African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — 1H F2020 Earnings Presentation
34 slides from African Rainbow Minerals's earnings presentation, May 1, 2020
Slide 1: Executive Chairman's results statement
“ARM benefitted from commodity diversification as headline earnings from the platinum operations increased significantly. The platinum operational performance is expected to improve in the second half of the year.” Dr Patrice Motsepe, Executive Chairman 1
Slide 2: Disclaimer
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 me
Slide 3: Results overview
Results overview Executive Chairman: Dr Patrice Motsepe Khumani Iron Ore Mine 3
Slide 4: Safety
Safety We are committed to creating and maintaining a safe work environment for all our employees. Regrettably, three of our colleagues were fatally injured at our operations in the period under review. We extend our deepest condolences to the families, friends and colleagues of Mr Malatji, Mr Tshwa
Slide 5: Salient features: Earnings
Salient features: Earnings Headline earnings Adjusted headline earnings* R2.2 billion 17% to R2.0 billion 1H F2019: R2.2 billion 1H F2019: R2.5 billion Segmental EBITDA Basic earnings 10% to 63% to R4.6 billion R2.1 billion 1H F2019 : R4.2 billion 1H F2019 : R1.3 billion** *Adjusted headline earning
Slide 6: Salient features: Dividends and financial position
Salient features: Dividends and financial position Interim dividend Dividends received from Assmang 25% to to R2.0 billion R5.00 per share 1H F2019: R1.75 billion 1H F2019: R4.00 per share ARM Company cash balance Net cash at 31 December 2019 70% to 146% to R2.5 billion R2.9 billion 31 December 2018
Slide 7: Strategy
Strategy Focus on ® value-enhancing and integrated growth. FaxtM African Rainbow Minerals STRATEGY DELIVER COMPETITIVE RETURNS AND SUSTAINABLE VALUE @ Operate our portfolio of assets safely, e responsibly and efficiently. Apply value-creating capital allocation. O FatM African Rainbow Minerals
Slide 8: Safe, responsible and efficient operations
Safe, responsible and efficient operations Safe operations Responsible production Efficient operations • Manage all health and safety risks, • Engagement with all stakeholders. • Invest in efficiency-improvement with a focus on elimination of • Transformation through local technologies. injuries, fa
Slide 9: Capital allocation
Capital allocation Allocation of funds INVEST IN ORGANIC BUSINESS GROWTH MERGERS AND ACQUISITIONS INVEST IN DEBT EXISTING BUSINESS REPAYMENT DIVIDEND PAYMENTS SHARE REPURCHASE AND/OR SPECIAL DIVIDENDS 9
Slide 10: Dividends per share (cents)
Dividends per share (cents) 1 400 1 300 1 200 1 000 1 000 900 800 650 600 750 * ** 400 650 225 500 200 400 225 250 0 - - F2016 F2017 F2018 F2019 1H F2020 Interim dividend per share Final dividend per share Sustained dividend growth. 10
Slide 11: Focus on value enhancing growth
Focus on value enhancing growth ARM is in a robust financial position which allows flexibility to pursue value-enhancing and integrated growth opportunities. A dedicated management team is assessing both organic and acquisition growth opportunities. Preferred commodities to strengthen our portfolio
Slide 12: Operational review
Operational review Chief Executive Officer: Mike Schmidt Two Rivers Platinum Mine 12
Slide 13: Headline earnings/(loss) by division / operation
Headline earnings/(loss) by division / operation R million 1H F2020 1H F2019 % change ARM Platinum 489 167 193 Two Rivers Mine 357 180 98 Modikwa Mine* 343 173 98 Nkomati Mine (211) (186) (13) ARM Ferrous 1 848 2 127 (13) Iron ore division 1 426 1 230 16 Manganese division 441 919 (52) Chrome divisi
Slide 14: Diversified earnings
Diversified earnings EBITDA split by commodity (%) 110% 2% 2% 3% 5% 4% 1% 90% 5% 19% 14% 27% 29% 38% 70% 46% 50% 58% 50% 54% 37% 30% 37% 30% 10% 17% 19% 16% (7%) (3%) (4%) (10%) F2016 F2017 F2018 F2019 1H F2020 PGM s Iron Ore Manganese Coal (GGV) Other Improved earnings contribution from PGMs. 14
Slide 15: EBITDA margin by commodity
EBITDA margin by commodity Manganese 23% alloy 10% Manganese 43% ore 34% 43% Iron Ore 47% 34% Coal (GGV) 10% 33% PGMs 42% 0 10% 20% 30% 40% 50% 60% 70% 1H F2019 1H F2020 15
Slide 16: ARM Ferrous
ARM Ferrous Load-out station at Black Rock Mine 16
Slide 17: Iron ore
Iron ore Salient features % (100% basis) unit 1H F2020 1H F2019 change Export sales 000 • Sales volumes decreased by 11% to 7.8 volumes tonnes 6 189 7 246 (15) million tonnes mainly due to logistical Local sales 000 challenges. volumes tonnes 1 561 1 507 4 Export sales % 56:44 58:42 lump:fines ratio
Slide 18: Manganese ore
Manganese ore Salient features % (100% basis) unit 1H F2020 1H F2019 change • Production volumes increased by 17% to Export sales 000 1 729 1 531 13 volumes tonnes 2.0 million tonnes as the Black Rock Project progressed on schedule. Local sales 000 53 74 (28) volumes tonnes Change in on- mine unit %
Slide 19: Manganese alloys
Manganese alloys Salient features % 100% basis unit 1H F2020 1H F2019 change • Manganese alloy prices remained Sales volumes: South 000 61 61 - under pressure. African operations tonnes 000 Sales volumes: Sakura 110 100 10 tonnes • Sales volumes from the SA operations Change in unit were flat. produ
Slide 20: ARM Ferrous: profit before tax variance analysis
ARM Ferrous Attributable profit before tax variance analysis Changes in on-mine unit production costs (%) (R million) 3 500 241 Iron ore 15% 3 000 2 783 86 2 612 2 500 (293) (134) (71) Cato Ridge Works (3%) 2 000 1 500 Manganese ore (3%) 1 000 500 Sakura (18%) 0 1H F2019 ZAR:USD USD Volume Cash Non-
Slide 21: ARM Platinum
ARM Platinum Modikwa Platinum Mine 21
Slide 22: PGMs (excluding Nkomati)
PGMs (excluding Nkomati) Salient features % (100% basis) unit 1H F2020 1H F2019 change • The Rand PGM basket price was 49% higher than 1H F2019. 6E PGM Production 294 011 332 675 (12) ounces Modikwa cash cost R/oz 6E 11 222 8 560 31 • Production volumes were impacted by safety stoppages at Modikwa a
Slide 23: Two Rivers volumes and costs
Two Rivers volumes and costs Factors driving the 22 772 6E PGM ounces decline • Two Rivers experienced flotation challenges in the concentrator plant in Grade challenges July 2019. 31% • Consequently, PGM recovery was lower with PGMs being deposited into spillage containment dams. Flotation challeng
Slide 24: Modikwa volumes and cost analysis
Modikwa volumes and cost analysis Factors driving the 15 892 6E PGM ounces decline: • Modikwa experienced numerous safety Load stoppages which negatively impacted Other shedding 25% 4% production volumes. • Lower grade material was blended with higher-grade fines to optimise the plant Safety stoppag
Slide 25: Nickel (100% basis)
Nickel (100% basis) Salient features Items affecting Nkomati 1H F2020 headline earnings: • Production at Nkomati Mine will cease • Provision for diesel tax rebate - R243 million from the end of September 2020 and the mine will be placed on care and • Provision for restructuring costs - R84 maintenan
Slide 26: ARM Platinum: profit before tax variance analysis
ARM Platinum Attributable profit before tax variance analysis Changes in on-mine unit production costs (%) (R million)(Excluding Nkomati) 2 500 1 332 PGM: Modikwa 24% 2 000 (416) 332 1 526 1 500 PGM: Two Rivers 19% (430) 1 000 127 (193) 774 500 Nickel 8% 0 0% 5% 10% 15% 20% 25% 30% 1H F2019 ZAR:USD
Slide 27: ARM Coal
ARM Coal Goedgevonden Coal Mine 27
Slide 28: GGV and PCB
GGV and PCB Salient features 1H 1H % (100% basis) Unit F2020 F2019 change • Earnings were negatively impacted by a Export sales volumes Mt 5.56 7.28 (24) steep decline in seaborne coal prices, as well as a reduction in saleable Domestic sales volumes Mt 4.32 3.20 35 production. GGV on-mine productio
Slide 29: ARM Coal: profit before tax variance analysis
ARM Coal Attributable profit before tax variance analysis (R million) Changes in on-mine unit production costs (%) 150 116 21 100 103 50 Coal: GGV 34% 0 -50 (182) (54) Coal: PCB 28% -100 (161) 49 -150 0% 10% 20% 30% 40% 1H F2019 ZAR:USD USD Prices Volume Costs Re- 1H F2020 measurement gains Changes
Slide 30: Capital allocation
Capital allocation FD: Abigail Mukhuba Black Rock Manganese Ore Mine 30
Slide 31: Analysis of movements in net cash and cash equivalents
Analysis of movements in net cash and cash equivalents (R million)* Sources Investing in Debt and Dividends of existing interest paid funds business payments 10 000 9 000 8 000 2 000 7 000 116 ( 205) 6 000 ( 492) ( 147) 921 5 000 4 613 4 239 (1 741) ( 78) 4 000 3 000 2 000 1 000 0 Balance Cash Divid
Slide 32: Net cash and debt
Net cash and debt R million 31 December 2019 30 June 2019 Cash and cash equivalents * 4 893 4 632 Total borrowings (2 024) (2 031) Long-term borrowings (1 536) (1 095) Short-term borrowings (488) (936) Net cash* 2 869 2 601 Total equity 31 620 29 703 Net cash to equity ratio 9.1% 8.8% Add back: Part
Slide 33: Segmental capital expenditure
Segmental capital expenditure* R million 4 000 1H F2020: R1 573 million 3 500 3 326 3 242 3 400 3 200 3 000 2 800 2 464 2 500 2 352 2 383 2 000 1 500 1 000 500 0 F2015a F2016a F2017a F2018a F2019a F2020e ** F2021e ** F2022e ** ARM Platinum ARM Ferrous ARM Coal ARM Copper * Capital expenditure includ
Slide 34: Thank you
Thank you Two Rivers Platinum Mine 34
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