Gem Diamonds Limited · LSE:GEMD
Gem Diamonds — FY2017 Earnings Presentation
32 slides from Gem Diamonds's earnings presentation, Mar 14, 2018
Slide 1: Full Year 2017 Results
Full Year 2017 Results 14 March 2018 The 910 carat Lesotho Legend recovered at Letšeng mine in January 2018
Slide 2: Disclaimer
Disclaimer The following presentations are confidential and are being made only to, and are only directed at, persons to whom such presentations may lawfully be communicated (“relevant persons”). Any person who is not a relevant person should not act or rely on these presentations or any of their co
Slide 3: Clifford Elphick, Chief Executive Officer
Description of picture here Clifford Elphick Chief Executive Officer
Slide 4: Our strategy – our key priorities
Our strategy – our key priorities… Extracting maximum value Working responsibly and Preparing for our future from operations maintaining social licence Business transformation – Promoting a culture of zero Advancing innovative driving business optimisation harm and responsible care technologies to e
Slide 5: … and what we achieved in 2017
… and what we achieved in 2017 Extracting maximum value Working responsibly and Preparing for our future from operations maintaining social licence Revenue: $214 million Zero fatalities Technical due diligence completed on early detection Underlying EBITDA: $49 million of diamonds within kimberlite
Slide 6: Our market
Our market Global economic backdrop Diamond market in 2017 Gem Diamonds’ market in 2017 position Continued growth of the Continued good demand in Improvement in the size and Chinese economy China quality of Letšeng’s production Reasonable growth in the US Continued US recovery Prices remain robust f
Slide 7: Improved $ per carat
Improved $ per carat $ per carat - 6 month rolling average 2 061 1 879 1 779 1 545 1 480 7.87 ct pink ($202 222 /ct) Dec 2016 Mar 2017 Jun 2017 Sep 2017 Dec 2017 58.38 ct ($61 905/ct) 2nd highest $/ct ever achieved Highest $/ct white diamond in 2017 8.65 ct pink ($164 855/ct) 202.16 ct ($44 083/ct)
Slide 8: Other significant Letšeng recoveries in 2017
Other significant Letšeng recoveries in 2017 126.45 ct white, 7.87 ct pink and 8.58 ct yellow 53.29 ct ($56 402/ct; $202 222/ct; $7 226/ct) (US$57 654/ct) 98.26 ct ($36 141/ct) 58.38 ct ($61 905/ct) 69.57 ct ($48 169/ct) 71.17 ct ($51 020/ct) 114.38 ct ($33 223/ct) 104.54 ct ($35 129/ct) 8
Slide 9: Our 910 carat Legend
Our 910 carat Legend Recovered in January 2018 Exceptional quality - Type IIa, D colour diamond Largest diamond recovered at Letšeng Fifth largest gem quality diamond ever recovered Sold for $40 million Other 2018 high-value recoveries include: - 169.16, 152.81, 149.43, 117.67, 116.98 an
Slide 10: Letšeng – five out of top ten this century
Letšeng – five out of top ten this century Largest white diamonds recovered this century Mine Rank Name Weight Country Year Karowe 1 Lesedi la Rona 1 109 Botswana 2015 Letšeng 2 Lesotho Legend 910 Lesotho 2018 Karowe 3 The Constellation 813 Botswana 2015 Letšeng 4 Lesotho Promise 603 Lesotho 2006 Am
Slide 11: Johnny Velloza, Chief Operating Officer
Description of picture here Johnny Velloza Chief Operating Officer
Slide 12: Zero harm is a priority
Zero harm is a priority Zero fatalities One lost time injury Zero major or significant community or environmental incidents CSI investment continues in line with our strategy All injury frequency rate (AIFR) Lost time injury frequency rate (LTIFR) 3.01 2.87 0.20 2.49 0.18 1.93 2.02 0.13 0.04
Slide 13: Letšeng operational overview
Letšeng operational overview Improvement in large diamond recoveries Continued optimisation of LoM plan – reduced waste tonnes; increased satellite pipe XRT installed in H2 2017 to retreat recovery tailings Continued focus on diamond damage Majority of business transformation value Waste t
Slide 14: Letšeng resource performance
Letšeng resource performance Grade performance - MCF of 99% Revenue by size fraction Diamonds >10.8 carats account for 76% of revenue 10% 14% 76% > 10 cts 5 - 10 cts < 5 cts Frequency of large diamond recoveries Jan & Feb Number of diamonds 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 15: Disruptive technology
Disruptive technology Reducing diamond damage remains a key value creation opportunity Complimentary key technologies designed to - Identify diamonds within kimberlite prior to crushing process - Liberate diamonds through electric pulse technologies Due diligence performed on positron emission
Slide 16: Ghaghoo
Ghaghoo Care and maintenance achieved in Formal sale process underway March 2017 - Recovered a total of 150k carats to date Annualised care and maintenance costs - Total resource of 20.5 million carats of $3.0 million (excluding once off - In situ value $4.9 billion costs) Once-off costs - R
Slide 17: Michael Michael, Chief Financial Officer
Description of picture here Michael Michael Chief Financial Officer
Slide 18: Full year 2017 – key performance indicators
Full year 2017 – key performance indicators Revenue EBITDA 271 106 104 249 213 214 79 190 $ millions 63 $ millions 48.6 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Basic EPS (pre exceptional items) Cashflow from operating activities 30 134 26 119 97 88 $ millions $ Cents 17 13 71 7 2013 2014 2
Slide 19: Full Year 2017 financial results
Full Year 2017 financial results 2017 2017 Before exceptional Exceptional % $ millions items items 2017 2016 Variance Revenue 214.3 - 214.3 189.8 13% Royalty and selling costs (18.8) - (18.8) (17.2) Cost of sales (137.7) (3.6) (141.3) (98.8) Corporate expenses (9.2) - (9.2) (11.0) Underlying EBITDA
Slide 20: Financial performance – cost analysis
Financial performance – cost analysis % Unit costs ($) 2017 2016 Variance Direct cash costs (before waste) per tonne treated 11.24 10.70 (5%) Operating costs per tonne treated 19.96 14.64 (36%) Waste cash cost per waste tonne mined 2.50 2.09 (20%) Exchange rate – Average LSL to $ 13.31 14.70 (9%) Un
Slide 21: Improving cashflows
Improving cashflows Cash Group cash of $47.7 million ($35.2 million attributable) Net cash of $1.4 million after debt of $46.3 million Dividend No dividend proposed for 2017 17 84 123 $ millions 18 9 8 36 53 2 1 1 48 31 Cash and facilities Letšeng - Financial Letšeng - Investment Corporate Inv
Slide 22: Funding
Funding Ghaghoo $25m facility repaid in February 2017 GDL facility restructured into $45 million facility consisting of: - $20 million RCF; and - $25 million term loan facility (Ghaghoo debt) Term / Amount Drawn down Available Company Lender Expiry Description ($ millions) ($ millions) ($ millio
Slide 23: Financial position
Financial position Increased equity value as a result of balance sheet strengthening Improved liquidity position (current ratio of 2.43 compared to 1.27 in 2016) $ millions 2017 2016 % Variance Non-current assets 321.0 271.9 Current assets 91.6 72.9 Total assets 412.6 344.8 20% Equity attributab
Slide 24: Clifford Elphick, Michael Michael and Johnny Velloza
Description of picture here Clifford Elphick, Michael Michael and Johnny Velloza Chief Executive Officer, Chief Financial Officer and Chief Operating Officer
Slide 25: Targeting $100 million
Targeting $100 million 4 Cumulative target of $100 million 20 1 over 4 years 4 Cumulative 42 Annual sustainable 14 savings of $100m savings of $30m Sustainable annual saving of $30 11 34 million by 2022 Implemented initiatives Mining Processing contributing $25 million of the Working capital &
Slide 26: Mining targeting $42 million
Mining targeting $42 million Timing of impact 5 6 2 3 3 2 2 2 1 31 1 8 9 9 9 5 0- Load, drill & haul Blasting practices Pit design 2017 2018 2019 2020 2021 2022 onwards All recurring initiatives Contract renegotiation – reduces unit 42 cost rates 28 Pit slopes – reduces waste tonnes 15 13 14 14
Slide 27: Processing targeting $34 million
Processing targeting $34 million Timing of impact 2 1 1 16 1 3 3 16 1 4 4 7 7 5 3 3 Plant uptime Additional throughput Plant consumables 1 - 2017 2018 2019 2020 2021 2022 onwards Recurring & once-off initiatives Increase treated tonnes and carats recovered through: 34 - Increasing plant uptime (fu
Slide 28: Working capital & overheads targeting $4 million
Working capital & overheads targeting $4 million Timing of impact 1 0.4 0.6 3 0.7 0.7 0.7 0.7 0.5 Overheads Working capital 0.1 0.0 2017 2018 2019 2020 2021 2022 onwards Recurring & once-off initiatives Once-off saving from working capital 3.7 management 0.5 3.0 0.6 Strict spend control procedur
Slide 29: Corporate activities targeting $20 million
Corporate activities targeting $20 million Timing of impact 4 7 16 3 3 3 3 Corporate costs Non-core assets 1 1 1 1 -- 1 Reducing or eliminating care & 2017 2018 2019 2020 2021 2022 onwards maintenance costs at Ghaghoo – formal Recurring & once-off initiatives sale process initiated 20 Selling no
Slide 30: 2018 Outlook
2018 Outlook FY 2018 Guidance Waste stripped (Mt) 24 - 26 Ore treated (Mt) 6.4 - 6.6 Satellite pipe ore contribution (Mt) 2.0 Carats recovered (Kct) 114 - 118 Carats sold (Kct) 112 - 116 Direct cash costs (before waste) per tonne treated1 (Maloti) 165 - 170 Operating costs per tonne treated2 (Maloti
Slide 31: Letšeng capital forecast
Letšeng capital forecast Letšeng 5 year capital plan 2018 2019 2020 2021 2022 Total tonnes mined (millions) 31.7 34.4 35.8 33.3 34.1 Project capital (US$m) 11 14 7 - - Stay in business capital (US$m) 15 6 6 6 6 Capital intensity (US$/tonnes mined) 0.82 0.58 0.36 0.18 0.18 Project capital 2018 -
Slide 32: Thank you
Thank you www.gemdiamonds.com The 910 carat Lesotho Legend recovered at Letšeng mine in January 2018