Valterra Platinum Limited · JSE:VAL
Valterra Platinum — H1 2023 Earnings Presentation
62 slides from Valterra Platinum's earnings presentation, Jul 24, 2023
Slide 1: Interim results presentation, 24 July 2023
[OFFICIAL] 24 July 2023 Mogalakwena Central Pit
Slide 2: Disclaimer
[OFFICIAL] Disclaimer that could cause Anglo American Platinum’s actual results, Anglo American Platinum included in this presentation is sourced performance or achievements to differ materially from those in from publicly available third party sources. This presentation has been prepared by Anglo A
Slide 3: Agenda
[OFFICIAL] Overview and operating context ESG performance Operational performance Financial performance Market performance Strategic performance Q&A Amandelbult headgear 3 Rope Shovel at Mogalakwena
Slide 4: Overview and operating context
[OFFICIAL] Overview and operating context 4 Water sampling at Mototolo / Der Brochen Casting of Palladium ingots at PMR
Slide 5: Safety, operational and financial highlights
[OFFICIAL] Overview and operating context Fatalities Zero Safety TRCFR¹ 1.58 M&C 1.85 PGM Moz Operational Refined 1.70 PGM Moz EBITDA R13bn Financial Mining margin 42% Effluent and Sodium Plant at RBMR
Slide 6: Operating context and mitigations
[OFFICIAL] Overview and operating context Macro-economic Socio-economic Energy security Uncertain global growth Infrastructure security Load curtailment management Context Interest rate and fx uncertainties Slow economic growth Escalating costs High inflationary environment Crime and corruption Shor
Slide 7: Our strategy and our culture work together to achieve our purpose
[OFFICIAL] Overview and operating context Our strategy and our culture work together to achieve our purpose. Four priorities for strategy delivery: A leader in ESG Go beyond resilience, thrive Maximise value from Stimulate new markets and through change our core leverage new capabilities We collabor
Slide 8: Value chain and operations overview
[OFFICIAL] Overview and operating context Mining Concentrating Smelting Refining Marketing & Market development Conventional Open pit Concentrators Smelters Magnetic Concentrator Plant (MCP) Amandelbult Mogalakwena Polokwane 26 years 75 years Waterval Cr Mortimer Unki Ni Cu Co Sodium Cobalt Base Met
Slide 9: Capital allocation considerations
[OFFICIAL] Overview and operating context Capital allocation considerations 1. Strong balance sheet to be maintained through cycles 2. Sustaining capital to ensure safe, stable and capable operations 3. Base dividend policy of 40% 4. Value-driven investments, ensuring assets operate in first half of
Slide 10: ESG performance
[OFFICIAL] ESG performance Water sampling at Mototolo / Der Brochen 10 Personal air quality monitoring at Waterval Smelter
Slide 11: Zero fatalities, lower injury frequency rates, new milestones
[OFFICIAL] ESG performance Zero fatalities Lower injury frequency rates¹ New milestones reached -85% Mogalakwena 10,63 11 years fatality free Amandelbult >2 years fatality free 4,52 Unki 1 1 12 years fatality free 2,34 1,58 Mototolo 0 0 12 years fatality free 2020 2021 2022 H1 2023 2012 2021 2022 H1
Slide 12: Energy security and community water supply
[OFFICIAL] ESG performance Energy security Community water supply and sanitation NECOM² support: Joint working platform between 15 water security and supply projects across government, Eskom and business operations Embedded solar projects underway Olifants Management Model ‘source to tap’ project un
Slide 13: Operational performance
[OFFICIAL] Operational performance Water sampling at Mototolo / Der Brochen 13 Drilling and charging in the North Pit at Mogalakwena
Slide 14: Mogalakwena, Amandelbult, Mototolo and Unki performance
[OFFICIAL] Operational performance F Mogalakwena Amandelbult 461 koz PGM (-10%) 299 koz PGM (-13%) 49% EBITDA margin 30% EBITDA margin Mototolo Unki 146 koz PGM (+2%) 121 koz PGM (+2%) 45% EBITDA margin 31% EBITDA margin 14 14 Pit laser leveling at the North Pit at Mogalakwena
Slide 15: Mogalakwena YTD performance and grade update
[OFFICIAL] Operational performance YTD performance Grade update Var % • A new One Model approach was introduced H1 2023 H1 2022 in Q4 2022 • Confident in reconciliation to actuals for H1 Tonnes milled Mt 6.8 +1% • Guidance remains Mogalakwena Built-up head grade is expected to be between A world cla
Slide 16: Future of Mogalakwena
[OFFICIAL] Operational performance Blinkwater TSF Proposed Solar PV Plant Future of Mogalakwena Motlhotlo community Mogalakwena North Pit Vaalkop TSF Mogalakwena Central Pit 1. Resource development plan Mogalakwena South Pit North Concentrator Proposed M3C 2. Operational efficiencies (3rd Concentrat
Slide 17: Amandelbult YTD performance and modernisation journey
[OFFICIAL] Operational performance YTD performance Modernisation journey Fatalities TRCFR¹ Var % 3 H1 2023 H1 2022 4,7 -34% 2 3,8 4,1 3,2 3,4 3,1 Tonnes milled Mt 2.1 -24% 1 2,1 Mogalakwena 2017 2018 2019 2020 2021 2022 H1 2017 2018 2019 2020 2021 2022 H1 2023 2023 A world class polymetallic ore Gra
Slide 18: Future of Amandelbult
[OFFICIAL] Operational performance Future of Amandelbult Illustrative scale of LP and XLP equipment⁴ 1. Embedding modernised mining and cycle elements 2. Future of Amandelbult studies 3. Middelaagte PFS-A and Tumela 1 Sub Shaft PFS-A 18
Slide 19: Refined production, smelter utilisation, long term stability
[OFFICIAL] Operational performance Refined production Smelters % utilisation Long term stability 1,959 63 63 1,872 1,700 48 Waterval Smelter digital stress zone model The life and stability of our processing assets must match the requirements of our life of mines The right work is happening to creat
Slide 20: Proactively managing the value chain; load curtailment impact
[OFFICIAL] Operational performance Proactively managing the value chain Load curtailment impact Mining operations have not been Mining Concentrating Smelting Refining impacted Collaboration with Eskom to ensure stability Conventional Open pit Concentrators Smelters Magnetic Concentrator Agility in o
Slide 21: Financial performance
[OFFICIAL] Finance performance Water sampling at Mototolo / Der Brochen 21 Der Brochen project at Mototolo
Slide 22: Financial performance highlights
[OFFICIAL] Financial performance Dollar PGM basket price EBITDA Mining margin $1,885 R13bn 42% ROCE Net cash H1 2023 dividend declared 30% R24bn R3bn R12 per share/40% pay-out 22
Slide 23: PGM rand basket price and EBITDA
[OFFICIAL] Financial performance EBITDA (Rand billion) PGM rand basket price 63 ~R34,800/ PGM ounce 15% down on H1 2022 -69% 43 Sales volumes (20) 1.8 million ounces - in line with refined production (8) 12 13 13 (2) 7 Mining EBITDA H1 H1 H1 H1 H1 Price/fx Sales Costs H1 2018 2019 2020 2021 2022 vol
Slide 24: Unit cost and guidance
[OFFICIAL] Financial performance Unit cost⁵ Impacted by R/ PGM oz Lower mined volume Eskom load curtailment +13% 139 Weaker rand/dollar exchange rate 414 390 16,056 1,077 14,604 Guidance Inflation stabilising Cost reduction programs underway 18,076 Confirming guidance at upper end of: R16,800 to R17
Slide 25: Trade working capital movements
[OFFICIAL] Financial performance Trade working capital movements WIP release in 2023 / 2024 R billion 9 1 4 10 100koz 4 2022 Polokwane smelter impact (8) 3 1 Load curtailment impact (7) Dec 2022 Inventory POC Creditor Customer H1 2023 ~66koz deferred prepayment Price & FX Volumes & other 25
Slide 26: Total capital and 2023 half year capital focus
[OFFICIAL] Financial performance Total Capital (Rand billion) 2023 Half year capital focus ~22.0 Stay in Business ~11.0 ~3.4 ~0.8 ~1.0 Capital maintenance - furnace rebuilds ~3.5 Mogalakwena HME ~13.8 ~2.5 Tailings Facilities – achieving GISTM Compliance ~2.3 ~2.8 ~11.0 ~2.8 Life extension 8.2 1.1 0
Slide 27: H1 2023 HEPS and dividend per share
[OFFICIAL] Financial performance H1 2023 HEPS and dividend per share Cash generated from operations Dividend pay-out ratio R17bn 40% 40% pay- 30 out ratio Dividend per share H1 2023 dividend declared 12 R12 per share R3bn HEPS Dividend per share 27
Slide 28: Market performance
[OFFICIAL] Market performance Water sampling at Mototolo / Der Brochen 28 H2 Moves fleet in Berlin
Slide 29: PGM basket price normalising; rhodium decline
[OFFICIAL] Market performance PGM prill split in US$ PGM basket price⁶ PGM basket price normalising 4.000 3.500 Rhodium decline means now more balanced with platinum 3.000 and palladium 2.500 Minor PGMs continuing to 2.000 make sizeable contributions 1.500 1.000 500 0 2018 2019 2020 2021 2022 2023 I
Slide 30: ICE vehicle production still rising
[OFFICIAL] Market performance ICE vehicle production still rising⁷ Room for car production to surprise on upside⁸ Global light vehicle production Global car production v global GDP ($bn) 100 ICE vehicles BEVs 120 Millions of vehicles 90 Global auto production, millions 100 80 70 ICE +3%, ahead 80 of
Slide 31: Platinum supply concerns and expected deficits
[OFFICIAL] Market performance Price swings on supply concerns, but rising automotive demand means deficits expected Investors react to supply risks Rising automotive platinum Platinum to be in deficit through ETFs⁹ demand on substitution¹⁰ (000 ounces)¹¹ 200 3,500 1200 1,080 150 1000 3,000 800 740 1
Slide 32: Palladium prices, flows and surplus outlook
[OFFICIAL] Market performance Price falls on recovering flows and speculative shorts. Market still in deficit but surpluses expected Imports from Russia recover¹² Speculators short palladium in Deficit again but surpluses record size¹³ expected (000 ounces)¹⁴ 1.2 3.5 800 Hong Kong Russia invasion /C
Slide 33: Rhodium glass industry sales and emissions testing
[OFFICIAL] Market performance Glass industry sales knock price and cause surplus but robust automotive demand remains modest Glass industry frees up surplus Shift to real-world emissions testing Rhodium surpluses to remain rhodium stock, begins selling¹⁵ (RDE) to support rhodium auto modest (000 oun
Slide 34: PGMs used in many hydrogen processes
[OFFICIAL] Market performance PGMs used, or potentially used, in many hydrogen processes¹⁸ Production, conversion Transportation, storage End-use • Green hydrogen • Liquid organic hydrogen carriers • Fuel cells • Blue hydrogen • Green / Synthetic carriers • Hydrogen / NH3-gas turbines • Electrochemi
Slide 35: Strategic performance
[OFFICIAL] Mogs operation picture Strategic performance Water sampling at Mototolo / Der Brochen 35 Drill and blast tunnel at the Mogalakwena Twin Exploration Decline
Slide 36: 2030 metrics: target and achieved
[OFFICIAL] Strategic performance Metrics 2030 Target Achieved Mechanised and modernised operations 100% 88% % of own-mine PGM production Cost curve position All mines in H1 2 out of 4 (out of 4 mines) Mining EBITDA margin ~35 - 40% 42% % ROCE ~25 - 35% 30% % 5 jobs off site Community jobs 6 jobs for
Slide 37: Thank you
[OFFICIAL] Thank you Water sampling at Mototolo / Der Brochen 37 Civil work at the Mototolo / Der Brochen project
Slide 38: Q&A
[OFFICIAL] Q&A 38 Watering for dust control at the Central Pit at Mogalakwena
Slide 39: Appendix
[OFFICIAL] Appendix 39 Drill rigs at Mogalakwena
Slide 40: Technology and operational efficiencies (P101)
[OFFICIAL] Appendix Communities – creating trusting Resource development plan – relationships and valued optimize resource partnerships development including underground opportunities Integrated efficiencies (P101) Technology & Operational Technology & innovation – Operational efficiencies – innovat
Slide 41: ESG ratings and accolades
Appendix Latest rating Previous rating Rating scale Rating agency 17.5 (low risk) 20.1 (low risk) (Sep 22) B- (Good) B- (Good) (Jun 22) A (Average) A(Average) (Mar 23) 4.5 4.5 (Jun23) Accolades 2023 Top Rated ESG Performer Top rated - Best Disclosure of ESG metrics (Investor Relations award) Sustain
Slide 42: Tailings storage facilities and dam construction
[OFFICIAL] Appendix Tailings storage facilities (TSF) Tailings dam construction There are six fundamental types of tailings dams using different methods Upstream Downstream Centreline Other A TSF is a structure specifically engineered and tailored to deal with the physical nature of the tailings mat
Slide 43: Technical standard and GISTM tailings management
[OFFICIAL] Appendix Our Technical standard Global Industry Standards Tailings Management (GISTM) We continue to work towards aligning with GISTM GISTM conformance protocols – six areas, 77 requirements using 219 criteria VI. Public disclosure & access to I. Affected communities Group technical speci
Slide 44: Green transition and new PGM demand applications
[OFFICIAL] Appendix Focus Applications PGM’s used Potential incremental ounces to the market Pt ~2 to ~5 Mn oz p.a. Green Green H2 &Mobility Pt Pd Ir Transition If FCEV captures 5-10% market share of global car sales & Battery & Storage Pt Pd Pd-using BEV captures another 25-50% Carbon-neutral feeds
Slide 45: Capital allocation: cash from operations and uses
[OFFICIAL] Appendix R17bn Cash from operations before taxes R7bn 2023 sustaining capital R3bn 2023 H1 dividend declared Portfolio upgrade Additional shareholder returns Future project options including ESG R1bn 2023 expansion/breakthrough capital 45
Slide 46: Contribution to stakeholders and society
[OFFICIAL] Appendix Taxes and royalties Local procurement Increasing contribution to stakeholders and society R3bn R17bn Rand billion 71 49 46 Salaries and wages Social investment 33 22 R9bn R190m H1 2019 H1 2020 H1 2021 H1 2022 H1 2023 Capital investment Dividends Taxes & royalties Capital investme
Slide 47: Production guidance 2023E-2025E
[OFFICIAL] Appendix Unit 2023E 2024E 2025E Metal-in-concentrate (M&C) Total PGMs (m ounces) 3.6 – 4.0 3.6 – 4.0 3.5 – 3.9 Platinum (m ounces) 1.65 – 1.85 1.65 – 1.85 1.6 -1.8 Palladium (m ounces) 1.15 – 1.25 1.15 – 1.25 1.1 – 1.2 Other PGMs and gold (m ounces) 0.8 – 0.9 0.8 – 0.9 0.8 -0.9 Refined pr
Slide 48: Capital expenditure 2021-2025E
[OFFICIAL] 22 23 4 4 Life extension 17 18 3 3 Growth / breakthrough capital 1 3 14 3 2 Capitalised waste stripping 0 4 5 3 4 5 Stay-in-business 3 11 11 10 9 7 2021 2022 2023E 2024E 2025E Capital expenditure 2021 2022 2023E 2024E 2025E Total Sustaining capital (R billion) 10.8 14.1 ~18.6 ~20.0 ~16.0
Slide 49: Production, unit cost and capex guidance
[OFFICIAL] Appendix Unit 2023E 2024E 2025E Metal-in-concentrate (M&C) Total PGMs (m ounces) 3.6 – 4.0 3.6 – 4.0 3.5 – 3.9 Platinum (m ounces) 1.65 – 1.85 1.65 – 1.85 1.6 -1.8 Palladium (m ounces) 1.15 – 1.25 1.15 – 1.25 1.1 – 1.2 Other PGMs and gold (m ounces) 0.8 – 0.9 0.8 – 0.9 0.8 -0.9 Refined pr
Slide 50: Sensitivity analysis 2023
[OFFICIAL] Sensitivity analysis - 2023 30 June 2023 spot Average realised EBITDA Impact of 10% change in price/FX Commodity / unit Platinum ($/oz) 906 1,008 2,069 Palladium ($/oz) 1,230 1,532 2,772 Rhodium ($/oz) 4,700 9,034 2,483 Gold ($/oz) 1,915 1,966 229 Nickel ($/ton) 20,458 23,876 615 Copper (
Slide 51: Net cash movement by asset
[OFFICIAL] Appendix Cash Effect of Net cash generated SIB & Economi Deferred Exchange Net cash 31 Project Tax Dividends Assets from waste c free consideratio rate Other 30 June December capital * paid paid operations capital cash flow n changes 2023 2022 on cash 7,074 Mogalakwena (4,129) 2,945 (763)
Slide 52: Cost base 2023 and 2022
[OFFICIAL] Appendix Sundry 2023 Cost base (Rbn) Volume % PGMs (koz) Labour Contractors Utilities Consumables Maintenance expenses Opencast Mining 4.8 41% 15% 5% 2% 35% 32% 11% 469 Conventional 4.9 32% 37% 9% 7% 20% 18% 9% Mining 392 Mechanised 5.3 27% 53% 4% 8% 15% 9% 11% Mining 314 Concentrating 4.
Slide 53: Basket price per PGM ounce reconciliation
[OFFICIAL] Appendix Joint Company Mogalakwena Amandelbult Mototolo Unki Mining POC/Other operations (ex-trading) Net sales revenue (US$ million) from platinum 188 154 60 49 77 528 292 820 from palladium 349 119 63 69 83 683 237 920 from rhodium 127 242 88 40 119 616 349 965 from other metals 228 156
Slide 54: All-in sustaining costs by operation
[OFFICIAL] Appendix Mining excl Mogalakwena Amandelbult Mototolo Unki Modikwa Kroondal other Costs (US$ million) Cash operating costs 444 328 121 125 75 94 1,187 Other costs and marketing 72 110 16 41 7 5 251 Capitalised waste costs 100 - - - - - 100 Stay-in-business capital 125 33 15 18 16 8 215 a
Slide 55: Net revenue, cash operating costs and other costs
[OFFICIAL] Appendix Attributable joint Exit and Company – (R million) Mogalakwena Amandelbult Mototolo Unki Mined POC & toll Trading Other Company operations C&M mines (ex trading) share a = (b x Net revenue c)/1000 + d 16,360 12,312 4,533 3,956 5,960 - 43,121 21,103 453 - 64,677 64,224 b Basket pri
Slide 56: Platinum, palladium and rhodium demand by sector
[OFFICIAL] Appendix Platinum Palladium Rhodium Jewellery 1% Jewellery Investment Industrial Fuel cells 1% 1% 1% 9% Industrial Industrial Automotive 15% 35% 40% 7m 10m 1m ounce market ounce market ounce market Automotive Jewellery Automotive 85% 20% 90% 56
Slide 57: Rising PGM loadings under emissions standards
[OFFICIAL] Appendix Rising PGM loadings – example Euro gasoline LDV²³ Euro emissions standards 24 5 5b 6b 6c 6d 7 (estimate) Loading 2010 2015 2020 2025 2030 57
Slide 58: Autocatalyst recycling volumes set to increase
[OFFICIAL] Appendix Projected autocatalyst recycling volume24 Autocatalyst recycling volumes set to increase as (000 ounces per annum) scrapped cars have higher loadings 6,000 Well-established trends 5,000 expected to continue - mature autocat recycling 4,000 market 3,000 Palladium volumes will grow
Slide 59: Light-duty emissions standards by region
[OFFICIAL] Appendix N America Tier 2 Tier 3 phase in Tier 3 Tier 4 EURO 5b EURO 6b EURO 6c EURO 6d EURO 7 Europe EURO 5 CHINA 4 CHINA 5 CHINA 6b + RDE CHINA 7 China (gas) CHINA 3 CHINA 6a Japan JAPAN 2009 JAPAN 2016 WHTC India BHARAT III BHARAT IV BHARAT V BHARAT VI + RDE 2010 2012 2014 2016 2018 20
Slide 60: Heavy-duty emissions standards by region
[OFFICIAL] Appendix N CARB 2024 CARB 2027 America US 2010 EPA 2027 Europe EURO V EURO VI EURO VII China CHINA III CHINA IV CHINA V CHINA VIa CHINA VIb CHINA VII Japan JAPAN 2009 JAPAN 2016 WHTC India BS III BS IV BS VI 2010 1900 2012 1900 2014 1900 2016 1900 2018 1900 2020 1900 2022 1900 2024 1900 2
Slide 61: Chinese trucks will need platinum-based catalysts by 2023
[OFFICIAL] Appendix Heavy-duty PGM automotive demand in China and India²⁷ All Chinese trucks sold by 2023 will need platinum- 000 ounces per annum based catalysts due to tightening emissions 70 75 Many manufacturers implementing systems 50 earlier to meet legislation Demand to be ~5x higher in 350 2
Slide 62: Footnotes and definitions
[OFFICIAL] 1) Total recordable case injury frequency rate (TRCFR) is a measure of all injuries requiring treatment above first aid per 1,000,000 hours worked (slide 5, 11, 17) 2) National Energy Crisis Committee (NECOM) (slide 12) 3) PGM oz variance assessed on an infrastructure like-for-like basis