Amg Critical Materials N.v. · EURONEXT:AMG
Amg Critical Materials — AMG Advanced Metallurgical Group — Investor Presentation (September 2016)
36 slides from Amg Critical Materials's investor presentation, September 2016
Slide 1: Leading the Critical Materials Revolution
LEADING THE CRITICAL MATERIALS REVOLUTION AMG Advanced Metallurgical Group N.V. September 2016
Slide 2: Table of Contents
TABLE OF CONTENTS Company Overview 4 Lithium Project 15 Financials: Q2 2016 30 2
Slide 3: Cautionary Note
Cautionary Note THIS DOCUMENT IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION BY AMG ADVANCED METALLURGICAL GROUP N.V. (THE “COMPANY”) AND MAY NOT BE REPRODUCED IN ANY FORM OR FURTHER DISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE
Slide 4: Company Overview
COMPANY OVERVIEW AMG Advanced Metallurgical Group N.V.
Slide 5: AMG at a Glance
AMG at a Glance Q2 2016 REVENUE BY SEGMENT: BY END MARKET: BY REGION: 39% Transportation 44% Europe 73% Critical Materials 23% Specialty Metals 32% North America & Chemicals 27% Engineering 22% Infrastructure 20% Asia 16% Energy 4% ROW AMG IS A GLOBAL SUPPLIER OF CRITICAL MATERIALS TO: ENERGY TRANSP
Slide 6: AMG End Markets, Competitors and Customers
AMG End Markets, Competitors and Customers Critical Materials AMG Engineering 2015 REVENUE: $757.5M 2015 REVENUE: $219.7M 2015 EBITDA: $60.8M 2015 EBITDA: $14.8M Units Antimony Aluminum TAC Graphite Chrome Silicon Tantalum Vanadium Engineering Heat Treatment End-Use Markets • FLAME • EXPANDED • MICR
Slide 7: Key Investment Highlights
Key Investment Highlights 1) Attractive portfolio of critical materials with significant upside potential 2) Growth across diverse end markets driven by strong global regulatory and environmental trends 3) Leader in advanced technologies to address CO2 reduction goals 4) Industry leading engineering
Slide 8: Attractive Portfolio of Critical Materials
Attractive Portfolio of Critical Materials AMG Critical Materials • Vanadium • Titanium Alloys & Coatings • Tantalum & Niobium • Graphite • Superalloys • Aluminum Alloys • Antimony • Silicon 200% The cumulative average 10 year price appreciation of the AMG Portfolio was 6.4 percentage AMG: EU Critic
Slide 9: Attractive Portfolio – with Significant Upside Potential
Attractive Portfolio – with Significant Upside Potential • Metal prices are measured on a Jun 2016 Position Jun 2015 Position scale of 0 to 10, with 0 and 10 Highest representing the minimum and 10 Price in 10 years maximum average quarterly prices occurring during the past 10 years • The positions
Slide 10: Leader in Advanced Technologies to Address CO2 Reduction
LEADER IN ADVANCED TECHNOLOGIES TO ADDRESS CO2 REDUCTION CO REDUCTION 2 A GLOBAL IMPERATIVE FOR THE 21ST CENTURY AMG: MITIGATING AMG: ENABLING TECHNOLOGIES TECHNOLOGIES Products and Processes saving Products and Processes saving raw materials, energy and CO2 CO2 emissions during use emissions during
Slide 11: Industry Leading Engineering Division – Select Recent Innovations
Industry Leading Engineering Division – Select Recent Innovations 2014 2015 Syncrotherm®: Newly-developed one-piece flow heat treatment furnace system for automotive market Newly developed plasma hearth melting furnaces for the recycling and reuse of titanium scrap to several key customers in the ae
Slide 12: Portfolio Effect Results in Stable Earnings versus Industry Peers
Portfolio Effect Results in Stable Earnings versus Industry Peers EBITDA ($m) • AMG’s portfolio of critical 100.00 materials lessens its exposure to $85 $86 price volatility of a single metal, Mean $76 enabling more stable $80M 75.00 $73 performance on a consolidated basis over time 50.00 • AMG Engi
Slide 13: Consistent Cash Flow Generation, Delivering Ample Liquidity
Consistent Cash Flow Financial Data: Generation, Net Debt Delivering & Operating CashAmple flowLiquidity OPERATING CASH FLOW (IN MILLIONS OF US DOLLARS) $50 • Q2 ‘16 cash flows from operating activities were $24.3M $35 H1 2016 CASH • Cash flows from the first half of FLOW 33% 2016 exceeded those fro
Slide 14: AMG – Ready for Growth
AMG – Ready for Growth Cost Reduction Supply Chain Excellence Scaling Profitable Growth Cost-reduction and Competitive advantage Properly positioned, capex discipline in through manufacturing financially and response to global and supply chain operationally, to pursue economic slowdown excellence, a
Slide 15: Lithium Project
LITHIUM PROJECT AMG Advanced Metallurgical Group N.V.
Slide 16: AMG Lithium – Project History
AMG LITHIUM – PROJECT HISTORY • 2002 – 2013: AMG began development of a pilot plant process route for the flotation of Mica and Feldspar from tailings • 2007 – 2008: Flotation equipment installed • 2009 – 2010: Dry magnetic separator installed • 2011: First set of samples produced and tested by indu
Slide 17: AMG Lithium – Project Overview
AMG LITHIUM – PROJECT OVERVIEW PHASE I – Lithium Concentrate PHASE II – Lithium Chemical OBJECTIVE OBJECTIVE Monetization of substantial lithium mineral deposits Downstream conversion of lithium concentrate into currently residing in AMG Mineração's tailings ponds lithium hydroxide monohydrate and/o
Slide 18: AMG Lithium – Project Strengths
AMG LITHIUM – PROJECT STRENGTHS • Existing management and mining infrastructure – not a new mine project • Strong understanding of the mine geology • AMG Mineração's last mineral resource estimate, published in 2013 and prepared in accordance with National Instrument 43-101 Guidelines, and endorsed
Slide 19: AMG Lithium – Phase I Timeline
AMG LITHIUM – PHASE I TIMELINE 2010-12 2013-14 2015 2016 2017 2018-20 PHASE I • Spodumene • Sample • Lithium • Spodumene plant • Updated 43-101 • Spodumene plant concentration production of concentrate basic engineering compliant to be at full processing route lithium (spodumene) completed July reso
Slide 20: Lithium Industry Basics & Battery Value Chain
LITHIUM INDUSTRY BASICS & BATTERY VALUE CHAIN LITHIUM HARD ROCK CONCENTRATE (SPODUMENE) CATHODE CHEMICALS BATTERIES PASTE BRINE 20
Slide 21: Global Lithium Demand and Pricing Outlook
GLOBAL LITHIUM DEMAND AND PRICING OUTLOOK LITHIUM DEMAND BY APPLICATIONS FUNDAMENTALS (2015 ACTUAL) Lithium-ion battery costs are falling rapidly as global battery producers expand manufacturing facilities Global lithium demand was 182k MT Consumer Industrial Electronics lithium carbonate equivalent
Slide 22: Battery Segment Growth
BATTERY SEGMENT GROWTH Transportation & Renewable Energy: Renewable Energy (Grid Storage) two key end markets driving long term growth, Driven by growth in renewable energy and with further upside potential need for resources to provide system flexibility and balance supply/demand Global installed b
Slide 23: Lithium Electric Vehicle Market Forecast
LITHIUM ELECTRIC VEHICLE (“EV”) MARKET FORECAST LIMITED EFFECT OF LITHIUM COSTS ON BATTERY PRICING OVERVIEW Global lithium carbonate market has been Cell Housing Electrolyte 14% short of supply since 2013 10% Lithium 11% It is estimated that there is ~6k MT of pure EV driven lithium demand today Lea
Slide 24: Global Lithium Supply
GLOBAL LITHIUM SUPPLY LITHIUM SUPPLY BY COUNTRY FUNDAMENTALS (2015 ACTUAL) Global supply of lithium minerals has been Portugal Brazil Zimbabwe 2% 1% historically dominated by large-scale lithium brine US 3% operations in South America 3% Global lithium supply has increased at a 7% China compound ave
Slide 25: Market Price Forecasts – Lithium Concentrate (Spodumene)
MARKET PRICE FORECASTS – LITHIUM CONCENTRATE (SPODUMENE) 800 700 US$/MT LITHIUM CONCENTRATE CIF 600 500 400 300 AMG expected cost including 200 transportation $206/MT (FOB) 100 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Low Base High Source: Roskill 2016 Lithium Market Report 25
Slide 26: Lithium Producer / Project Cost Position
LITHIUM PRODUCER / PROJECT COST POSITION – LITHIUM CONCENTRATE (SPODUMENE) 400 350 US$/MT LITHIUM CONCENTRATE 300 250 200 150 Estimate of AMG operating cost of $127/MT 100 (excl. transportation) 50 0 GREENBUSHES WHABOUCHI PILGANGOORA MT. CATTLIN MT. MARION PILGANGOORA ROSE TIANQI LITHIUM1 NEMASKA PI
Slide 27: Lithium Market Balance, Through 2025
LITHIUM MARKET BALANCE, THROUGH 2025 Outlook for lithium consumption remains optimistic. Demand Additional supply needed to feed strong demand Overall cumulative average growth rate in multiple markets. (CAGR) from FY12 to FY25 of 6.4% (Base Case) Battery demand CAGR of 12.6% High Case – stronger gl
Slide 28: AMG Mineração – Mibra Mine
AMG MINERAÇÃO – MIBRA MINE History and Overview Present Product Lines The mine was founded in 1945 and Tantalum concentrate sold exclusively acquired by Metallurg / AMG in 1978 to United States under long term contract Activities include open pit mining, crushing/grinding, gravimetric and Feldspar s
Slide 29: Mibra Mine – Mineral Resources
MIBRA MINE – MINERAL RESOURCES MT Li20 MT Li20 Contained in MT MT Material % Li20 Contained MT LCE Spodumene Spodumene Source (ore/Tailings) Contained in Ore Contained Concentrate Concentrate Ore source – 2013 19,360,000 1 146,363 361,019 90,745 1,463,630 Less consumption 3,214,584 3 15,517 38,274 9
Slide 30: Financials: Q2 2016
FINANCIALS: Q2 2016 AMG Advanced Metallurgical Group N.V.
Slide 31: Q2 2016 at a Glance
Q2 2016 at a Glance AMOUNTS IN $M % Q2 2016 Q2 2015 • Q2 ‘16 EBITDA up 4% versus Q2 (EXCEPT EARNINGS PER SHARE) CHANGE ‘15 due to improved profitability within AMG Engineering REVENUE $248.3 $257.4 (4%) • Annualized ROCE increased to 17.8% versus 15.7% in Q2 2015 GROSS PROFIT $53.8 $44.6 20% • Q2 ‘1
Slide 32: Financial Data: ROCE & EBITDA
Financial Data: ROCE & EBITDA EBITDA (IN MILLIONS OF US DOLLARS) • Q2 ‘16 EBITDA up 4% versus $25.1 $26.0 Q2 ’15 due to improved $20.4 $21.2 profitability within AMG Engineering Q2 ‘16 EBITDA UP 4% VERSUS $9.7 Q2 ‘15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 ANNUALIZED ROCE 17.8% • Q2 2016 annualized ROCE
Slide 33: AMG Critical Materials Financial Data
AMG Critical Financial Materials Data: Net Debt & Operating Cash flow REVENUE & EBITDA (IN MILLIONS OF US DOLLARS) • Q2 2016 revenue down $19.6 million, or 10%, vs. Q2 2015 $201.2 due to double-digit declines in $187.7 average quarterly prices of $176.6 $181.6 $166.3 Q2 2016 REVENUE Nickel, Aluminum
Slide 34: AMG Critical Materials – Quarterly Revenue Drivers
AMG Critical Materials – Quarterly Revenue Drivers • Double-digit declines in the Q2 ‘16 REV Q2 ‘15 KEY PRODUCT VOLUME PRICE CURRENCY average quarterly prices of ($M) REV ($M) Nickel, Aluminum, Chrome, Niobium and Antimony FeV & FeNiMo $22.8 $28.1 negatively affected revenue in the second quarter of
Slide 35: AMG Engineering Financial Data
AMG Engineering Financial Data: Net Debt & Operating Cash flow REVENUE & EBITDA (IN MILLIONS OF US DOLLARS) $66.7 • Q2 2016 revenue up 19% vs. $60.8 Q2 2015 due to strong sales of $56.3 $54.1 $54.6 plasma remelting furnaces for EBITDA the aerospace market IMPROVEMENT DUE TO HIGHER SALES • EBITDA inc
Slide 36: Mo Sb Cr Ti Ni Nb Al Ta
Mo Sb Cr Ti Ni Nb Al Ta
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