Mmg Ltd. · HKEX:1208
Mmg — H1 2015 Earnings Presentation
35 slides from Mmg's earnings presentation, Aug 18, 2015
Slide 1: 2015 Interim Results
2015 Interim Results 18 August 2015
Slide 2: Andrew Michelmore
Andrew Michelmore Executive Director and Chief Executive Officer 2
Slide 3: We think safety first
We think safety first TRIF1 TRIF1 of 2.0 per million hours worked in 1H15. per one million hours 4.8 Continuous improvement in safety translates to 4.1 improved operational discipline. 3.0 2.4 2.3 Safety is a core value with management incentives 2.0 directly linked to safety performance. (3)
Slide 4: Results overview
Results overview Stable revenue Higher sales volumes offset by lower commodities prices. Operating discipline Record copper production with strong contribution from Kinsevere and Sepon. Earnings growth EBITDA up 3%, EBITDA margin at 34%. Profit Negatively impacted by US$94.1 million of amort
Slide 5: David Lamont
David Lamont Executive Director and Chief Financial Officer 5
Slide 6: Financial highlights
Financial highlights Stable revenue of US$1,113.8 million despite Foreign exchange and commodity price commodity price volatility. performance Indexed, 2014=100 1H14 1H15 EBITDA of US$375.9 million, up 3%. Demonstrating strong cash generation from 100 operations. A$ / US$ 86 Loss for the first
Slide 7: EBIT variance analysis
EBIT variance analysis EBIT variance Price variance US$ million US$ million 150 Sepon (47.1) 100 Copper (108.5) Price Kinsevere (43.8) (156.9) 1H14 EBIT 50 116.5 Century (34.3) Zinc (20.7) Rosebery (5.3) Gold (6.7) 0 Lead (12.4) Golden Grove Silver (8.6) (26.4) -50 7
Slide 8: EBIT variance analysis
EBIT variance analysis EBIT variance US$ million Volume variance US$ million 150 Golden Grove 7.2 Silver 11.6 Rosebery 7.7 Lead 11.3 100 Century 12.4 Gold 5.4 Zinc 4.4 Price (156.9) 1H14 EBIT Kinsevere 37.6 50 116.5 Copper 44.3 Volume 77.0 Sepon 12.1 0 -50 8
Slide 9: EBIT variance analysis
EBIT variance analysis EBIT variance US$ million 140 Other Selling Exploration 8.9 Royalty 13.3 Stock D&A expenses Production movt. excl.Century 4.7 expenses 9.7 provision 54.5 (38.6) 90 Underlying 1H14 EBIT EBIT 116.5 89.1 Volume 40 77.0 Century provision (94.1) -10 1H15 EBIT (5.0) Price (156.9) -6
Slide 10: Improving core profitability
Improving core profitability Operating expenses decreased US$68.9m (9%) due to cost reductions as well as favourable Australian dollar exchange rates (favourable impact of US$55.8m). EBITDA increased at Century by US$20.3m (14%) and Rosebery by US$26.6m (88%). Improved EBITDA margin from 31% t
Slide 11: Analysis of cash flow
Analysis of cash flow >>> Inflows 1H 2015 Cash flow summary US$ million Cash generated from operating Operations Financing $202.7m $1,125.0m activities of US$202.7m. Net cash from financing activities of Inflows US$1,125.0m including proceeds from borrowings of US$489.0m and related party borrow
Slide 12: MMG external debt
MMG external debt Debt is backed by large Chinese government supported financial institutions with a government mandate for long-term stable investment. Debt servicing covered by operational cash generation. Shareholder loan viewed by MMG and external debt providers as subordinated debt provid
Slide 13: Marcelo Bastos
Marcelo Bastos Chief Operating Officer 13
Slide 14: Focus on asset utilisation and operational excellence
Focus on asset utilisation and operational excellence Strong first half copper production with 98,264 Asset Utilisation across MMG assets tonnes produced, due to record copper production at Kinsevere and increased production from Sepon. 86% 89% 90% 94% 78% Improved safety performance reducing do
Slide 15: Continuous focus on cost management
Continuous focus on cost management Sepon facing higher costs to C1 Cost process harder and higher US$/lb acid consuming Type II ore. 2.00 Kinsevere managed operating costs by adjusting the mine plan to draw down from 1.50 previously built up ore stockpiles. 1.00 Century is being managed to ma
Slide 16: Sepon – strong production results
Sepon – strong production results Financials Successful transition to harder Type II ore with quarterly milling record delivered. US$ million 1H15 1H14 % 44,632 tonnes copper cathode produced. Revenue 269.3 304.2 (11) Maintained stable mining and milling costs in response to increased mine act
Slide 17: Kinsevere – half year production record
Kinsevere – half year production record Half year production record of 39,095 tonnes of Financials copper cathode. US$ million 1H15 1H14 % Operational efficiencies, stable electricity, increases to mill throughput. Revenue 222.7 228.9 (3) Lower copper prices marginally offset by 16% EBITDA1 80
Slide 18: Century – strong production and cost performance
Century – strong production and cost performance Production of 221,049 tonnes of zinc despite Financials transition to lower grades in final stages of mining. US$ million 1H15 1H14 % Mining costs down US$31.3 million or 53%. Revenue 390.1 412.1 (5) Mining from single stage of open-pit mine, lo
Slide 19: Australian Operations update
Australian Operations update Century Zinc production down 1% to 221,049 tonnes due to lower zinc grades. Rosebery Zinc production up 40% to 48,924 tonnes driven by higher mill throughput and higher zinc grades. Golden Grove Lower-cost zinc ore prioritised over copper. Zinc production up 39%
Slide 20: Andrew Michelmore
Andrew Michelmore Executive Director and Chief Executive Officer 20
Slide 21: Copper market fundamentals
Copper market fundamentals 2015 global refined copper demand growth forecast 3.3%, and forecast surplus of 339kt. Demand disappointed during 1H15, reflecting weakness in China and other key consuming nations. Copper prices down 14% compared to the same period 2014, with prices benefitting from
Slide 22: Zinc market fundamentals
Zinc market fundamentals 2015 global refined zinc demand growth forecast of 4.2%, and forecast surplus of 50kt. Demand disappointed during 1H 2015 as a result of current market sentiment surrounding Greece and China. Prices up 4% over six months to end of June; offset by higher treatment charg
Slide 23: Las Bambas update
Las Bambas update Overall construction progress 95% with concentrate-related construction 90% as of 30 June 2015. Community relocation continued with 96% of families now successfully relocated to new Fuerabamba town – relocation of remaining families is not impacting project construction. 130k
Slide 24: Dugald River update
Dugald River update One of the highest-grade undeveloped zinc resources globally. Long life 28 year underground zinc mine. Mine production rate of 1.5Mtpa, producing on average 160,000 tonnes of zinc in concentrate per annum. Significant by-products including 18,000 tonnes of lead and 981,00
Slide 25: 2020 objective: One of the world’s top mid-tier miners
2020 objective: One of the world’s top mid-tier miners Complete construction of Las Bambas and first production by 1Q16. Clear pathway for Dugald River. Build on presence in two of the world’s most prospective copper belts. Progressive remediation will not affect future potential use of Cent
Slide 26: We mine for progress
WE MINE FOR PROGRESS A
Slide 27: Overview of assets
Overview of assets WE MINE FOR puocness IVEIVIG copper / lead / / NORTH AMERICA Century lead / silver / zinc x Golden Grove copper / gold / lead / silver / zinc Legend: e Operating assets lam sore AMERICA ! 1 1 i / Rosebery copper / gold / lead / silver / zinc r } Development assets ‘._} Exploration
Slide 28: Financial dashboard
Financial dashboard Revenue by commodity Revenue by customer location 21% 36% Zinc Australia Copper 19% Europe 16% Gold Middle East Silver Japan & Korea 7% 50% Lead Other Asia 4% 19% 19% China 3% 6% EBITDA by operating segment Operating expenses (Sites) 8% People 18% Sepon 8% 22% External Services 3
Slide 29: Rosebery
Rosebery Financials Production of zinc and lead concentrate was 40% and 3% higher respectively due to higher US$ million 1H15 1H14 % milling grades and increased throughput. Revenue 120.4 118.0 2 Increased cash generation with EBITDA margin increasing to 47% from 26%. EBITDA1 56.8 30.2 88 Oper
Slide 30: Golden Grove
Golden Grove Financials Production of zinc 39% higher – zinc US$ million 1H15 1H14 % focused production in 2015. Revenue 111.3 130.5 (15) Production expenses decreased US$17.8m EBITDA1 (0.4) 4.4 (109) (17%). Zinc C1 costs US$0.18/lb. EBIT (20.2) (14.4) (40) Copper C1 costs US$2.07/lb. EBITDA
Slide 31: 2015 Guidance
2015 Guidance AA "288232 IMIVIG SEPON Copper— production Copper-C1 costs KINSEVERE Copper-—production Copper— (C1 costs CENTURY Zinc — production Zinc-C1 costs Lead — production ROSEBERY Zinc — production Zinc-(C1 costs Lead - production GOLDEN GROVE Copper—production Copper-C1 costs Zinc — producti
Slide 32: Condensed consolidated income statement
Condensed consolidated income statement Six months ended 30 June 2015 2014 Variance US$ million Unaudited Audited % Revenue 1,113.8 1,193.7 (7) Other income 1.5 5.4 (72) Expenses (Excluding depreciation and amortisation) (739.4) (834.4) 11 EBITDA 375.9 364.7 3 Depreciation and amortisation (380.9) (
Slide 33: Condensed consolidated balance sheet
Condensed consolidated balance sheet 30 June 2015 31 December 2014 US$ million Unaudited Audited Non-current assets 12,844.9 12,280.6 Current assets – cash and cash equivalents 613.3 251.2 Current assets – other 960.7 958.2 Total assets 14,418.9 13,490.0 Total equity 3,176.3 2,974.6 Non-current liab
Slide 34: Consolidated financial performance: Cash flow statement
Consolidated financial performance: Cash flow statement Six months ended 30 June 2015 2014 Unaudited Audited US$ million Receipts from customers 1,161.6 1,197.2 Payments to suppliers (865.2) (855.2) Payments for exploration expenditure (17.9) (31.2) Income tax paid (75.8) (80.3) Net cash generated f
Slide 35: Financial resources and liquidity
Financial resources and liquidity Total drawn down of US$5,538.7 million in bank Maturity profile of borrowings borrowings and a US$2,261.3 million in as at 30 June 2015 shareholder borrowings to fund the Las Bambas project. 15% within one year Gearing ratio1 MMG Group (excluding Las 8% one - tw