Impala Platinum Holdings Limited · JSE:IMP
Impala Platinum — FY2020 Earnings Presentation
47 slides from Impala Platinum's earnings presentation, Sep 3, 2020
Slide 1: Annual Results FY2020
ANNUAL RESULTS FY2020 3 September 2020
Slide 2: Forward-looking and cautionary statement
FORWARD-LOOKING AND CAUTIONARY 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
Slide 3: Agenda
AGENDA 01 Group 02 Operational 03 Financial 04 Market 05 Business overview overview review review outlook Nico Muller Mark Munroe Meroonisha Kerber Sifiso Sibiya Nico Muller Gerhard Potgieter IMPLATS 3 ANNUAL RESULTS FY2020
Slide 4: Group overview
01 GROUP OVERVIEW Nico Muller IMPLATS ANNUAL RESULTS FY2020
Slide 5: Group safety overview
GROUP SAFETY OVERVIEW • The Group’s safety performance continued to improve: LTIFR 14% lower at 4.54 from 5.30 per million man hours worked FATALITIES AND LOST-TIME INJURY FREQUENCY RATE • Regrettably, five employees at Group managed operations and another two at joint venture 14 8 operations lost t
Slide 6: Covid-19 statistics
COVID-19 STATISTICS SOUTH IMPLATS COVID-19 CASES GLOBAL SA MINING IMPLATS AFRICA 2000 40 Cases 25 914 484 628 259 14 666 1 961 1800 35 1600 Deaths 861 462 14 263 158 19 30 1400 Cases & recoveries Recoveries 18 205 622 549 263 13 423 1 920 25 1200 Deaths Test rate 5.76% 6.18% 10.32% 26.09% 1000 20 80
Slide 7: Covid-19 production impact
COVID-19 PRODUCTION IMPACT FOREGONE 6E PRODUCTION The business impacts on Group operations have been varied OPERATION Q3 FY2020 Q4 FY2020 FY2020 koz 18 133 151 SOUTH AFRICA All mining operations suspended during 3 week national lockdown Impala % 6% 42% 12% initiated on 25 March 2020. Restricted ramp
Slide 8: Covid-19 related cost (March – June 2020)
8 COVID-19 RELATED COST (MARCH – JUNE 2020) IMPALA ITEMS IMPLATS IMPALA ZIMPLATS MARULA MIMOSA TWO RIVERS TOTAL CANADA Rm Rm US$000 C$000 Rm US$000 Rm Rm Protective clothing and equipment - 40.2 2 479 20 0.3 291 0.5 91.0 Isolation facilities - 18.3 1 969 0 0.2 185 0.5 57.6 Donations 20.0 5.7 226 87
Slide 9: Group performance
GROUP PERFORMANCE PRODUCTION* COST* DESCRIPTION FY2020 FY2019 VAR (%) 3 100 3 074 13 345 11 283 12 089 11 886 Tonnes Milled# Mt 19.58 19.47 1% 10 665 2 908 2 925 Concentrate production 6E koz 2 849 3 010 (5%) koz R/oz Mine-to-market production 6E koz 2 523 2 649 (5%) 2 813 Impala 6E koz 1 109 1 286
Slide 10: Performance against strategic objectives
PERFORMANCE AGAINST STRATEGIC OBJECTIVES RESPONSIBLE OPERATIONAL ORGANISATIONAL OPTIMAL COMPETITIVE MINERAL MARKET DEVELOPMENT CORPORATE EXCELLENCE EFFECTIVENESS CAPITAL AND PROCESSING AND VALUE CHAIN STEWARDSHIP IN PGMS STRUCTURE ASSET PORTFOLIO OPTIMISATION Effective Covid-19 response Improved SAF
Slide 11: ESG accolades
ESG ACCOLADES ‘A’ rating for disclosures, awareness and management of water security risk FTSE/JSE Responsible ‘B’ rating for climate change action and Investment Top 30 Index Top 100 Best Emerging disclosures Markets Performer One of 325 and one of eight in South Africa to be included this year FTS
Slide 12: Community development
COMMUNITY DEVELOPMENT South African operations Other operations • R113 million and R175 million spent on community ZIMPLATS development initiatives and housing and living conditions, • US$152 000 invested to upgrade the Gutu Rural Hospital this respectively, in FY2020 year • R5.4 million invested in
Slide 13: Caring for our environment
CARING FOR OUR ENVIRONMENT • No ‘major’ (Level 5) or ‘significant’ (Level 4) incidents reported since 2013 • A 35% decrease in ‘limited-impact’ (Level 3) incidents recorded in FY2020 (FY2020: 15 incidents; FY2019: 23 incidents) • 44% of consumed water was recycled prior to use in FY2020 (against a t
Slide 14: Mineral resources and mineral reserves
MINERAL RESOURCES AND MINERAL RESERVES Attributable Group Mineral Resource estimate increased ATTRIBUTABLE MINERAL RESERVES BY ASSET by 8.7 million 6E ounces to 277 million ounces MINERAL RESERVES Pt Pd Rh OPGMs • Platinum resources increased by 0.9 million ounces 25 000 7% • Palladium resources inc
Slide 15: Operational overview
02 OPERATIONAL OVERVIEW Mark Munroe IMPLATS ANNUAL RESULTS FY2020
Slide 16: Impala
16 IMPALA VAR PRODUCTION* DESCRIPTION FY2020 FY2019 REMARKS (%) 1 278 1 298 1 263 koz 1 116 1 115 Tonnes milled kt 9 635 11 211 -14% • Covid-19 disruptions • Increased development to stoping ratio 6E head grade g/t 3.91 3.99 -2% • Complex geology on UG2 reef horizon 6E in concentrate koz 1 109 1 286
Slide 17: 6E ounces stock-adjusted – FY2020 / FY2019
6E OUNCES STOCK-ADJUSTED – FY2020 / FY2019 1 400 4 2 1 7 7 5 10 1 350 10 15 33 18 44 1 300 1 298 149 6E koz 1 250 1 200 1 150 1 100 1 115 1 050 1 000 1 FY2019 16# Re-mining 14# 11# 20# 12# E&F 9# 6# Other 10# 1# COVID-19 FY2020 6E koz 173 10 193 175 116 113 35 47 47 46 103 57 1 115 Revenue R/6E oz 2
Slide 18: Key projects progress
KEY PROJECTS PROGRESS 16 SHAFT DESCRIPTION FY2020 FY2019 Project completion % 95.6 92.0 Estimated completion date date Nov 21 Nov 21 Approved capital Rm 7 939 7 939 Estimate at completion Rm 7 899 7 939 Expenditure to date Rm 7 589 7 382 Estimated steady-state achievement date Oct 22 Jun 22 Design p
Slide 19: Key projects progress
KEY PROJECTS PROGRESS 20 SHAFT DESCRIPTION FY2020 FY2019 Project completion % 100 100 Actual completion date date Mar 19 Jun 19 Approved capital Rm 7 930 7 930 Estimate at completion Rm 7 887 7 930 Expenditure to date Rm 7 887 7 885 Estimated steady-state achievement date Oct 22 Jul 22 Design produc
Slide 20: Operational overview
02 OPERATIONAL OVERVIEW Gerhard Potgieter IMPLATS ANNUAL RESULTS FY2020
Slide 21: Marula
MARULA PRODUCTION* DESCRIPTION FY2020 FY2019 VAR (%) REMARKS 205 224 217 210 178 koz • Operational delivery unimpeded by social instability, Tonnes milled kt 1 636 1 772 (8%) but negatively impacted by Covid-19 disruptions • Increased stoping to development ratio and reduced 6E head grade g/t 4.70 4
Slide 22: Two Rivers
TWO RIVERS PRODUCTION* DESCRIPTION FY2020 FY2019 VAR (%) REMARKS 401 390 348 313 261 koz Tonnes milled kt 3 016 3 405 (11%) • Covid-19 disruptions and Eskom power cuts • Increased contribution of split reef to overall 6E head grade g/t 3.45 3.52 (2%) production. COST** 9 513 8 140 6 771 6E in concen
Slide 23: Zimplats
23 ZIMPLATS PRODUCTION* 617 DESCRIPTION FY2020 FY2019 VAR (%) REMARKS 602 578 580 580 koz Tonnes milled kt 6 751 6 486 4% • First contributions from Mupani 6E head grade g/t 3.48 3.48 0% • Stable delivery COST** 627 6E in concentrate koz 597 572 4% • Stable processing performance 615 600 584 US$/oz
Slide 24: Key projects progress – Mupani
KEY PROJECTS PROGRESS MUPANI DESCRIPTION FY2020 FY2019 Project completion % 37 28 Estimated completion date date Jul-24 Jul-24 Approved capital US$m 264 264 Estimate at completion US$m 260 260 Expenditure to date US$m 98 67 Design production (nominal 6E value koz per 192 192 in matte at steady state
Slide 25: Mimosa
MIMOSA PRODUCTION* DESCRIPTION FY2020 FY2019 VAR (%) REMARKS 266 261 259 254 248 koz Tonnes milled kt 2 701 2 814 (4%) • Impacted by primary mill failure during Q1 6E head grade g/t 3.85 3.83 0% • Sustained COST** 771 768 6E in concentrate koz 248 261 (5%) • Lower recoveries due to milling constrain
Slide 26: Impala Canada
IMPALA CANADA DESCRIPTION FY2020 REMARKS Tonnes milled Kt 1 553 • 6 week mine closure after Covid-19 outbreak • Increased underground ore production will improve 3E head grade g/t 2.45 grade to 2.7g/t in FY2021 3E in concentrate Koz 97 • Covid-19 production impact of 29koz Cash Cost C$m 105 • Consis
Slide 27: IRS
IRS MINE-TO-MARKET RECEIPTS DESCRIPTION FY2020 FY2019 VAR (%) REMARKS* 1 476 1 397 1 392 1 354 1 214 koz • Impacted by force majeure and Covid-19 Receipts 6Ekoz 1 540 1 715 (10%) disruptions Mine-to-market 6Ekoz 1 214 1 354 (10%) THIRD PARTY RECEIPTS • Impacted by force majeure and Covid-19 488 500
Slide 28: Financial review
03 FINANCIAL REVIEW Meroonisha Kerber IMPLATS ANNUAL RESULTS FY2020
Slide 29: Income statement
INCOME STATEMENT VARIANCE R MILLION FY2020 FY2019 Revenue up 44% to R69.9 billion (%) • Rand revenue basket 57% higher year-on-year Sales 69 851 48 629 44 • Sales volumes negatively impacted by Covid-19 Cost of sales (46 580) (41 791) (11) Cost of sales increased by 11% Gross profit 23 271 6 838 >10
Slide 30: Revenue
REVENUE • Revenue up by R21.2 billion (44%) REVENUE • Higher dollar metal prices contributed R20.8 billion 5 112 - US$ per 6E ounces sold increased by 46% to US$1 624 20 824 151 69 851 (FY2019: US$1 112) 4 865 • Weaker exchange rate contributed R5.1 billion - 8% weaker at R15.31 (FY2019: R14.20) 48
Slide 31: Cost of sales
1 COST OF SALES • Cost of sales increased by 11% year on year COST OF SALES • Cash costs increased by R1.8 billion year on year - Implats mining inflation of 6.9% 6 719 - Inclusion of Impala Canada costs R1.3 billion - Covid-19 related costs of R263 million 1 033 46 580 - Partially offset by lower v
Slide 32: Stock-adjusted unit costs
2 STOCK-ADJUSTED UNIT COSTS VARIANCE FY2020 FY2019 (%) • On-mine cash costs impacted by: On-mine operations¹ (Rm) 18 581 17 686 -5% • Overall mining inflation of 6.9% Concentrating and smelting operations (Rm) 6 096 5 410 -13% • Weaker rand on the translation of Zimplats US dollar costs Concentratin
Slide 33: Production impact (excess inventory)
PRODUCTION IMPACT (EXCESS INVENTORY) • The disrupted supply from operations during Covid-19 was EXCESS 6E WORK IN PROGRESS supplemented by excess concentrate inventory to normalise the beneficiation stream 350 • All previously identified excess work in progress material 300 was depleted during May 2
Slide 34: EBITDA and headline earnings
EBITDA AND HEADLINE EARNINGS • EBITDA improved by R18.9 billion to R29.4 billion EBITDA 21 222 934 29 386 • Revaluation of foreign currency balances resulted in a gain of 1 838 1 278 126 1 148 721 1 182 R786 million compared to a loss of R362 million in FY2019 impacted by weaker rand (Rm) 6 719 6 92
Slide 35: Headline earnings by company
HEADLINE EARNINGS BY COMPANY • Impala benefitted from metallurgical re-allocation of stock (R5 billion pre tax) and stock write on (R1.3 billion pre-tax) HEADLINE EARNINGS PER COMPANY – FY2020 687 421 168 16 126 • IRS earnings impacted positively by the ability to treat the surface 3 358 1 131 464 i
Slide 36: Cash flow
CASH FLOW • Cash generated at operations increased by R6.5 billion as R MILLION FY2020 FY2019 improved rand metal prices were partially offset by lower production Net cash from operating activities 17 122 10 658 Capital (4 248) (3 877) • Capital expenditure was 10% higher due to the maiden Finance i
Slide 37: Cash net of debt
3 7 CASH NET OF DEBT R MILLION JUNE 2020 JUNE 2019 • Cash net of debt of R5.7 billion at 30 June 2020 (excluding finance leases), benefitted from strong free cash flow generation Gross cash 13 331 8 242 • Zimplats debt with Standard Bank fully repaid Convertible bonds (2 914) (5 831) • Impala Canada
Slide 38: Capital allocation framework and FY2020 dividend
CAPITAL ALLOCATION FRAMEWORK AND FY2020 DIVIDEND BALANCE SHEET STRENGTH TAXES PAID • Repayment of Zimplats term loan (R0.7 billion) FREE CASH FLOW OF R14.4 BILLION • Payment of incentive premium on US bonds R3.6bn R 1.7bn outflow (R0.5 billion) • Funding of shares for legacy share schemes (R0.4 bill
Slide 39: Market review
04 MARKET REVIEW Sifiso Sibiya IMPLATS ANNUAL RESULTS FY2020
Slide 40: Metal price performance
METAL PRICE PERFORMANCE IMPALA BASKET PRICE PER PGM OUNCE DESCRIPTION FY2020 FY2019 VAR (%) 40 000 2 400 Platinum (US$/oz) 871 825 6% 2 200 35 000 2 000 Palladium (US$/oz) 1 901 1 233 54% 30 000 1 800 R/oz US$/oz Rhodium (US$/oz) 6 854 2 624 161% 1 600 25 000 Nickel (US$/t) 13 974 12 342 13% 1 400 2
Slide 41: PGM revenue baskets FY2020
PGM REVENUE BASKETS FY2020 REVENUE CONTRIBUTION BY METAL 8% 2% 4% 1% 2% 8% 3% 11% 18% 3% 1% 24% 29% 27% TWO IMPALA MARULA RIVERS 25% IMPLATS 37% 29% Revenue of Revenue of Revenue of Revenue of 30% R30.2bn R5.3bn R6.2bn R69.9bn 39% 37% 32% 30% 8% 8% 7% 2% 7% 5% 23% 8% 5% 4% 24% 27% 6% IMPALA ZIMPLATS
Slide 42: Supply and demand balances
SUPPLY AND DEMAND BALANCES • Reduced 2020 platinum market surplus (+600 koz) SUPPLY AND DEMAND BALANCES 1 500 - Demand expected to fall by 28% • Automotive down on weak Europe and rising gasoline market share • Jewellery lower on ‘Covid-19’ shock to consumer activity in 2020 • Industrial buffered fr
Slide 43: PGM market outlook
PGM MARKET OUTLOOK Platinum • Support from physical investment due to appeal of ‘hard assets’ • Sustained underlying market surpluses in medium-term • Rising above-ground inventory • Eventual tightening from stagnant supply and growing industrial and auto demand • Potential to accelerate tightening
Slide 44: Business outlook
05 BUSINESS OUTLOOK Nico Muller IMPLATS ANNUAL RESULTS FY2020
Slide 45: Group outlook
GROUP OUTLOOK ACTUAL GUIDANCE BUSINESS AREA UNIT FY2020 FY2021 REFINED PRODUCTION: 2 813 2 800 – 3400 Group 6E oz refined CONCENTRATE PRODUCTION: Impala 6E oz (in conc) 1 109 1 100 – 1 270 Zimplats 6E oz (in conc) 597 570 – 600 Two Rivers 6E oz (in conc) 261 260 – 300 Mimosa 6E oz (in conc) 248 230
Slide 46: Annual Results FY2020
ANNUAL RESULTS FY2020 3 September 2020
Slide 47: Achieved metal prices
ACHIEVED METAL PRICES IMPALA BASKET PRICE PER PGM OUNCE DESCRIPTION FY2020 FY2019 VAR (%) 40 000 2 400 2 200 Platinum (US$/oz) 885 827 7% 35 000 2 000 Palladium (US$/oz) 1 896 1 185 60% 30 000 1 800 R/oz US$/oz Rhodium (US$/oz) 6 870 2 568 168% 1 600 25 000 1 400 Nickel (US$/t) 14 109 12 649 12% 20
Impala Platinum Holdings — FY2020 Earnings Presentation on 6ix