African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — FY2004 Earnings Presentation
27 slides from African Rainbow Minerals's earnings presentation, September 2004
Slide 1: Annual Results Presentation for the financial year ended 30 June 2004
Annual Results Presentation for the financial year ended 30 June 2004 Patrice Motsepe | Chairman and CEO André Wilkens | CE Jan Steenkamp | CE Frank Abbott | Financial Director
Slide 2: ARM is now focusing on maximising the value of its existing operations
“ARM is now focusing on maximising the value of its existing operations, in-house projects and current partnerships and on rolling out its growth strategy.”
Slide 3: It has been a year of fundamental change
“It has been a year of fundamental change. We have successfully concluded the ARMI/Avmin/Harmony agreement announced on 13 November 2003. We are now implementing the changes and improvements to create value for shareholders.”
Slide 4: Financial highlights
Financial highlights • Basic earnings for the year R1,4bn (2003: loss of R191m) • Basic earnings 1 062 cps (2003: loss of 170cps) • Strong 2nd half performance from Nkomati and ARMferrous • Profit from operations – January 2004 to June 2004: R409m (July 2003 to December 2003: loss of R5m) • Substant
Slide 5: Profit from operations
Profit from operations (R million) 462 500 404 400 300 236 200 100 0 -15 -100 -125 -200 -154 -300 Gold Platinum Nickel Ferrous Corporate Total • Benefited from diversification and commodity price cycle Gold – Avgold 10 months Platinum – Modikwa two months
Slide 6: Operational highlights
Operational highlights • Nkomati • Cash operating income up 33% year-on-year • Solid performance • Costs contained at 4,9% • Modikwa • Build-up is now at 70% of full design • Two Rivers • Trial mining confirms project assumptions • Record sales in all commodities • Significant increase in production
Slide 7: Corporate highlights
Corporate highlights • Group restructured to reflect new focus: gold, PGMs, nickel and ferrous metals • Management and Board reconstituted • Good progress with in-house projects • Head office restructuring during second half of year – number of employees reduced from 120 to 55 • Growth strategy form
Slide 8: Growth strategy
Growth strategy Maximise value in Operational excellence existing projects • low cost producer • strategic partners • strong organic growth • managing project risk Creating value for Increase shareholders Acquisitive growth competitiveness through “smart” deals • cross holding issues • Mining Charte
Slide 9: André Wilkens – CE
André Wilkens — CE feRM platinum FoxrM African Rainbow Minerals
Slide 10: Nkomati
Nkomati • Remaining 25% acquired from Anglo American • Solid performance Six months ended Year ended 30 June 31 Dec 30 June 30 June 2004 2003 2004 2003 Cash operating profit R million 170 176 346 260 Ton treated (‘000) 175 169 344 292 Grade (% nickel) 1,94 2,11 2,02 2,38 On mine cash cost – tons tre
Slide 11: Two Rivers
Two Rivers • Trial mining underway • Objective to move project risk from greenfields to brownfields • 60 000 ton development ore stockpile available • Stope grade (6E) of 4,7g/t is confirmed in trial mining area • All feasibility assumptions confirmed
Slide 12: Modikwa
Modikwa • Final build-up stage to be achieved by early-2005 Projected Q4 2004 production annualised Total* at full production Tons milled ('000) 2 500 2 880 Head grade 4E g/t 3,89 4,50 Pt production** oz 120 000 160 000 PGM production** oz 264 000 366 000 * 41,5% attributable to ARM ** ounces in con
Slide 13: Planned production levels
Planned production levels PGM ounces/year* 450 400 350 300 250 200 150 100 50 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Modikwa (41,5%) Nkomati + Expansion (100%) Two Rivers (55%) * Subject to project approval
Slide 14: Strengths
Strengths • Long life quality assets • Seven-day-work-cycle mines • Mature partnerships with Anglo Platinum and Impala Platinum • Unique PGM and Nickel combination • Project and operational skills • Well positioned to participate in further consolidation of PGM assets
Slide 15: Jan Steenkamp – CE
Jan Steenkamp — CE AeRM ferrous FoxrM African Rainbow Minerals
Slide 16: Divisional structure
Divisional structure Assore Limited 50,3% 46% Assmang Limited Manganese Chrome Iron Ore Nchwaning Mine – Manganese ore Dwarsrivier Mine – Chrome ore Beeshoek Mine Gloria Mine – Manganese ore Machadodorp Works – Ferro-Chrome Cato Ridge Works – Ferro-Manganese Cato Ridge Alloys – Ferro-Manganese (Join
Slide 17: Financial highlights
Financial highlights • Earnings up despite stronger rand • Cash flow strong on improved volumes Six months ended Year ended 30 June 31 Dec 30 June 30 June (R millions) 2004 2003 2004 2003 Turnover 1 972 1 333 3 305 2 904 Profit from operations 340 52 392 389 Headline earnings 210 4 214 204 Borrowing
Slide 18: Earnings before interest and tax
Earnings before interest and tax Chrome ore Charge chrome 1% 10% Iron ore 4% Manganese ore 47% Manganese alloys 38% Twelve months to 30 June 2004
Slide 19: Operational highlights
Operational highlights • Record sales volumes For the year ended 30 June 2004 2003 % ('000 metric tons) Iron ore 5 500 5 300 4 Manganese ore 1 400 1 200 16 Manganese alloys 218 197 11 Charge chrome 295 244 21
Slide 20: Strategy – ARMferrous: Iron ore, Manganese
Strategy – ARMferrous • Iron ore • Double the production capacity of Iron ore • Feasibility studies underway to investigate new 10 million ton mine – Bruce, King, Mokaning • Upgrade of Sishen-Saldanha line scheduled for 2009/10 • COEGA – future Manganese/Iron ore bulk terminal • Manganese • Secure l
Slide 21: Strategy – ARMferrous: Chrome, Ferro-Chrome
Strategy – ARMferrous • Chrome • Become the chrome ore supplier of choice • Supply chrome ore of acceptable quality at competitive prices • Ferro-Chrome • New furnace – full production • Total capacity of 300 000 tons per annum • Term supplier – not subjected to spot price movements • Metal Recovery
Slide 22: Frank Abbott – Financial Director
Frank Abbott – Financial Director
Slide 23: Changes to group structure
Changes to group structure • Disposals • Chambishi – 30 June 2003 • Avgold – 30 April 2004 • Acquisitions • Remaining 25% of Nkomati – 31 January 2004 – 100% Division • Harmony – 30 April 2004 – Equity Accounted • ARM Platinum 30 April 2004 - Consolidated
Slide 24: Income statement
Income statement For the year ended 30 June 2004 2003 (R millions) Revenue 4 529 4 896 Profit from operations* 404 521 Loss from associates (67) - Exceptional items 1 419 (388) Basic earnings 1 360 (191) * Profit from operations H2: R409m (H1: loss of R5m)
Slide 25: Earnings reconciliation
Earnings reconciliation For the year ended 30 June 2004 2003 (R millions) Basic earnings 1 360 (191) Profit - Avgold (1 342) - - Assore (140) - - Other / Tax 169 388 Headline earnings 47 197 Cents per share Basic earnings per share 1 062 (170) Profit - Avgold (1 047) - - Assore (109) - - Other / Tax
Slide 26: Balance sheet
Balance sheet For the year ended 30 June 2004 2003 (R millions) Assets Non-current assets 9 321 5 064 Current assets 2 404 2 097 Total assets 11 725 7 161 Equity and liabilities Total shareholders’ equity 8 206 4 962 Non-current liabilities 1 874 775 Current liabilities 1 645 1 424 Total equity and
Slide 27: Questions?
African Rainbow Minerals Questions? www.arm.co.Za
African Rainbow Minerals — FY2004 Earnings Presentation on 6ix