Royal Bafokeng Platinum — H1 2013 Earnings Presentation
42 slides from Royal Bafokeng Platinum's earnings presentation, Aug 12, 2013
Slide 1: Interim results for the six months ended 30 June 2013
Interim results for the six months ended 30 June 2013
Slide 2: Disclaimer
Disclaimer The information presented in this presentation is of a general nature and the forward looking information, opinions and beliefs of the Company and its affiliates are based on various market related assumptions. Changes in market circumstances after the production of the information may im
Slide 3: Agenda
1 > Overview 2 > Safety 3 > Market review 4 > Operational review and project update 5 > Financial review 6 > Outlook
Slide 4: Overview
SECTION 1 Overview >4
Slide 5: Key focus areas for FY2013 and progress thus far
Key focus areas for FY2013 and progress thus far > Will strive to further improve safety performance • 8% reduction in LTIFR and 12% increase in injury free days • Regrettably one fatal accident – Mr Robert Mohlaoli Mohoanyane > Improved operational flexibility • Additional Merensky mining levels; I
Slide 6: Key focus areas for FY2013 and progress thus far (continued)
Key focus areas for FY2013 and progress thus far….continued > Cost containment • 2% increase in cash operating costs to R988 million • 7.8% increase in unit cost per tonne milled to R917/t • 1.3% increase in unit cost per platinum ounce to R11 756/Pt > Continue to deliver Styldrift on time and on bu
Slide 7: Waterkloof Hill Ext 1 – our pilot housing project
Waterkloof Hill Ext 1 – our pilot housing project Phase 1 > 400 houses to be built > Currently 56 houses under construction > First occupancy by October 2013 > Phase 1 completion scheduled for March 2014 RBPlat Interim Results Presentation 12 August 2013 >7
Slide 8: Education – Investing in our youth
Education – Investing in our youth Improving quality of education > Sponsorship of additional teachers – mathematics, science > Leadership development programs > Career guidance programs Conducive learning environment > Upgrading of mathematics and science laboratories > Upgrading of sports faciliti
Slide 9: Safety
SECTION 2 Safety >9
Slide 10: Safety performance – ongoing improvement
Safety performance – ongoing improvement Desc ription Unit H1 2012 H1 2013 V ar % Fatal injuries No. 1 1 - LTIFR /200 000 0.67 0.61 8% SIFR /200 000 0.32 0.32 2% SIFR LTIFR > One construction related fatality 8 May – South 1.20 shaft 0.60 0.53 > Two million fatality free shifts 2 April 2013 0.50 0.4
Slide 11: Reduction in safety stoppages
Reduction in safety stoppages 4E Ounces lost - Sect 54's Safety stoppages: H1 2013 12.0 Ventilation, 4% 10.50 Support, 8% 10.0 8.0 7.17 Supervision, 12% koz 6.0 4.88 4.32 Fatality, 43% 4.0 3.54 2.0 Winches & 0.0 rigging, 33% Description Unit H1 2012 H1 2013 Var % Events No. 7 4 43% Milled tonnes los
Slide 12: Market review
SECTION 3 Market review > 12
Slide 13: Platinum demand – China to overtake Europe as largest consumer
Platinum demand – China to overtake Europe as largest consumer > Global platinum demand expected to increase marginally in 2013 > Global above-ground stocks much higher than initially forecast > European platinum demand negatively impacted: • low car sales – 20 year lows • increased use of palladium
Slide 14: Palladium and rhodium demand
Palladium and rhodium demand – rhodium price has to support UG output Palladium > Palladium favoured in terms of demand but not reflected in short-term pricing > Palladium use in diesel autocatalysts growing – currently ca.36% > China’s largest car market drives biggest share of increased palladium
Slide 15: Operational review and project update
SECTION 4 Operational review and project update > 15
Slide 16: Overall performance consistent with strategy and objectives
Overall performance consistent with strategy and objectives • IMS panel ratio 1.52 • UG2 contribution at 18% • Accelerated development • Broken tonnes up 9% Operational flexibility • Access to UG2 • Grade improvement 6% • Milled tonnes /TEC up 8% • Labour review • Labour reduction of 760 (11%) • Key
Slide 17: Strengthening mining platform
Strengthening mining platform Description Unit H1 2012 H1 2013 Var % > Reef tonnes broken 10% Stoping square metres 000 m² 225 246 9% > Tonnes delivered 5% Stoping square metres - Merensky 000 m² 200 211 5% • Sweeping and vamping Stoping square metres - UG2 000 m² 25 35 42% • Surface stockpiles Reef
Slide 18: 1% Increase in ounce production
1% Increase in ounce production Description Unit H1 2012 H1 2013 Var % BRPM concentrator recovery (4E) Tonnes milled - total kt 1 138 1 095 -4% 100.0 Tonnes milled - Merensky kt 990 896 -9% Tonnes milled - UG2 kt 149 199 34% 90.0 86.49 87.83 87.21 86.98 UG2% % 13% 18% 39% 80.0 Tonnes milled - BRPM c
Slide 19: Labour reduction in line with cost reduction strategy
Labour reduction in line with cost reduction strategy Description Unit H1 2012 H1 2013 Var Var % > BRPM working cost labour down 11% Total labour No. 8 501 7 368 1 133 13% • Review of organisational structures BRPM labour No. 7 889 6 541 1 348 17% Working cost labour No. 6 744 5 984 760 11% • Shared
Slide 20: Operating cost increase below inflation
Operating cost increase below inflation Description Unit H1 2012 H1 2013 Var % Cash operating cost R'm 969 988 -2.0% Key drivers Cash unit cost R/t 851 917 -7.8% > Inflation @ 5.6% Cash cost/4E oz M&C R/oz 7 519 7 637 -1.6% > Reduced volumes Cash cost/Pt oz M&C R/oz 11 606 11 756 -1.3% > Above infla
Slide 21: Cost reduction mainly associated with mining process
Cost reduction mainly associated with mining process Process costs Cash cost breakdown 1 000 900 136 800 120 H1 2012 H1 2013 124 146 700 134 111 Sundries 600 120 12% Sundries Utilities 12% R/t milled 106 Utilities 8% 8% 500 Labour 37% Labour 38% 400 Stores Stores 20% 19% 609 636 300 Contractor Contr
Slide 22: Reduced capital expenditure
Reduced capital expenditure Description Unit H1 2012 H1 2013 Var % SIB % of Opex 14% Stay in business capital R'm 116.2 48.9 58% 12% SIB % of operating cost % 12% 5% 59% 12% Replacement capital R'm 156 85 45% 10% Phase II R'm 65 7 90% 8% Phase III R'm 90 78 13% 6% % 6% BRPM UG2 R'm 0 0 100% 6% 5% Ex
Slide 23: Phase III Merensky replacement project progressing well
Phase III Merensky replacement project progressing well Phase III : North shaft decline extension to boundary Description Unit Plan Act Var % Complete % 44% 49% 5% Development m 4 371 5 004 633 Completion date month Aug 17 Jun 17 2 Expenditure to date R'm 603 489 115 Estimate at completion R'm 1 270
Slide 24: Styldrift I Project
Styldrift I Project > 24
Slide 25: Styldrift optimisation outcomes
Styldrift optimisation outcomes Styldrift project has undergone a major optimisation design process which has culminated in a scope, schedule and cost re-baseline (1 January 2013): Description Unit IP Optimised Variance > Revised capital cost: Total (Mining and concentrating) • Project budget reduce
Slide 26: Styldrift on schedule and below budget
Styldrift on schedule and below budget Optimised IP Progress Description Unit Plan Actual Var Plan > Service shaft sink to 642 level Progress Overall progress % 31.2 32.2 1.0 37 > Main shaft sink to 708 level Main shaft sinking m 708 708 - 708 Service shaft sinking m 642 642 - 642 > 603m of lateral
Slide 27: Styldrift project progressing to plan
Styldrift project progressing to plan Shaft sinking and lateral development Main shaft rock winder Service Shaft Main Shaft 600 Level – Reef Level 642 Level – Top of Silo Silo no. 1 708 Level – Loading Level Station cutting: 708 level Shaft bottom ramp Progress PTD # Sinking and raise-boring H2-2013
Slide 28: Styldrift concentrator options being investigated
Styldrift concentrator options being investigated Styldrift standalone concentrator > RBPlat internal ore processing: • Standalone 230ktpm concentrator plant at Styldrift Styldrift mine Footprint • Feasibility study due for completion in August 2013 • Upgrading existing BRPM concentrator to accommod
Slide 29: Styldrift II study project
Styldrift II study project > 29
Slide 30: Styldrift II study work progressing well
Styldrift II study work progressing well Studies > Concept study completed in May 2012 > Pre-feasibility study in progress (completion Q4-2014) Pre-feasibility study focus > Primary access strategies and shaft location options > Production rate (200ktpm – 240ktpm) Approximate SD II # Position > Mini
Slide 31: Financial review
SECTION 5 Financial review > 31
Slide 32: Improved gross profit
Improved gross profit Six months Six months Full year ended 30 June ended ended Description Unit 2013 30 June 2012 % change 31 December 2012 Average basket price* R/Pt oz 18 294 15 638 17.0 16 404 Average Rand:US$ received R/US$ 9.30 7.94 17.1 8.21 Revenue R’m 1 548.0 1 305.3 18.6 2 865.3 Cost of sa
Slide 33: Increase in normalised earnings
Increase in normalised earnings Six months Six months ended ended Full year ended Description Unit 30 June 2013 30 June 2012 % change 31 December 2012 Headline earnings R’m 143.2 70.6 102.8 170.3 Weighted average shares outstanding #m 164.3 164.0 0.2 164.0 HEPS R/share 0.87 0.43 102.8 1.04 Fair valu
Slide 34: Strong cash generation by operations
Strong cash generation by operations Six months Six months ended ended Full year ended Description Unit 30 June 2013 30 June 2012 % change 31 December 2012 Cash generated by operations R’m 515.7 302.3 70.6 687.3 Cash, net of debt (incl. pref share R’m 992.1 1 167.8 15.0 910.5 investment) Capital exp
Slide 35: Revenue contribution by metal
Revenue contribution by metal Six months ended Average price 30 June 2013 achieved* Description sales volume (US$) Platinum (oz) 84 628 1 519/oz Palladium (oz) 34 338 749/oz Gold (oz) 4 134 1 444/oz Rhodium (oz) 7 178 1 099/oz Iridium (oz) 2 367 982/oz Ruthenium (oz) 12 293 84/oz Nickel (tonne) 847
Slide 36: Satisfactory cost containment
Satisfactory cost containment Six months Six months Six months Six months ended ended ended ended 30 June 30 June 30 June 30 June 2013 2013 % 2012 2012 Description R million % of total change R million % of total Labour 371.4 35.8 3.2 359.9 35.9 Utilities 82.9 8.0 5.1 78.9 7.9 Contractor costs 231.0
Slide 37: Improved headline earnings
Improved headline earnings 253.1 (79.1) 400 350 15.3 (46.3) 213.1 (57.6) 10.5 45.2 300 (78.9) 43.9 1.7 (12.4) 250 (52.4) (14.8) 200 R’million (36.6) 150 143.2 60.2 (18.3) 100 70.6 50 0 RBPlat Interim Results Presentation 12 August 2013 > 37
Slide 38: Surplus cash after capital expenditure
Surplus cash after capital expenditure Surplus cash flow of R88 million after all capital expenditure 1 600 535.4 (49.0) (85.0) 1 400 (311.9) 1 200 0.4 (1.5) (6.8) 992.1 1 000 910.5 R’million 800 RBPlat 622.2 RBPlat 600 599.4 400 200 BRPM JV BRPM JV 311.1 369.9 0 Cash and cash Cash generated SIB Cap
Slide 39: R2 billion funding available
R2 billion funding available > R992.1 million cash on hand (BRPM JV R369 million – 67% attributable to RBPlat) > R1 billion unutilised revolving credit facility > R458 million working capital facilities • R152.5m utilised for Eskom, rehabilitation and rental guarantees • R200m utilised for employee
Slide 40: Outlook
» SECTION 6 Outlook i i | \ i: wh lL”
Slide 41: Outlook for the remainder of the year
Outlook for the remainder of the year > Build on improved safety record achieved > Anticipate full year production of approximately 2.3 million tonnes > Expect UG2 contribution of up 20% > Cost containment remains core management focus > Expect platinum and palladium deficits of ca 400koz and 1 200k
Slide 42: Thank you
Thank you > 42
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