African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — FY2006 Earnings Presentation
32 slides from African Rainbow Minerals's earnings presentation, Aug 31, 2006
Slide 1: Provisional results for the year ended 30 June 2006
Provisional results for the year ended 30 June 2006 Thursday, 31 August 2006
Slide 2: Disclaimer
2 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 unkn
Slide 3: Overview and strategy
3 Overview and strategy Patrice Motsepe Executive Chairman
Slide 4: Highlights
4 Highlights • Headline earnings increased by 36% to R462 million from R339 million • Record product sales achieved by: Iron ore ↑ 3% to 5.9 million tonnes Ferromanganese ↑ 32% to 260 thousand tonnes Nickel ↑ 6% to 5 616 tonnes PGMs ↑ 4% to 293 thousand ounces • ARM Coal successfully establi
Slide 5: Highlights
5 Highlights • Modikwa reported annual operating profits of R153 million compared to the loss of R83 million • ARM Broad-based Economic Empowerment Trust now registered and beneficiaries include trade unions and church groups as well as five provincial rural upliftment trusts and a women upliftment
Slide 6: Growth strategy
6 Growth strategy • We will continue investing capital in our organic growth programme to double production in key commodities in South Africa by 2010 • Significant exploration investment through the capitalisation of TEAL (through the listing), focused on Africa • We expect volume demand and commod
Slide 7: We do it better
We do it better Two Rivers + Nkomati expansion + Modikwa + Dwarsrivier + Khumani - Nchwaning Ill - + Nchwaning III + Two Rivers Increasing operational Creating organic ency to maintain growth in key commodities and improve and core assets — competitiveness 2 x 2010 strategy Unlocking value in Growin
Slide 8: Business review
8 Business review André Wilkens Chief Executive Officer
Slide 9: Headline earnings per share over years
9 Headline earnings per share over 3 years Year ended 30 June: 250 225 200 166 cents per share 150 100 37 50 0 2004 2005 2006
Slide 10: More balanced and diversified
10 More balanced and diversified • Good progress in achieving a balanced diversified earnings portfolio through the implementation of our growth strategy 400 370 300 cents per share 219 185 196 200 164 100 42 67 43 0 -22 -25 -47 -100 -56 -81 -99 -200 *1 *2 *2 *2 *3 PGMs Nickel Iron ore Manganese Chr
Slide 11: 2 x 2010 growth
11 2 x 2010 growth ARM is in the process of building new mines and further upgrading operations From (2005) To Status Two Rivers – PGMs – 220 000 PGM oz Ahead of schedule Modikwa – PGMs 210 000 PGM oz 350 000 PGM oz Near full production 21 500 t Ni Nkomati – PGMs 5 000 t Ni Expansion plan approved 1
Slide 12: 2 x 2010 growth
12 2 x 2010 growth ARM is in the process of building new mines and further upgrading operations From (2005) To Status Dwarsrivier – chrome 0,65 mt 1,5 mt 1,2 mt completed Nchwaning 3 – manganese 2,1 mt 2,8 mt Fully operational 280 000 t/ Gloria* – manganese 190 000 t Blue sky opportunity 700 000 t B
Slide 13: Project pipeline
13 Project pipeline Nchwaning Nkomati (manganese) (nickel and PGMs) Dwarsrivier (chrome) 2.1m t → 2.8m t 5 000t Ni → 0.65m t → 1.5m t Two Rivers 21 500t Ni, 130 000 PGM oz (PGMs) 0 → 220 000 PGM oz 2005 2006 2007 2008 2009 210 000 PGM oz → 350 000 PGM oz 6 → 8.4 mtpa (’09) 8.4 → 12.0 mtpa (’10) 12 →
Slide 14: ARM Ferrous – production growth
14 ARM Ferrous – production growth Iron ore build-up – Beeshoek and Khumani 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 Manganese ore build-up – Gloria and Nchwaning 2,000 0 2004/5 2007/8 2010/11 2013/14 2016/17 4 3.5 Beeshoek Khumani 3 2.5 2 1.5 1 0.5 0 2005/6 2007/8 2009/10 2011/12 2013/1
Slide 15: ARM Platinum – PGM production growth
15 ARM Platinum – PGM production growth PGM production attributable 400 350 300 250 200 150 100 50 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Modikwa Two Rivers Nkomati
Slide 16: Capital expenditure by division
16 Capital expenditure by division Actual Estimate R million June 2006 June 2007 June 2008 June 2009 ARM Platinum 1 114 820 355 257 • Modikwa 107 184 171 161 • Nkomati 50 213 54 - • Two Rivers 957 422 130 96 ARM Ferrous 554 907 920 583 ARM Coal - 177 293 102 TEAL 2 73 1 1 ARM company 1 1 1 1 TOTAL 1
Slide 17: ARM Ferrous – 50% stake in Assmang
17 ARM Ferrous – 50% stake in Assmang • Revenue flat for the year at R4.4 billion • increased iron ore and ferromanganese volumes • lower manganese ore and charge chrome volumes • weaker $ prices for manganese (ore and alloys) and ferrochrome • Continued success in increased efficiencies and lower c
Slide 18: ARM Ferrous
18 ARM Ferrous Assmang product volume sales – 100% basis Year ended 30 June 2006 2005 Percentage ‘000 ‘000 change metric tonnes metric tonnes Iron ore 5 926 5 776 3 Manganese ore 1 678 1 811 (7) Manganese alloys 260 197 32 Charge chrome 210 262 (20) Chrome ore* 178 35 409 * Excluding intra-group sal
Slide 19: ARM Platinum
19 ARM Platinum • Modikwa Platinum Mine Modikwa reported attributable earnings of R42 million, up from a R99 million loss for the prior year PGM in concentrate up by 4% Cash costs rose by 8% mainly due to increased mineable ore reserves – now 13 months Ramp-up substantially complete and chan
Slide 20: ARM Platinum
20 ARM Platinum Modikwa – 100% basis Year ended 30 June Percentage Operational statistics 2006 2005 change Cash operating profit R million 360 (173) 308 Tons milled Million tonnes 2.51 2.46 2 Head grade (4E) g/t 4.28 4.23 2 PGMs in concentrate ounces 293,313 281,177 4 Cash cost R/tonne 398 367 (8) C
Slide 21: ARM Platinum
21 ARM Platinum • Two Rivers Platinum Project • Excellent progress in building of concentrator plant and the mine • Wet commissioning of concentrator plant in July 2006 with ore processing in August 2006 – well ahead of schedule
Slide 22: ARM Platinum
22 ARM Platinum • Two Rivers Platinum Project • Concentrator plant to be at full capacity Q4 of 2006 calendar year and full production from mine in Q4 of 2007 • Current stock pile of 1.1 million tonnes will enhance initial ramp-up and related returns • Project comfortably within budget
Slide 23: ARM Platinum
23 ARM Platinum Nkomati – 100% basis Year ended 30 June Operational statistics Percentage 2006 2005 change Cash operating profit R million 547 349 57 Tonnes milled ‘000 373 346 8 Head grade % nickel 1,89 2,01 (6) On-mine cash cost per tonnes treated R/tonne 392 369 (6) Cash cost (net of by-products)
Slide 24: TEAL
24 TEAL • Konkola North Copper Project - Zambia • Management expects to announce an update on the resource base before December 2006 • Mwambashi Copper Project - Zambia • feasibility study for a 12,000 tonnes per annum copper producer remain positive • would require a favourable off-take arrangement
Slide 25: ARM Coal
25 ARM Coal • Formation of ARM Coal implemented • R400 million funded through debt facilities • respective committees and management teams established and active • Goedgevonden Project (12 Mtpa ROM) to be taken to respective boards for consideration in Q4 of 2006 calendar year • RBCT expansion proje
Slide 26: ARM Coal
26 ARM Coal Structure Transaction Steps n ARM Coal is established and ARM and Xstrata ARM Xstrata subscribe for their interests through respective contributions of R400 million and R384 million 51% 100% 49% o ARM Coal subscribes for a 20% interest in Xstrata Coal SA in the form of XSA ARM participat
Slide 27: ARM Coal: A compelling rationale for ARM
27 ARM Coal: A compelling rationale for ARM • Further diversification of asset portfolio with the addition of quality coal assets • Establishment of a strategic relationship with a major international metal and mining group and leading thermal coal producer • The partners have agreed to pursue oppor
Slide 28: Summarised income statement
28 Summarised income statement Year ended 30 June Reviewed** Restated R’million 2006 2005 Revenue 4 622 5 485 Profit from operations 1 112 1 588 Income from investments 24 22 Finance costs (134) (172) Loss from associate - (150) Exceptional items 139 155 Taxation (377) (530) Minority interest (163)
Slide 29: Summarised balance sheet
29 Summarised balance sheet Reviewed** Restated R’million 2006 2005 ASSETS Non-current assets 12 305 8 806 Current assets 2 306 2 960 14 611 11 766 EQUITY AND LIABILITIES Capital and reserves 10 250 6 511 Minority interest 143 1 461 Total shareholders’ interest 10 393 7 972 Non-current liabilities 2
Slide 30: Breakdown of total debt
30 Breakdown of total debt Long and short term debt at 30 June 2006 R million Assmang – 50% 51 ARM Company 614 Modikwa 536 Two Rivers - Banks 545 - Impala 506 2 252
Slide 31: We do it better
We do it better 31 Two Rivers + Nkomati expansion + Modikwa + Dwarsrivier + Khumani - Nchwaning Ill - + Nchwaning III + Two Rivers Increasing operational Creating organic ency to maintain growth in key commodities and improve and core assets — competitiveness 2 x 2010 strategy Unlocking value in Gro
Slide 32: Questions?
32 FaxrM African Rainbow Minerals Questions?
African Rainbow Minerals — FY2006 Earnings Presentation on 6ix