Valterra Platinum Limited · JSE:VAL
Valterra Platinum — Anglo American Platinum — FY2015 Earnings Presentation
39 slides from Valterra Platinum's earnings presentation, Feb 8, 2016
Slide 1: Anglo American Platinum 2015 Annual Results Presentation
PLATINUM ANGLO AMERICAN PLATINUM 2015 ANNUAL RESULTS PRESENTATION 8 FEBRUARY 2016
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT Disclaimer: This presentation has been prepared by Anglo American Platinum Limited (“Anglo American Platinum”) and comprises the written materials/slides for a presentation concerning Anglo American Platinum. By attending this presentation and/or reviewing the slides you agree t
Slide 3: Agenda
PLATINUM AGENDA • Overview of 2015 • Safety, Health & Environment • Operational Performance • Financial Performance • Market Review • Strategy Update • 2016 Outlook • Key Messages from 2015
Slide 4: Overview of 2015
PLATINUM OVERVIEW OF 2015 CHRIS GRIFFITH, CHIEF EXECUTIVE OFFICER
Slide 5: Overview of 2015: Managing the business
OVERVIEW OF 2015 Managing the business… Net Debt profile (R billion) • Zero Harm remains the priority 14.6 • PGM pricing remains challenging 12.8 • All operations cash positive 11.5 • R4 billion of free cash flow generated from operations 2013 2014 2015 • Net debt reduced to R12.8 billion from R14.6
Slide 6: Safety, Health & Environment
PLATINUM SAFETY, HEALTH & ENVIRONMENT CHRIS GRIFFITH, CHIEF EXECUTIVE OFFICER
Slide 7: Safety, Health & Environment: Zero Harm remains the priority
SAFETY, HEALTH & ENVIRONMENT Zero Harm remains the priority… SAFETY Fatalities • Record safety performance in H2 2015 25 • Tragically, 2 fatalities during H1 2015 • 232 fatality free days at the end of 2015 7 6 3 • LTIFR of 0.98, reduced in H2 2015 2 • Reduction in severity of s54 stoppages 2007 201
Slide 8: Operational Performance
PLATINUM OPERATIONAL PERFORMANCE CHRIS GRIFFITH, CHIEF EXECUTIVE OFFICER
Slide 9: Operational Performance in 2015
OPERATIONAL PERFORMANCE IN 2015 Loss-making ounces cut…efficiencies improving at profitable operations… • Platinum production of 2,337 koz, up 25% Total platinum production (‘000 ounces) (2) – Mogalakwena production up 6% to 392 koz 2,356 2,337 – Amandelbult production up 100% to 437 koz 1,870 – Unk
Slide 10: Mogalakwena
MOGALAKWENA Another record performance… Platinum production (‘000 ounces) (2) 392 • Strong safety performance – 3.5 years fatality 370 23 free 341 22 16 • Record production performance 348 369 325 305 • Unit costs reduced 7% due to cost management and productivity initiatives 2012 2013 2014 2015 Mog
Slide 11: Amandelbult
AMANDELBULT Focusing on making Amandelbult investable again… Platinum production (‘000 ounces) (2) • Fatality free year 437 381 • Tumela, Dishaba and concentrators consolidated 373 into one Amandelbult complex • Production performance improvement in H2 219 driven by operational stability • 4E head g
Slide 12: Joint Venture Operations
JOINT VENTURE OPERATIONS Maintained solid performance… Lost Time Injury Frequency Rate (1) SAFETY 1.03 • LTIFR at 0.62, a 10% improvement 0.84 PRODUCTION 0.69 0.62 • Solid production performance of 768koz: – Kroondal improved by 3% due to improved concentrator recoveries 2012 2013 2014 2015 Platinum
Slide 13: Non-core Operations - Rustenburg & Union
NON-CORE OPERATIONS - RUSTENBURG & UNION Operational improvements lead to operating free cash flow generation … RUSTENBURG Production (‘000 ounces) (2) Operating FCF (R million) (4) 552 578 653 • Platinum production of 485 koz, up 71% from 485 318 strike impacted 2014 228 284 • Further consolidation
Slide 14: Refined Production & Sales Volume in 2015
REFINED PRODUCTION & SALES VOLUME IN 2015 Refined production back to normal levels… PLATINUM Total refined platinum production (million ounces) 2.53 • Platinum refined production up 30% to 2,459 koz 2.39 2.38 2.46 – Platinum production of 2,337 koz – Drawdown in pipeline inventory to normalised leve
Slide 15: Financial Performance
PLATINUM FINANCIAL PERFORMANCE IAN BOTHA, FINANCE DIRECTOR
Slide 16: Summary of 2015 Results
SUMMARY OF 2015 RESULTS Weaker Rand basket price has negatively impacted earnings… Headline Earnings per share (Rand/share) Key financials 0.41 Rbn 2015 2014 9.45 4.52 4.23 Sales Revenue 59.8 55.6 5.56 4.52 (5) 3.01 EBITDA 8.8 6.1 4.12 5.99 5.99 0.41 0.30 (6) (0.76) (2.48) EBIT 3.6 1.2 (3.25) Headli
Slide 17: 2015 EBIT Variance
2015 EBIT VARIANCE Performance impacted by weak prices and restructuring costs… 2015 vs. 2014 (Rbn) Uncontrollable Controllable Once-off (0.9) 3.6 2.3 (0.4) 2.2 0.7 1.2 2.9 (9.2) (1.7) 7.8 0.9 (1.9) 2014 Price (8) Currency CPI (9) Sales (10) 2014 (11) Costs(12) Associates 2015 Stock Restruc- 2015 Vo
Slide 18: Impairments
IMPAIRMENTS Impairments to Rustenburg, Twickenham, BRPM, Bokoni and Atlatsa… (8) Rbn Impairment Impact on earnings IMPAIRMENTS TAKEN DUE TO: Rustenburg 4.5 Basic • Prolonged decrease in PGM prices RBPlat & BRPM 3.5 Basic • Rustenburg – signing of SPA with Sibanye Gold Twickenham 2.5 Basic • Twickenh
Slide 19: Unit Cost
UNIT COST Management intervention reducing unit cost escalation below mining inflation… Unit cash cost escalation below mining inflation Sustained high mining inflation (%) 12.7% Rand / produced platinum ounce 22,574 AAP Mining 7.7% inflation: 6.9% (2014: 8.3%) SA CPI = 4.6% (2014: 6.2%) 19,750 5.8%
Slide 20: Capital Expenditure
CAPITAL EXPENDITURE Disciplined capital allocation… Capital Expenditure (Rbn) (14) Capex excludes capitalised interest • Delivering value in reducing capital intensity 5.8 without introducing risk • SIB and Project Capital incremental value 3.7 3.7 – 4.2 accretive projects during 2015: 3.9 2.9 - 3.2
Slide 21: Net Debt Profile
NET DEBT PROFILE Despite weaker Rand basket price… Net Debt (Rbn) Net Debt Profile (Rbn) 14.6 Opening net debt 1 January 2015 14.6 12.8 Cash flow from operations (11.8) 11.5 Capex and waste stripping 4.7 Cash tax paid 0.7 Net interest 1.3 2013 2014 2015 Other 1.1 Liquidity Headroom (Rbn) 10.9 Free c
Slide 22: Cash Flow by Operation
CASH FLOW BY OPERATION Despite weaker Rand basket price… Operating free cash flow per mining complex (4) Retained in 2015 Exit 4.4 H2 (ZAR basket price: R22,837 / Pt oz) 1.7 H1 (ZAR basket price: R25,748 / Pt oz) 2.6 1.3 0.9 0.6 0.3 0.6 0.6 0.3 0.4 0.4 0.2 0.2 0.6 0.6 0.2 0.2 0.4 0.3 0.3 0.2 0.2 0.1
Slide 23: Actions to Maintain Health of Balance Sheet
ACTIONS TO MAINTAIN HEALTH OF BALANCE SHEET Our focus remains on delivering against management actions… MANAGEMENT ACTIONS ACTIONS FOCUS AREAS 1 • Optimised mine plans, overhead downsizing Cash Flow Improvement • All operations to be cash positive 2 • Liquidity maintained through cash and commit
Slide 24: Market Review
PLATINUM MARKET REVIEW CHRIS GRIFFITH, CHIEF EXECUTIVE OFFICER
Slide 25: Market Prices
MARKET PRICES Dollar platinum price fell 27% … Decline in US$ Platinum price in 2015 (US $/oz) 1,300 LOWER US DOLLAR PRICE Year-on-year: (24)% 1,200 US Dollar per ounce • The US Dollar platinum price declined 27% in 2015, 1,100 Full Year: (27)% down 24% year-on-year 1,000 2015: $1,051/oz • US Dollar
Slide 26: Platinum Market
PLATINUM MARKET A return to normalised production levels… DEMAND (+4%) Platinum Market Balance (‘000 ounces) 430 • Autocat demand increased 5% due increased auto-sales in Surplus Europe, increased loadings and resilient diesel share • Net jewellery demand fell 5% owing to lower consumer demand Defic
Slide 27: Palladium Market
PALLADIUM MARKET Palladium market deficits reduced … Palladium Market Balance (‘000 ounces) DEMAND (-14%) • Autocat demand grew by 1% Surplus 1,255 − US demand up 5.8% (228) − China demand up 5.3% - weak H1; recovering in H2 due to (408) Deficit tax cuts (1,077) (1,867) − Offset by decrease in Japan
Slide 28: Market Development
MARKET DEVELOPMENT Remains a priority in challenging market conditions… JEWELLERY • PGI focused on India and China - PGI head office relocated to Hong Kong • Marketing campaigns in India continue to stimulate platinum jewellery demand - c.60% increase since 2013 • Indian business development model i
Slide 29: Strategy Update
PLATINUM STRATEGY UPDATE CHRIS GRIFFITH, CHIEF EXECUTIVE OFFICER
Slide 30: Repositioning the Portfolio
REPOSITIONING THE PORTFOLIO Focus remains on repositioning the portfolio… Restructuring since 2013… …now repositioning the portfolio… …to generate long term value Retained Assets 1. RESHAPE RUSTENBURG & EXIT • Optimised and integrated 5 mines to 3 in 2013 Mogalakwena • Further consolidation to 2 in
Slide 31: Managing the Business for the Current Environment
MANAGING THE BUSINESS FOR THE CURRENT ENVIRONMENT Focus on cash generation, capital discipline… CASH GENERATION Overhead cost reductions (R billion) • Ensure all operations are cash flow positive – optimised (37)% mine plans 5.4 • Commencing the process towards placing Twickenham on (0.2) care and m
Slide 32: 2016 Outlook
PLATINUM 2016 OUTLOOK CHRIS GRIFFITH, CHIEF EXECUTIVE OFFICER
Slide 33: 2016 Outlook: Guidance and outlook
2016 OUTLOOK Guidance and outlook… • Platinum production between 2.3 – 2.4 million ounces • Unit cash cost guidance between R19,250 – R19,750 per platinum ounce (metal in concentrate) • Direct overhead savings and indirect savings of R1.0 billion identified • Capital expenditure guidance of between
Slide 34: Key Messages from 2015
PLATINUM KEY MESSAGES FROM 2015 CHRIS GRIFFITH, CHIEF EXECUTIVE OFFICER
Slide 35: Key Messages from 2015
KEY MESSAGES FROM 2015 Managing the business… • Zero Harm across all operations remains a priority • Challenging macroeconomic environment - managing the business for the current PGM price environment • Operational improvements resulted in positive cash generation across the portfolio • R4 billion o
Slide 36: Appendices
PLATINUM APPENDICES Real Mining. Real People. Real Difference.
Slide 37: Net Debt and Cash Flow by Mine
NET DEBT AND CASH FLOW BY MINE Despite weaker Rand basket price… R7.5bn (3.5) (0.5) (7.2) (1.2) 11.9 (2.0) (0.2) (10.6) (1.1) (1.1) (12.8) (14.6) R4.0bn Funding of Net Debt Associates & Operating Current Net Debt Net Debt December Cash from SIB & Waste Cash to Free cash Project Taxation & before one
Slide 38: Cost Breakdown
COST BREAKDOWN Labour Materials Utilities Contractors Sundry (Stores) (Power and expenses Water) Conventional 62% 17% 8% 3% 9% Mechanised 38% 24% 3% 25% 10% Open pit 19% 51% 12% 5% 14% Company 40% 26% 13% 6% 15% • Diesel – 3% of total cost and 17% at open pit • Electricity – 11% of total cost • Non
Slide 39: Footnotes
FOOTNOTES (1) Lost time injury frequency rate per 200,000 hours worked (2) Platinum production is platinum in concentrate produced and purchased (3) Calculated as (revenue - cash operating costs) / revenue (4) Operating free cash flow is defined as free cash flow for operating mines after full overh
Anglo American Platinum — FY2015 Earnings Presentation on 6ix