Slide 1: Interim Results Presentation for the six months ended 30 June 2010
Interim Results Presentation for the six months ended 30 June 2010
Slide 2: Slide 2
Slide 3: Legal Notice / Disclaimer
Interim Results Presentation for the six months ended 30 June 2010 Notes: 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. Informatio
Slide 4: Agenda
Agenda 1. Key highlights 2. Safety & operational review 3. Market dynamics 4. Financial review 5. Recent developments 6. Outlook 7. Annexures 3 Notes: 1. Key highlights Notes: Interim Results Presentation 2 for the six months ended 30 June 2010
Slide 5: Strong safety, operational and financial performance in first half of 2010
Strong safety, operational and financial performance in the first half of 2010 • Basic EPS of 8 cents - outstanding turnaround from global financial crisis in 2009 • Ferrochrome prices • Sales and production volumes • Reduction in Lost Time Injury Frequency Rate 5 Notes: 2. Safety & operational revi
Slide 6: Safety – a very good performance; cost saving initiatives continue
Safety – a very good performance • No fatalities in this period • Substantial improvement in LTIFR* (down by 43% from 2009 year to H1 2010) • New safety initiatives introduced – the SLAM and SEEP initiatives Stop, Look, Assess and Manage Systems, Environment, Equipment and People * Lost Time Injury
Slide 7: Global stainless steel production breakdown
3. Market dynamics Notes: Global stainless steel production breakdown Global stainless steel production was up 38% from first half of 2009 and 11% from second half of 2009 Change Change H1 2009 H2 2009 H1 2010 H1 2010 / H1 2010 / in ‘000t in ‘000t in ‘000t H1 2009 H2 2009 in % in % NAFTA 702 916 1,1
Slide 8: Stainless steel product mix and ferrochrome market overview H1 2010
Stainless steel product mix – what we see going forward into remainder of 2010 / 2011 25% 17% 58% Source: Heinz Pariser / Merafe Resources / July 2010 11 Notes: Overview of the ferrochrome market in H1 2010 • December 2009 – China fully stocked, pull back in Chinese demand, January Chinese New Year
Slide 9: Global ferrochrome production and capacity utilisation
Global ferrochrome production breakdown – 2010 expected to be up 29% year on year 2009 2010 Change 10/09 in ‘000t in ‘000t in % Other 380 691 +82 Russia, Turkey, Albania 443 522 +18 India 670 955 +43 Kazakhstan 982 1,076 +10 South Africa 2,179 3,219 +48 China 1,510 1,460 (3) Total 6,164 7,923 +29 Ch
Slide 10: Global ferrochrome demand
Global ferrochrome demand – ferrochrome demand is up 13% year on year & expected to exceed production in both 2010 & 2011 2009 2010 Change 09/10 in ‘000t in ‘000t in % NAFTA 229 463 +102 European Union 1,242 1,512 +22 Japan 459 674 +47 S.Korea/Taiwan/India 1,245 1,264 +2 Others 633 723 +14 China 3,4
Slide 11: Profits recovered from the global economic crisis in 2009
Profits recovered from the global economic crisis in 2009 • Revenue up by 45% period on period • Profit for the six months to 30 June 2010 of R189 m equating to basic earnings per share of 8 cents compared to a basic loss per share of 3 cents in the comparative period • Ferrochrome inventory levels
Slide 12: Reconciliation of operating profit to net profit; Strong Balance Sheet
Reconciliation of operating profit to net profit for the period 19 Notes: Strong Balance Sheet As at As at 30 June 2010 31 December 2009 Reviewed R’000 Audited R’000 Total non-current assets 2,060,467 1,949,464 Property, plant and equipment 2,060,467 1,949,464 Total current assets 1,579,948 1,454,43
Slide 13: Balance Sheet (continued)
Balance Sheet (continued) As at As at 30 June 2010 31 December 2009 Audited R’000 Audited R’000 Total non-current liabilities 801,911 782,153 Loans and borrowings 313,116 363,626 Provision for closure and restoration costs 36,768 37,347 Deferred tax liability 452,027 381,180 Total current liabilitie
Slide 14: EBITDA margins and return on capital recover from 2009 downturn
EBITDA margins and return on capital recover from 2009 downturn EBITDA margin average for last 4.5 years is 28% %( $( #( "( !( ( ( ( ( ( ( " # $ % ( * EBITDA / Revenue ** Profit/loss after tax / (Share Capital & Share Premium) *** Relates to average over the last 4.5 years 23 Notes: 5. Recent develo
Slide 15: Project Tswelopele - pelletising and sintering plant at Rustenburg
Project Tswelopele - new 600 000 tonnes per annum pelletising and sintering plant to be constructed at Rustenburg smelter • Initiated after the success of a similar plant, Bokamoso that was commissioned at the Wonderkop smelter in 2007 • The Xstrata-Merafe Chrome Venture will benefit from the follow
Slide 16: Complete ore agglomeration solution; board and management changes
Complete ore agglomeration solution Wonderkop Lion plant plant Boshoek plant Lydenburg plant Rustenburg plant 27 Notes: Changes to the board and management team Changes to the board of directors • Mr Steve Phiri resigned as Chief Executive Officer (CEO) with effect from 31 March 2010 and will be con
Slide 17: Outlook; Stainless steel outlook
6. Outlook Notes: Stainless steel outlook Q3 2010 stainless steel production will be impacted by • Lower nickel prices nickel alloy surcharge distributors / service centres adopt a “wait and see approach” • Weakening euro • Traditionally seasonal softening in third quarter northern hemisphere summer
Slide 18: Ferrochrome outlook; Q&A
Ferrochrome outlook • SA cut production in response to higher winter electricity tariffs • Ferrochrome inventory levels remain low at 10-12 weeks • Visibility still poor • Expected recovery in demand during Q4 2010 through to 2011 due to continued global economic growth coupled with the lack of any
Slide 19: Annexures; Global end use of stainless steel
7. Annexures Notes: Global end use of stainless steel – positive 5.3% average growth Source: Heinz Pariser / Merafe Resources / July 2010 34 Notes: Interim Results Presentation for the six months ended 30 June 2010 17
Slide 20: Global stainless steel demand; Venture's geographical sales
Global stainless steel demand - dominated by China and Europe with India growing Source: Heinz Pariser / Merafe Resources / July 2010 35 Notes: Venture‘s geographical sales fairly match geographical stainless steel production Global Stainless Steel Venture's sales of ferrochrome Production per regio
Slide 21: Reviewed Interim Results for the six months ended 30 June 2010
R EVI E WE D I NT E R I M R E S U LTS f o r th e s ix mo nt hs e nd e d 3 0 J u ne 2010 Basic EPS of 8 cents – Ferrochrome Sales and production Reduction in an outstanding turnaround prices volumes LTIFR equating to profit of R189 million MERAFE RESOURCES LIMITED (Incorporated in the Republic of Sou
Slide 22: Market review
Market review As stainless steel melt production increased, restocking of stainless steel commenced in the first half of the year, leading to a recovery in demand for ferrochrome. 15,6 million tonnes of stainless steel melt was produced in the first half of 2010, 38% higher than in the comparable pe
Slide 23: Group condensed statement of comprehensive income and financial position
GROUP CONDENSED STATEMENT OF COMPREHENSIVE INCOME Six months ended Six months ended 30 June 2010 30 June 2009 Reviewed Reviewed R’000 R’000 Revenue 1 191 272 824 081 EBITDA 322 379 (74 737) Depreciation (46 023) (50 507) Net financing costs (12 727) (1 145) Profit/(loss) before taxation 263 629 (126
Slide 24: Group condensed statements of changes in equity and cash flows
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY Six months ended Six months ended 30 June 2010 30 June 2009 Reviewed Reviewed R’000 R’000 Share capital 24 605 24 593 Balance at beginning of the period 24 593 24 593 Share options exercised 12 – Share premium 1 244 872 1 244 072 Balance at beginning of
Slide 25: Notes:
Notes:
Slide 26: Notes:
Notes:
Slide 27: Ance.motiv
Ance.motiv
Slide 28: Merafe Resources
M MERAFE RESOURCES