African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — H1 F2018 Earnings Presentation
31 slides from African Rainbow Minerals's earnings presentation, 2018
Slide 1: Headline earnings increased by 15% to R1.95 billion
“Headline earnings increased by 15% to R1.95 billion. A maiden interim dividend of R2.50 per share was declared. ARM completed the disposal of Lubambe Mine and increased its interest in Two Rivers Mine to 54%.” Patrice Motsepe Executive Chairman
Slide 2: Overview and strategy
Khumani Iron Ore 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% 14.3% Gold: Platinum Ferrous Coal Copper Harmony PGMs Iron Ore Coal Copper 41.5% Modikwa1 50% Khumani 20% Participating Coal 40% Lubambe and 54% Two Rivers 2 50% Beeshoek Business (PCB) 3 Lubambe Extension Area 4 Nickel, PGMs & Chrome Manganese Ore Coal 50% Nko
Slide 5: Salient features
Salient features Headline earnings increased by 15% to R1 945 million compared to R1 693 million in the corresponding period (1H F2017). Headline earnings per share were 1 023 cents (1H F2017: 893 cents). Maiden interim dividend of 250 cents per share declared. 5
Slide 6: Salient features
Salient features Basic earnings were R1 753 million (1H F2017: R254 million basic loss). The basic loss in 1H F2017 included an attributable impairment of the Nkomati Mine and Modikwa Mine assets of R711 million and R734 million after tax and non- controlling interest, respectively. Higher US Dollar
Slide 7: Salient features
Salient features ARM’s interest in Two Rivers Mine increased to 54% from 9 November 2017 after the mine’s amended mining right was executed by the Department of Mineral Resources (DMR). Cash dividends received from the Assmang joint venture were R1 000 million (1H F2017: R988 million). Since the per
Slide 8: Safety
Safety Regrettably an employee, Mr Fabian Majoro, was fatally injured when he was exposed to irrespirable atmosphere underground at Modikwa Mine on 9 October 2017. The Board and management express their sincerest condolences to the family, friends and colleagues of Mr Majoro. The Lost Time Injury Fr
Slide 9: Six-monthly headline earnings (R million)
Six-monthly headline earnings (R million) 2 500 2 331 2 341 2 000 1 945 1 767 1 693 1 503 1 500 1 406 1 026 1 000 718 507 544 500 0 F2013 F2014 F2015 F2016 F2017 F2018 First half (1H) Second half (2H) 9
Slide 10: Six-monthly headline earnings per share (cents)
Six-monthly headline earnings per share (cents) 1200 1 081 1 084 1 023 1000 893 816 791 800 654 600 473 400 330 261 233 200 0 F2013 F2014 F2015 F2016 F2017 F2018 First half (1H) Second half (2H) 10
Slide 11: EBITDA margins by commodity
EBITDA margins by commodity 30% Coal (GGV) 43% 30% Manganese 41% 44% Iron Ore 38% 24% PGM 26% 18% Nickel 12% (7%) Copper* (2%) (20%) (10%) 0 10% 20% 30% 40% 50% 1H F2017 1H F2018 * The disposal of ARM’s interest in Lubambe Mine was completed on 22 December 2017. 11
Slide 12: ARM strategy
ARM strategy Quality growth continues in Operational ARM’s existing efficiencies portfolio of commodities Acquisitions and Africa partnerships World-class Entrepreneurial Profit and cash flow Owner operator management team management focused Partnering with communities, workers Employer of choice Pa
Slide 13: Operational efficiencies
Operational efficiencies ARM’s objective is to ensure that all operations are below the 50th percentile Two Rivers Platinum Cato Ridge PCB Coal Ferromanganese Operations GGV Modikwa Sakura Platinum Coal Ferroalloys (F2021) Manganese Ore Operations Beeshoek Khumani Iron Ore Iron Ore Nkomati Nickel Co
Slide 14: Operational review
Nkomati Nickel Mine Operational review Mike Schmidt, Chief Executive Officer
Slide 15: Headline earnings / (loss) by division / operation
Headline earnings / (loss) by division / operation six months ended 31 December R million 2017 2016 % change ARM Platinum 226 179 26 Two Rivers Mine 173 205 (16) Modikwa Mine 36 (54) Nkomati Mine 17 28 (39) ARM Ferrous 1 765 1 779 (1) Iron ore division 873 1 023 (15) Manganese division 872 378 131 C
Slide 16: Segmental EBITDA split by commodity (%)
Segmental EBITDA split by commodity (%) 100% 6% 4% 4% 7% 8% 5% 11% 14% 80% 12% 13% 31% 33% 60% 57% 44% 59% 56% 57% 40% 39% 8% 10% 3% 20% 8% 5% 24% 29% 19% 19% 20% 16% 0% (6%) (20%) F2013 F2014 F2015 F2016 F2017 1H F2018 PGM Nickel Iron Ore Manganese Chrome Coal (GGV) Copper 16
Slide 17: Segmental profit variance analysis
Segmental profit variance analysis Unaudited profit variance analysis – Profit from operations before special items (R million) 4 000 1 710 (351) 3 500 (438) 3 000 (9) 88 2 845 2 500 2 100 (400) 2 000 145 1 500 Increase Decrease 1 000 500 0 1H F2017 Exchange Exchange US Dollar Volume Cash cost Non-c
Slide 18: Changes in sales volumes
Changes in sales volumes 1H F2018 versus 1H F2017 sales volume changes (%) Increase 31% Decrease 17% 10% 3% 4% 0% 0% (14%) (31%) Nickel Eskom Copper Export PGMs Iron Manganese Manganese Chrome and local coal ore* ore* alloys** concentrate coal * External sales only. ** Includes Sakura Ferroalloys sa
Slide 19: Changes in average realised US Dollar prices
Changes in average realised US Dollar prices 1H F2018 versus 1H F2017 average realised US Dollar price changes (%) 80% Increase 69% Decrease 40% 32% 24% 16% 9% (0%) (8%) (24%) (61%) Nkomati Two Rivers Platinum Export Nickel Export Export Copper Palladium Manganese Rhodium chrome chrome ($/oz) iron o
Slide 20: Changes in average realised Rand prices
Changes in average realised Rand prices 1H F2018 versus 1H F2017 average realised Rand price changes (%) 72% 62% Increase Decrease 34% 26% 18% 11% 5% (4%) (12%) (27%) (62%) Nkomati Two Rivers Platinum Export Nickel Export Export Copper Palladium Manganese Rhodium chrome chrome (R/oz) iron ore (R/lb)
Slide 21: Unit cost changes by commodity
Unit cost changes by commodity 1H F2018 versus 1H F2017 on-mine unit production costs Rand per tonne basis (%) Increase Nickel * (18%) Decrease South African Inflation (CPI) at 4.8% Iron ore (1%) PGM: Two Rivers and Modikwa 0% Coal: GGV and PCB 18% Manganese ore** 23% Manganese alloys*** 23% (25%) (
Slide 22: ARM Ferrous: Iron ore
ARM Ferrous: Iron ore Iron ore operational performance - 100% basis Sales volumes increased by 4% to a record 1H 1H % F2018 F2017 change 9.1 million tonnes. Export sales 000 7 387 7 288 1 volumes tonnes Local sales 000 1 734 1 517 14 volumes tonnes Change in on-mine On-mine unit production costs at
Slide 23: ARM Ferrous: Manganese ore
ARM Ferrous: Manganese ore Manganese ore operational performance - 100% basis Sales volumes increased 10% to 1.6 million tonnes while production volumes increased 1H 1H % F2018 F2017 change 43% to 1.9 million tonnes. Export sales 000 1 516 1 348 12 volumes tonnes Local sales 000 40 69 (42) volumes*
Slide 24: ARM Ferrous: Manganese alloys
ARM Ferrous: Manganese alloys Manganese alloys operational performance - 100% basis Average realised US Dollar prices increased 1H 1H % by 69%. F2018 F2017 change Sales volumes 000 57 97 (41) (South Africa) tonnes Sales volumes 000 105 42 150 (Sakura) tonnes Change in unit % 23 7 - production costs
Slide 25: ARM Platinum: PGMs
ARM Platinum: PGMs PGM operational performance - 100% basis Two Rivers Mine production volumes 1H 1H % decreased by 14% as a result of a decline in F2018 F2017 change the grade due to split reef mining. 6E PGM Production 422 104 407 846 3 ounces Modikwa cash cost R/oz 6E 8 832 8 559 3 Modikwa Mine p
Slide 26: ARM Platinum: Nickel
ARM Platinum: Nickel Nickel C1 cash costs net of by-products Nickel production increased by 2% however sales volumes decreased by 31% due to 1H F2018 1H F2017 % change shipping delays. On-mine cash cost* US$/lb 10.38 7.02 48 Off-mine cash cost US$/lb 0.79 3.34 (76) By-product credits US$/lb (6.23) (
Slide 27: ARM Coal: GGV and PCB
ARM Coal: GGV and PCB GGV and PCB operational performance - 100% basis ARM and Glencore are continuing 1H 1H % negotiations to restructure the ARM Coal F2018 F2017 change partner loans to improve ARM’s Total export sales Mt 8.35 8.33 - obligations in terms of these loans. volumes Total Eskom sales M
Slide 28: ARM Copper
ARM Copper Lubambe Mine operational performance - 100% basis The disposal of ARM and Vale’s interest in the Lubambe Mine was completed on 22 1H F2018 1H F2017 % change December 2017. Milled tonnes 000t 539 545 (1) Mill head grade % Cu 2.12 2.09 1 Concentrator recovery % 81.9 84.6 (3) Copper produced
Slide 29: Net debt to equity ratio
Net debt to equity ratio R million 1H F2018 1H F2017 F2017 Cash and cash equivalents 1 919 1 335 1 488 Total borrowings (3 021) (4 843) (2 759) Long-term borrowings (2 311) (3 618) (2 002) Short-term borrowings (710) (1 225) (757) Net debt (1 102) (3 508) (1 271) Total equity 24 926 22 781 24 040 Ne
Slide 30: Capital allocation: segmental analysis
Capital allocation: segmental analysis Capital expenditure (R million)* 4 000 Actual 1H F2018: R1 147 million 3 489 1H F2017: R1 159 million 3 500 3 326 2 918 3 000 2 800 2 800 2 600 2 352 2 383 2 500 2 000 1 500 1 000 500 - F2013a F2014a F2015a F2016a F2017a F2018e ** F2019e ** F2020e ** ARM Platin
Slide 31: Thank you
We do it better FaxtM African Rainbow Minerals ES ES ES Thank you 31
African Rainbow Minerals — H1 F2018 Earnings Presentation on 6ix