Mmg Ltd. · HKEX:1208
Mmg — Investor Presentation (November 2016)
42 slides from Mmg's investor presentation, Nov 1, 2016
Slide 1: Rights Issue Presentation
Rights Issue Presentation 1 November 2016
Slide 2: Important notices and disclaimer
Important notices and disclaimer The information contained in this presentation is restricted and is not for release, publication or distribution, directly or indirectly, in whole or in part in, into or from Canada, Japan, the United Kingdom, the United States, the People’s Republic of China, Irelan
Slide 3: Important notices and disclaimer (continued)
Important notices and disclaimer (continued) Any decision to purchase securities of the Company in any public or private offering should be made solely on the basis of the prospectus to be prepared by the Company in relation to any such contemplated offering. This document contains no information or
Slide 4: Contents
Contents 1. Overview of Rights Issue 2. MMG overview 3. Company highlights 4. Appendix a) 3Q 2016 production report b) 1H 2016 interim results c) Mineral resources & ore reserves 4
Slide 5: 1. Overview of Rights Issue
MA “prouress EWEIVIG 1. Overview of Rights Issue
Slide 6: MMG Limited
MMG Limited An emerging copper major Operations in Peru, Africa, Asia and Australia – including the Tier 1 Las Bambas asset Industry leading ramp up at Las Bambas Headquartered in Melbourne, with dual listing structure on the Hong Kong Exchange and ASX 6
Slide 7: Overview of the Rights Issue
Overview of the Rights Issue MMG has announced a fully underwritten Rights Issue to raise ~US$512 million Rights Issue size MMG Limited ("MMG") will offer 2,645 million New Shares at HK$1.50 per New Share to raise and structure approximately US$512 million via a fully underwritten Rights Issue M
Slide 8: Rationale for the Rights Issue
Rationale for the Rights Issue The Rights Issue is a meaningful step to reduce gearing and fund growth Reduce gearing and MMG is seeking to reduce its gearing profile and aims to achieve this through: fund growth — Net proceeds of ~US$412 million of the Rights Issue used to repay existing debt — I
Slide 9: Sources and uses of funds
Sources and uses of funds The ~US$512 million Rights Issue will be used to repay existing debt and fund the development of the Dugald River project Sources of funds US$ million Gross proceeds from the Rights Issue1 512 Cost of issue2 (8) Net Proceeds 504 Uses of funds US$ million ICBC term & revolvi
Slide 10: Rights Issue timetable
Rights Issue timetable Time / Date1 Announcement of Rights Issue 1 Nov 16 Last day of dealings in Shares on a cum-rights basis 8 Nov 16 Record Date 16 Nov 16 Despatch of the Prospectus 23 Nov 16 First day of dealings in Nil-Paid Rights 25 Nov 16 Last day of dealings in Nil-Paid Rights 2 Dec 16 Right
Slide 11: Company highlights
Company highlights 1 Las Bambas is a transformational and world class copper asset 2 Dugald River is one of the largest and high grade zinc development projects globally 3 Access to long-term debt and majority shareholder support – core competitive advantages 4 A history of operational excellence –
Slide 12: 2. MMG overview
MA “prouress EWEIVIG 2. MMG overview
Slide 13: Overview of MMG
Overview of MMG MMG is a mid-tier global resources company that mines, explores and develops base metals projects around the world Overview Share price performance (year to date1) Rebased to MMG (HK$) Founded in 2009, MMG is a diversified base metals company with five operating mines and one devel
Slide 14: Overview of portfolio
Overview of portfolio We have a globally diversified portfolio of base metals producing and development projects Las Bambas Copper Project 3 2 1 6 5 4 Dugald River Zinc Project Asset Status Location Interest Commodities Produced 1 Las Bambas Production Peru 62.5% Copper, Gold, Silver, Molybdenum 2 K
Slide 15: Emerging copper major positioned for growth
Emerging copper major positioned for growth With the support of its majority shareholder, MMG’s objective is to be valued as one of the world’s top, mid-tier miners by 2020 Overview 2016 copper production guidance1 Kt, Cu Continue to squeeze efficiencies from operations and earn the right to grow
Slide 16: Our values: we mine for progress
Our values: we mine for progress We place safety at the centre of everything we do and we believe that nothing is so important that it cannot be done safely Safety performance Safety our first value – TRIF1 of 1.7 per million hours worked in 1H16 represents lowest half yearly TRIF 4.1 ever recorde
Slide 17: 3. Company highlights
MA “prouress EWEIVIG 3. Company highlights
Slide 18: Las Bambas – size, scale and life
1 Las Bambas – size, scale and life Las Bambas is a transformational world class copper asset Overview 2017 forecast production capability1 Largest greenfield copper development in the past Escondida 10 years Targeting 2 million tonnes of copper in copper PT Freeport Indonesia concentrate produc
Slide 19: Las Bambas – successful development
1 Las Bambas – successful development Las Bambas reached 97% of design capacity in 6 months and MMG has already reached the lower end of its 2016 production guidance of 250,000 – 300,000 tonnes of copper in copper concentrate1 McNulty curve for plant ramp up2 1st year production for greenfield coppe
Slide 20: Las Bambas – low cost position
1 Las Bambas – low cost position Bottom quartile costs achieved within 6 months progressing towards steady state C1 cost target of US$0.80 – 0.90/lb1 Breakdown of 2H16 C1 cost guidance Transport – demonstrated capability yet logistics challenges remain Transport logistics chain identified as a key
Slide 21: Dugald River – size, scale and life
2 Dugald River – size, scale and life At full production Dugald River will be one of the ten largest zinc mines globally Overview 2019 forecast production capability1 Wholly-owned zinc deposit located in Queensland Rampura-Agucha Highest-grade zinc project currently being developed Red Dog Exp
Slide 22: Dugald River – high grade zinc project
2 Dugald River – high grade zinc project Dugald River is a large, long life and high grade zinc project Grade (%) New Base Case Projects Restarted Base Case Projects 16 New Probable / Possible Projects Restarted Probable / Possible Projects Dairi 14 Dugald River 12 10 Prairie Creek Balmat Restart 8
Slide 23: Long term debt – competitive advantage
3 Long term debt – competitive advantage A core competitive advantage of MMG remains its access to long-term debt from Chinese banks and funding support from its majority shareholder (CMC1) Amortisation schedule US$ million MMG's capital structure has a number of competitive advantages: 6,000 − Lo
Slide 24: Operational excellence – maximise asset utilisation
4 Operational excellence – maximise asset utilisation Operating approach is based on improving output by maximising asset utilisation Summary Kinsevere Asset Utilisation vs. MSPR Squeeze the assets: operating approach targets 218 tpd 222 tpd 238 tpd 238 tpd consistent improvement in utilisation 14
Slide 25: Executive team – global experience
5 Executive team – global experience Chief Executive Officer Chief Financial Officer Chief Operating Officer Mr Andrew Michelmore1 Mr Ross Carroll Mr Marcelo Bastos 30+ years of metals and mining 25+ years of experience in the Natural 30+ years mining experience in iron ore, experience. Resour
Slide 26: Board – sound corporate governance
5 Board – sound corporate governance Chairman Executive Director Executive Director Non-executive Director Mr Jiao Jian Mr Andrew Michelmore1 Mr Xu Jiqing Mr Gao Xiaoyu Independent Independent Independent Independent Non-executive Director Non-executive Director Non-executive Director Non-executive
Slide 27: Appendix
MA “prouress EWEIVIG Appendix
Slide 28: A. 3Q 2016 Production Report
MA “prouress EWEIVIG A. 3Q 2016 Production Report
Slide 29: Key highlights from 3Q 2016 Production Report
Key highlights from 3Q 2016 Production Report MMG maintained its 2016 production guidance of 415 – 477 kt of copper and 120 – 135 kt of zinc1 Key highlights 3Q 2016 production summary Las Bambas – achieved commercial production in July 3Q 16 vs 3Q 16 vs YTD 16 vs Tonnes 3Q 16 YTD 2016 and reached
Slide 30: B. 1H 2016 Interim Results
MA “prouress EWEIVIG B. 1H 2016 Interim Results
Slide 31: 1H 2016 Interim Results – key takeaways
1H 2016 Interim Results – key takeaways 1H 2016 was pivotal for MMG Loans & borrowings Operations remained cash generative: EBITDA of MMG has ongoing discussions with its external financiers in $134.3m (64% below 1H15) despite Cu, Zn price relation to waivers from compliance with and amendment o
Slide 32: 1H 2016 Interim Results – key takeaways
1H 2016 Interim Results – key takeaways Shifting towards increased copper exposure Sales volume1 and commodity price performance Indexed, 2015=100 Revenue decreased by US$527.7m due to Century mine closure, lower copper sales 1H15 1H16 and lower realised prices 100 Las Bambas sales volumes will
Slide 33: Condensed consolidated income statement
Condensed consolidated income statement Six months ended 30 June 2016 2015 Variance US$ million % Revenue 586.1 1,113.8 (47) EBITDA 134.3 375.9 (64) Depreciation and amortisation (201.3) (380.9) 47 Underlying EBIT (67.0) (5.0) (1,240) Net Interest (47.1) (41.8) (13) Income tax credit/(expense) 21.1
Slide 34: Condensed consolidated cash flow statement
Condensed consolidated cash flow statement Half year ended 30 June 2016 2015 US$ million Receipts from customers 686.1 1,161.6 Payments to suppliers (561.0) (865.2) Payments for exploration expenditure (18.8) (17.9) Income tax paid (48.6) (75.8) Net cash generated from operating activities 57.7 202.
Slide 35: Financial dashboard – 1H 2016
Financial dashboard – 1H 2016 Revenue by commodity Revenue by customer location 11% 2% Zinc 16% Australia 19% Copper Europe 61% Gold Middle East 7% Silver Japan & Korea 3% Lead 43% Other Asia 8% 18% South America China 9% 2% EBITDA by operating segment1 Operating expenses (sites) 15% People 14% Sepo
Slide 36: Guidance for 2016
Guidance for 2016 MMG re-affirms 2016 guidance Las Bambas Rosebery Copper – production1 250,000 – 300,000 tonnes Zinc – production 75,000 – 80,000 tonnes Copper – C1 costs 2H16 US$1.00 – 1.10 / lb Zinc – C1 costs US$0.30 – 0.40 / lb Copper – C1 costs2 US$0.80 – 0.90 / lb Lead – production 18,000 – 2
Slide 37: Sepon – transition to tail of proven Cu resources
Sepon – transition to tail of proven Cu resources Financials Transition to lower grade and more complex ores US$ million 1H16 1H15 % Production impacted by planned total concentrator shutdown Revenue 176.3 269.3 (35) Focus on operational efficiencies and cost controls EBITDA1 61.2 154.9 (60) t
Slide 38: Kinsevere – sustained improvements
Kinsevere – sustained improvements Financials Production up 2% to 39,974 tonnes of copper cathode US$ million 1H16 1H15 % Operational efficiencies, stable electricity, increases to mill throughput Revenue 192.3 222.7 (14) Lower copper prices marginally offset by EBITDA1 67.9 80.9 (16) 2% incre
Slide 39: Australian Operations – transition beyond Century
Australian Operations – transition beyond Century Financials Production of 7,231 tonnes of copper in copper concentrate, US$ million 1H16 1H15 % down 50% on 1H15 Revenue 193.7 231.7 (16) Reduced throughput at Golden Grove from 1.6 Mtpa to 1 Mtpa to preserve value of the resource while exploratio
Slide 40: C. Mineral Resources & Ore Reserves
C. Mineral Resources & Ore Reserves
Slide 41: Mineral Resources
Mineral Resources Copper and zinc Mineral Resources of 16.1Mt and 13.1Mt respectively Mineral Resources – Contained Metal (100% asset basis) As at 30 June 2016 Project Copper Zinc Lead Silver Gold Molybdenum Nickel kt kt kt moz moz kt kt Las Bambas 12,787 189 2.7 352.4 Kinsevere 1,439 Sepon 651 1.4
Slide 42: Ore Reserves
Ore Reserves Copper and zinc Ore Reserves of 8.8Mt and 3.4Mt respectively Ore Reserves – Contained Metal (100% asset basis) As at 30 June 2016 Project Copper Zinc Lead Silver Gold Molybdenum kt kt kt moz moz kt Las Bambas 7,710 119 2.0 205.2 Kinsevere 577 Sepon 379 Dugald River 2,736 440 36 0.0 Rose