African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — FY2018 Earnings Presentation
35 slides from African Rainbow Minerals's earnings presentation, 2018
Slide 1: Headline earnings increased by 51% to R4.8 billion
“Headline earnings increased by 51% to R4.8 billion including a R1 billion net fair value gain as a result of restructuring of the ARM Coal debt. A final dividend of R7.50 per share is declared. A maiden interim dividend of R2.50 was paid for 1H F2018 bringing the cumulative dividend for F2018 to R1
Slide 2: Overview and strategy
Black Rock Mine Overview and strategy Patrice Motsepe, Executive Chairman
Slide 3: Disclaimer
Disclaimer Certain statements in this report constitute forward looking statements that are neither reported financial results nor other historical information. They include but are not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, trends, pla
Slide 4: Group structure
Group structure 100% 100% 10% 51% 100% 14.6% Gold: Platinum Ferrous Coal Copper4 Harmony PGMs Iron Ore Coal 41.5% Modikwa1 50% Khumani 20% Participative Coal 54% Two Rivers2 50% Beeshoek Business (PCB)3 Nickel, PGMs & Chrome Manganese Ore Coal 50% Nkomati 50% Nchwaning 51% Goedgevonden 50% Gloria (G
Slide 5: Salient features
Salient features Headline earnings increased by 51% to R4 814 million (F2017: R3 196 million), which includes a net fair value gain of R977 million. The net fair value gain is due to a change in the net present value of loan repayment cash flows as a result of restructuring the ARM Coal debt. Exclud
Slide 6: Salient features
Salient features Final dividend of 750 cents is declared. A maiden interim dividend of 250 cents per share was declared and paid for the first half of the financial year (1H F2018). The cumulative dividend for F2018 is 1 000 cents per share (F2017: 650 cents per share). 6
Slide 7: Salient features
Salient features Basic earnings were R4 562 million (F2017: R1 372 million) and include the net fair value gain of R977 million as a result of restructuring of the ARM Coal debt. F2017 included attributable impairments of the Nkomati Mine and Modikwa Mine assets of R711 million and R734 million afte
Slide 8: Salient features
Salient features The disposal of ARM and Vale’s 80% interest in Lubambe Mine was completed on 22 December 2017. Dividends received from the Assmang joint venture were R3 000 million (F2017: R2 488 million). The consolidated net cash/debt position improved by R2 266 million to net cash of R995 millio
Slide 9: Safety
Safety We are committed to creating and maintaining a safe work environment for all our employees. The Ferrous division Lost Time Injury Frequency Rate (LTIFR) improved by 24% to 0.13 per 200 000 man-hours (F2017: 0.17 per 200 000 man-hours). Black Rock Mine and Khumani Mine recorded 6 million and 2
Slide 10: Safety
Safety Beeshoek Mine recorded 16 000 fatality-free production shifts, an accomplishment which took approximately 15 years to achieve. Nkomati Mine and Two Rivers Mine recorded 6 million and 4 million fatality-free shifts respectively. Regrettably, Mr Fabian Majoro was fatally injured at Modikwa Mine
Slide 11: Safety
Safety It is with regret that we note the fatality of Mr Raymond Anak Edmund Samaie at the Sakura Ferroalloys operation and Mr Bonga Lingeni at Tweefontein Coal Mine. ARM and its partners would like to express their sincerest condolences to the families, friends and colleagues of those who have lost
Slide 12: Headline earnings and dividends per share (cents)
Headline earnings and dividends per share (cents) 3 000 2 526* 2 500 513* 2 000 1 900 1 684 2 013* 1 500 1 000 1 000 803 750 600 650 494 500 350 225 250 0 F2014 F2015 F2016 F2017 F2018 Headline earnings per share Final dividend per share Interim dividend per share *The F2018 headline earnings per sh
Slide 13: Headline earnings (R million)
Headline earnings (R million) 6 000 5 000 4 814 * 4 108 977 * 4 000 3 737 3 451 3 196 3 837 * 3 000 2 000 1 744 1 051 1 000 0 F2012 F2013 F2014 F2015 F2016 F2017 F2018 *The F2018 headline earnings were R4 814 million including the net fair value gain of R977 million as a result of restructuring of t
Slide 14: Headline earnings analysis (R million)
Headline earnings analysis (R million) 5 000 51% 977 4 814 4 800 4 600 4 400 4 200 4 000 20% 193 32 3 843 3 800 ( 6) 197 3 600 330 ( 175) 70 3 400 3 351 3 196 3 200 3 000 F2017 Silicosis Discontinued F2017 Platinum Ferrous Coal Corporate F2018 Discontinued Net F2018 provision operations** adjusted a
Slide 15: EBITDA margins by commodity
EBITDA margins by commodity* 37% Manganese 44% 45% Iron ore 39% 26% Coal (GGV)** 33% 23% PGMs 25% 15% Nickel 11% 0 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% F2017 F2018 *Copper (Lubambe Mine) and Chrome (Dwarsrivier Mine) EBITDAs are not included in the above graph as they are discontinued operations.
Slide 16: Cost curve position
Cost curve position ARM is focused on maximising margins at each of our operations. Two Rivers Platinum Cato Ridge PCB Coal Ferromanganese Operations GGV Modikwa Sakura Coal Platinum Ferroalloys (F2021) Manganese Ore Operations Beeshoek Khumani Iron Ore Iron Ore Nkomati Nickel Commodity Unit cash co
Slide 17: Operational review
Black Rock Mine Operational review Mike Schmidt, Chief Executive Officer
Slide 18: Headline earnings / (loss) by division / operation
Headline earnings / (loss) by division / operation 12 months ended 30 June R million 2018 2017 % change ARM Platinum 420 350 20 Two Rivers Mine 306 325 (6) Modikwa Mine 105 (66) Nkomati Mine 9 91 (90) ARM Ferrous 3 528 3 709 (5) Iron ore division 1 672 2 187 (24) Manganese division 1 904 1 161 64 Ch
Slide 19: Segmental EBITDA split by commodity (%)
Segmental EBITDA split by commodity (%) 100% 4% 3% 5%* 6% 8% PGM 5% 11% 14% 80% 12% 14% 27% 38% Nickel 60% 56% Iron Ore 46% 59% 58% 50% 40% 37% Manganese 8% 9% 20% 8% 4% 2% Chrome 25% 30% 16% 18% 17% 19% 0% (3%) Coal (GGV) (6%) -20% Copper F2013 F2014 F2015 F2016 F2017 F2018 *EBITDA margin excluding
Slide 20: Changes in sales volumes
Changes in sales volumes F2018 versus F2017 sales volume changes (%) 40% 36% Increase Decrease 30% 25% 20% 10% 7% 3% 3% 0% (3%) (2%) (10%) (20%) (17%) (16%) (30%) Two Rivers Nickel PGMs Export Eskom Iron Manganese Manganese Nkomati chrome coal coal ore ore * alloys** chrome concentrate concentrate *
Slide 21: Changes in average realised US Dollar prices
Changes in average realised US Dollar prices F2018 versus F2017 average realised US Dollar price changes (%) 110% Increase 97% 90% Decrease 70% 50% 33% 25% 25% 27% 27% 30% 22% 10% (10%) (5%) (10%) (9%) (30%) (50%) (50%) (70%) Nkomati Two Rivers Export Platinum Export Export Nickel Manganese Copper P
Slide 22: Changes in average realised Rand prices
Changes in average realised Rand prices F2018 versus F2017 average realised Rand price changes (%) 100% Increase 86% Decrease 80% 60% 40% 25% 17% 18% 18% 20% 20% 20% 0% (20%) (14%) (10%) (15%) (40%) (60%) (53%) (80%) Nkomati Two Rivers Export Platinum Export Export Nickel Manganese Copper Palladium
Slide 23: Unit cost changes by operation
Unit cost changes by operation F2018 versus F2017 on-mine unit production costs Rand per tonne basis (%) Iron ore 2% Mining PPI at 8% Sakura 5% Cato Ridge Works 6% Coal: GGV 9% PGM: Modikwa* 9% PGM: Two Rivers* 10% Manganese ore 16% Coal: PCB 19% Nickel** 22% 0% 5% 10% 15% 20% 25% * Modikwa and Two
Slide 24: ARM Ferrous: Iron ore
ARM Ferrous: Iron ore Operational performance – 100% basis % unit F2018 F2017 change Export sales 000 Record volumes of 17.9 million tonnes sold. volumes tonnes 14 302 14 061 2% Local sales 000 3 572 3 214 11% volumes tonnes Change in on- mine unit % 2 3 production costs Capital R million 1 781 1 16
Slide 25: ARM Ferrous: Manganese ore
ARM Ferrous: Manganese ore Operational performance – 100% basis % unit F2018 F2017 change Export sales 000 Production volumes increased by 21% to 3 080 2 871 7 volumes tonnes 3.7 million tonnes. Local sales 000 97 103 (6) volumes * tonnes Change in unit % 16 1 production costs Capital The Manganese
Slide 26: ARM Ferrous: Manganese alloys
ARM Ferrous: Manganese alloys Operational performance – 100% basis % unit F2018 F2017 change Sakura Ferroalloys is fully ramped up and is 000 producing at higher than design capacity. Sales volumes 378 303 25 tonnes Cato Ridge change in unit % 6 5 production costs Sakura change in unit % 5 - product
Slide 27: ARM Platinum: PGMs
ARM Platinum: PGMs Operational performance – 100% basis % unit F2018 F2017 ARM and Angloplat concluded improved change terms on the Modikwa Mine purchase of 6E PGM Production 792 583 815 188 (3) concentrate agreement for three years ounces effective from 1 January 2017. Modikwa cash cost R/oz 6E 9 1
Slide 28: ARM Platinum: Nickel
ARM Platinum: Nickel Operational performance – 100% basis Nickel C1 cash costs net of by-products The mill head grade decreased to 0.24% nickel, mainly due to higher than expected unit F2018 F2017 % very low grade MMZ material being milled to change ensure that both mills operate at optimal On-mine
Slide 29: ARM Coal: GGV and PCB
ARM Coal: GGV and PCB Operational performance – 100% basis % The ARM Coal debt restructuring was unit F2018 F2017 change concluded and is effective from 1 July Total export sales volumes Mt 16.29 16.60 (2) 2017. The restructuring significantly improves ARM and ARM Coal’s obligations Total Eskom sale
Slide 30: Capital expenditure: segmental analysis
Capital expenditure: segmental analysis Capital expenditure (R million)* 3 500 3 326 3 075 2 918 2 900 3 000 2 800 2 383 2 464 2 500 2 352 2 000 1 500 1 000 500 0 F2014a F2015a F2016a F2017a F2018a F2019e F2020e ** F2021e ** ARM Platinum ARM Ferrous ARM Coal ARM Copper * Capital expenditure includes
Slide 31: Cash and cash equivalents
Cash and cash equivalents Cash and cash equivalents* movement from 1 July 2017 to 30 June 2018 (R million) 7 000 3 000 (1 714) 6 000 Increase Decrease 5 000 ( 426) 4 000 (1 150) 741 ( 250) ( 105) ( 210) 1 934 59 2 910 3 000 2 000 1 031 1 000 0 Balance Cash Net Dividend Dividend Taxation Capital Proc
Slide 32: Net cash/ (debt) to equity ratio
Net cash/ (debt) to equity ratio R million F2018 F2017 1H F2018 Cash and cash equivalents * 3 291 1 488 1 919 Total borrowings (2 296) (2 759) (3 021) Long-term borrowings (1 744) (2 002) (2 311) Short-term borrowings (552) (757) (710) Net cash/ (debt) 995 (1 271) (1 102) Total equity 27 378 24 040
Slide 33: Thank you
FaxtM African Rainbow Minerals en Thank you We do it better
Slide 34: Additional slides
Additional slides We do it better
Slide 35: ARM Coal debt restructuring
ARM Coal debt restructuring 10% Shareholder loan to PCB PCB revolving credit facility Glencore Holdings South PCB / ARM debt African Rainbow Minerals Africa Proprietary Limited Limited (GHSA) (ARM Limited) 51% PCB / ARM Coal Shareholder loan debt from ARM ARM Coal Proprietary 100% Limited 49% (ARM C
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