Merafe Resources Limited · JSE:MRF
Merafe Resources — Merrill Lynch 14th Annual Sun City Conference 2013
28 slides from Merafe Resources's conference presentation, March 2013
Slide 1: Merafe Resources - Merrill Lynch 14th Annual Sun City Conference
INVESTED IN LONG-TERM SUSTAINABLE PARTNERSHIPS `+ MERAFE RESOURCES LIMITED Merrill Lynch 14th Annual Sun City Conference March 2013 Presented by Zanele Matlala (CEO)
Slide 2: Legal notice/disclaimer
2 Legal notice/disclaimer This presentation is published solely for informational purposes and does not constitute investment, legal, tax or other advice nor is it to be relied upon in making an investment decision. Information contained herein has been taken from sources considered by Merafe Resour
Slide 3: Agenda
3 Agenda 1. Corporate and Operational Overview 2. Key Drivers 3. Challenges 4. Outlook Annexures
Slide 4: Corporate and Operational Overview
Corporate and Operational Overview The Tswelopele pelletising and sintering plant North West province
Slide 5: Experienced Management Team focused on delivering returns
5 Experienced Management Team focused on delivering returns Zanele Matlala CA(SA) – Chief Executive Officer • Appointed CFO in October 2010 having been on the Merafe Board as a non-executive director since 2005. Appointed CEO in June 2012 • Extensive financial experience at Industrial Development Co
Slide 6: Largest Ferrochrome Producer in the World
6 Largest Ferrochrome Producer in the World Investor Profile Ticker: MRF Market Cap* : R2bn Share price* : 78 cents 20.5% of EBITDA 79.5% of EBITDA 52 week high : 95 cents 52 week low : 64 cents * As at 11 March 2013 Xstrata-Merafe Venture Formed 1 July 2004 6
Slide 7: Merafe pooled assets with Xstrata to form the Xstrata-Merafe Chrome Venture
7 On 1 July 2004 Merafe pooled assets with Xstrata to form the Xstrata-Merafe Chrome Venture 20.5% of EBITDA 79.5% of EBITDA Xstrata-Merafe Chrome Venture Joint Board EXCO Trans- Marketing Treasury Audit SHEQ Operations formation Merafe is represented at all levels of the Xstrata Merafe Chrome Ventu
Slide 8: Our growth in ferrochrome since 2002
8 Our growth in ferrochrome since 2002 Merafe participates in 360 000 tpa Lion Lion I ferrochrome ferrochrome plant and Commissioning plant goes Helena Mine of Merafe’s into Boshoek Merafe Interest in production smelter and Formation of acquires an the the Motswedi Merafe Xstrata- interest in Ventur
Slide 9: Our growth in ferrochrome since 2002
9 Our growth in ferrochrome since 2002 Merafe Merafe participates in participates in Merafe Merafe expansionary Tswelopele participates in participates in projects pelletising Lion II and Lion II Bokamoso including and sintering the Project ferrochrome pelletising Horizon and plant and K1 developmen
Slide 10: Project Lion Phase II - 360,000 tonnes of ferrochrome capacity
Project Lion Phase II - 360,000 tonnes of ferrochrome 10 capacity Project Rationale: − Positioning the Venture to be one of the first movers in the ferrochrome industry, underpinned by favourable supply-demand fundamentals − Expected to reduce the total costs of the Venture’s ferrochrome production
Slide 11: What sets us apart from the competition
What sets us apart from the competition 11 Lower quartile of the ferrochrome cost curve with the gap widening Energy efficient technology reducing impact of high electricity costs in SA Secure long-term supply of ore reserves Strong Balance Sheet and proven track record Organic growth in ferrochrome
Slide 12: Shareholder Base
12 Shareholder Base 9% 29% Royal Bafokeng IDC SA Free Float 40% Offshore Free Float 22%
Slide 13: Global Chrome Reserves favour South Africa
13 Global Chrome Reserves favour South Africa 4% 12% Kazakhstan 11% Zimbabwe Others South Africa 73%
Slide 14: Geographical Distribution Provides Competitive Advantage
Geographical Distribution Provides Competitive 14 Advantage Chrome ore - 9 mines, chrome mineral resources in excess of 450 Megatonnes, 6 UG2 plants and long-term supply agreements with major SA platinum producers New Project- Ferrochrome Lion II - 20 furnaces - 1.979 million tonnes installed ferroc
Slide 15: Key Drivers
Key Drivers Production Engineer, Charlotte Ntsole, at work on the new Tswelopele pelletising and sintering plant North West province
Slide 16: Key Drivers
16 Key Drivers Market − Stainless steel production − Ferrochrome demand − Ferrochrome supply Costs − Labour − Electricity Pricing and foreign exchange
Slide 17: Global stainless steel production
17 Global stainless steel production 40 000 2011 ACTUAL TONNES in '000 3% 35 000 2012 ESTIMATED TONNES in '000 30 000 25 000 20 000 9% 15 000 10 000 1% 5 000 3% 3% 4% 9% 1% - 2 469 34 081 1 985 15 730 2 074 7 447 3 360 14 460 3 256 35 161 1 107 2 265 7 559 3 173 1 114 3 243 Others NAFTA India Japan
Slide 18: Global ferrochrome demand
18 Global ferrochrome demand 12 000 2011 ACTUAL TONNES in '000 2% 10 000 2012 ESTIMATED TONNES in '000 8 000 6 000 5% 4 000 0.1% 2 000 10% 4% 4% 0.1% 1% - 9 734 766 4 842 9 554 767 4 596 1 722 553 495 664 752 781 1 724 462 695 469 NAFTA India Japan Others S Korea / EU China Total Taiwan Heinz H. Par
Slide 19: Global ferrochrome production
19 Global ferrochrome production 10 000 v 1% 9 000 2011 ACTUAL TONNES in '000 8 000 2012 ESTIMATED TONNES in '000 7 000 6 000 5 000 4 000 v 19% 9% 3 000 2 000 2% 4% 1 000 4% 13% 14% - 941 277 985 9 178 9 303 336 323 1 088 3 319 348 286 1 114 2 798 3 017 329 3 320 Others Russia / Turkey / EU India Ka
Slide 20: Challenges
Challenges The Lion ferrochrome plant at Steelpoort Limpopo province
Slide 21: Challenges
21 Challenges Chrome ore exports Rising costs − Electricity − Labour
Slide 22: Chrome ore imports into China remain significant
22 Chrome ore imports into China remain significant 2012 2011 2010 % change ‘000 ‘000 ‘000 2012/2011 South Africa 4 490 4 675 3 100 (4.0) Turkey 1 840 1 612 1 933 14.1 Oman 426 645 902 (34.0) India 310 439 389 (29.4) Pakistan 472 440 512 7.3 Albania 305 357 363 (14.6) Iran 448 330 350 35.8 Zimbabwe
Slide 23: Venture technology
23 The Venture invested in energy efficient technologies to counter the rising costs of electricity Average energy efficiency improvements the Venture has achieved and expects to achieve Venture technology This improvement represents more than MWh/t 25% in energy efficiency over the past decade.
Slide 24: Outlook
Outlook The Lion ferrochrome plant at Steelpoort Limpopo province
Slide 25: Positive long-term outlook
Positive long-term outlook 25 – Projected 5% CAGR in stainless global steel industry fuels ongoing demand for ferrochrome – Long-term demand fundamentals remain strong as China continues to expand – The Xstrata-Merafe Venture will retain advantage as lowest cost SA producer ― outstanding historical
Slide 26: Questions
Questions 26 ee M MERAFE eteources
Slide 27: Annexures
Annexures Lion II ferrochrome plant under construction Limpopo province
Slide 28: Abridged Audited Group Annual Financial Statements for 2012
28 Abridged Audited Group Annual Financial Statements for 2012
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