Gem Diamonds Limited · LSE:GEMD
Gem Diamonds — H1 2016 Earnings Presentation
25 slides from Gem Diamonds's earnings presentation, Aug 17, 2016
Slide 1: Half Year 2016 Results
Half Year 2016 Results 17 August 2016
Slide 2: Disclaimer
Disclaimer 2 The following presentations are confidential and are being made only to, and are No statement in this presentation is intended as a profit forecast or profit estimate only directed at, persons to whom such presentations may lawfully be and no statement in the presentation should be inte
Slide 3: Agenda
Agenda 3 Half Year 2016 Results highlights Diamond market Operational performance HSSE Letšeng Ghaghoo Sales, marketing and manufacturing Group financial performance Group outlook
Slide 4: Half Year 2016 Results Highlights
Half Year 2016 Results Highlights 4 REVENUE EBITDA and EBITDA margin US$109m US$44m 200 80 42% 44% 50% 39% 40% 149 34% 150 131 60 40% 122 118 63 109 58 30% 100 40 46 41 44 20% 50 20 10% 0% H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 BASIC EPS (pre exceptional item
Slide 5: Diamond Market
Diamond Market Clifford Elphick Chief Executive Officer
Slide 6: Diamond Market
Diamond Market 6 Diamond Price Indices 1.80 Market remains cautious High polished inventory levels and liquidity 1.60 concerns continue to create challenges for the diamond market 1.40 Medium to long term demand/supply fundamentals favourable 1.20 Annual seasonal slow down in rough 1.00 diam
Slide 7: Operational Performance
Operational Performance Johnny Velloza Chief Operating Officer
Slide 8: Group HSSE Performance
Group HSSE Performance 8 LTIFR Zero fatalities 0.30 Two Lost Time Injuries 0.20 Group Lost Time Injury Frequency Rate 0.13 0.15 (LTIFR) 0.15 Group All Injury Frequency Rate (AIFR) - 2.61 2012 2013 2014 2015 H1 2016 Zero major or significant stakeholder or AIFR environmental incidents 4.45
Slide 9: Letšeng Operational Overview
Letšeng Operational Overview
Slide 10: Letšeng Operational Overview
Letšeng Operational Overview 10 Waste mined (tonnes millions) Strong first half operational performance 15.3 Waste mined - in line with optimised mine plan 10.0 9.9 11.4 12.6 Satellite pipe contribution – 1.0 million tonnes (mt) with Full Year guidance increase to 1.7 – 1.8 mt from 1.65 mt H1 20
Slide 11: Letšeng Operational Overview
Letšeng Operational Overview 11 Heavy snow falls and extreme winds impacted Letšeng in late July • Government owned power lines damaged • Access to mine restricted • Standby generators operated plants, albeit at reduced rates Current status • Power lines repaired and external power supply fully rest
Slide 12: Ghaghoo Operational Overview
Ghaghoo Operational Overview
Slide 13: Ghaghoo Operational Overview
Ghaghoo Operational Overview 13 Downsizing progressed • Production downsized to 300 000 tonnes per annum • Sink hole buffer zone successfully created • Retrenchments undertaken Development progressed well • Total development metres – 1 168 metres • Development of all 13 VKSE tunnels on Level 1 compl
Slide 14: Sales, Marketing and Manufacturing
Sales, Marketing and Manufacturing Clifford Elphick Chief Executive Officer
Slide 15: Diamond Pricing
Diamond Pricing 15 Letšeng Letšeng 6 and 12 Month Rolling $/carat Prices achieved for Letšeng's high value large 6 month 12 month Type II diamonds have remained resilient in H1 2016 3 000 Prices achieved H1 2016 - US$ 1 899* per carat 2 500 2 113 12 month rolling average - US$ 2 113* per carat
Slide 16: Sales, Marketing and Manufacturing
Sales, Marketing and Manufacturing 16 Sales and marketing 357ct white diamond which was sold for US$ 19.3 million Flexible sales strategy 20 rough diamonds achieved a value of greater than US$ 1.0 million each 11.8 carat pink diamond (pictured) achieved the third 11.8 carat pink diamond from L
Slide 17: Group Financial Performance
Group Financial Performance Michael Michael Chief Financial Officer
Slide 18: Group Financial Performance
Group Financial Performance 18 H1 2016 pre exceptional Exceptional US$ millions item item H1 2016 H1 2015 % Variance Revenue 109.1 - 109.1 118.0 (8%) Royalty and selling costs (9.8) - (9.8) (9.7) Cost of sales (48.7) - (48.7) (56.1) Corporate expenses (7.1) - (7.1) (6.1) Underlying EBITDA 43.5 43.5
Slide 19: Financial Performance – Letšeng Mining Operations
Financial Performance – Letšeng Mining Operations 19 Sales H1 2016 H1 2015 % Variance Average price per carat (US$) 1 899 2 264 (16%) Carats sold 55 948 46 961 19% US$ millions H1 2016 H1 2015 % Variance Revenue 106.2 106.3 - EBITDA 49.5 41.4 20% EBITDA margin 47% 39% Unit costs (local currency - Ma
Slide 20: Group Cash and Funding
Group Cash and Funding 20 Cash • Dividend of US$ 11.8 million paid in June 2016 • Group cash of US$ 66.5 million (US$ 53.2 million attributable to Gem Diamonds) • Net cash of US$ 37.6 million after debt of US$ 28.9 million Funding • Total Group facilities of US$ 52.1 million available for draw down
Slide 21: Group Outlook
Group Outlook Clifford Elphick Chief Executive Officer
Slide 22: Group Outlook
Group Outlook 22 Dividend Policy remains unchanged Gem Diamonds has a strong balance sheet – net cash position Ghaghoo remains an important asset for the Group Long term fundamentals for diamonds remain strong Letšeng Ghaghoo • Commence construction of mining • Downsizing optimisation workshop and s
Slide 23: Thank you
Thank you
Slide 24: Annexure - Gem Diamonds capital structure
Annexure 1 - Gem Diamonds capital structure 24 Gem Diamonds share price performance as at since 1 January 2016 Major shareholders 15 August 2015 170 2 500 Share Price Volume Graff Diamonds International Ltd 15.11% 160 150 2 000 Lansdowne Partners Ltd 14.98% 140 1 500 130 Gem Diamonds Holdings Ltd
Slide 25: Annexure - Letšeng 2016 Guidance
Annexure 2 - Letšeng 2016 Guidance 25 FY 2016 FY 2016 Revised guidance Original guidance Waste tonnes mined (Mt) 29 – 32 29 - 32 Ore treated (Mt) 6.6 – 6.8 6.8 – 7.0 Satellite ore contribution (Mt) 1.7 - 1.8 1.65 Carats recovered (Kct) 107 – 109 107 - 109 Carats sold (Kct) 107 – 110 107 – 110 Direct