MMG Ltd. · HKEX:1208
MMG — Macquarie Australian Equities Conference 2016
30 slides from MMG's conference presentation, May 5, 2016
Slide 1: Macquarie Australian Equities Conference
Macquarie Australian Equities Conference Ross Carroll, Chief Financial Officer 5 May 2016 HKEx:1208 ASX:MMG
Slide 2: Disclaimer
Disclaimer The information contained in this presentation is intended solely for your personal reference and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person (whether within or outside your organisation/firm) or published, in whole or in part, for any pu
Slide 3: Las Bambas – Mid-cap miner – Base metals – Global access
_ _ _ _ Las Bambas – Mid-cap miner Base metals Global World class with growth focus and expertise and copper mandate diversification access to long-term capital 3
Slide 4: Our values: We mine for progress
Our values: We mine for progress Safety Performance Safety our first value - TRIF1 of 2.1 per 5 million hours worked in 2015. 4.8 4 Safety aligned with management 4.1 incentives – critical to performance. 3 3.0 MMG CEO Chair of International 2 2.4 Council on Mining and Metals (ICMM) – 2.3 2.1
Slide 5: Global development expertise
Global development expertise US$3 million global partnership with UNICEF on nutrition and child rights. Significant investment in schools, education and capacity in DRC, Lao and Peru. World’s leading practice relocation and livelihood restoration in Sustained investment in local business development
Slide 6: Our Company
Our Company Capital Millions Structure Primary Listing HKEx Secondary ASX Listing (CDI) Market Cap US$1,195bn1 Shares 5,290 Major 74% shareholder (China ownership Minmetals Corporation) Head Office Melbourne, Australia (1) As at 2 May 2016. 6
Slide 7: 2015 Financial results
2015 Financial results Year ended 31 December 2015 2014 Variance US$ million % Revenue 1,950.9 2,479.8 (21) EBITDA 420.9 780.8 (46) Depreciation and amortisation (649.4) (537.1) (21) Underlying EBIT (228.5) 243.7 (194) Underlying (Loss)/profit for the period (264.4) 99.2 (367) EBITDA margin 22% 31%
Slide 8: Sound investment case
Sound investment case 1 Las Bambas transformational world class copper asset – in ramp-up. 2 Mid-cap miner with clear growth mandate and financial capability. 3 Base metals focus - diversified portfolio, cash generative with good copper/zinc fundamentals and exposure. 4 Accomplished international ex
Slide 9: Las Bambas - world class copper asset
1 Las Bambas - world class copper asset 5km conveyor, 8,000t/hr. 140ktpd throughput design capacity with two SAG and ball mill trains working independently of each other, pebble crusher and regrind circuit. Dual train, conventional copper concentrator with 1.1m dry metric tpa Loading concentrate at
Slide 10: Las Bambas – size, scale and life
1 Las Bambas – size, scale and life Located in Apurimac region of Peru. 2017 Forecast annual production capability1 US$5.85bn acquisition in August 2014 from previous owner Glencore. Escondida PT Freeport Ownership 62.5% MMG (operator), Indonesia 22.5% Guoxin, 15% Citic. Cerro Verde 2016 pro
Slide 11: Ramp up underway, cash generation potential
1 Ramp up underway, cash generation potential US$ M Las Bambas EBITDA projections1 2,500 Project construction complete. Commissioning and ramp up continues. 2,000 Shipping through new Berth F at Matarani Port. 31,470 tonnes of copper in copper 1,500 concentrate produced as part of commission
Slide 12: Growth mandate - Dugald River zinc
2 Growth mandate - Dugald River zinc Updated development plan approved. Subject to final financing arrangements. Provides important exposure to zinc at a time of shrinking global supply. Remaining capital expenditure US$750 million including interest cost. Reviewing project fundamentals an
Slide 13: Access to long term capital a competitive advantage
2 Access to long term capital a competitive advantage Amortisation schedule1 US$ million 14,000 MMG total debt borrowings have attractive quasi-equity features: 12,000 – Sourced from Chinese government 10,000 supported financial institutions. – Majority vanilla structure with 8,000 optionality. –
Slide 14: Base Metals focus – operating discipline
3 Base Metals focus – operating discipline Strong 2015 – exceed production guidance at all Asset Utilisation across operations. MMG assets1 Copper production record of 207,528 tonnes. 97% Record production at Kinsevere, solid Sepon performance. 90% 89% 86% Overall, reduced down-time - increa
Slide 15: Base metals focus - longer term price support for copper
Base metals focus - longer term price 3 support for copper Tonnes 000’ US$/lb 25,000 4.50 4.00 20,000 3.50 3.00 15,000 2.50 2.00 10,000 1.50 Short – term volatility 1.00 5,000 0.50 0 0.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Base Case + Probable Projects Copper Supply Bas
Slide 16: Base metals focus - zinc facing declining output
3 Base metals focus - zinc facing declining output Tonnes 000’ US$/lb 20,000 2.00 18,000 1.80 16,000 1.60 14,000 1.40 12,000 1.20 10,000 1.00 8,000 0.80 6,000 0.60 Short – term 4,000 0.40 volatility 2,000 0.20 0 0.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Base Case + Probab
Slide 17: Executive team – global experience
4 Executive team – global experience Chief Executive Officer Chief Financial Officer Chief Operating Officer Mr Andrew MICHELMORE Mr Ross CARROLL Mr Marcelo BASTOS 30+ years of metals and mining 25+ years of experience in the Natural 30+ years mining experience in iron ore, experience. Resourc
Slide 18: Board - sound corporate governance
4 Board - sound corporate governance Chairman Executive Director Executive Director Non-executive Director Mr JIAO Jian Mr Andrew MICHELMORE Mr XU Jiqing Mr GAO Xiaoyu Independent Independent Independent Independent Non-executive Director Non-executive Director Non-executive Director Non-executive D
Slide 19: Building a major mid-tier base metals miner
Building a major mid-tier base metals miner Strong production base with experienced international operations team Confidence in long term fundamentals for copper and zinc. Growth pipeline in execution: – Las Bambas - a world class asset in ramp-up phase, with significant growth options. Las Ba
Slide 20: Macquarie Australian Equities Conference
Macquarie Australian Equities Conference Sydney 5 May 2016 HKEx:1208 ASX:MMG
Slide 21: Appendices
ii “procrese IMEIVIG Appendices
Slide 22: 2015 Financial dashboard
2015 Financial dashboard Revenue by commodity Revenue by customer location 24% 32% Zinc Australia Copper Europe 19% Gold 14% Middle East 53% Silver Japan & Korea 7% Lead Other Asia 21% 16% China 5% 6% 3% EBITDA by operating segment Operating expenses (Sites) 12% 21% 39% Sepon People 7% Kinsevere Ext
Slide 23: Kinsevere – full year production record
Kinsevere – full year production record YTD production record of 80,169 tonnes of Financials copper cathode. US$ million 2015 2014 % Operational efficiencies, stable electricity, increases to mill throughput. Revenue 418.1 465.7 (10) Lower copper prices marginally offset by EBITDA1 131.8 189.3
Slide 24: Sepon – successfully transitioning
Sepon – successfully transitioning Successful transition to harder Type II ore Financials with quarterly milling record delivered. US$ million 2015 2014 % YTD production record of 89,253 tonnes of Revenue 496.9 620.2 (20) copper cathode. EBITDA1 248.8 366.5 (32) Maintained stable mining and mi
Slide 25: Rosebery
Rosebery Financials US$ million 2015 2014 % Revenue 201.1 247.5 (19) EBITDA1 79.1 85.2 (7) EBIT 12.5 38.7 (68) EBITDA margin (%) 39 34 C1 costs – zinc (US$ / lb) 0.30 0.26 Zinc in zinc concentrate production Lead in lead concentrate production ‘000 tonnes ‘000 tonnes 25 88 92 25 82 81 84 23 23 75-80
Slide 26: Golden Grove
Golden Grove Financials US$ million 2015 2014 % Revenue 221.2 293.1 (25) EBITDA1 19.5 29.0 (33) EBIT (25.1) (15.2) (65) EBITDA margin (%) 9 10 C1 costs – zinc (US$ / lb) 0.30 0.25 Copper in copper concentrate production Zinc in zinc concentrate production ‘000 tonnes ‘000 tonnes 71 34 73 34 31 28 26
Slide 27: Century – last production
Century – last production Production of 392,667 tonnes of zinc and 79,153 Financials tonnes of lead despite transition to lower grades in final stages of mining. US$ million 2015 2014 % Mining from single stage of open-pit mine, lower Revenue 613.6 853.3 (28) strip ratio, reduction in consumable
Slide 28: 2016 Guidance
2016 Guidance Las Bambas Rosebery Copper – production1 250,000 – 300,000 tonnes Zinc – production 75,000 – 80,000 tonnes Copper – C1 costs2 US$0.80 – US$0.90 / lb Zinc – C1 costs US$0.30 – US$0.40 / lb Lead – production 18,000 – 22,000 tonnes Kinsevere Golden Grove Copper – production 75,000 - 80,00
Slide 29: Consolidated financial performance: Cash flow statement
Consolidated financial performance: Cash flow statement Year ended 31 December 2015 2014 US$ million Receipts from customers 2,289.0 2,578.4 Payments to suppliers (1,875.2) (1,744.8) Payments for exploration expenditure (42.4) (73.0) Income tax paid (89.0) (93.9) Net cash generated from operating ac
Slide 30: Financial resources and liquidity
Financial resources and liquidity Gearing ratio1 MMG Group (excluding Las Maturity profile of borrowings Bambas) as at 31 Dec 2015 of 0.51. as at 31 December 2015 Gearing ratio1 MMG South America Management 36% within one year Group as at 31 Dec 2015 of 0.65 10% one - two years two - five years