Impala Platinum Holdings Limited · JSE:IMP
Impala Platinum — H1 2015 Earnings Presentation
54 slides from Impala Platinum's earnings presentation, February 2015
Slide 1: Interim Results and Strategic Review
INTERIM RESULTS AND STRATEGIC REVIEW For the six months ended 31 December 2014
Slide 2: Forward Looking Statement
FORWARD LOOKING STATEMENT 2 Certain statements contained in this presentation other than the statements of historical fact contain forward‐looking statements regarding Implats’ operations, economic performance or financial condition, including, without limitation, those concerning the economic outlo
Slide 3: Agenda
AGENDA 3 Overview Terence Goodlace Financial Review Brenda Berlin Strategic Review and Terence Goodlace Conclusion Interim results for the six months ended 31 December 2014 www.implats.co.za
Slide 4: Overview
IMPLATS Distinctly Platinum
Slide 5: Safety Performance
SAFETY PERFORMANCE OVERVIEW Zero Harm Initiatives Industry Fatalities per Calendar Year Performance 45 – Fatal Injury Frequency rate increased to 40 0.081 pmmhw 35 – Lost Time Injury Frequency rate decreased to 3.47 pmmhw 30 Four employees and one contractor 25 suffered fatal injuries in Augus
Slide 6: Financial – Key Features
FINANCIAL – KEY FEATURES 6 OVERVIEW Revenue down 3.6% to R15.9bn HEPS Gross profit of R1.5bn down from R1.8 bn 142 Gross profit margin declined to 10% from 11% Headline earnings per share declined 54% to 66 cents (cps) 66 Cash reserves of R2.7bn No dividend declared H1 2014 H1 2015 Inter
Slide 7: Operational – Key Features
OPERATIONAL – KEY FEATURES 7 OVERVIEW Reduced volumes: Platinum Production – Ramp‐up of Impala and safety stoppages 786 – Marula industrial action and safety stoppages 631 – Pre‐cautionary closure of Bimha mine Gross refined platinum production down (oz 000) 19.8% to 630 600 ounces 390 – Mine‐to
Slide 8: Impala Rustenburg Build-up Post Strike
IMPALA RUSTENBURG BUILD‐UP POST STRIKE OVERVIEW Achieved targeted production of 4Mt and 250koz for the six months 4 day Section 54 stoppage Tonnes per shift YTD December 2014 Interim results for the six months ended 31 December 2014 www.implats.co.za
Slide 9: Group Refined Platinum Production
GROUP REFINED PLATINUM PRODUCTION 9 OVERVIEW 450 400 390 350 300 252 250 Pt oz (000) 200 150 115 112 109 100 83 84 91 55 39 36 51 50 0 Impala Zimplats Marula Mimosa Two Rivers IRS third party H1 2014 H1 2015 Interim results for the six months ended 31 December 2014 www.implats.co.za
Slide 10: Group Costs Including Capital
GROUP COSTS INCLUDING CAPITAL 10 OVERVIEW 35 000 30 000 25 000 (Rand per platinum ounce) 20 000 15 000 10 000 5 000 0 Impala Zimplats Marula Group Mimosa Two Rivers Cash costs Stay in business capital Replacement capital Expansion capital H1 2015 Revenue per pt oz sold Current basket Interim results
Slide 11: Regulatory Environment
REGULATORY ENVIRONMENT 11 OVERVIEW South Africa Mining Charter review underway – Templates being populated and submitted to the DMR – Implats subsidiaries all fully compliant MPRDA Amendment Bill – Referred back to Parliament – Working through Chamber of Mines Zimbabwe Indigenisation – advanci
Slide 12: Our Response to the Eskom Challenge
OUR RESPONSE TO THE ESKOM CHALLENGE OVERVIEW 36000 350 340 34000 330 32000 320 310 Impala (MW) 30000 National (MW) 300 28000 290 26000 280 270 24000 260 22000 250 01:00 02:00 03:00 04:00 05:00 06:00 07:00 08:00 09:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00
Slide 13: Financial Review
FINANCIAL REVIEW Brenda Berlin
Slide 14: Gross Income Statement
GROSS INCOME STATEMENT FINANCIAL REVIEW Revenue down 4% at R million H1 2014 H1 2015 % change 2014 R15.9 billion Sales 16 502 15 903 (4) 29 028 Profit 69% lower at R283 million Cost of sales (14 742) (14 384) 2 (25 786) Gross profit 1 760 1 519 (14) 3 242 HEPS decreased by 54% to 66 cents Gros
Slide 15: Gross Profit Movement
GROSS PROFIT MOVEMENT 15 FINANCIAL REVIEW Gross profit down R358 million R241 million 3 000 2 500 266 Revenue impacted by 46 478 volumes 2 000 1 760 808 536 (Rm) 1 519 1 500 Operating costs up by 1 327 336 R368 million 1 000 368 500 R808 million build‐up costs transferred 0 ‐93 2 019 ‐500 In
Slide 16: Implats Group Unit Cost
IMPLATS GROUP UNIT COST 16 FINANCIAL REVIEW 4 941 22 952 1 701 16 310 (R/Pt oz) Interim results for the six months ended 31 December 2014 www.implats.co.za
Slide 17: Headline Earnings Movement
HEADLINE EARNINGS MOVEMENT 17 FINANCIAL REVIEW Transfer of build‐up costs 1000 Creditors revaluation 900 860 800 Net foreign exchange losses 88 700 600 Reduced tax charge 241 (Rm) 500 200 212 400 400 300 200 319 100 0 Interim results for the six months ended 31 December 2014 www.implats.co.z
Slide 18: Headline Earnings per Operations
HEADLINE EARNINGS PER OPERATIONS FINANCIAL REVIEW R million H1 2014 H1 2015 % change FY2014 Impala (171) (488) (185) (1 373) IRS 807 545 (33) 1 138 Zimplats 246 312 27 714 Marula (93) (128) (38) (185) Mimosa 30 70 133 82 Two Rivers 94 153 63 273 Other (53) (64) (21) (125) Headline profit 860 400 (53
Slide 19: Movement in Net Cash Position
MOVEMENT IN NET CASH POSITION 19 FINANCIAL REVIEW Operating cash flow 6 000 impacted by 5 000 106 – Build‐up volumes 256 160 4 305 – Working capital increased 4 000 to more normal level (Rm) 3 000 2 714 Capital expenditure for the six (2 113) months of R2.1 billion 2 000 1 000 0 FY2014 Operating
Slide 20: Net Debt
NET DEBT 20 FINANCIAL REVIEW Low gearing ratio at 6.7% R million H1 FY2015 FY2014 % change Gross cash 2 714 4 305 (37) Net debt of R4.0 billion at Convertible bond (4 639) (4 410) (5) 31 December 2014 excluding leases Marula BEE debt (881) (878) Zimplats debt (1 215) (1 117) (9) Available Bank
Slide 21: Strategic Review
STRATEGIC REVIEW Terence Goodlace
Slide 22: Implats Strategy – Key Features
IMPLATS STRATEGY‐ KEY FEATURES 22 STRATEGIC REVIEW Strategic review undertaken to ensure long term shareholder value Investment through Key decisions Positive long term PGM fundamentals the cycle Expect LOWER for LONGER prices R30 billion investment over the next 5 years Maintain optionality Red
Slide 23: The PGM Markets
THE PGM MARKETS Terence Goodlace
Slide 24: Platinum Supply and Demand
PLATINUM SUPPLY AND DEMAND 24 MARKET OVERVIEW 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 ‘000TOZ 2013 (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) DEMAND Automotive 3 150 3 215 3 550 3 810 3 945 4 155 4 320 4 495 4 675 4 865 5 0
Slide 25: Palladium Supply and Demand
PALLADIUM SUPPLY AND DEMAND 25 MARKET OVERVIEW 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 ‘000TOZ 2013 (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) DEMAND Automotive 6 500 7 100 7 900 8 200 8 400 8 660 8 890 9 04 0 9 200 9 400 9
Slide 26: The PGM Market
THE PGM MARKET 26 MARKET OVERVIEW Bullish long‐term fundamentals for Platinum, Palladium and Rhodium – Demand growth estimated between 2% to 5% pa for the next ten years – Primary supply growth estimated between 1.5% to 3.6% pa – Secondary supply growth estimated at 4% pa is not sufficient to sati
Slide 27: Operational Strategies
OPERATIONAL STRATEGIES Terence Goodlace
Slide 28: Impala Rustenburg
IMPALA RUSTENBURG 28 STRATEGIC REVIEW Delivery of 850 000 platinum ounces 12 by 2019 10 3.5 More concentrated mining operation with higher mining efficiency 8 5.5 Access to two new modern shaft complexes (16 and 20 shafts) 7.1 6 – More Merensky reserves (Moz) Significant optionality to exten
Slide 29: Impala Rustenburg Major Projects
IMPALA RUSTENBURG MAJOR PROJECTS 29 STRATEGIC REVIEW Major capital projects 20 Shaft 16 Shaft 17 Shaft* Full production date 2019 2020 2025 Steady‐state throughput 1.7mtpa 2.7mtpa 2.7mtpa Steady‐state platinum production 125kozpa 185kozpa 180kozpa Remaining capital spend R1.9bn R0.7bn R10.3bn * Shaf
Slide 30: 17 Shaft
17 SHAFT 30 STRATEGIC REVIEW Project slowed to critical path shaft sinking activities in FY2015 and to continue into FY2016 – Total project capital spend reduction for the two years is R2.5bn The shaft remains essential for Impala to: – Maintain an annual throughput rate of 850koz as from 2020 o
Slide 31: 17 Shaft Critical Path
17 SHAFT CRITICAL PATH 31 STRATEGIC REVIEW By June 2015 By June 2016 R415m R537m Interim results for the six months ended 31 December 2014 www.implats.co.za
Slide 32: 17 Shaft Critical Path
17 SHAFT CRITICAL PATH 32 STRATEGIC REVIEW By June 2017 Interim results for the six months ended 31 December 2014 www.implats.co.za
Slide 33: Operational Excellence at Impala Rustenburg
OPERATIONAL EXCELLENCE AT IMPALA RUSTENBURG 33 STRATEGIC REVIEW Increasing Ore Reserves Impala Decreasing Productivity Increasing Unit Costs Improvement Efficiency “Fixco” Increasing Quality Interim results for the six months ended 31 December 2014 www.implats.co.za
Slide 34: Impala Rustenburg Production Profile
IMPALA RUSTENBURG PRODUCTION PROFILE 34 STRATEGIC REVIEW 16 000 14 000 12 000 10 000 8 000 (000t) 6 000 4 000 2 000 ‐ FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 Old Mine Big Five New shafts Interim results for the six months ended 31 December 2014 www.implats.co.za
Slide 35: Impala Rustenburg Shafts
IMPALA RUSTENBURG SHAFTS 35 STRATEGIC REVIEW KEY METRICS Estimate Strategic Plan FY2015 FY2020 Increasing face length Total development km 85 81.4 Mineable face length km 22 24.2 Mining quality Mining Mix (MR:UG2) ratio 46 49 Head Grade 4E g/t 3.49 3.69 MR ‐ Merensky Reef ‐ 6E ratios: 57% Pt, 25% Pd
Slide 36: Impala Rustenburg Shafts
IMPALA RUSTENBURG SHAFTS 36 STRATEGIC REVIEW KEY METRICS Estimate Strategic Plan FY2015 FY2020 Productivity Number of shaft complexes No 14 9 Number of half levels No 188 187 Stoping people in service No 10 099 12 199 Overhead people in service No 12 227 10 804 Total employees in service at shafts N
Slide 37: Zimplats
ZIMPLATS 37 STRATEGIC REVIEW Mechanised low cost operation Key focus is to restore production, operational performance and profitability: – Opencast mining – Re‐developing Bimha from the existing portal Capital programme undergoing intense review to ensure Zimplats is self funding We are adv
Slide 38: Zimplats
ZIMPLATS 38 STRATEGIC REVIEW Platinum production capacities: Bimha • Bimha 90 000oz • Mupfuti 90 000oz • Rukodzi 45 000oz • Ngwarati 45 000oz South Box Cut 5 km Ngezi Dam Interim results for the six months ended 31 December 2014 www.implats.co.za
Slide 39: Zimplats
ZIMPLATS 39 STRATEGIC REVIEW Re‐development in virgin ground out of the existing portal Targeting 1.8mtpa as from 2019 Interim results for the six months ended 31 December 2014 www.implats.co.za
Slide 40: Zimplats Production Profile
ZIMPLATS PRODUCTION PROFILE 40 STRATEGIC REVIEW 7 000 6 000 5 000 4 000 (000t) 3 000 2 000 1 000 0 FY2015 FY2016 FY2017 FY2018 FY2019 Ngwarati Mine Rukodzi Mine Mupfuti Mine Bimha Mine Open Pit Interim results for the six months ended 31 December 2014 www.implats.co.za
Slide 41: Marula and Afplats
MARULA AND AFPLATS 41 STRATEGIC REVIEW Marula Mine still planned to achieve 90koz per annum by 2020 DMR and stakeholder communication processes have commenced Seeking to dispose of the mine to realise value Leeuwkop Project (Afplats) Project to be deferred for 4 years DMR and stakeholder c
Slide 42: Mimosa, Two Rivers, IRS
MIMOSA, TWO RIVERS, IRS 42 STRATEGIC REVIEW Mimosa 15% platinum export levy on platinum has a material impact on Mimosa’s profitability Maintain operations at current production levels of 2.4Mtpa Have shelved all potential expansions in the current environment Two Rivers Implats equity posit
Slide 43: Conclusion
CONCLUSION Terence Goodlace
Slide 44: Maintaining and Protecting the Balance Sheet
MAINTAINING AND PROTECTING THE BALANCE SHEET 44 CONCLUSION Raised a R4.5 billion convertible bond R2.7 billion cash at 31 December 2014 R3 billion unutilised facilities at 31 December 2014 Current gearing at 6.7% , below the industry norm Slowed 17 shaft R2.2 billion capex cut in FY2016
Slide 45: Implats Strategy – Key Features
IMPLATS STRATEGY‐ KEY FEATURES 45 CONCLUSION Strategic review undertaken to ensure long term shareholder value Investment through Key decisions Positive long term PGM fundamentals the cycle Expect LOWER for LONGER prices R30 billion investment over the next 5 years Maintain optionality Reduce ca
Slide 46: Interim Results and Strategic Review
INTERIM RESULTS AND STRATEGIC REVIEW For the six months ended 31 December 2014
Slide 47: Group Costs
GROUP COSTS 47 CONCLUSION 26 430 22 952 22 000 18 188 17 090 16 597 16 455 16 692 16 310 13 500 (R/Pt oz) 12 165 10 999 Impala Zimplats Marula Mimosa* Two Rivers* Group H1 2014 H1 2015 * Not included in Group Interim results for the six months ended 31 December 2014 www.implats.co.za
Slide 48: Consensus Rand Basket Market Prices
Consensus rand basket market prices 48 CONCLUSION 40 000 35 000 30 000 $ per platinum ounce 25 000 20 000 15 000 10 000 5 000 ‐ Jan Price FY2015 FY2016 FY2017 FY2018 FY2019 Consensus 25 166 28 224 28 961 30 928 32 707 34 933 Interim results for the six months ended 31 December 2014 www.implats.co.za
Slide 49: Sales Volumes by Metal
SALES VOLUMES BY METAL 49 CONCLUSION December December % % 2014 2013 change South African sales Platinum (000oz) 611 720 (15) 16 Palladium (000oz) 393 426 (8) 54 Rhodium (000oz) 84 80 4 24 Nickel (000t) 5.0 5.7 (12) 37 Fully deliveries from October 2014 Interim results for the six months ended 31
Slide 50: Average Prices Achieved – Major Metals
AVERAGE PRICES ACHIEVED – MAJOR METALS 50 CONCLUSION Free Market December December % change prices* 2014 2013 Platinum ($/oz) 1 333 1 320 1 426 (7) Palladium ($/oz) 822 823 723 14 Rhodium ($/oz) 1 216 1 227 973 26 Nickel ($/t) 17 137 17 295 13 953 24 Basket ($/Pt oz sold) 2 341 2 333 2 226 4 (R/Pt o
Slide 51: Vehicle Sales
VEHICLE SALES 51 CONCLUSION World Light‐duty vehicles sales by region Units: Millions 2014 2013 % change North America 16.5 15.6 5.8 China 19.7 17.9 9.7 Western Europe 12.1 11.6 5.0 Japan 5.6 5.4 3.5 Eastern Europe 3.8 4.1 (6.9) Interim results for the six months ended 31 December 2014 www.implats.c
Slide 52: Investment
INVESTMENT 52 CONCLUSION Global Platinum ETF / 2014: +155K Global Palladium ETF 2014: +900K Futures Market Driven by sentiments Interim results for the six months ended 31 December 2014 www.implats.co.za
Slide 53: Rhodium Supply and Demand
RHODIUM SUPPLY AND DEMAND 53 CONCLUSION 2015 2016 2017 2018 2019 2020 2021 2022 2023 ‘000TOZ 2013 2014 (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) DEMAND Automotive 800 825 880 925 980 995 1 010 1 030 1 050 1 070 1 100 Industrial 135 160 165 170
Slide 54: Interim Results and Strategic Review
INTERIM RESULTS AND STRATEGIC REVIEW For the six months ended 31 December 2014
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