Mineral Resources Limited · ASX:MIN
Mineral Resources — H1 FY2016 Earnings Presentation
32 slides from Mineral Resources's earnings presentation, Feb 18, 2016
Slide 1: First half FY2016 results presentation
For personal use only First half FY2016 results presentation 18 February 2016
Slide 2: Agenda
Agenda For personal use only 1 First half FY2016 highlights 2 MRL background and business model overview 3 Operational performance 4 Financial performance 5 Innovation and Growth 6 FY2016 Outlook 2
Slide 3: Result highlights
Result highlights For personal use only • Revenue of $577m down 23% on the prior corresponding period (‘pcp’) reflecting lower revenue from a decline in revenue in 1H FY16 commodity business as a result of a 24% decline in the Platts 62% iron ore price (pcp) and the prior opportunistic sale of 0.3 m
Slide 4: Result highlights (cont)
Result highlights (cont) For personal use only • The Mt Marion Project is scheduled for first shipment mid 2016 and an additional 80Ktpa of +4% Lithium product for sale under investigation. Innovation and • LNG power generation facilities are being developed to meet the remote demand for power on MR
Slide 5: MRL background
MRL background For personal use only MINING SERVICES BUSINESS 5
Slide 6: MRL overview
MRL overview For personal use only Innovative mining Founded in 1993, Mineral Resources (MRL) is a leading and infrastructure highly innovative full-service provider of mining services provider infrastructure services in Australia MRL provides innovative and low cost Pit to Port solutions across PHO
Slide 7: Mining Infrastructure Services
Mining Infrastructure Services MRL delivers integrated infrastructure services across the mining supply chain For personal use only Mining supply chain Plant / Port Sales Site services Mining Transport Processing services • Remote, mine-site • Mine scheduling • Crushing and mineral • Road & rail log
Slide 8: Unique value proposition
Unique value proposition “Partner with selected clients to deliver innovative high quality and cost efficient For personal use only mineral processing and mining infrastructure Pit to Port solutions” • Proven track record of innovative designs for crushing, screening, mineral Global leader in design
Slide 9: Profit share model
Profit share model For personal use only MRL is uniquely positioned to benefit from profit share partnerships MRL’s profit share model—stages in the cycle Benefits of profit share model • MRL targets undeveloped resource assets Acquire / joint that will materially benefit from MRL’s venture mining i
Slide 10: Case Study - Yilgarn
Case Study - Yilgarn Track record of investing in projects with strong returns on capital employed For personal use only • In March 2010, MRL purchased Polaris for c.$160m. MRL has Total Investment c.$310m spent an additional $150m in capital expenditure since March 2010 • Mine life of >15 years (su
Slide 11: Case Study – Mt Marion
Case Study – Mt Marion Track record of investing in projects with strong returns on capital employed For personal use only • In September 2015, MRL agreed to proceed with the Mt Marion Total expected c.$AUD50m project to produce 280kt of +4-6% Lithium spodumene concentrate Investment and provide a c
Slide 12: Operational performance
Operational performance For personal use only MRL locomotives in action - Yilgran regionof Western Train loading circuit for the Carina operation - Yilgarn region MRL locomotives in action - Yilgran regionof Western Australia 12
Slide 13: Operational highlights
Operational highlights For personal use only Equivalent crushing capacity (MT pa) 135 120 105 94 85 90 75 60 45 30 1H 15 1H 0 2008 2009 2010 2011 2012 2013 2014 2015 2016F Fortescue BOO contracts Exported tonnes with profit share (MT pa) 12 12.0 10.5 10 8 6 4 1H 1H 2 1H 1H 0 2008 2009 2010 2011 2012
Slide 14: Mining Infrastructure Services
Mining Infrastructure Services MRL is currently operating across 26 sites and 5 different commodity types For personal use only Annuity style earnings Transactional earnings • Strong customer retention for crushing and processing • Commenced works on Nammuldi Incremental tonnes wet business as a res
Slide 15: Commodity Business - Projects
Commodity Business - Projects For personal use only Key statistics for Mining Operations (with profit share) (by commodity) Iron Ore Lithium Manganese Project name Iron Valley Yilgarn Mt Marion Mesa % of product profit 100%1 100% 30%2 81.5% Annual production 7Mt 5-6Mt 280Tt(4-6% Li20) On hold Annual
Slide 16: Commodity Business
Commodity Business Key per tonne statistics for iron ore operations with profit share For personal use only • MRL’s commodity business is currently in iron ore, $AUD per wet 1H 14 2H14 1H 15 2H 15 1H16 manganese and lithium metric tonne (WMT) • MRL’s current and future supply chain Platts 62% Fe 137
Slide 17: Safety performance
Safety performance For personal use only Continued improvement in safety to a global best practice standard MRL saftey track record • MRL’s 12 month Total Recordable Injury Frequency rate (TRIFR) in 1H2016 was 5.1, with the latest 3 month TRIFR being 2.8—a world 16 class standard 14 12 • Development
Slide 18: Financial performance
Financial performance For personal use only MINING SERVICES BUSINESS MRL’s Carina operations in the Yilgarn 18
Slide 19: Financial highlights
Financial highlights MRL has a track record of improving its financial performance and delivering returns for For personal use only shareholders over the long term EBITDA ($m) Dividends paid to shareholders since 600 IPO ($ per share) 3.50 500 3.00 400 2.50 300 2.00 Total dividends 3.3x the IPO 1.50
Slide 20: Profit and loss statement
Profit and loss statement For personal use only Stable 1H FY2016 earnings result despite a difficult commodity price environment • Revenue of $577m down 23% (‘pcp’) reflecting $ million 1H2015 1H2016 – Lower revenue as a result of a 24% decline in the Platts 62% iron ore price (pcp) Revenue 751.7 57
Slide 21: Statement of financial position
Statement of financial position Significant balance sheet flexibility to grow the business in the future For personal use only • Improved net cash position of $174m and unused debt $ million 30-Jun-15 31-Dec-15 facility of greater than $400m to provide significant Current assets Cash and cash equiva
Slide 22: Cash Flow Statement
Cash Flow Statement For personal use only • Growth capex included: $ million 1H2016 • Development and mine fleet (including Mount Marion EBITDA 132.8 Lithium project), Movement in working capital (ex. Construction) 28.9 • Additional crushing capacity, and Movement in working capital—Construction 28.
Slide 23: Innovation and growth
Innovation and growth For personal use only MINING SERVICES BUSINESS Nammuldi Below Water Table process plant - Pilbara region 23
Slide 24: Priorities for innovation and growth
Priorities for innovation and growth Multiple drivers of organic growth For personal use only 1 Growth of existing business • Management expects build own operate growth with two additional plants to be secured in the next 6 to 12 months • MRL’s business model is transferable to bulk material operat
Slide 25: Supply chain infrastructure
Supply chain infrastructure For personal use only MRL’s expanded remote power service is expected to create significant savings LNG power generation • MRL will install and operate remote LNG plants to power mine equipment and infrastructure underwritten by long term contracts • MRL’s new solution wi
Slide 26: Road transport initiatives
Road transport initiatives For personal use only Superquads Strategy • Project has evolved from the development of a safer roadtrain design on public highways • World first design provides significant operational and costs savings along with achieving the initial objective of safer equipment • A new
Slide 27: Composite materials
Composite materials For personal use only Carbon fibre Strategy • Focus is on developing a carbon fibre manufacturing facility, employing robotic technology, for the manufacture of structural components • Develop a range of composite products specifically for the mining and mineral processing indust
Slide 28: Bulk Ore Transport System
Bulk Ore Transport System ‘Bulk Ore Transport System’ (BOTS) will create significant annuity profit streams for For personal use only MRL and its customers Overview • BOTS is MRL’s proprietary, mine-to-port transport and infrastructure service comprising an elevated, relocatable below rail system wi
Slide 29: Outlook
Outlook For personal use only MINING SERVICES BUSINESS 3D model of a MRL crushing plant 29
Slide 30: Profit guidance
Profit guidance For personal use only • EBITDA guidance of between $250-290m (unchanged from MRL’s AGM announcement in Nov 2015) • The key assumptions in this guidance include: • 62% CFR iron ore to average USD$42 per tonne from Feb to Jun 2016 • AUD / USD to average 0.70 from Feb to Jun 2016 • 12Mt
Slide 31: Capital management
Capital management For personal use only • MRL has commenced its $30m on-market share buyback scheme as announced at its AGM in Nov 2015 • As at 5 Feb 2015, MRL has bought back 1.2m shares at an average price of $3.64 per share ($4.3m) • The Company will look to purchase the remaining $25.7m worth o
Slide 32: Disclaimer
Disclaimer For personal use only This presentation has been prepared by Mineral Resources Limited (“MRL” or “the Company”).It should not be considered as an offer or invitation to subscribe for or purchase any securities in the Company or as an inducement to make an offer or invitation with respect