African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — 1H F2021 Earnings Presentation
37 slides from African Rainbow Minerals's earnings presentation, March 2021
Slide 1: Headline earnings increased by 134% to a record
“Headline earnings increased by 134% to a record R5 039 million driven mainly by the iron ore and PGM operations. We declared an interim dividend of R10.00 per share which is 100% higher than the corresponding interim dividend.” Dr Patrice Motsepe, Executive Chairman 1
Slide 2: 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 3: Results overview
Results overview Executive Chairman: Dr Patrice Motsepe Two Rivers Mine
Slide 4: Salient features: Safety and health
Salient features: Safety and health LOST TIME INJURY TOTAL RECORDABLE INJURY FREQUENCY RATE (LTIFR)* FREQUENCY RATE (TRIFR)** 17% to 17% to 0.40 0.82 (1H F2020: 0.48) (1H F2020: 0.99) FATALITIES COVID-19 2 fatalities at Modikwa Mine Strict protocols to prevent the spread of Covid-19 are (1H F202
Slide 5: Salient features: Earnings
Salient features: Earnings HEADLINE EARNINGS SEGMENTAL EBITDA 134% to 235% to R5.0 billion R5.1 billion (1H F2020: R2.2 billion) (1H F2020: R1.5 billion) ARM FERROUS HEADLINE EARNINGS ARM PLATINUM HEADLINE EARNINGS 60% to 313% to R3.0 billion R2.0 billion (1H F2020: R1.8 billion) (1H F2020:
Slide 6: Salient features: Dividends and financial position
Salient features: Dividends and financial position INTERIM DIVIDEND NET CASH AT 31 DECEMBER 2020 100% to 29% to R10.00 per share R4.8 billion (1H F2020: R5.00 per share) (1H F2020: R3.7 billion) DIVIDENDS RECEIVED FROM TWO RIVERS DIVIDENDS RECEIVED FROM ASSMANG 380% to R1.5 billion R432 millio
Slide 7: Covid-19 update
Covid-19 update* TESTING AND SCREENING 82 703 Covid-19 health screenings 1 201 Positive Covid-19 cases 4 209 Covid-19 tests 96% to 98% recovery rate 5 employees Through the Minerals Council succumbed to Covid-19 in 1H F2021 South Africa, ARM is supporting We extend our sincere condolences to those w
Slide 8: Headline earnings (R million)
Headline earnings (R million) 6 000 5 534 5 226 5 000 4 814 5 039 4 000 3 025 3 379 3 196 2 869 3 000 1 503 2 000 2 201 2 155 1 945 1 693 1 000 0 F2017 F2018 F2019* F2020* F2021* First half (1H) Second half (2H) * The F2019 to 1H F2021 headline earnings include re-measurement gains and losses on par
Slide 9: Dividends per share (cents)
Dividends per share (cents) 1 400 1 300 1 200 1 200 1 000 1 000 1 000 900 700 800 650 600 750 500 400 650 400 200 250 0 F2017 F2018 F2019 F2020 F2021 Interim dividend per share Final dividend per share 9 Interim dividend declared increased by 100% compared to 1H F2020.
Slide 10: Headline earnings analysis by operation / division
Headline earnings analysis by operation / division (R million) 7 000 6 000 146% 5 024 15 5 039 1 107 305 5 000 (19) 4 000 1 588 3 000 2 155 2 043 2 000 (112) 1 000 0 1HF2020 Net re- 1HF2020 Platinum Ferrous Coal Corporate 1HF2021 Net re- 1HF2021 headline measurement adjusted adjusted measurement h
Slide 11: Diversified earnings
Diversified earnings EBITDA SPLIT BY COMMODITY (%) 120% 2% 2% 1% 100% 4% 6% 3% 5% 19% 5% 29% 80% 27% 38% 44% 60% 46% 40% 50% 54% 37% 20% 45% 37% 17% 19% 16% 0% (3%) (4%) (20%) F2017 F2018 F2019 F2020 1H F2021 PGMs Iron Ore Manganese Coal (GGV) Other* * Other is made up of chrome, nickel and ARM corp
Slide 12: Growth projects
Growth projects CURRENT AND FUTURE GROWTH PROJECTS Two Rivers Additional 182 000 6E PGM ounces, Plant commissioning Merensky Project 1 600 tonnes nickel and 1 300 tonnes in Q2 F2023 copper per annum. Two Rivers Additional 40 000 to 60 000 6E PGM ounces Plant commissioning Plant Expansion per annum.
Slide 13: African Rainbow Minerals strategy
FaxtM African Rainbow Minerals DELIVER COMPETITIVE RETURNS AND CREATE %. Entrepreneurial SUSTAINABLE VALUE management FOR ALL STAKEHOLDERS Operate e ~ Investing in our portfolio our employees of assets safely, responsibly and efficiently with Allocate capital s and © Focus on value-enhancing and int
Slide 14: Operational review
Operational review Chief Executive Officer: Mike Schmidt Loading at Khumani Mine
Slide 15: Headline earnings/(loss) by division / operation
Headline earnings/(loss) by division / operation (R million) 1H F2021 1H F2020 % change ARM Platinum 2 021 489 >200 Two Rivers Mine 1 279 357 >200 Modikwa Mine 462 343 35 Nkomati Mine 280 (211) >200 ARM Ferrous 2 955 1 848 60 Iron ore division 2 835 1 426 99 Manganese division 137 441 (69) Consolida
Slide 16: EBITDA margins by commodity
EBITDA margins by commodity* 3% Coal (GGV) 10% 16% Manganese 29% 24% Nickel (25%) 53% Iron Ore 47% 61% PGMs 42% (40%) (20%) 0% 20% 40% 60% 80% 1H F2021 1H F2020 * Excludes any re-measurement adjustments 16
Slide 17: ARM Ferrous
ARM Ferrous Loading at Black Rock Manganese Ore Mine
Slide 18: ARM Ferrous
ARM Ferrous VARIANCE ANALYSIS – ATTRIBUTABLE PROFIT BEFORE TAX (R MILLION) CHANGES IN ON-MINE UNIT PRODUCTION COSTS (%) 7 000 18% 1 924 317 20% 17% 6 000 5 000 4 162 15% 12% 4 000 888 10% 2 612 (1 358) (221) 3 000 5% 2 000 0% 1 000 (1%) (5%) 0 Manganese ore Iron ore SA Manganese Sakura 1H F2020 ZAR:
Slide 19: Iron ore (100% basis)
Iron ore (100% basis) 1H 1H % SALIENT FEATURES Unit F2021 F2020 change 000 Export sales volumes 6 713 6 189 8 • Headline earnings increased by 99% driven by tonnes higher iron ore prices and increased sales 000 Local sales volumes 1 533 1 561 (2) tonnes volumes. Export sales lump:fines ratio % 59:41
Slide 20: Manganese (100% basis)
Manganese (100% basis) SALIENT FEATURES 1H 1H % Unit F2021 F2020 change Export sales volumes 000 tonnes 1 796 1 729 4 • Manganese ore prices remained under pressure. Local sales volumes 000 tonnes 65 53 23 Change in on-mine unit % 18 (3) • Production volumes were impacted by Covid-19 production cost
Slide 21: Manganese alloys (100% basis)
Manganese alloys (100% basis) SALIENT FEATURES 1H 1H % unit F2021 F2020 change Sales volumes: South • US dollar prices for manganese alloys were African operations 000 tonnes 67 61 10 under pressure in 1H F2021. Sales volumes: Sakura 000 tonnes 103 110 (6) • Lower demand resulted in reduced producti
Slide 22: ARM Platinum
ARM Platinum Underground operations at Modikwa Platinum Mine
Slide 23: ARM Platinum
ARM Platinum VARIANCE ANALYSIS – ATTRIBUTABLE PROFIT BEFORE TAX* (R MILLION) CHANGES IN ON-MINE UNIT PRODUCTION COSTS** (%) 50% 7 000 40% 39% 6 000 5 000 2 381 4 121 30% 4 000 (148) 20% 3 000 (344) (143) 1 526 478 2 000 10% 3% 1 000 0% 0 (6%) 1H F2020 ZAR:USD USD Volume Cash costs Non cash 1H F2021
Slide 24: PGMs (100% basis)
PGMs (100% basis) SALIENT FEATURES 1H 1H % unit F2021 F2020 change 6E PGM • Higher US dollar prices and a weaker rand versus Production ounces 261 599 294 011 (11) US dollar exchange rate resulted in basket prices Modikwa cash cost R/oz 6E 15 590 11 222 39 at both mines increasing by more than 75%.
Slide 25: Two Rivers Merensky Project (100% basis)
Two Rivers Merensky Project (100% basis) The ARM board of directors has approved the Merensky project at Two Rivers Mine Mine. Annual steady state production rate of 182 000 ounces 6E, 1 600 tonnes nickel, and 1 300 tonnes of copper, with a life of mine of more than 20 years years. Total capital exp
Slide 26: Progress on Nkomati Mine care and maintenance
Progress on Nkomati Mine care and maintenance Scaling down of Nkomati Mine in preparation for care and maintenance and subsequent closure is progressing well. Cessation of the open pit mining was delayed and is now expected at the end of March 2021. The most recent assessment estimates the attributa
Slide 27: ARM Coal
ARM Coal Goedgevonden Coal Mine
Slide 28: ARM Coal
ARM Coal VARIANCE ANALYSIS – ATTRIBUTABLE PROFIT BEFORE TAX (R MILLION) CHANGES IN ON-MINE UNIT PRODUCTION COSTS (%) (10) 15% (20) 10% 10% (50) 5% (80) (54) 48 (24) 0% (110) (87) (109) 3 (140) 49 (5%) 1H F2020 ZAR: USD Volume Costs Re- 1H F2021 (7%) USD Prices measurement (10%) gains Coal: GGV Coal:
Slide 29: GGV and PCB (100% basis)
GGV and PCB (100% basis) 1H 1H % SALIENT FEATURES Unit F2021 F2020 change Export sales volumes Mt 6.15 5.56 11 • Thermal coal prices remained largely Domestic sales volumes Mt 2.66 4.32 (38) depressed in 1H F2021 after the sharp decline GGV on-mine production in 2H F2020 R/t 503 458 10 costs PCB on-
Slide 30: Capital allocation
Capital allocation Finance Director: Tsundzukani Mhlanga Open pit operations at Beeshoek Iron Ore Mine
Slide 31: Cash flow analysis (R million)
Cash flow analysis* (R million) Investing in Interest and Shareholder Sources of funds existing business debt repayments returns Other 856 10 000 1 500 (800) 135 8 000 2 026 (843) (177) 6 485 (1 364) 6 000 5 512 (360) 4 000 2 000 0 Balance 1 Cash Dividends Net transfers Taxation Capital Net Net fina
Slide 32: Net cash and debt (R million)
Net cash and debt (R million) Restated 31 December 2020 30 June 2020 Cash and cash equivalents * 6 815 5 715 Total borrowings (2 003) (1 978) Long-term borrowings (1 551) (1 565) Short-term borrowings (452) (413) Net cash* 4 812 3 737 Total equity 38 300 34 108 Net cash to equity ratio 12.6% 11.0% A
Slide 33: Segmental capital expenditure (R million)
Segmental capital expenditure* (R million) 4 000 3 506 3 600 3 338 3 400 3 500 3 000 2 700 2 526 2 500 2 352 2 383 2 000 1 500 1 000 500 0 F2016 F2017 F2018 F2019 F2020 F2021e** F2022e** F2023e** ARM Platinum ARM Ferrous ARM Coal ARM Copper * Capital expenditure includes (i) deferred stripping at Nk
Slide 34: ARM Coal receivable
ARM Coal receivable ARM Coal in prior periods recorded an amount payable by Glencore Operations South Africa (GOSA) to ARM Coal of R452 million (ARM's attributable portion: R230 million) as a long-term receivable. At the date of ARM’s previous report, GOSA had not agreed the outstanding balance of t
Slide 35: ARM Coal receivable continued
ARM Coal receivable continued All the items included in the ARM Coal long-term receivable were valid receivables, however R283 million should have been classified as trade and other receivables and R53 million should have been included in the long-term borrowings. Paragraph 3.18(b) of the JSE Listin
Slide 36: Summary of re-measurement gains and losses (R million)
Summary of re-measurement gains and losses (R million) 1H F2021 1H F2020 ARM Mining Consortium (Modikwa) (107) (51) ARM Mining Consortium (Modikwa) - intercompany (123) (59) Anglo American Platinum (6) (3) Non-controlling interest 22 11 ARM Coal 2 104 Goedgevonden Mine (23) 1 PCB operations 25 103 A
Slide 37: Thank you
Thank you Control room at Black Rock Manganese Ore Mine
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