Gem Diamonds Limited · LSE:GEMD
Gem Diamonds — FY2012 Earnings Presentation
29 slides from Gem Diamonds's earnings presentation, Mar 12, 2013
Slide 1: Full Year 2012 Presentation
Presentation Full Year 2012 12 March 2013 © 2013 GEM DIAMONDS LIMITED
Slide 2: Disclaimer
1 Full Year 2012 Results Disclaimer The following presentations are being made only to, and are only directed at, The presentations also contain certain non-IFRS financial information. The Group’s persons to whom such presentations may lawfully be communicated (“relevant management believes these me
Slide 3: Strategy Progressed
2 Full Year 2012 Results Strategy Progressed Growth Value Creation Sustainable Development Capital discipline • Record carats recovered and • 4 Star in external SHE audit sold at Letšeng for all operations Project Kholo optimised: • Reduced capex • Increased throughput and • 32 months LTI-free
Slide 4: Diamond Market
3 Full Year 2012 Results Diamond Market 2012 was a challenging year 2013 has seen improved demand as a result Rough prices down 15% of rough supply constraint Factors – declining polished prices, Euro Improved polished trading crisis, liquidity Supply/ demand imbalance Q4 improvement in demand and p
Slide 5: Group HSSE Performance
4 Full Year 2012 Results Group HSSE Performance Lost time injury frequency rate All injury frequency rate 0.50 0.45 4.90 0.40 4.80 0.30 4.70 0.30 0.25 4.60 0.20 4.50 0.10 4.40 0.00 4.30 0.00 2009 2010 2011 2012 4.20 2010 2011 2012 Regrettably 3 fatalities and 5 other LTIs across Corporate social Exp
Slide 6: Operational Review – Letšeng
5 Full Year 2012 Results Operational Review – Letšeng © 2013 GEM DIAMONDS LIMITED
Slide 7: Operational Review – Letšeng
6 Full Year 2012 Results Operational Review – Letšeng Carats Carats recovered 140 000 Record carat production, 114 350 carats, up 2% 120 000 Recovered grade of 1.75 cpht, up 6% 100 000 Ramping up waste profile 80 000 Operational efficiencies 60 000 40 000 Continued focus on cost management 20 000 Pr
Slide 8: Letšeng Mining Area and Resource Extension
7 Full Year 2012 Results Letšeng Mining Area and Resource Extension KSouth K4 KNorth K6 SVK NVK 793 metres 828 metres 19 holes drilled in 2012 including 4 deep resource extension holes 226 metres added to the Satellite pipe and 317 metres added to Main pipe Mining in 2nd half of 2012 and 1st half of
Slide 9: Letšeng - Project Kholo Update
8 Full Year 2012 Results Letšeng - Project Kholo Update An update of Project Kholo announced in Dec 2012 Current status Development of Plant 3 on hold Replacement of secondary/tertiary crushers for Plants 1&2 (Q2 2013) • Reduce diamond damage Feasibility study underway for new stand alone Recovery P
Slide 10: Letšeng – Addressing diamond damage
9 Full Year 2012 Results Letšeng – Addressing diamond damage Problem: High incidence of type II diamonds Brittle and prone to damage High level of damage through traditional crushers Immediate Solution: Studies done on Letšeng ore in Japan Liner configuration designed for Letšeng specific ore Improv
Slide 11: Letšeng – Upside Opportunities
10 Full Year 2012 Results Letšeng – Upside Opportunities X-Ray transmissive technology Tested at Letseng to recover type II diamonds Results indicate 100% recovery Old recovery tailings re-treated and US$12 million revenue generated Will enable the mine to recover large high value diamonds early in
Slide 12: Letšeng Expansion Scenarios
11 Full Year 2012 Results Letšeng Expansion Scenarios Increased production for the 10 mtpa and 7.5 mtpa scenarios start in 2016 The 10 mtpa and 7.5 mtpa scenarios include increased liberation in the carat profiles Optimising the various waste profiles remains an on-going work stream © 2013 GEM DIAMO
Slide 13: Operational Review – Ellendale
12 Full Year 2012 Results Operational Review – Ellendale © 2013 GEM DIAMONDS LIMITED
Slide 14: Operational Review – Ellendale
13 Full Year 2012 Results Operational Review – Ellendale Carats Carats recovered 200 000 Carat production 155 996cts, up 30% 150 000 Tonnes ore mined 4.67mt up 71% 100 000 Tonnes treated 4.17mt, up 34% 50 000 Disposed of to Goodrich Resources for - 2010 2011 2012 US$15.3m Ellendale mt Tonnes treated
Slide 15: Ghaghoo Mine Development
14 Full Year 2012 Results Ghaghoo Mine Development © 2013 GEM DIAMONDS LIMITED
Slide 16: Ghaghoo Phase 1 production to commence mid-2014
15 Full Year 2012 Results Ghaghoo Phase 1 Phase 1 production to commence mid-2014 © 2013 GEM DIAMONDS LIMITED
Slide 17: Ghaghoo Mine Development
16 Full Year 2012 Results Ghaghoo Mine Development Objectives of Phase 1 Current Status Strategic Options To prove up key metrics: Phase 1 underway U/G - Double up Grade Total capex spent to end U/G - Maximum 2012: US$53m (capex production US$ per carat budget: US$96m) Milling characteristics for De
Slide 18: Group Financial Performance
17 Full Year 2012 Results Group Financial Performance Market factors – significant impact on revenues Capital discipline to protect balance sheet Postive cashflows and profits from Letšeng and through sales and manufacturing divisions Underperforming assets exited Facilities implemented © 2013 GEM D
Slide 19: Group Financial Performance
18 Full Year 2012 Results Group Financial Performance 2012 2011 Before Before exceptional exceptional US$ millions items* items* % Change Revenue 202.1 306.1 (34%) Royalty and selling costs (19.1) (26.5) Cost of Sales (103.3) (97.8) Corporate expenses (14.2) (15.3) Underlying EBITDA 65.5 166.5 (61%)
Slide 20: Group Financial Performance
19 Full Year 2012 Results Group Financial Performance 2012 Before exceptional Exceptional US$ millions items items Total Revenue 202.1 - 202.1 Royalty and selling costs (19.1) - (19.1) Cost of Sales (103.3) - (103.3) Corporate expenses (14.2) - (14.2) Underlying EBITDA 65.5 - 65.5 Depreciation and A
Slide 21: Segmental Performance
20 Full Year 2012 Results SEGMENTAL PERFORMANCE US$ (millions) Letšeng Diamonds Kimberley Diamonds 2012 2011 2012 2011 Revenue 207.7 300.6 113.6 89.4 Royalty and selling costs (16.7) (24.5) (6.9) (5.6) Cost of sales (100.1) (95.4) (94.3) (70.6) EBITDA 90.9 180.7 12.4 13.2 EBITDA margin 43.8% 60.1% 1
Slide 22: Sales and Manufacturing
21 Full Year 2012 Results Sales and Manufacturing Contribution to Group EBITDA of US$6.4m US$10.4m at rough value (US$1.2 m in 2011) in inventory on hand at year end. Unrealised profit for the year of US$5.4m (US$0.6 m in 2011) © 2013 GEM DIAMONDS LIMITED
Slide 23: Group Cash Reconciliation
22 Full Year 2012 Results Group Cash Reconciliation (US$m) 320 300 280 33 260 240 (97) 220 100 200 180 160 (73) 140 120 100 (31) 80 159 (14) (9) 3 60 40 71 68 20 0 © 2013 GEM DIAMONDS LIMITED
Slide 24: Group EBITDA Reconciliation
23 Full Year 2012 Results Group EBITDA Reconciliation (US$m) Non-controllable Controllable 200 10 180 160 86 140 3 120 21 25 100 6 12 180 14 80 1 60 98 40 78 20 0 * Includes Kimberley Diamond Company © 2013 GEM DIAMONDS LIMITED
Slide 25: Group Cash and Funding
24 Full Year 2012 Results Group Cash and Funding Total Group cash on hand at December 2012: US$68m net of debt (US$63m attributable) of which US$51m is in the corporate office Working capital facility implemented 3 year facility of M250m (US$29.5m) with Standard Lesotho Bank, facility available for
Slide 26: Outlook
25 Full Year 2012 Results Outlook Strong start to 2013 with prices up +10% Supply remains constrained Decrease diamond damage – new crushers Feasibility study on new recovery plant Complete access decline at Ghaghoo Corporate office cost alignment with current asset base © 2013 GEM DIAMONDS LIMITED
Slide 27: Appendix - Share Information
26 Full Year 2012 Results Appendix 1 - Share Information Share prices and trading volumes 15 Feb Major Shareholders 2013 Graff Diamonds International Limited 15.12% Lansdowne Partners Ltd 14.99% Black Rock Inc. 11.37% FIL Limited/FMR LLC 8.17% Gem Diamonds Holdings Ltd 6.74% Capital Group Companies
Slide 28: Appendix – 2013 Guidance
27 Full Year 2012 Results Appendix 2 – 2013 Guidance Letšeng Guidance 2013 Waste tonnes Operating 1. costsmined (Mt)excludes royalty, selling costs, depreciation and mine amortisation, per tonne 15 -but 17 includes inventory, Ore treated (Mt) waste and ore stockpile adjustments. 6.5 – 7.0 2. Foreign
Slide 29: Thank You
Thank You © 2013 GEM DIAMONDS LIMITED