Mineral Resources Limited · ASX:MIN
Mineral Resources — 1H20 Earnings Presentation
48 slides from Mineral Resources's earnings presentation, Feb 11, 2020
Slide 1: 1H20 Financial Results
1H20 Financial Results February 2020 This announcement dated 12 February 2020 has been authorised for release to the ASX by Mineral Resources Ltd’s Board of Directors
Slide 2: Contents
01 Key Headlines 3 02 1H20 Performance Summary 4 03 1H20 Financial Performance 7 04 1H20 Operational Performance 15 CONTENTS 05 Where our growth will come from 19 06 Innovation & Infrastructure 28 07 Supplementary Information 30 08 Disclaimer 47 2
Slide 3: Key Headlines
Key Headlines Mining Services • Best first half result to date: • Crushing & Processing tonnes run-rate up by 11%1 • Statutory EBITDA $1.6bn, including $1.3bn • Total Mining Services tonnes run rate up by 59%1 gain on 60% Wodgina sale • Revenue up 31% • Underlying EBITDA $330m, up 224% pcp Iron Ore
Slide 4: Safety Performance Summary
Safety Performance Summary Lost Time Injury Frequency Rate (LTIFR) Total Recordable Injury Frequency Rate Mining Services Workforce (TRIFR) 3,023 1.32 14.52 2,558 3.73 0 FY13 FY14 FY15 FY16 FY17 FY18 FY19 31 Jan 20 FY13 FY14 FY15 FY16 FY17 FY18 FY19 31 Jan 20 FY13 FY14 FY15 FY16 FY17 FY19 H1 FY20 FY
Slide 5: 1H20 Financial Performance Summary
1H20 Financial $987m $161m Performance Revenue Operating Cash Flow Summary $1,575m $192m EBITDA Capex & (statutory) Investments $330m ROIC 52% EBITDA Return on (underlying) Invested Capital1 Notes: 5 1. Return on Invested Capital (ROIC) calculated on a rolling 12 month basis.
Slide 6: Financial performance since listing in 2006
Financial performance since listing in 2006 19%1 21%2 1H20 ROIC EPS Av. ROIC Dividends Declared growth p.a. 23cps 26%3 99%4 TSR Av. Cash growth p.a. Conversion Notes: 1. Average Compound Annual Growth Rate (CAGR) in diluted Earnings Per Share (EPS) from FY07 to 1H20 where 1H20 EPS is calculated on a
Slide 7: Financial Performance
Financial Performance Mark Wilson 7
Slide 8: 1H20 Financial Performance
1H20 Financial Performance Metric 1H20 Result Comparison to pcp1 Revenue $987m Up 78% EBITDA (statutory) $1,575m Up 2,088% EBITDA (underlying)2 $330m Up 224% NPAT (statutory) $884m Up 6,700% NPAT (underlying)2 $129m Up 279% Diluted EPS 470.1cps Up 6,429% Dividends declared 23cps Up 77% Operating cas
Slide 9: Underlying Profit & Loss
Underlying Profit & Loss • Revenue of $987m up 78% on prior corresponding period (pcp) and EBITDA Underlying Profit & Loss 1H19 1H20 Variance of $330m up 224% on pcp ($ million) Revenue 555 987 432 • 1H20 Revenue and EBITDA driven by: Operating costs (453) (656) (203) • Mining Services growth from K
Slide 10: Underlying EBITDA Movement (pcp)
Underlying EBITDA Movement (pcp) Notes: 1. Mining Services – Construction reflects construction team overhead costs not capitalised to projects. 10
Slide 11: Impairments
Impairments Impairments 1H20 ($ million) Exploration and mine development expenditure (50) Idle plant and equipment (56) Ore stockpiles and other (8) Total post-tax impairment (114) 11
Slide 12: Cash Flow
Cash Flow • Working capital outflow of $13m in 1H20 as a result of: Cash Flow 1H19 1H20 Variance ($ million) • Build up of inventory levels (both current and non-current): Underlying EBITDA 102 330 228 • Wodgina - pre care & maintenance Movement in working capital (80) (13) 67 • Koolyanobbing – ramp
Slide 13: Summary Balance Sheet
Summary Balance Sheet Summary Balance Sheet FY19 1H20 Variance ($ million) • Inventories decreased $20m from reallocation of Wodgina stockpiles to non- Inventories 180 160 (20) current assets following the decision to put the project into care and Trade and other receivables 167 156 (11) maintenance
Slide 14: Net Debt Waterfall
Net Debt Waterfall Cash Flow ($m) Pre-investment +$94m Capital Expenditure 20 Deferred strip 5 10 50 Iron Valley extension Wodgina construction 20 Iron ore expansion - Yilgarn 25 Iron ore expansion - Pilbara Innovation 60 Other Notes: 1. Net Debt as at 30 June 2019 ($871.6m + $25.6m held for sale),
Slide 15: Operational Performance
Operational Performance Chris Ellison 15
Slide 16: Our Business
Our Business Mining Services Commodities Profit Share Projects Innovation & Infrastructure • Leading provider of mining Lithium • Take an equity position in the • Extensive supply chain services ore body • Strategic port allocations • Wodgina (40%), Pilbara - 259Mt • Deliver contracted earnings reso
Slide 17: 1H20 Mining Services Performance
1H20 Mining Services Performance Crushing Processing Construction • Total tonnes crushed run-rate increased • Mt Marion production run-rate up 13%1 • Wodgina construction completed by 11%1 • Wodgina in care & maintenance • Commenced fabrication of first 15Mtpa • 2 NextGen crushing plant contracts Ne
Slide 18: 1H20 Commodities Performance
1H20 Commodities Performance Iron Valley Mt Marion • 3.6Mt shipped • 194Kt spodumene concentrate shipped1 • 127Kt of 6% • Average revenue $98/t • 67Kt of 4% • Average cost $77/t CFR • Average revenue $674/t • $806/t for 6% • $405/t for 4% • Average cost $505/t CFR below guidance - lower than planned
Slide 19: Where our growth will come from
Where our growth will come from • Operations 2H20 outlook • Project pipeline 19
Slide 20: FY20 Guidance
FY20 Guidance Profit & Loss • Previous expected growth looks set to continue COMMODITIES Koolyanobbing Iron Valley Mt Marion Wodgina • Hard to predict the impact the Novel Coronavirus may have on parts of our business Spodumene Spodumene • Staying with guidance released November 2019 and Commodity I
Slide 21: 2H20 Mining Services Outlook
2H20 Mining Services Outlook Crushing Processing Contract Mining • Expect 2H growth to continue at same • Growth steady – in line with 1H • Expect to continue to grow at same rate pace as 1H of 1H, up by approximately 30% • Koolyanobbing ramp up to 11Mtpa run rate • Replacement NextGen plant (15Mtpa
Slide 22: 2H20 Commodities Outlook
2H20 Commodities Outlook Iron Valley Koolyanobbing Mt Marion Wodgina • Export: 2.5 - 3.0Mt • Export: 5.4 – 5.9Mt • Run at steady state • Placed into care and • 50% Lump product • 50% Lump product maintenance until market • Export 170-190Kt made up demand improves • Year end run rate: 8Mtpa • Year en
Slide 23: Iron Ore Operations
Iron Ore Operations Yilgarn - Koolyanobbing Pilbara – Iron Valley • Current resource of 108Mt in region with 87Mt of measured • Iron Valley is a high cost mine with a low grade ore body indicated resource • Continue to operate at 8Mtpa as long as reasonable prices prevail • Expect to bring Parker Ra
Slide 24: Iron Ore Development Projects
Iron Ore Development Projects Marillana West Pilbara • Drilling programme to verify a 20-25 year operation at 15- • Significant study for West Pilbara including drilling, feasibility on 20Mtpa with grades in excess of 60% Fe mine planning, infrastructure assets - rail and port • Expect to complete s
Slide 25: Lithium Hydroxide
Lithium Hydroxide • 50Ktpa two-train lithium hydroxide plant being constructed by Albemarle at Kemerton, Western Australia • MRL 40% free carry in the plant • First train • Expected commissioning 2021 • Full production expected 2022 25
Slide 26: Perth Basin
Perth Basin • 6,600 square kilometers of highly prospective acreage • Adjacent to 3 of the largest onshore conventional gas discoveries within Australia in the last 5 years (2 in the past 12 months) • In 2020 we are planning: • 250 kilometres of seismic survey • one conventional gas exploration well
Slide 27: Investment philosophy
Investment philosophy Capability and track record • 28 year history has created a strong culture of accountability and focus on detail • Strong, proven track record in identifying investment opportunities and generating outstanding returns from them • In-house expertise across the full project lifec
Slide 28: Innovation & Infrastructure
Innovation & Infrastructure 28
Slide 29: Innovation & Infrastructure
Innovation & Infrastructure Crushing & Processing Carbon Fibre Technology Synthetic Graphite Bulk Ore Shuttle System • MRL has designed a 15Mt • Developed a carbon fibre • Developed a successful • Project is on hold NextGen crushing and manufacturing facility synthetic graphite pilot plant screening
Slide 30: Supplementary Information
Supplementary Information 30
Slide 31: Reconciliation of Non-IFRS Financial Information
Reconciliation of Non-IFRS Financial Information Reconciliation of Non-IFRS Financial Information ($ million) 1H19 2H19 FY19 1H20 Statutory Revenue 555 957 1,512 987 Statutory EBITDA 72 314 386 1,575 Less: gain on disposal of 60% interest in Wodgina1 - - - (1,290) Less: fair value loss on investment
Slide 32: Operating Segments
Operating Segments • Mining Services provides pit-to-port infrastructure services Operating Segments 1H19 1H19 1H19 1H20 1H20 1H20 across mining supply chain to Australia’s blue chip mining ($ million) Revenue Underlying Margin Revenue Underlying Margin companies and MRL’s own and joint venture proj
Slide 33: Mining Services Revenue
Mining Services Revenue Major external contract win / renewal metrics Metrics FY15 FY16 FY17 FY18 FY19 1H20 New contracts commenced - - 3 1 3 - Ore bodies exhausted early, contracts ended due to end of life-of-mine - (1) - (1) - - Existing contracts renewed 7 1 3 4 7 1 Existing contracts lost on ren
Slide 34: Mining Services Growth
Mining Services Growth Mining Services contract volumes and margins Mining Services less construction EBITDA2 Contract volumes (tonnes - rebased to 100 in 1H15) EBITDA ($'000/index unit) 200 300 900 180 CAGR 20% 182 800 250 CAGR 19% 251 160 700 140 131 EBITDA ($'000/index unit) 200 600 127 122 Contr
Slide 35: Commodities Segment
Commodities Segment Iron Ore Commodities Segment 1H19 1H19 1H19 1H20 1H20 1H20 ($ million) Revenue Underlying Margin Revenue Underlying Margin • Record exports of 6.7Mt up 70% pcp from Koolyanobbing EBITDA EBITDA ramp-up Iron Ore 259 2 1% 696 185 27% • Further increase forecast for 2H20 as Koolyanob
Slide 36: Commodities – Koolyanobbing Iron Ore
Commodities – Koolyanobbing Iron Ore • 3.2Mt exported in 1H20, in line with FY20 guidance Koolyanobbing Iron Ore 1H18 2H18 FY18 1H19 2H19 FY19 1H20 Lump • Lump contribution of exports at 36% for the period, but is expected to increase in 2H20 to achieve Exports (Kwmt) - - - 55 1,216 1,271 1,135 aver
Slide 37: Commodities – Iron Valley Iron Ore
Commodities – Iron Valley Iron Ore • 3.6Mt exported in 1H20, in line with FY19 and up on Iron Valley Iron Ore 1H18 2H18 FY18 1H19 2H19 FY19 1H20 FY20 guidance Lump • Lump contribution to exports of 36%, down from 42% Exports (Kwmt) 2,024 2,178 4,202 1,926 1,187 3,113 1,305 in FY19, but expected to i
Slide 38: Commodities – Mt Marion Lithium
Commodities – Mt Marion Lithium • 1H20 Spodumene Concentrate exports in line with Mt Marion Lithium 1H18 2H18 FY18 1H19 2H19 FY19 1H20 FY20 guidance and previous periods 6% Spodumene Concentrate • 6% Product contribution of exports at 66% for the half Exports (at 100%) (Kwmt) 109 101 209 138 134 272
Slide 39: Depreciation & Amortisation
Depreciation & Amortisation Depreciation Depreciation and Amortisation 1H19 2H19 FY19 1H20 • Depreciation increased due to higher physical volumes during ($ million) 1H20, including increases at Koolyanobbing as it ramps up to a Depreciation (42) (49) (91) (78) 11Mtpa project, after having commenced
Slide 40: Credit Metrics and Debt Maturity Profile
Credit Metrics and Debt Maturity Profile Credit Metrics1 FY192,3 1H204 Debt Maturity Profile5 Net gearing 39% (4%) 1200 999 1000 Gross gearing 45% 36% 800 $ million Net debt/(cash) to Underlying EBITDA 2.0x (0.1x) 600 Gross debt to Underlying EBITDA 2.6x 1.9x 400 250 200 Underlying EBITDA to net int
Slide 41: FY20 Guidance – Capital Expenditure
FY20 Guidance Capital Expenditure1 CAPEX FY20 FY20 ($ million) Deferred strip and other 60 Iron Valley extension (to maintain operations to March 2021) 50 Total sustaining capex 110 Completion of Wodgina construction 50 Iron ore expansion – Yilgarn 120 Iron ore expansion – Pilbara (drilling and feas
Slide 42: Koolyanobbing
RESERVES & RESOURCES (100% basis at June 2019) Koolyanobbing Category Ore (Mt) Fe grade (%) Project Overview Proven 13.8 57.1% Probable 27.0 58.8% • Open pit Iron Ore operation, located in Western Australia Total reserves 40.8 58.2% • Located immediately adjacent to MRL’s Carina Iron Measured 25.7 5
Slide 43: Iron Valley
RESERVES & RESOURCES (100% basis at June 2019) Iron Valley Category Ore (Mt) Fe grade (%) Project Overview Proved 56.9 58.2% • Open pit Iron Ore operation, located in Western Probable 32.2 58.6% Australia Total reserves 89.0 58.3% • Iron Valley held on tenements owned by BCI Measured 86.4 57.7% Mine
Slide 44: Mt Marion
Mt Marion Project Overview RESERVES & RESOURCES (100% basis at October 2018) • Open pit Lithium hard rock operation, located in Category Ore (Mt) Li20 grade (%) Western Australia Indicated 22.7 1.34% • Structured as a 50:50 incorporated JV with Jiangxi Inferred 48.7 1.38% Ganfeng Lithium Co. (“Ganfe
Slide 45: Wodgina
Wodgina Project Overview RESERVES & RESOURCES (100% basis at October 2018) Category Ore (Mt) Li20 grade (%) • Lithium hard rock operation located in Western Australia Probable 151.9 1.17% • Project structured as a 40:60 unincorporated JV with Total reserves 152 1.17% Albemarle Corporation (“Albemarl
Slide 46: Definitions
Definitions 1H First half K Thousand 2H Second half M Million $ Australian dollar Net debt / (cash) Gross debt less cash and cash equivalents US$ United States dollar NPAT Net profit after tax CFR Cost and freight rate PBT Profit before tax CFR cost Operating costs of mining, processing, rail/road h
Slide 47: Disclaimer
Disclaimer This presentation has been prepared by Mineral Resources Limited (“MRL” or “the Company”). It should not be considered as an offer or invitation to subscribe for or purchase any securities in the Company or as an inducement to make an offer or invitation with respect to those securities.
Slide 48: www.mrl.com.au
OFFICE: 1 Sleat Road, Applecross, WA 6153 POSTAL: PO Locked Bag 3, Canning Bridge LPO, Applecross, WA 6153 P +61 8 9329 3600 F +61 8 9329 3601 www.mrl.com.au