African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — H1 2006 Earnings Presentation
34 slides from African Rainbow Minerals's earnings presentation, Feb 20, 2006
Slide 1: Results for the six months ended 31 December 2005
Results for the six months ended 31 December 2005 20 February 2006
Slide 2: Disclaimer
Disclaimer Forward looking statements Certain statements in this presentation constitute “forward looking statements” within the meaning of section 27A of the US Securities Act of 1933 and section 21E of the US Securities Exchange Act of 1934. Such forward looking statements involve known and unknow
Slide 3: We do it better
“Headline earnings have increased to R131 million for the six months under review, with Modikwa having reported improved results and ARM Ferrous’ earnings negatively impacted by market conditions. We have made significant progress in the release and completion of our projects, through establishing a
Slide 4: Overview and highlights
Overview and highlights Patrice Motsepe, Executive Chairman
Slide 5: Financial highlights
Financial highlights • Headline earnings for the six months to December 2005 of R131 million significantly higher than the R19 million for the comparable period • Revenue for the period of R2.3 billion similar to that of the comparative period • Net gearing comfortably at 16% with net debt at R1.5
Slide 6: Highlights
Highlights • ARM Ferrous results impacted by negative market conditions in the manganese operations in particular • ARM Platinum (Modikwa Platinum and Nkomati Nickel) has been able to benefit from strong US$ prices • Two Rivers Platinum Project released in June 2005 shows excellent progress in devel
Slide 7: Highlights
Highlights • Exploration assets outside South Africa listed through TEAL on the Toronto Stock Exchange – growth into Africa • Assmang shareholders’ agreement renegotiated and delisting approved • Release of the 8.4 million tons per annum export BKM Iron Ore Mine • Nkomati Expansion approved from 30
Slide 8: Growth strategy
Growth strategy • We expect similar volume demand across our commodity portfolio – manganese ore and ferrochrome demand, however, weaker • We remain confident that longer term US$ prices for bulk commodities will continue at levels higher than experienced before the 2004/2005 price increases • Growt
Slide 9: We do it better: 2 x 2010
WE DO IT BETTER • Significant organic growth expected through the building of new mines and the upgrading of two operations – double production output by 2010 – increased efficiencies, thereby continue to be a low cost producer Operationally more efficient to improve and retain competitiveness Organ
Slide 10: Operational review
Operational review André Wilkens, Chief Executive Officer
Slide 11: Profit from operations before exceptional items
Profit from operations before exceptional items Results for six months ended 31 December 2005 – R million 700 625 568 600 498 500 445 400 300 200 141 73¹ 100 16 0 100 53 31 36 Platinum Nickel Ferrous Corporate Total and other 2004 2005 ¹ 2005 only 50% of Nkomati Nickel • During the period unde
Slide 12: Profit from operations before exceptional items
Profit from operations before exceptional items Results for six months ended 31 December 2005 – R million 963 885 900 700 568 625 445 498 500 300 141 170 16 73 100 100 53 30 31 72 36 Platinum Nickel Ferrous Corporate Total 1/7/2004 – 31/12/2004 (“comparable period”) and other 1/1/2005 – 30/6/2
Slide 13: Headline earnings from Assmang
Headline earnings from Assmang Results for six months ended 31 December 2005 – R million 350 333 300 250 200 151 167 150 100 50 7 13 0 50 44 Manganese Iron Ore Chrome 2004 2005 13
Slide 14: 2 x 2010 growth
2 x 2010 growth ARM is in the process of building new mines and further upgrading operations From To Status Two Rivers – PGMs – 220 000 PGM oz √ 210 000 PGM Modikwa – PGMs 350 000 PGM oz oz 16 500 t Ni Nkomati – PGMs 5 000 t Ni 100 000 PGM oz Dwarsrivier – chrome 0,65m t 1,5m t √ Nchwaning 3 – m
Slide 15: Project pipeline
Project pipeline Nchwaning Nkomati (manganese) Dwarsrivier (nickel and PGMs) (chrome) R400 m Two Rivers (PGMs) R2 bn R1,3 bn 2005 2006 2007 2008 2009 R3 bn Modikwa Bruce, King and Mokaning (PGMs) (iron ore) • Solid project pipeline • Large resource base in key commodity sectors • Longlife, high qua
Slide 16: ARM Ferrous - stake in Assmang
ARM Ferrous stake in Assmang • Revenue flat at R1.9 billion – increased volumes of iron ore and manganese alloys – manganese ore volumes significantly less than for the comparable period – weaker US$ prices for manganese alloys and ferrochrome (particularly when compared to first half of 2005 cale
Slide 17: ARM Ferrous
ARM Ferrous Assmang product volumes sales 2005 2004 ‘000 metric ‘000 metric % tons tons change Manganese ore * 573 766 (25%) Iron ore 2 600 2 541 2% Manganese alloys 130 105 24% Charge chrome 89 104 (14%) Chrome ore * 56 23 144% * Excluding intragroup sales 17
Slide 18: ARM Ferrous
ARM Ferrous • Exciting growth through new projects: – double production by 2010 – new 8.4 mtpa iron ore BKM project released – construction at Dwarsrivier Chrome Mine ahead of schedule – Nchwaning 3 manganese mine completed and fully operational • Volumes likely to be maintained over the next six mo
Slide 19: ARM Ferrous - BKM Iron Ore Mine
ARM Ferrous BKM Iron Ore Mine • The new 8.4 million tons per annum BKM iron ore mine, at a capital cost of R3.2 billion, has been approved by the Boards • Construction will commence in early 2006 • Project team established, all key project appointments made and process of issuing key longlead suppl
Slide 20: ARM Ferrous - Iron ore build-up
ARM Ferrous Iron ore buildup – Beeshoek and BKM 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2004/5 2007/8 2010/11 2013/14 2016/17 Beeshoek BKM 20
Slide 21: BKM - mine and plant layout
ARM Ferrous BKM – mine and plant layout Discard dump Wash, screen & beneficiation plant ROM blending stockpiles with stackers & reclaimers 21
Slide 22: ARM Platinum - Modikwa
ARM Platinum Modikwa • ARM jointly manages Modikwa with Anglo Platinum • Reported cash operating profits for the six months of R70 million (at 50% ownership) (2004: R8 million) • New mining method introduced to reach design capacity in next reporting period • Deepening of current infrastructure bein
Slide 23: ARM Platinum - Modikwa operational statistics
ARM Platinum Modikwa continuing to improve and will meet targets 6 months to 6 months to 100% basis December December Operational statistics 2005 2004 % change Tons milled m/t 1.29 1.14 13% Head grade (4E) g/t 4.15 4.35 (5%) Platinum in ounces 65 445 60 000 9% concentrate Cash cost R/t 373 373 Cas
Slide 24: ARM Platinum - Two Rivers Platinum Project
ARM Platinum Two Rivers Platinum Project • Trial mining commenced 18 months ago – Trial mining will provide 1 million tons of ore on surface by September 2006 • Total project capex of R1.3 billion fully funded • Attractive Pt : Pd ratio of 5 : 3 • Operating costs expected to be within lower quartile
Slide 25: Two Rivers - section view / access declines
ARM Platinum Two Rivers – section view / access declines • Declines 66% complete 25
Slide 26: PGM production attributable
ARM Platinum PGM production attributable 350 300 250 200 150 100 50 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Modikwa Two Rivers Nkomati 26
Slide 27: ARM Platinum - Nkomati Nickel Mine
ARM Platinum Nkomati Nickel Mine For the six months ended 100% basis December December % change Operational statistics 2005 2004 Cash operating profit R million 195 178 10% Tons milled (‘000) 182 184 (1%) Nickel head grade (% nickel) 1.97 1.94 2% Cash cost (net of by US$/lb. 0.87 1.32 34% products)
Slide 28: Nkomati Nickel Expansion Project
ARM Platinum Nkomati Nickel Expansion Project • Project approved to increase from a 30 000 tons per month to a 100 000 tons per month mine and concentrator • Mining the MMZ orebody – 47 000 tons per month from current underground infrastructure – 53 000 tons per month from new open pits • New 100 00
Slide 29: TEAL Exploration & Mining Inc.
TEAL Exploration & Mining Inc. • The capital raising in late 2005 raised US$33.3 million to fund ARM’s development and exploration assets in Africa – IPO concluded on 15 November 2005 and TEAL listed on TSX • Strategic portfolio of near production mineral projects – Four advanced projects in Zambia,
Slide 30: TEAL Exploration & Mining Inc.
TEAL Exploration & Mining Inc. 30
Slide 31: Financial information
Financial information AaRM African Rainbow Minerals
Slide 32: Summarised income statement
Summarised income statement Six months ended 31 December R’million 2005 2004 Revenue 2 348 2 391 Profit from operations before exceptional items 498 625 Income from investments 10 12 Finance costs (81) (98) Loss from associate (138) Exceptional items 116 284 Taxation (166) (285) Profit after tax 3
Slide 33: Summarised balance sheet
Summarised balance sheet 31 December 31 December 2005 2004 R’million ASSETS Noncurrent assets 11 043 8 206 Current assets 2 977 2 508 14 020 10 714 EQUITY AND LIABILITIES Capital and reserves 8 227 5 890 Minority interest 1 604 1 494 Total shareholders’ interest 9 831 7 384 Noncurrent liabilities
Slide 34: www.arm.co.za
Www.arm.CcoO.Za AaRM African Rainbow Minerals
African Rainbow Minerals — H1 2006 Earnings Presentation on 6ix