African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — H1 F2022 Earnings Presentation
46 slides from African Rainbow Minerals's earnings presentation, Mar 1, 2022
Slide 1: Executive Chairman statement on Bokoni acquisition and dividend
“We are pleased to have signed the agreement to acquire the Bokoni Platinum Mine. Development of the mine will allow us to scale our PGM portfolio and create value for shareholders and other stakeholders. We declared an interim dividend of R12.00 per share and remain committed to paying competitive
Slide 2: Disclaimer and forward looking statements
Disclaimer Throughout this presentation a range of financial and non-financial measures are used to assess the company’s performance, including, but not limited to financial measures that are not defined under International Financial Reporting Standards (IFRS). These adjusted financial measures are
Slide 3: Overview of results
Overview of results For the six months ended 31 December 2021 Khumani Mine
Slide 4: Salient features: Safety and health
Salient features: Safety and health LOST TIME INJURY TOTAL RECORDABLE INJURY FREQUENCY RATE (LTIFR)* FREQUENCY RATE (TRIFR)** 10% to 18% to 0.36 0.67 (1H F2021: 0.40) (1H F2021: 0.82) FATALITIES COVID-19 1 fatality at Two Rivers Mine 99% recovery rate 68% of total workforce was fully (1H F2021:
Slide 5: Salient features: Headline earnings
Salient features: Headline earnings GROUP HEADLINE EARNINGS ARM FERROUS HEADLINE EARNINGS 27% to 18% to R3.7 billion R2.4 billion (1H F2021: R5.0 billion) (1H F2021: R3.0 billion) ARM PLATINUM HEADLINE EARNINGS ARM COAL HEADLINE EARNINGS 38% to to R1.2 billion R351 million (1H F2021: R2.0 bi
Slide 6: Salient features: Total dividends
Salient features: Total dividends INTERIM DIVIDEND DIVIDENDS RECEIVED FROM ASSMANG 20% to 133% to R12.00 per share R3.5 billion (1H F2021: R10.00 per share) (1H F2021: R1.5 billion) Since the period end ARM received a dividend of R2 000 million from Assmang. DIVIDENDS RECEIVED FROM TWO RIVERS
Slide 7: Salient features: Financial position and growth
Salient features: Financial position and growth ASSMANG CASH AND CASH EQUIVELENTS BOKONI PLATINUM MINE GROUP NET CASH AT 31 DECEMBER 2021* AT 31 DECEMBER 2021** 8% to Sale and purchase agreement signed for the 35% to acquisition of Bokoni Platinum Mine (subject to R4.4 billion conditions prece
Slide 8: Headline earnings (R million)
Headline earnings (R million) 9 000 8 025 8 000 7 000 6 000 5 039 5 000 4 000 3 696 3 379 2 869 3 025 3 000 2 201 2 155 1 945 2 000 1 000 0 F2018 F2019* F2020* F2021* F2022* First half (1H) Second half (2H) * The F2019 to F2022 headline earnings include re-measurement gains and losses on partner loa
Slide 9: Dividends per share (cents)
Dividends per share (cents) 2 500 2 000 2 000 1 500 1 200 1 000 1 000 900 750 700 500 500 400 250 0 F2018 F2019 F2020 F2021 F2022 Interim dividend per share Final dividend per share 9
Slide 10: EBITDA split by commodity (%)
EBITDA SPLIT BY COMMODITY (%) EBITDA (R million) 2 443 1 476 3 923 12 227 3 337 110% 2% 3% 4% 1% 1% 8% 5% 4% 90% 19% 10% 29% 38% 70% 46% 42% 46% 50% 54% 37% 30% 46% 46% 37% 10% 19% 16% (3%) (4%) (6%) (10%) F2018 F2019 F2020 F2021 1H F2022 PGMs Iron Ore Manganese Coal (GGV) Other* Significant EBITDA
Slide 11: African Rainbow Minerals strategy
FaxmM African Rainbow Minerals FaxtM African Rainbow Minerals "DELIVER COMPETITIVE | RETURNS AND CREATE fe Entrepreneurial SUSTAINABLE VALUE management FOR ALL STAKEHOLDERS Operate @ @ Focus on fe Investing in ae a @ value-enhancing our employees CUE 2 and integrated responsibly and efficiently P, A
Slide 12: Growth projects
Growth projects CURRENT AND FUTURE GROWTH PROJECTS Potential ramp up to 4.6 million tonnes Ramp up to 4.4 million tonnes Black Rock and saleable product per annum subject to saleable product per annum in Gloria Projects rail availability and market conditions F2023 Two Rivers Additional 40 000 to 60
Slide 13: Salient features of the Bokoni Mine acquisition
Salient features of the Bokoni Mine acquisition • A new wholly owned subsidiary of ARM Platinum has been established to acquire 100% of the shares and claims in Bokoni Platinum Mines Proprietary Limited (Bokoni Mine) from Anglo American Platinum Limited and Atlatsa Resources. Transaction • ARM Plati
Slide 14: Salient features of the Bokoni Mine acquisition
Salient features of the Bokoni Mine acquisition • ARM has sufficient cash resources to fully fund the purchase consideration. Financing • A Definitive Feasibility Study (DFS) will be completed in approximately 12 months. • Approximately R5.3 billion of development capital in real 2021 terms to be sp
Slide 15: Operational review
Operational review Chief Executive Officer: Mike Schmidt Modikwa Mine
Slide 16: Headline earnings analysis by operation / division
Headline earnings analysis by operation / division (R million) 7 000 27% 6 000 20% 5 039 5 024 5 000 ( 15) 557 4 042 4 000 ( 883) 3 696 ( 129) ( 527) ( 346) 3 000 2 000 Increase Decrease 1 000 0 1H F2021 Net re- 1H F2021 Platinum Ferrous Coal Corporate 1H F2022 Net re- 1H F2022 headline earnings mea
Slide 17: Headline earnings/(loss) by division / operation
Headline earnings/(loss) by division / operation R million 1H F2022 1H F2021 % change ARM Ferrous 2 428 2 955 (18) Iron ore division 1 889 2 835 (33) Manganese division 559 137 >200 Consolidation adjustment and other (20) (17) (18) ARM Platinum 1 245 2 201 (38) Two Rivers Mine 725 1 279 (43) Modikwa
Slide 18: EBITDA margins by commodity (%)
EBITDA margins by commodity (%)* 67% Coal (GGV) 3% 51% PGMs 61% 46% Iron ore 53% Manganese 26% alloy 19% Manganese 21% ore 6% 0% 10% 20% 30% 40% 50% 60% 70% 1H F2022 1H F2021 *Excludes any re-measurement adjustments. 18
Slide 19: Bokoni is a large high-grade opportunity
Bokoni is a large high-grade opportunity Overview of Bokoni Mine PGM mine located in Limpopo Province, South Africa and forms part of the North-Eastern Limb of the Bushveld Complex. Bokoni Mine’s Mineral Resource is the second largest PGM resource in South Africa. Existing mining and processing plan
Slide 20: Bokoni Mine is a large high-grade opportunity
Bokoni Mine is a large high-grade opportunity Overview of Bokoni Mine As of 31 December 2020 Bokoni Mine had measured, indicated and inferred mineral resources of 153 million ounces contained 4E PGMs with a grade of 5.87 g/t. Bokoni Mine’s Mineral Resource comprises of approximately 64% UG2 and 36%
Slide 21: Bokoni is a compelling fit and opportunity for ARM
Bokoni is a compelling fit and opportunity for ARM Substantially increased resource base Strong improvement to portfolio Mineral Attractive Eastern Limb portfolio Resource grade (100% basis) (100% basis) (Moz 4E) (g/t 4E) Close Bokoni Mine Modikwa Two Rivers proximity to by 0,8 g/t ■ 135% to existin
Slide 22: Proposed DFS Plan for Bokoni Mine
Proposed DFS Plan for Bokoni Mine ARM has developed a new UG2 mechanised mine plan for Bokoni Mine • Initially mine the UG2 orebody exclusively – allowing for a >23 year mine plan mining Measured UG2 Resources with high confidence levels, commencing in 2024 with: Precious metal to be recovered (6E K
Slide 23: Proposed DFS Plan for Bokoni Mine
Proposed DFS Plan for Bokoni Mine ARM has developed a new UG2 mechanised mine plan for Bokoni Mine • Targets: - Average 6E production of approximately 300 000 Life of mine ore mining schedule ounces per annum. - Within the bottom half of the industry cash cost 250 000 6.0 curve - given its mechanise
Slide 24: ARM Ferrous
ARM Ferrous Khumani Mine
Slide 25: ARM Ferrous
ARM Ferrous VARIANCE ANALYSIS – SEGMENT RESULT (R MILLION) CHANGES IN AVERAGE US DOLLAR INDEX PRICES (%) 5 000 100% 91% 4 162 80% 4 000 ( 495) 852 2 971 60% 3 000 ( 336) 40% 26% 16% 2 000 ( 712) 20% ( 500) 0% 1 000 (7%) (20%) 0 High Carbon Export 44% Export 37 % Export iron ore*** 1H F2021 ZAR:USD V
Slide 26: Iron ore (100% basis)
Iron ore (100% basis) SALIENT FEATURES % unit 1H F2022 1H F2021 change • Beeshoek and Khumani mines completed 18.5 and 7 Export sales volumes 000 tonnes 6 657 6 713 (1) consecutive years fatality-free, respectively. Local sales volumes 000 tonnes 1 517 1 533 (1) • A 33% decrease in headline earnings
Slide 27: Manganese ore (100% basis)
Manganese ore (100% basis) % SALIENT FEATURES unit 1H F2022 1H F2021 change Export sales volumes 000 tonnes 1 681 1 796 (6) • Black Rock Mine achieved 10 million fatality-free shifts on Local sales volumes 000 tonnes 70 65 8 14 February 2022. Change in on-mine production % (6) 18 • Manganese ore pri
Slide 28: Manganese alloys (100% basis)
Manganese alloys (100% basis) SALIENT FEATURES unit 1H F2022 1H F2021 % change • US dollar prices for high carbon manganese alloys Sales volumes: increased by 91%, mainly as a result of the resurgence of steel production in Europe and the USA, as well as South African operations 000 tonnes 51 67 (24
Slide 29: ARM Platinum
ARM Platinum
Slide 30: ARM Platinum
ARM Platinum VARIANCE ANALYSIS SEGMENT RESULT* (R MILLION) CHANGES IN ON-MINE UNIT PRODUCTION COSTS** (%) 5 000 489 112 4 121 428 4 000 (172) PGMs: Modikwa (13%) (398) 2 822 3 000 2 000 (1 758) 1 000 PGMs: Two Rivers 16% 0 1H F2021 ZAR:USD USD Prices Volume Cash costs Non-cash Mark-to- 1H F2022 cost
Slide 31: PGMs (100% basis)
PGMs (100% basis) SALIENT FEATURES % unit 1H F2022 1H F2021 change 6E PGM • Headline earnings negatively impacted by mark-to-market Modikwa production volumes ounces 152 379 111 295 37 adjustments following a sharp decline in rhodium and 6E PGM Two Rivers production volumes ounces 146 524 150 304 (3
Slide 32: Mark-to-market adjustments
Mark-to-market adjustments* Two Rivers and Modikwa mines recognise revenue using provisional pricing. The sales price of PGM concentrate is determined on a provisional basis at the date of sale. Adjustments are made to the sales price based on movements in the discounted forward commodity prices up
Slide 33: ARM Coal
ARM Coal GGV Mine
Slide 34: ARM Coal
ARM Coal VARIANCE ANALYSIS – SEGMENT RESULT (R MILLION)* CHANGES IN ON-MINE UNIT PRODUCTION COSTS (%) 600 270 487 500 400 459 Coal: PCB 31% 300 (25) 200 (105) 100 0 Coal: GGV 7% (87) (25) -100 1H F2021 ZAR:USD USD Prices Volume Costs Re- 1H F2022 measure- ment gains 0% 5% 10% 15% 20% 25% 30% 35% CHA
Slide 35: GGV and PCB (100% basis)
GGV and PCB (100% basis) SALIENT FEATURES unit 1H F2022 1H F2021 % change Export sales volumes Mt 6.59 6.15 7 • US dollar prices for thermal coal increased as global coal Domestic sales volumes Mt 1.75 2.66 (34) supply was constrained and demand increased. GGV on-mine production costs R/t 537 503 7
Slide 36: Capital allocation
Capital allocation Finance Director: Tsundzukani Mhlanga Modikwa Mine
Slide 37: Capital allocation guiding principles
Capital allocation guiding principles ALLOCATION OF FUNDS Invest in existing business Debt repayment Invest in growth of existing business Maintenance and Healthy gearing levels efficiency improvement create a flexible platform capital expenditure to for sustainable growth Mergers and acquisitions s
Slide 38: Cash flow analysis (R million)
Cash flow analysis* (R million) Interest Investing in and debt Shareholder 20 000 Sources of funds existing business repayments returns Other 3 520 18 000 ( 314) ( 643) 243 16 000 ( 853) ( 66) 4 825 14 000 12 066 12 000 (3 917) ( 391) 7 10 000 9 655 8 000 6 000 4 000 2 000 0 Balance 1 July Cash gene
Slide 39: Net cash and debt (R million)
Net cash and debt (R million) 31 December 2021 30 June 2021 31 December 2020 Cash and cash equivalents per statement of financial position* 12 082 9 671 6 815 Cash and cash equivalents per statement of cash flows 12 066 9 655 6 485 Overdrafts 16 16 330 Total borrowings (1 026) (1 469) (2 003) Long-t
Slide 40: Segmental capital expenditure
Segmental capital expenditure* (R million) 7 000 6 100 6 000 Total capex for 1H F2022 5 800 5 400 was R1 933 million. 5 000 4 105 4 000 3 506 3 338 3 000 2 526 2 352 2 383 2 000 1 000 0 F2016 F2017 F2018 F2019 F2020 F2021 F2022e** F2023e** F2024e** ARM Platinum ARM Ferrous ARM Coal * Capital expendi
Slide 41: Thank you
Thank you
Slide 42: Appendix
At Rainbow Minerals Appendix
Slide 43: Re-measurement gains and losses
Re-measurement gains and losses ARM Coal partner loans accounting treatment: The ARM Coal loans are revalued at each period end based on the expected operational cash flows derived from the life of mine plans using the most relevant macro and operational assumptions. The higher thermal coal price ou
Slide 44: Summary of re-measurement and fair value gains / (losses)
Summary of re-measurement and fair value gains / (losses) (R million) 1H F2022 1H F2021 ARM Mining Consortium (Modikwa) - (107) ARM Mining Consortium (Modikwa) - intercompany - (123) Anglo American Platinum - (6) Non-controlling interest - 22 ARM Coal 18 2 Goedgevonden Mine 259 (23) PCB operations (
Slide 45: Two Rivers Mine mark-to-market adjustments
Two Rivers Mine mark-to-market adjustments unit 1H F2022 1H F2021 Realised mark-to-market adjustments* (722) 454 Provisional sales value R million 5 958 3 554 Final sales value R million 5 236 4 008 Unrealised mark-to-market adjustments 53 115 Initial provisional sales recognition R million 1 491 1
Slide 46: Modikwa Mine mark-to-market adjustments
Modikwa Mine mark-to-market adjustments unit 1H F2022 1H F2021 Realised mark-to-market adjustments* (255) 203 Provisional sales value R million 2 588 1 518 Final sales value R million 2 333 1 721 Unrealised mark-to-market adjustments 48 88 Initial provisional sales recognition R million 1 062 762 Pe
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