Anglo American plc · LSE:AAL
Anglo American — De Beers — Corporate Update (November 2003)
32 slides from Anglo American's corporate update, Nov 5, 2003
Slide 1: De Beers Operations and Exploration Overview
De Beers Operations and Exploration Overview 5 November 2003 GA Beevers Director Operations
Slide 2: Interim Results: DTC Sales
INTERIM RESULTS DTC SALES 3,000 2,500 2,842 2,920 2,422 US $ Millions 2,000 1,500 1,000 500 - 2002 June 2003 June 2003 June Actual Budget Actual
Slide 3: Interim Results: Operating Cashflow
INTERIM RESULTS OPERATING CASHFLOW 1,200 1,000 1,144 1,115 US $ Millions 800 600 400 200 - 2002 June Actual 2003 June Actual
Slide 4: Interim Results: Net Gearing
INTERIM RESULTS NET GEARING 60% 50% 40% 53.7% 30% 20% 20.3% 10% 0% 2002 June 2003 June Actual Actual
Slide 5: Debt Management
DEBT MANAGEMENT 2001: Leveraged Buyout Delisting/Private Company US$ 3.55 billion principal debt US$ 1 billion revolving credit facility Fixed interest arrangements i.e. 50 % hedged which as things turned out was expensive 2002: Principal debt: US$ 2.6 billion / Revolving credit untouched US$ 710 mi
Slide 6: Debt Management
DEBT MANAGEMENT 2003: Strong cashflow generated June: US$ 1 115 million ‘Defying gravity...’ Debt Refinancing US$ 2.5 Billion Revolving Credit loan 5 year / Standard commercial terms
Slide 7: De Beers Exploration Strategy
De Beers Exploration Strategy Exploration vision Finding De Beers’ Future Exploration mission Securing economic diamond resources through discovery, partnership and acquisition Future Strategic Alignment Secure new high margin mines Extend geographic diversity of De Beers’ operations Focus mainly on
Slide 8: World Diamond Production - 1870 to 2002
World Diamond Production - 1870 to 2002 US$ Billion RSA O ther Nam ibia DRC/Zaire Angola Russia Botswana Australia Canada 9 8 South Africa Africa Alluvials Big Pipes 7 6 5 4 3 2 1 0 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
Slide 9: How do we explore?
How do we explore? • Identify most prospective areas – Early into new areas with maximum holdings • Identify, assess, action potential quality JVs or acquisition opportunities • Top-class support – Labs, MRM, financial, legal, HR, corporate, … • Different strategies for different environments – Mix
Slide 10: Airborne discovery technologies
Airborne discovery technologies
Slide 11: Current Areas of Activity
Current Areas of Activity CANADA Toronto Sudbury Grande Prairie INDIA Bangalore SOUTH AFRICA AMERICA Lobatse Brasilia Bulawayo AUSTRALIA Kimberley Melbourne Johannesburg Perth
Slide 12: Laboratory support services
Laboratory support services • Mineralogical Laboratories – Toronto / Brasilia / Lobatse / Bulawayo / Kimberley / Centurion / Melbourne / Bangalore – Support to global exploration activities – Examination of sample concentrates for the recovery of kimberlitic indicator minerals • Microdiamond Laborat
Slide 13: Laboratory Focus Areas
Laboratory Focus Areas • Dedicated facilities for high priority areas • Increase laboratory capacity • More efficient sample turnaround • New technologies introduced • Providing full, reliable and timely results to our partners
Slide 14: De Beers Exploration Expenditure
De Beers Exploration Expenditure 2002 Exploration Spend Services South America (20%) RSA Support & (8%) Services (22%) Advanced North America Exploration & Europe (18%) Early stage Exploration (39%) Africa (62%) (20%) Australia & Asia (11%) In 2002 De Beers Exploration discovered 63 new kimberlites
Slide 15: De Beers Exploration Expenditure
De Beers Exploration Expenditure 2003 Forecast Exploration Spend By region By Stage RSA Support & Services Africa Services 19% 18% 21% South America Advanced 8% 9% Australia & Asia Early stage North America 13% 72% & Europe 32%
Slide 16: Country Risk
Country Risk After WMRC Country League Table, January 2003
Slide 17: Operations
OPERATIONS Williamson TANZANIA ORAPAQD @y OomTsHAn QL ETLHAK ANE BOTSWANA \ Windhoek e NAMIBIA IWAN ENGg Oe. @ ELIZABETH BAY Johannes burg KIMBERLEY D os MINES a SCORES EIN ” \ SOUTH AFRICA 4 ‘e Cape Town
Slide 18: Growth: Production Performance
GROWTH PRODUCTION PERFORMANCE Carats - Million Tons - Million 60 210 55 185 50 160 45 135 40 110 35 85 60 30 2000 2001 2002 2003 F 2004 B Tons treated Tons mined Carats recovered
Slide 19: Growth: Efficiency Improvement
GROWTH EFFICIENCY IMPROVEMENT De Beers Group US$ per Ton Treated 12.2 11.2 10.2 US$ 9.2 8.2 7.2 6.2 1998 1999 2000 2001 2002 2003 2004 Forecast Provincial Budget
Slide 20: Growth: Recently Completed Projects
GROWTH RECENTLY COMPLETED PROJECTS • Kimberley Combined Treatment Plant – Treatment of underground production material and old dump material – Extension of operations at Kimberley to 2020 – Production ramp-up challenges/problems • Equipment failure • Lack of redundancy • Ore mix • De Beers Marine –
Slide 21: Growth: Expansion Projects
GROWTH EXPANSION PROJECTS • Finsch Block 4 – Introduction of Block Cave mining – New mining level – 63 Level – Project Implementation • Premier C – Cut – Extension of life of mine – Evaluation for board submission in 2004
Slide 22: Growth: Expansion Projects
GROWTH EXPANSION PROJECTS • Namdeb Elizabeth Bay – Wet primary crushing circuit – Wet and cemented ore – Extension of life from 2004 to 2013 • Venetia Quick Wins – Process plant ‘de-bottlenecking’ – Maximize tonnage treated – Throughput increase: 1.3 million tons / 1.6 million carats per year
Slide 23: Growth: New Mines
GROWTH NEW MINES • Canadian Operations – Development of operations in Canada • Snap Lake – Trial Mining in 2004 • Victor – Feasibility study & permitting • Gahcho Kué – Pre-feasibility study – Capital Investment of around US$ 1.5 billion
Slide 24: Growth: New Mines
GROWTH NEW MINES • South Africa Voorspoed – Discovered in 1906 – Mined for 5.5 years by Voorspoed Diamond mining company – Bought by DBCM in 1912 – Sampled in 1965/67, 1979/80, 1997 and 1998 – Feasibility study to re-open – Geotechnical & Ore dressing activities
Slide 25: Growth: Resources Extension
GROWTH RESOURCES EXTENSION • Enhanced resources information • Short-term forecasting • Supplier of Choice / ITO • LOM extension for brownfield ore bodies • Programme cost: > R500 million • Focused MRM team
Slide 26: Current Challenges
CURRENT CHALLENGES • Exchange rate – 2003 Budget at rate higher than R7-00 – Financial pressure • Marginal/small mines – more pressured! • Voluntary Separation – Avoid forced retrenchments – Survival – Incentive – Fair and transparent process
Slide 27: Current Challenges: SA Royalty Bill
CURRENT CHALLENGES • SA Royalty/Money bill – 8 % ad valorem royalty on diamonds – Diamonds attract highest royalty – Other major commodities: • Gold – 3 % royalty • Platinum – 4 % royalty – De Beers’ position: Bill is discriminatory & punitive against diamond industry
Slide 28: Current Challenges: Mining Charter Scorecard
CURRENT CHALLENGES • Minerals and Petroleum Resources Development Act/Charter/Scorecard Element Internal Rating HR Development Employment Equity Procurement Housing & Nutrition Mine Community Development
Slide 29: Current Challenges: Mining Charter Scorecard
CURRENT CHALLENGES • Minerals and Petroleum Resources Development Act/Charter/Scorecard Element Internal Rating Beneficiation Migrant Labour Ownership & Joint Venture Reporting
Slide 30: Empowerment
EMPOWERMENT • Exploration: Ndowana JV – Mvelaphanda & De Beers • Preparation for BEE partner – Partner of choice – Selection process in progress – More than 30 interested parties • Stand-alone asset / De Beers Group of Companies • Broad-based socio-economic empowewrment • Proudly South African
Slide 31: Empowerment: Employment Equity
EMPOWERMENT 70% EMPLOYMENT EQUITY 500 450 60% 400 50% 350 # of Employees 300 40% 250 30% 34.2% 200 30.7% 24.7% 27.3% 20% 150 100 10% 50 0% 0 2000 2001 2002 1st Half 2003 Designated % Designated
Slide 32: Thank You
THANK YOU . oe ¢