Thungela Resources Limited · JSE:TGA
Thungela Resources — H1 2022 Earnings Presentation
25 slides from Thungela Resources's earnings presentation, 2022
Slide 1: 2022 Interim Results
[OFFICIAL] 2022 Interim Results Presentation for the six months ended 30 June 2022
Slide 2: Cautionary Statement
[OFFICIAL] CAUTIONARY STATEMENT Disclaimer: This presentation has been prepared by Thungela Resources Limited (“Thungela”) and comprises the written materials/slides for a presentation concerning Thungela and its affiliates (together, the "Group"). By attending this presentation and/or reviewing the
Slide 3: Our Purpose
[OFFICIAL] OuR PURPOSE create value together thingela
Slide 4: 2022 H1 Highlights
[OFFICIAL] 2022 H1 HIGHLIGHTS A FATALITY-FREE BUSINESS PROFITABILITY BALANCE SHEET STRENGTH Thungela has operated for Profit for the period Adjusted operating free cash flow Net cash position 12 months R9.6 billion R8.9 billion R14.8 billion without a loss of life (H1 2021: R351 million) (H1 2021: R
Slide 5: Operating a Fatality Free Business
[OFFICIAL] OPERATING A FATALITY FREE BUSINESS KEY SAFETY METRICS ELIMINATION OF FATALITIES IS OF PARAMOUNT IMPORTANCE 42 • Non-negotiable target: Fatality-free business • 12 months without a loss of life: Encouraging performance, but we cannot allow ourselves to become complacent 34 • Safety Strateg
Slide 6: Our Strategy
[OFFICIAL] OUR STRATEGY Delivering our strategy through four pillars Drive Maximise Create Optimise our ESG the full potential future capital aspirations of our existing diversification allocation assets options
Slide 7: Spiking on S – Distribution of R500m to EPP and CPP
[OFFICIAL] SPIKING ON “S” – DISTRIBUTION OF R500M TO EPP AND CPP DISTRIBUTIONS TO EPP AND CPP1 (R million) OUR PEOPLE AS OUR PARTNERS 773 • R250m distribution to SACO Employee Partnership Trust for H1 2022 (in addition to R137 million distribution relating to 2021) 250 CREATING A LASTING SOCIAL IMPA
Slide 8: Thuthukani Enterprise and Supplier Development Programme
[OFFICIAL] THUTHUKANI ENTERPRISE AND SUPPLIER DEVELOPMENT PROGRAMME LAUNCH OF OUR NEW ENTERPRISE SUPPLIER DEVELOPMENT (ESD) PROGRAMME • ‘Thuthukani’ means to uplift in isiZulu • Focused on providing small enterprises with hands-on entrepreneurial business support, mentorship and technical enablement
Slide 9: Charting a Pathway to Net Zero by 2050
[OFFICIAL] CHARTING A PATHWAY TO NET ZERO BY 2050 Develop Intermediate targets by March 2023 Net Zero by 2050 Initial targets achieved early Developing emissions reduction targets is only the first step in the development Review emission and execution of our climate change reduction targets Thungela
Slide 10: Elders Project Approved by the Board
[OFFICIAL] ELDERS PROJECT APPROVED BY THE BOARD MAXIMISING VALUE OF EXISTING ASSETS AND OPTIMISING CAPITAL • Elders has been an integral part of Thungela’s equity story from the outset as it will replace existing production volumes from Goedehoop • Elders was originally envisaged to cost R3 billion,
Slide 11: Elders Project Key Investment Criteria
[OFFICIAL] ELDERS PROJECT KEY INVESTMENT CRITERIA STRATEGIC PILLARS INVESTMENT CRITERIA Drive our ESG ENVIRONMENTAL SOCIAL GOVERNANCE aspirations Drive responsible • No increase to current • Regional development • Approved Environmental production profile • Sustain regional jobs impact assessment an
Slide 12: TFR Performance and Mitigation
[OFFICIAL] TFR PERFORMANCE AND MITIGATION TFR1 AVERAGE COAL RAILED TO RBCT (Mt per annum run rate) INCONSISTENT AND POOR TFR PERFORMANCE • At 30 June 2022 annualised run rate was 53.3Mt per annum, -24% • H1 2022 rail performance impacted by locomotive failures, availability of spares, theft of infra
Slide 13: The Numbers
[OFFICIAL] The Numbers Our performance
Slide 14: Highlights
[OFFICIAL] HIGHLIGHTS PROFIT FOR THE PERIOD ADJUSTED EBITDA ADJUSTED OFCF DIVIDEND R9.6 billion R16.7 billion R8.9 billion R60 per share (H1 2021: R351 million) (H1 2021: R1.9 billion) (H1 2021: R8.2 billion R1.7 billion utilisation) 92% of Adjusted OFCF EXPORT EQUITY EXPORT SALEABLE FOB COST/ FOB C
Slide 15: Strong Fundamentals Resulted in Record Prices
[OFFICIAL] STRONG FUNDAMENTALS RESULTED IN RECORD PRICES BENCHMARK AND REALISED THERMAL COAL PRICES (R/t) EXPORT MARKETS R/t 5,500 • Strong demand for seaborne thermal coal as global 5,000 economic growth continued post Covid-19 • Supply constraints and ongoing geopolitical tensions 4,500 remain pri
Slide 16: Decrease in Export Saleable Production Due to Curtailment
[OFFICIAL] DECREASE IN EXPORT SALEABLE PRODUCTION DUE TO CURTAILMENT EXPORT SALEABLE PRODUCTION (Mt) 7.1 EXPORT SALEABLE PRODUCTION 6.7 0.4 1.0 6.1 • As a result of poor and inconsistent rail performance, 0.2 0.2 stockpiles were full at the beginning of 2022 • Decision taken to curtail production at
Slide 17: FOB Cost per Export Tonne
[OFFICIAL] FOB COST PER EXPORT TONNE FOB COST PER EXPORT TONNE (R/t) RECONCILIATION COST PERFORMANCE • FOB cost per export tonne was R1,093/t including royalty charges in H1 2022 61 1,093 +10.2% 171 • R927/t excluding royalty charges 892 91 • Royalty charges significantly 820 72 impacted FOB costs i
Slide 18: Profit for the Period
[OFFICIAL] PROFIT FOR THE PERIOD PROFIT RECONCILIATION (R billion) SUBSTANTIAL IMPROVEMENT IN PROFITABILITY 2.2 • Revenue movement driven by record realised prices ($240/t), as well as a period-on-period foreign exchange benefit of R1.1 billion 3.5 • Volume impact muted as sales broadly flat year on
Slide 19: Fair Value Movements on Derivatives
[OFFICIAL] FAIR VALUE MOVEMENTS ON DERIVATIVES IMPACT OF HIGHER BENCHMARK COAL PRICES ON COAL SWAP AGREEMENTS UNDERSTANDING THE COAL SWAPS 350 3 Russia-Ukraine 1) 1 At 31 December 2021 ~900kt locked into coal swaps at USD/t conflict average price of $130/t. The forward curve at the time resulted in
Slide 20: Adjusted Operating Free Cash Flow
[OFFICIAL] ADJUSTED OPERATING FREE CASH FLOW ADJUSTED EBITDA TO ADJUSTED OPERATING FREE CASH FLOW (R billion) RECONCILING ADJUSTED EBITDA TO OPERATING FREE CASH FLOW 16.7 • Corporate taxes of R3.6 billion excludes 3.6 royalty payments of R1.0 billion • Derivative settlement relates to the cash settl
Slide 21: Capital Expenditure
[OFFICIAL] CAPITAL EXPENDITURE CAPITAL EXPENDITURE (R billion) CAPITAL EXPENDITURE • Capex of R568 million up to 30 June 2022 - R327 million spent on stay-in-business and R213 million 0.1 – 0.2 0.1 – 0.2 spent on stripping and development activities - R28 million expansionary capital spent on feasib
Slide 22: Returns to Shareholders in Excess of Stated Dividend Policy
[OFFICIAL] RETURNS TO SHAREHOLDERS IN EXCESS OF STATED DIVIDEND POLICY LIQUIDITY (R billion) 14.8 14.8 LIQUIDITY CONSIDERATIONS AND Green Fund 0.5 0.2 EPP/CPP DIVIDEND • Dividend policy is to target a minimum TGA payout of 30% of adjusted operating Surplus cash 8.8 8.2 shareholders free cash flow •
Slide 23: Outlook for FY2022
[OFFICIAL] OUTLOOK FOR FY2022 EXPORT SALEABLE PRODUCTION (Mt) FOB COST PER EXPORT TONNE (R/t) CAPITAL EXPENDITURE (R billion) Guidance Guidance Guidance -8% 1,025 – 1,065 145 870 - 890 +5% 20 0.1 – 0.2 Expansionary 13.0 – 13.6 14.0 – 15.0 885 - 915 850 - 870 1.6 – 1.8 Sustaining 2022 Revised 2022 Pr
Slide 24: Conclusion
[OFFICIAL] CONCLUSION Operating a fatality Strong market, Approval free business weak rail of Elders Continue to work tirelessly to performance Maximising value from existing ensure that everyone returns assets and optimising capital home safely every day Supportive price environment allocation expe
Slide 25: Thank you
[OFFICIAL] Thank you