African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — FY2005 Earnings Presentation
27 slides from African Rainbow Minerals's earnings presentation, Sep 12, 2005
Slide 1: Results for the financial year ended June 2005
Results for the financial year ended June 2005 12 September 2005
Slide 2: Disclaimer
Disclaimer Forward looking statements Certain statements in this presentation constitute “forward looking statements” within the meaning of section 27A of the US Securities Act of 1933 and section 21E of the US Securities Exchange Act of 1934. Such forward looking statements involve known and unknow
Slide 3: We do it better
ARM is a nichediversified mining company with excellent long life, low cost assets in key commodities We own and operate our assets Our unique management style, supported by experienced management and entrepreneurship adds significant value to our business Our partners in various ventures makes val
Slide 4: Overview and highlights
Overview and highlights Patrice Motsepe – Executive Chairman
Slide 5: Highlights
Highlights • Revenue for the year of R5.5 billion up by 41% from the R3.9 billion of the prior year • Profit from operations increased to R1.6 billion for 2005 from R528 million for 2004 • Headline earnings of R350 million significantly higher than the R47 million of the previous year • Nickel joint
Slide 6: Highlights – continued
Highlights – continued • We have seen significant improvements at Modikwa with buildup now at 90% for platinum ounces – Full production is expected by the end of 2005 calender year – Deepening of Modikwa is being considered • Pooling of the ARM and LionOre teams at Nkomati have already shown positi
Slide 7: Highlights – continued
Highlights – continued • ARMFerrous, through Assmang, has shown a tremendous growth in turnover and profits – Higher volumes for iron ore and manganese – Good cost control at all operations – Significant US$ price increases in iron ore and manganese products • The ARM/Harmony crossholding structure
Slide 8: Growth strategy
Growth strategy • We expect continued strong volume demand across our commodity portfolio • Growth will be underpinned in the medium term by the favourable US$ prices we are currently experiencing • However, we are confident that longer term US$ prices will remain at levels higher than seen before t
Slide 9: We do it better
We do it better • Significant organic growth expected through the building of six new mines and the upgrading of two operations – double production output by 2010 – increased efficiencies, thereby continue to be a low cost producer Operationally more efficient to improve and retain competitiveness O
Slide 10: Operational review
Operational review André Wilkens – CEO
Slide 11: Financial highlights
Financial highlights • During 2005 financial year, we have been able to fully benefit from the existing commodity cycle across all our businesses – significant US$ price increases; strong US$ prices and higher volumes • Revenue for the year of R5.5 billion up by 41% from the R3.9 billion of the prio
Slide 12: Attributable profit from operations
Attributable profit from operations Results for year ended June 2005 – R million 2 000 1 599 1 463 1 500 1 000 528 391 500 1 241 311 15 0 83 89 92 500 Platinum Nickel Ferrous Corporate Total and other 2004 2005 1 For two months only • Earnings highly geared toward ZAR exchange rate • Benefited
Slide 13: ARM Ferrous (50.4% in Assmang)
ARM Ferrous (50.4% in Assmang) • ARM Ferrous was a star performer for this year with a total contribution to headline earnings of R480 million • Revenue increased by 33% to R4.4 billion – increased volumes of iron ore and manganese – stronger US$ prices for iron ore and manganese (in particular Mn a
Slide 14: ARM Ferrous – continued
ARM Ferrous – continued Assmang product sales volumes (tons) 2005 2004 Iron ore 5 775 5 460 Manganese ore (excluding deliveries 1 811 1 438 to Cato Ridge) Manganese alloys 197 218 Charge chrome 262 295 14
Slide 15: ARM Ferrous – continued
ARM Ferrous – continued • Exciting growth through new projects: – double production by 2010 – new 16 mtpa iron ore BKM project to Board for consideration later this year (conversion of prospecting rights received) – expansion at Dwarsrivier Chrome Mine on track and within budget • Volumes likely to
Slide 16: ARM Platinum
ARM Platinum Modikwa • ARM jointly manages Modikwa with Anglo Platinum • Currently at 90% of Pt ounces rampup • Reported cash operating profits before Capex for March to June 2005 of R21 million • New mining method will be introduced • Planned full production: 350 000 oz PGM per annum (160 000 oz o
Slide 17: Modikwa Platinum
Modikwa Platinum Modikwa continuing to improve and will meet targets 6 months 6 months to to June December Operational statistics 2005 2004 % change Tons milled m/t 1.32 1.14 16% Head grade (4E) g/t 4.13 4.23 (2%) Pt in concentrate oz 66 112 60 000 10% Cash cost R/t 346 373 7% 17
Slide 18: Modikwa Platinum – continued
Modikwa Platinum – continued R/t ton milled – cash cost Modikwa – Ore reserves 500 10 400 8 R/ton milled Months 300 6 200 4 100 2 0 0 Dec Jan Feb Mar Apr May Jun Dec Jan Feb Mar Apr May Jun Modikwa – m2 broken 50 000 40 000 30 000 M2 20 000 10 000 0 Dec Jan Feb Mar Apr May Jun 18
Slide 19: Two Rivers Platinum
Two Rivers Platinum • ARM manages the project which was recently commissioned • Total project Capex of R1.3 billion funded • Pt: Pd ratio very attractive at 5:3 • Quick rampup to full production due to very successful trial mining • Operating costs expected to be within lower quartile of operators
Slide 20: Two Rivers Mine layout
Two Rivers Mine layout TWOP RIVERS CAPITAL DEVELOPMENT TO FEBRUARY 2007 [EE Mined to date (I Mining remaining TRP Production 20
Slide 21: Nkomati Nickel Mine
Nkomati Nickel Mine • Record nickel sales and cash operating profits nickel sales of 5.3 kt up by 7.5% • Jointly managed with LionOre since June 2005 • Existing underground mine (MSB) expected to continue to 2007, but life could be extended • Expansion will most likely be in a phased approach – incr
Slide 22: Nkomati Nickel Mine – continued
Nkomati Nickel Mine – continued Operational statistics 2005 2004 Cash operating profit R million 349 346 Tons treated (‘000) 346 344 Grade (% nickel) 2.01 2.02 Onmine cash cost tons created (R/ton) 369 361 Market sales Nickel tons 5 291 4 920 Copper tons 3 260 3 300 Cobalt tons 97 62 PGMs oz 39 370
Slide 23: 2 x 2010 growth
2 x 2010 growth ARM is currently building six new mines and upgrading two From To Two Rivers – PGMs – 220 000 PGM oz Modikwa – PGMs 210 000 PGM oz 350 000 PGM oz 16 500 t Ni Nkomati – PGMs 5 000 t Ni 100 000 PGM oz Dwarsrivier – chrome 0,65m t 1,5m t Nchwaning 1, 2* & 3 – manganese 2,1mt 2,8mt Glori
Slide 24: Financial information
Financial information
Slide 25: Summarised income statement
Summarised income statement Year ended 30 June 2005 2004 R’million Reviewed Audited Revenue 5 485 3 885 Profit from operations 1 599 528 Income from investments 22 26 Finance costs (172) (80) Loss from associate (150) (120) Exceptional items 155 1 148 Taxation (530) (291) Profit after tax 924 1 211
Slide 26: Summarised balance sheet
Summarised balance sheet 30 June 30 June 2005 2004 R’million Reviewed Audited ASSETS Noncurrent assets 8 835 9 056 Current assets 2 931 2 404 11 766 11 460 EQUITY AND LIABILITIES Capital and reserves 6 511 6 628 Minority interest 1 461 1 326 Total shareholders’ interest 7 972 7 954 Noncurrent liab
Slide 27: Questions?
Questions? www.arm.co.za
African Rainbow Minerals — FY2005 Earnings Presentation on 6ix