumes Unexplored license areas Magnetite Downstream integration due to oil and gas Single footprint L
Slide 17: Exxaro Energy
Pigtie Energy PE ao
Slide 18: Delivering on strategy: Energy
Delivering on strategy: Energy Where to? Energy project timeline • Continue to explore opportunities in the renewable energy industry to develop the clean energy pipeline Established Cennergi, 50:50 JV with Tata Power • Exxaro to participate in the Independent Power Producer 2012 Bid projects for Ro
Slide 19: Financial capacity
Financial capacity
Slide 20: Capital structure: sufficient capacity for projects
Capital structure: sufficient capacity for projects Ratios: FY11 FY10 Net financing cost cover (times) - EBITDA 18 9 Return on equity - attributable income (%) 37 34 Return on capital employed (%) 45 38 45% ROCE vs target of 28% Cash positive, 1% net cash/equity Exxaro has sufficient R8bn 8 year cor
Slide 21: South Africa
exxaroa POWERING POSSIBILITY
Slide 22: SA infrastructure: clarity emerging
SA infrastructure: clarity emerging Transnet railing volumes on existing RBCT line have significantly improved over the past 12 months • Performance appears sustainable Recent infrastructure Maputo corridor has also seen significant rail volume improvements over the past 2 years performance Tr
Slide 23: Transnet infrastructure investment plan
Transnet infrastructure investment plan To position SA as a key thermal coal exporter On 10th April 2012, Transnet launched its capital investment plan which will see the company spending R300bn on upgrading infrastructure over a seven year period, expanding rail, port and pipeline capacities Tran
Slide 24: Summary
Summary Maximising Strong cash flow and healthy balance sheet – a shareholder platform to fund growth value Dividend paying Driving Coal remains a core focus area operational Continue to grow mineral sands business excellence Safety and LTIFR improving development Mpower and Management s