Impala Platinum Holdings Limited · JSE:IMP
Impala Platinum — H1 FY2016 Earnings Presentation
38 slides from Impala Platinum's earnings presentation, Feb 25, 2016
Slide 1: Interim Results 31 December 2015
INTERIM RESULTS 31 December 2015 25 February 2016
Slide 2: Forward Looking Statement
FORWARD LOOKING STATEMENT Certain statements contained in this presentation other than the statements of historical fact contain forward‐looking statements regarding Implats’ operations, economic performance or financial condition, including, without limitation, those concerning the economic outlook
Slide 3: Agenda
AGENDA OVERVIEW Terence Goodlace FINANCIAL REVIEW Brenda Berlin MARKET REVIEW Paul Finney OUTLOOK AND Terence Goodlace CONCLUSION Interim Results February 2016 3
Slide 4: Overview
OVERVIEW Terence Goodlace
Slide 5: Safety Performance
SAFETY PERFORMANCE Achieved lowest ever 12 month moving average of 0.024 per million man‐hours worked Fatal injury frequency rate Equates to 210 fatal free calendar days (8 million shifts) 0.087 Meaningful safety achievements include: Impala Rustenburg operated for seven months without a fat
Slide 6: Financial – Key Features
FINANCIAL – KEY FEATURES Response plan starting to show positive results Headline earnings Enhanced focus on cash preservation in a low price environment Balance sheet strengthened through successful R4 billion equity‐ raising 400 To be spent on completion of Impala’s 16 and 20 Shafts 347
Slide 7: Operational – Key Features
OPERATIONAL – KEY FEATURES The Group’s operational performance has improved: Zimplats has restored platinum output to design capacity Platinum production Marula improved production levels Mimosa and Two Rivers exceed expectations 692 Impala’s production impacted by a lock‐up due to planned
Slide 8: Responding to a Low Price Environment
RESPONDING TO A LOW PRICE ENVIRONMENT LOW PRICE ENVIRONMENT Interim Results February 2016 8
Slide 9: Responding to a Low Price Environment: Cost optimisation strategy
RESPONDING TO A LOW PRICE ENVIRONMENT Cost optimisation strategy The Group continues to focus on cash preservation and profitability in the lower metal price environment Target Update Strategic review in February 2015 identified measures to At the end of December 2015 a saving of approximately i
Slide 10: Reprioritising and rescheduling capital expenditure
RESPONDING TO A LOW PRICE ENVIRONMENT Reprioritising and rescheduling capital expenditure The balance of short and long‐term demands have been reassessed with the principle focus on cash preservation and profitability in a lower price environment Target Update Capital budget reduced by R1.3 billio
Slide 11: Implementing the Impala Lease Area strategy
RESPONDING TO A LOW PRICE ENVIRONMENT Implementing the Impala Lease Area strategy Transform the Lease Area into a more concentrated mining operation with access to new, modern shaft complexes making better use of the invested fixed cost base, with higher mining efficiencies and lower unit costs Targ
Slide 12: Strengthening the group balance sheet
RESPONDING TO A LOW PRICE ENVIRONMENT Strengthening the group balance sheet Position Implats to become more competitive over time and enable delivery of the strategic plan in the context of the current price environment Target Update Enhance debt facilities Debt facilities enhanced Facilities
Slide 13: Impala Production
IMPALA Production Mill throughput increased by 47% from the previous ramp‐up affected 326 period to 5.9 million (4.0 million) tonnes (Pt oz refined (000)) 252 Refined platinum production increased by 29% to 325 900 (252 400) ounces Production impacted by maintenance work undertaken at the smel
Slide 14: Zimplats Production
ZIMPLATS Production Tonnes milled increased by 26% to 3.1 million (2.5 million) as the impact of 130 lower production volumes from Bimha Mine (Portal 4) were mitigated (Pt oz in matte (000)) 102 Production was supplemented by further open‐pit mining and the redeployment of mining teams to other
Slide 15: Marula Production
MARULA Production Marula delivered an improved performance 42 (Pt oz in concentrate (000)) The optimisation strategy focusing on operational performance and 37 profitability has started to show results Tonnes milled improved by 7% to 887 000 (829 000) tonnes Head grade benefited from higher
Slide 16: IRS Third-party deliveries
IRS Third‐party deliveries IRS maintained its significant and important financial contribution to the Group despite low PGM prices 97 Platinum production from mine‐to‐market operations was relatively stable at 289 300 (286 700) ounces 76 Deliveries from third‐party customers improved by 28% to
Slide 17: Mimosa Production
MIMOSA Production Throughput and production exceeded steady‐state capacity and output achieved in the prior comparable period 60 (Pt oz in concentrate (000)) 59 Tonnes milled improved to 1.3 million, while the head grade was maintained at 3.93g/t Platinum in concentrate production increased to
Slide 18: Two Rivers Production
TWO RIVERS Production Two Rivers delivered a solid performance with tonnes milled increasing 92 to 1.7 million (Pt oz in concentrate (000)) 87 Head grade was higher by 3% to 4.09g/t (3.97g/t) Platinum in concentrate production increased by 5.2% to 91 800 (87 300) ounces Unit costs decreased
Slide 19: Financial Review
FINANCIAL REVIEW Brenda Berlin
Slide 20: Income Statement
INCOME STATEMENT Revenue increased due to R million Dec‐2015 Dec‐2014 % change improved production levels Sales 16 976 15 903 7 Gross profit margin of 0.1% Cost of sales (16 955) (14 384) (18) Gross profit 21 1 519 (99) Impairment of 12 Mechanised section Gross margin (%) 0.1 9.6 (99) Impairme
Slide 21: Sales Revenue
SALES REVENUE Revenue up by R1.1 billion: Higher volumes 20 000 Lower dollar metal prices 3 105 19 000 Weaker exchange rate 18 000 3 022 16 976 17 000 15 903 (Rm) 16 000 15 000 14 000 5 054 13 000 12 000 11 000 10 000 Dec‐2014 Sales Volume Sales Price Sales ROE Dec‐2015 Interim Results Febru
Slide 22: Cost of Sales Movement
COST OF SALES MOVEMENT R1.5 billion negative movement in gross profit impacted by: 18 000 Lower rand metal prices 16 955 Production volumes up, but 57 370 Dec‐2014 was impacted by: 52 47 623 16 000 Build‐up after industrial action at Impala Temporary closure of Bimha 14 384 (Rm) 14 000 2 1
Slide 23: Implats Group Unit Cost
IMPLATS GROUP UNIT COST 2 111 22 952 22 380 21 185 2 683 (R/Pt oz) Interim Results February 2016 23 FINANCIAL REVIEW
Slide 24: Headline Earnings Movement
HEADLINE EARNINGS MOVEMENT Cash costs of R808 million 600 transferred from cost of sales 400 400 857 347 during the six months to Dec‐2014 200 Forex loss of R922 million includes R633 million conversion loss on the 0 dollar bond ‐200 826 50 Other income of R681 million 532 ‐400 (Rm) includes R
Slide 25: Movement in Gross Cash Position
MOVEMENT IN GROSS CASH POSITION Balance sheet strengthened through the R4 billion equity raise 7 000 before expenses 3 900 630 6 355 6 000 772 Total capital expenditure of 5 000 R1.9 billion includes (Rm) 16 and 20 Shafts spend which 4 000 amounted to R772 million 3 000 2 597 Balance covered
Slide 26: Net Debt
NET DEBT Net debt of R291 million at R million Dec‐2015 Dec‐2014 % change 31 December 2015 excluding leases Gross cash 6 355 2 714 134 Available Convertible bond (5 508) (4 639) (19) R6.4 billion cash Derivative financial Current facilities of R4 billion 1 311 497 instrument Marula BEE debt
Slide 27: Market Review
IMPLATS Distinctly Platinum \ \ MARKET REVIEW RES Paul Finney AS aS VN PANE DEERE
Slide 28: Vehicle Sales
VEHICLE SALES Strong recovery in developed world World Light‐duty vehicle sales by region Units: Millions 2015 2014 % change Global long‐term* Growth in sales at 2 to 3% per annum driven by: North America 17.44 16.5 5.7 Sales growth in the US, WE, China, India and RoW Ever‐tightening emissions r
Slide 29: Vehicle Diesel Technology
VEHICLE DIESEL TECHNOLOGY Diesel vehicles have received a large amount of negative publicity in recent times Proposed bans in London and Paris VW scandal However, The OEMs need diesel in their fleet mix for CO2 emissions compliance by 2020. Diesel vehicles have superior fuel economy to gasol
Slide 30: Emissions Standards
EMISSIONS STANDARDS Global harmonisation of emissions standards VW scandal highlights the need for harmonised emissions standards 2015 global vehicle production (%) Only 50% of all vehicles produced in 2015 have to meet the tightest existing emissions legislations i.e. Euro 6 or < Euro 4 tighter
Slide 31: Platinum Jewellery
PLATINUM JEWELLERY Global platinum jewellery 2015 (‐100 koz)* China: flat to ‐3% Latest indications (retail/manufacturing) point to Q4 2015 being stronger than expected Sharp decline in recycling India: 25 to 28% Japan: flat to 1.0% USA: 5 to 8% Long‐term We continue to support PGI’s foc
Slide 32: Industrial
INDUSTRIAL 2015 global demand growth* Platinum +85 koz Pt industrial demand growth (2015-2020), Chemical, Electrical, Glass and Fuel Cells Avg. growth per annum (%) Petroleum 8% 7% Electrical Palladium +50 koz 6% Glass Chemical Chemical, 5% Other Dental, Electrical and Fuel Cells 4% 3% M
Slide 33: Investment
INVESTMENT Loss of investor interest in commodities as an asset class driven by concerns over China and fragile global economy 2015 speculative market (Nymex, Tocom) Driven by sentiments Platinum ‐203 koz Palladium ‐1.45 moz 2015 global ETFs Platinum 230 koz Palladium ‐660 koz However, the
Slide 34: Supply and Demand
SUPPLY AND DEMAND 2016 platinum fundamentals Market to remain in fundamental deficit Supply/demand deficits Automotive and Industrial Jewellery 0 Marginal Supply increase Recycling continues to be depressed, on the ‐250 back of: Low PGM and steel prices (oz 000) Vehicles taking longer
Slide 35: The PGM Market
THE PGM MARKET We remain bullish on the medium to long‐term fundamentals for our major metals: Steady reduction of available liquid stocks Increasing vehicle sales (and ever‐tightening emissions regulations) Continued supply challenges in South Africa, compounded by ongoing reduced capital inv
Slide 36: Outlook and Conclusion
OUTLOOK AND CONCLUSION Terence Goodlace
Slide 37: Outlook and Conclusion
OUTLOOK AND CONCLUSION Challenges remain significant and will continue to constrain supply We continue to forecast fundamental deficits in PGMs over the medium to long‐term Near‐term metal prices remain constrained by an uncertain global economic outlook and negative sentiment on resources in
Slide 38: Interim Results December 2015
INTERIM RESULTS 31 December 2015 25 February 2016
Impala Platinum Holdings — H1 FY2016 Earnings Presentation on 6ix