African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — H1 2009 Earnings Presentation
27 slides from African Rainbow Minerals's earnings presentation, Feb 20, 2009
Slide 1: Making profits and growing despite global economic crisis
Making profits and growing despite global economic crisis Interim results for the six months ended 31 December 2008 0 Corporate structure 100% 100%*** 51% 65%**** 16% Exploration Gold TEAL Harmony Platinum Ferrous Coal (primary listing on TSX) (primary listing on JSE) PGMs Iron Ore 10% 20% Xstrata C
Slide 2: Disclaimer
0 Disclaimer Certain statements in this report constitute forward looking statements that are neither reported financial results nor other historical information information, include but are not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, tr
Slide 3: Highlights
0 “ARM is well-positioned to continue to grow and be profitable despite the current global economic crisis.” Patrice Motsepe ARM Executive Chairman 5 0 Highlights • Strong headline earnings increase of 201% from R741 million to R2 232 million or 1 055 cents per share • Profit from operations before
Slide 4: Interim headline earnings growth continues
0 Interim headline earnings growth continues Cents per share 7 0 Earnings growth trend continues Cents per share 8 4
Slide 5: ARM Strategy: firing on all cylinders
0 ARM Strategy: firing on all cylinders Operational Organic growth efficiencies 2 x 2010 Acquisitions Africa / TEAL Entrepreneurial Owner operator Profit focused Partner of choice Management World-class management team 9 0 TEAL JV with Vale reaching finality TEAL listed to raise funding to further A
Slide 6: JV with Vale on African assets
0 JV with Vale on African assets • Understands and has good reputation in Africa • Excellent relationships in Africa • Capital • Assets • World-class copper expertise • Capital • Base metals mining experience 11 0 A proven track record ARM’s track record of project delivery continues Project assessm
Slide 7: Quality long term growth assets of ARM
0 Quality long term growth assets of ARM Goedgevonden Thermal Nkomati Nickel Large Khumani Iron Ore Coal Scale Expansion Capex committed 80% 70% 60% Stage Ramp-up Being commissioned Being developed Position on cost curve 40th percentile 25th percentile 40th percentile Steady state 10mt Iron Ore 3.5m
Slide 8: Operational review
Operational review André Wilkens, Chief Executive Officer 0 Operational performance • 5% increase in iron ore sales to 3.5 million tonnes • 10% reduction in manganese ore external sales to 1.3 million tonnes • 8% increase in domestic thermal coal sales (excluding discard dumps) to 5.65 million tonne
Slide 9: Diversified earnings base
0 Diversified earnings base Half yearly divisional attributable headline earnings R million 17 0 Dynamic diversified contributions Attributable EBIT commodity contributions (before exceptional items and corporate expenditure) Six months ended 31 December 2008 Six months ended 31 December 2007 Mangan
Slide 10: Strong underlying cash flows
0 Strong underlying cash flows ARM EBITDA margin is 57% ARM cash flow from operating activities R million 1 2 3 * *Excluding June 2008 debtors mark-to-market, Platinum EBITDA margin = 4% For six months ended 31 December 2008 1. GGV only 2. Assmang Chrome division 3. Nickel and Chrome` 19 0 High EBIT
Slide 11: Operations optimised to be cash positive
0 Operations optimised to be cash positive • Continuation of growth projects Capex • Total capex rescheduled over 3yrs >25% • Maintain gearing at manageable levels • Optimisation of operations Costs • Managing working capital • Short Sh t term t cutt backs b k – Machadodorp charge chrome and Dwarsri
Slide 12: Strong revenue drivers
0 Strong revenue drivers Percentage change in key revenue drives >400% Positive US Negative US D ll Dollar D ll Dollar commodity commodity price increase price increase Manganese Cr Ore (R/t) FeMn ($/t) Iron Ore ($/t) Export Rand/ Dollar Gold ($/oz) Platinum Palladium Nickel ($/lb) Rhodium Ore ($/t)
Slide 13: In rand terms, long term commodity prices remain strong
0 In rand terms, long term commodity prices remain strong Consensus commodity prices converted to rand Jan 09 4PGM Manganese Ore Aug 08 R/kg R/mtu Jun 07 500 000 145 450 000 130 115 400 000 100 350 000 85 300 000 70 55 250 000 40 200 000 25 150 000 10 2006 2007 2008 2009F 2010F 2011F 2012F 2006 2007
Slide 14: 2 x 2010 growth strategy – 100% basis
0 2 x 2010 growth strategy – 100% basis Nkomati Nickel Thousand tonnes Financial years Chrome ore Million tonnes Financial years 27 0 2 x 2010 growth strategy – 100% basis All sales volumes for financial years Manganese Ore Iron Ore Thousand tonnes Thousand tonnes Ferro Manganese Charge Chrome Thous
Slide 15: 2 x 2010 growth strategy – attributable
0 2 x 2010 growth strategy – attributable Thermal Coal Million tonnes 7 PCB GGV 6 5 4 3 2 1 0 2005a 2006a 2007a 2008a 2009e 2010e 2011e 2012e Financial Years 29 0 Balance Sheet stronger since F2008 EBITDA excluding exceptional items Cash on Balance Sheet R million R million Capital Expenditure Net D
Slide 16: Growth Projects continue
0 Growth Projects continue Indicative revisions to Attributable capital ARM Coal expenditure by division Two Rivers R million Modikwa Nkomati 4 000 TEAL 3 615 ARM Ferrous 3 500 3 000 2 736 2 610 2 500 2 000 1 500 1 000 500 0 F2008a F2009e F2010e F2011e Previous 4 235 4 836 3 760 • Strong EBITDA of R
Slide 17: Safety
0 Safety • Reduction in Lost-Time-Injuries • No increase in reportable accidents • Modikwa achieved 4 million Fatality Free Shifts • Beeshoek achieved 6 000 Fatality Free Shifts • Dwarsrivier achieved 4 098 Fatality Free Production Shifts, per the DME 1 000 Fatality Free Production Shifts competitio
Slide 18: ARM operational summary
Questions 0 ARM operational summary 1H F2009 F2008 Modikwa Cash cost R/kg 169 645 144 334 (100% basis) PGMs in concentrate (4E) Ounces 156 335 294 721 Cash operating margin (excluding debtor June 08 adjustment) % -71 (-9) 58 Two Rivers Cash cost g R/kg 139 771 125 391 (100% basis) PGMs in concentrat
Slide 19: ARM Platinum: Modikwa and Two Rivers
0 ARM Platinum: Modikwa and Two Rivers PGMs in concentrate sales Modikwa (4E) – 100% basis Two Rivers (4E) – 100% basis ARM attributable (4E) Slowing volumes, maintaining Mining rate reduced, plant efficiencies Small reduction expected, but development to improve operational continue to improve oper
Slide 20: ARM Ferrous: Iron Ore and Manganese Ore sales
0 ARM Ferrous: Iron Ore and Manganese Ore sales Iron Ore – 100% basis Manganese Ore – 100% basis • Khumani continues ramp-up • Slowdown in sales, especially spot sales Million tonnes Million tonnes ? ? 1H F2008 2H F2008 1H F2009 2H F2009 39 0 ARM Ferrous: Manganese and Chrome Alloys sales Manganese
Slide 21: ARM Coal and Summarised income statement
0 ARM Coal: Export and Domestic Thermal Coal Export Thermal Coal Domestic Thermal Coal • Struggling volumes due to poor • Strong volumes (excl discard dumps) performance at Coal link p p expected to continue at favourable p prices Million tonnes attributable to ARM 1H F2008 2H F2008 1H F2009 2H F200
Slide 22: Summarised cash flow and balance sheet
0 Summarised cash flow Unaudited Unaudited R million Dec 2008 Dec 2007 Cash generated by operations 4553 1 565 Net finance costs 64 (88) Dividends received 85 - Dividends paid (847) (315) Tax paid (1 057) (164) 2 798 998 Capital p expenditure p ((1 776)) ((1 361)) Net borrowings raised / (repaid) (6
Slide 23: Growth matched with strong long term pricing
0 Growth matched with strong long term pricing Consensus commodity prices in US$ Jan 09 Aug 08 Nickel Iron Ore Jun 07 $/lb $/t 20 250 18 16 200 14 12 10 150 8 6 100 4 2 0 50 2005 2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009F 2010F 2011F 2012F Thermal Coal Manganese Ore $/t $/mtu 130 14 12
Slide 24: Platinum: supply versus demand analysis
0 Platinum: supply versus demand analysis 2007a 2008e 2009e 2010e 2011e 2012e 2013e 2014e 2015e 2016e Platinum Price (US$ per oz) 1 331 1 675 1 550 1 625 1 650 1 575 1 500 1 450 1 520 1 566 Supply South Africa 5 035 5 000 5 250 5 500 5 775 6 064 6 367 6 685 7 020 7 371 Russia 910 920 918 946 974 1 0
Slide 25: Minerals Resource/Reserve summary
0 Minerals Resource/ Reserve summary Manganese (Measured and Indicated) (Proved and Probable) Mineral Resources Mineral Reserves Mt Mn% Fe% Mt Mn% Fe% Nchwaning No 1 Seam 137.7 44.7 8.83 115.3 44.7 8.83 No 2 Seam 185 2 185.2 42 5 42.5 15 4 15.4 - - - Gloria No 1 Seam 52.5 38.3 5.54 40.4 38.3 5.54 No
Slide 26: ARM Platinum operating costs split F2008
0 ARM Platinum operating costs split F2008 Two River Modikwa Nkomati R340/tonne milled R538/tonne milled R339/tonne milled Consumables 48% Consumables 25% Consumables 32% Other 2% Other 16% Other 4% Power 3% Power 3% Power 4% Labour 47% Labour 56% Labour 60% Average contribution to the total cost Di
Slide 27: Questions
Questions www.arm.co.za 27
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