Merafe Resources Limited · JSE:MRF
Merafe Resources — H1 2014 Earnings Presentation
18 slides from Merafe Resources's earnings presentation, Jun 30, 2014
Slide 1: Results Presentation for the six months ended 30 June 2014
Results Presentation for the six months ended 30 June 2014 Zanele Matlala (CEO) and Ditabe Chocho (CFO)
Slide 2: Slide 2
Slide 3: Legal notice/disclaimer
Zanele Matlala (CEO) (CEO) and and (CFO) Ditabe Chocho (CFO) Results Presentation For the six months ended 30 June 2014 Merafe Resources Results presentation for the six months ended 30 June 2014 Legal notice/disclaimer This presentation is published solely for informational purposes and does not co
Slide 4: Key agenda
Key agenda 1. Key features 2. Operational review 3. Market review 4. Strategic focus 5. Financial review 6. Outlook Annexures Merafe Resources Results presentation for the six months ended 30 June 2014 01 Key features Merafe Resources Results presentation for the six months ended 30 June 2014
Slide 5: Key features
Key features OPERATIONAL MARKET • Ferrochrome production of • 10.5% increase in global stainless steel 168kt production • Five-month platinum strike over • 15% increase in global ferrochrome • Strong cost performance demand • 20% increase in global ferrochrome production • 15% reduction in chrome or
Slide 6: Operational review
Operational review Increase of 16% in ferrochrome production • stronger market • non-recurring Eskom buy backs • higher furnace capacity utilisation Employee relations and safety • Regrettably one fatality • TRIFR of 4.41 • Platinum industry strike impacted – chrome ore costs – chrome ore sales volu
Slide 7: Global market review
03 Market review Merafe Resources Results presentation for the six months ended 30 June 2014 Global market review GLOBAL GLOBAL GLOBAL STAINLESS STEEL FERROCHROME FERROCHROME PRODUCTION DEMAND PRODUCTION 10.5% increase 15% increase to 20% increase to 21.1mt (H1 2013: 5.71mt (H1 2013: to 5.72mt (H1 2
Slide 8: Ferrochrome market review
Ferrochrome market review European benchmark ferrochrome prices Rising demand in Europe, doubts 2013 Usc/lb 2014 Usc/lb Change about security of electricity supply Q1 112.5 118 +5% in SA and the platinum strike Q2 127 122 (4%) Seasonal slowdown and Q3 112.5 119 +6% softer ferrochrome prices in China
Slide 9: Strategic focus
04 Strategic focus Merafe Resources Results presentation for the six months ended 30 June 2014 Strategic focus Renewed focus • Background • Focusing short- to medium term on ferrochrome operations and maximising cash flows from the Venture • Diversification not being actively pursued in the short- t
Slide 10: Key financial features
05 Financial review Merafe Resources Results presentation for the six months ended 30 June 2014 Key financial features 35% 101% 134% 13% 3% Cash flows from Revenue EBITDA HEPS operating Net debt activities H1 2014 H1 2014 H1 2014 H1 2014 H1 2014 R1 991m R423m 8.9 cents R265m R587m EBITDA in millions
Slide 11: Revenue and ferrochrome production cost per tonne
Revenue 25% 16% 39% 13% Average European Average Ferrochrome benchmark Rand/US$ Ferrochrome Chrome ore sales tonnes ferrochrome exchange rate revenue revenue prices H1 2014 H1 2014 H1 2014 H1 2014 H1 2014 171kt 120USc/lb 10.7 R1 787m R204m Revenue in millions 4 000 3 497 3 500 3 000 2 542 2 500 2 42
Slide 12: EBITDA reconciliation to profit and capital expenditure
EBITDA reconciliation to profit 500 460 450 400 (37) 350 300 (85) (18) R'm 250 (36) 225 200 (59) 150 100 50 0 Merafe's 20.5% of Corporate costs* Depreciation Net financing costs Current tax expense Deferred tax expense Profit EBITDA from the Venture * includes R13m restructuring costs Merafe Resourc
Slide 13: Balance sheet
Balance sheet As at As at 30 June 2014 31 December 2013 Reviewed R’000 Audited R’000 Total non-current assets 3 249 215 3 099 988 Property, plant and equipment 3 249 215 3 099 988 Total current assets 1 890 909 1 903 622 Inventories 1 206 738 1 132 986 Trade and other receivables 617 831 677 649 Cur
Slide 14: Debt and facilities
Debt and facilities Net debt movement R’m 400 265 300 200 100 0 (100) (200) (151) (300) (95) (400) (500) (600) (700) (606) (587) Net debt at Cash from Expansionary Sustaining Net debt at 31 operating capex capex 30 June December activities 2014** 2013 ** Comprises R575m loans and borrowings, R31m sh
Slide 15: Outlook
Outlook Strong forecasted growth in stainless steel production and demand Partnership and excellent relationship with Glencore Positive about future prospects Committed to returning cash to shareholders and reducing debt Merafe Resources Results presentation for the six months ended 30 June 2014 25
Slide 16: Annexures: Ferrochrome prices
Annexures Merafe Resources Results presentation for the six months ended 30 June 2014 Ferrochrome prices Merafe Resources Results presentation for the six months ended 30 June 2014 28
Slide 17: A changing market environment
A changing market environment (Regional share of global stainless production and ferrochrome demand) Stainless Steel 80 70 60 China Market Share in % 50 EU 40 30 20 Japan USA 10 © Heinz H. Pariser 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 © Heinz H. Pariser, Alloy Metal
Slide 18: Global power prices
Global power prices 0.12 All data based on average power prices and exchange rates for the years stated / South African Projection based on Exchange Rate of ZAR 10.1 per US$ Average power price, in US$ per kWh 2012/14 0.10 2011 2010 2011/12 2013 2012/13 2013/14 2010/11 2014 2009 2016/17 0.08 2009/10