Mmg Ltd. · HKEX:1208
Mmg — H1 2020 Earnings Presentation
37 slides from Mmg's earnings presentation, Aug 20, 2020
Slide 1: 2020 Interim Results
2020 Interim Results 20 August 2020
Slide 2: Disclaimer
Disclaimer The information contained in this presentation is intended solely for your personal reference and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person (whether within or outside your organisation/firm) or published, in whole or in part, for any pu
Slide 3: Overview
Overview Geoffrey Gao, CEO 2020 first half performance Ross Carroll, CFO Financial results Geoffrey Gao, CEO Strategy and outlook Questions and Answers 3
Slide 4: 2020 first half in review
2020 first half in review Geoffrey Gao Chief Executive Officer
Slide 5: Safety, Environment and Social Performance
Safety, Environment and Social Performance Safety performance ▪ Safety – Our cornerstone value ▪ Total Recordable Injury Frequency (TRIF) rate of 1.82 for the first half of 2020.1 ▪ Committed to ICMM’s 10 principles of Sustainable Development and Performance Expectations. ▪ Proactively managing the
Slide 6: Market update
Market update Mined copper supply gap and requirement for new capacity Recent uplift in the prices of copper and zinc, but short term uncertainty remains 35 Mt Base Case Production Capability 30 Probable Projects ▪ Economic recovery in China and global stimulus is supporting 25 Primary Demand copper
Slide 7: Peru Community Update
Peru Community Update ▪ Peru Southern Road Corridor continues to experience periodic community protests. The road is currently clear, with logistics transportation operating normally. ▪ Matarani is now world’s largest copper port, shipping 49% of Peru’s production – utilised by Las Bambas, Constanci
Slide 8: Financial results
Financial results Ross Carroll Chief Financial Officer
Slide 9: Financial performance
Financial performance 2020 Key Financial Metrics (US$ million) 1H2020 1H2019 v 2019 Income statement Revenue 1,191.4 1,387.4 (14%) EBITDA 383.6 646.7 (41%) Loss After Tax (182.7) (73.0) (150%) Attributable to: Equity holders (158.0) (81.0) (95%) Non-controlling interests (24.7) 8.0 (409%) Basic loss
Slide 10: EBITDA waterfall H1 2019 vs H1 2020
EBITDA waterfall H1 2019 vs H1 2020 10
Slide 11: Underlying profit to MMG equity holders
Underlying profit to MMG equity holders ▪ MMG is focused on improving financial and NPAT attributable to equity holders 2020 operational performance in 2H20: 1H2020 1H2019 v (US$m) 2019 − Cash flow and earnings expected to Profit after tax – Las Bambas 62.5% interest (41.2) 13.3 (410%) improve as st
Slide 12: Earnings sensitivity
Earnings sensitivity ▪ High earnings and cash flow leverage to copper and zinc prices. ▪ In response to COVID-19 uncertainty and following recent price rallies, a short-term commodity hedging program has been executed with respect to ~110kt of copper at $2.91/lb; and ~54kt of zinc at $1.08/lb. Estim
Slide 13: Debt and CAPEX
Debt and CAPEX Continued reduction in borrowings ▪ Continued reduction in borrowings, despite challenges 12,000 of COVID-19 and cash flow impacts of concentrate 10,339 transport interruptions at Las Bambas. 10,000 9,271 8,203 7,692 7,615 ▪ Taking advantage of record low interest rates, 8,000 US$m ap
Slide 14: Debt maturity profile
Debt maturity profile ▪ Scheduled term debt repayments of Term debt repayment schedule1 (US$m) US$300m in H1 2020. ▪ Average outstanding maturity profile now ~4.4 years. ▪ Commitment received from major shareholder to address U$700m shareholder loan repayment, due in July 2021. ▪ Strong liquidity po
Slide 15: Las Bambas
Las Bambas H1 2020 OVERVIEW ▪ EBITDA: U$333.2 million. ▪ Significantly impacted by lower commodity prices, community disruption and conveyor belt maintenance. ▪ Maintained reduced operations, despite impacts of COVID-19 with H1 copper production of 131.7kt. ▪ C1 costs: US$1.15/lb, impacted by lower
Slide 16: Kinsevere
Kinsevere H1 2020 OVERVIEW ▪ EBITDA: U$13.4 million. ▪ Increased in revenue due to higher production and sales volumes. ▪ C1 costs: US$1.86/lb, 25% below prior year comparative period, due to higher production volumes and lower production costs. H2 2020 FOCUS ▪ Preparing for next phase of developmen
Slide 17: Dugald River
Dugald River H1 2020 OVERVIEW ▪ EBITDA: US$9.1 million. ▪ Zinc production of 79kt, with increased sales volumes partly offsetting the impact of lower commodity prices. ▪ C1 costs: US$0.76/lb, 6% below prior year comparative period, with higher production volumes and lower production costs offsetting
Slide 18: Rosebery
Rosebery H1 2020 OVERVIEW ▪ EBITDA: US$48.5 million. ▪ Zinc production of 33.9kt, with significant lead, copper, silver and gold by- products. ▪ Lower volumes in line with expectations as the mine moves to deeper areas, with a focus on maintaining high throughput levels. ▪ C1 costs: US$0.10/lb, 66%
Slide 19: Comprehensive financial response to COVID-19
Comprehensive financial response to COVID-19 ▪ H1 2020 has been marked by a high degree of uncertainty Copper and Zinc price – 2020 YTD and extreme volatility. ▪ MMG has proactively responded to the conditions, both operationally and financially. ▪ Key financial initiatives implemented over the firs
Slide 20: MMG Outlook
MMG Outlook Geoffrey Gao Chief Executive Officer
Slide 21: Transforming our business
Transforming our business ▪ Whole of Business Transformation began in Q4 2019. ▪ Driven by competitiveness improvement, operating discipline, structure, accountability and process reform. ▪ Transformation initiatives are targeted to four strategic drivers: − Become a China Champion - Building on the
Slide 22: Delivering in difficult times
Delivering in difficult times ▪ Continued demonstration of a capability to maintain production in the 1. COVID-19 Response face of challenges related COVID-19, particularly in Peru and the DRC. ▪ Minimising the impacts of COVID-19 on our people and our communities, while protecting our underlying bu
Slide 23: 2020 Interim Results – Q&A
2020 Interim Results – Q&A 20 August 2020
Slide 24: Appendix
Appendix
Slide 25: MMG asset base
MMG asset base Established presence in the key Andean and African copper belts and a world HIGH class Australian LAKE zinc business IZOK LAKE DUGALD RIVER (100%) LAS BAMBAS (62.5%) 2020 production guidance: Note: LB guidance for 2020 170,000 – 180,00 tonnes of was withdrawn on 13 April due zinc in z
Slide 26: Tax reconciliation
Tax reconciliation ▪ MMG’s prima facie income tax rate from its operations is approximately 32%. 1H20 Actual ETR % ▪ This broadly reflects the corporate income tax rates in Peru, Australia and Loss Before Tax (243.7) the DRC. Income Tax Credit 61.0 25.0% ▪ In 1H20, MMG’s Effective Tax Rate (ETR) was
Slide 27: Las Bambas 1H20 performance
Las Bambas 1H20 performance Key highlights: Financials ▪ Revenue of US$751.2 million 17% lower, due to lower sales volumes US$ million 1H20 1H19 % and lower realised commodity prices. The lower sales volumes were the result of community roadblocks that took place in the first quarter of Revenue 751.
Slide 28: Kinsevere 1H20 performance
Kinsevere 1H20 performance Key highlights Financials ▪ Copper cathode production of 36,505 tonnes was 26% higher than the US$ million 1H20 1H19 % prior year comparative period. This reflected higher mill throughput, due to sustained plant stability and a 14.5% increase in ore feed grade with Revenue
Slide 29: Dugald River 1H20 performance
Dugald River 1H20 performance Key highlights Financials ▪ Revenue decreased by US$42.9 million (26%), primarily due to lower US$ million 1H20 1H19 % metal prices offset by higher sales volumes across all commodities. Revenue 120.9 163.8 (26%) ▪ Higher sales volumes were driven by higher zinc product
Slide 30: Rosebery 1H20 performance
Rosebery 1H20 performance Key highlights Financials ▪ Revenue decreased by 16% to US$119.4 million compared to first US$ million 1H20 1H19 % half of 2019 due to lower commodity prices and lower sales volumes, Revenue 119.4 142.8 (16%) primarily attributable to zinc and lead. Impacts were partly offs
Slide 31: Profit & Loss Statement
Profit & Loss Statement 6 months ended 30 June 2020 2019 US$ million US$ million Revenue 1,191.4 1,387.4 Operating expenses (778.0) (726.7) Exploration expenses (8.1) (13.4) Administration expenses (13.6) (11.5) Other income / (expenses) (8.1) 10.9 EBITDA 383.6 646.7 Depreciation and amortisation ex
Slide 32: Balance Sheet
Balance Sheet US$ million 30 June 2020 31 Dec 2019 Non-current assets 11,375.1 11,602.5 Current assets – cash and cash equivalents 70.9 217.5 Current assets – other 811.6 845.1 Total assets 12,257.6 12,665.1 Total equity 2,490.9 2,677.9 Non-current liabilities – other 1,551.1 1,625.3 Non-current lia
Slide 33: Statement of Cash Flow
Statement of Cash Flow US$ million - Six months ended 30 June 2020 30 June 2019 Receipts from customers 1,377.6 1,558.6 Payments to suppliers and employees (1,042.6) (1,101.4) Payments for exploration expenditure (8.1) (13.4) Income tax (paid)/ refunded 39.7 (153.8) Net cash generated from operating
Slide 34: MMG overview
MMG overview Overview Broker Coverage ▪ Founded in 2009, MMG is a diversified base metals company with four Broker Name operating mines located across three continents Argonaut Helen Lau ▪ Headquartered in Melbourne (Australia), with a primary listing on the HKEx (1208 HK). BOCI Lawrence Lau ▪ Prima
Slide 35: Mineral Resources
Mineral Resources Copper and zinc Mineral Resources of 12.6Mt and 11.1Mt respectively Mineral Resources – Contained Metal (100% asset basis) As at 30 June 2019 Copper (Acid Project Copper Zinc Lead Silver Gold Molybdenum Cobalt Soluble) kt kt kt kt moz moz Kt Kt Las Bambas 10,613 148 2.2 286 Kinseve
Slide 36: Ore Reserves
Ore Reserves Copper and zinc Ore Reserves of 6.9Mt and 3.2Mt respectively Ore Reserves – Contained Metal (100% asset basis) As at 30 June 2019 Copper (Acid Project Copper Zinc Lead Silver Gold Molybdenum Soluble) kt kt kt kt moz moz kt Las Bambas 6,560 94 1.6 191 Kinsevere 307 252 Dugald River 2,854
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