Afrimat Limited · JSE:AFT
Afrimat — RMB Morgan Stanley Off Piste Conference 2023
38 slides from Afrimat's conference presentation, Sep 20, 2023
Slide 1: RMB Morgan Stanley Off Piste Conference
RMB Morgan Stanley Off Piste Conference 20 September 2023
Slide 2: Core message
Core message Our strategy is working and Substantial progress provides a trajectory made on strategic for sustained long- projects term growth Company culture and high standard of execution supports Group moats 2
Slide 3: What we do
1 WHAT WE DO A leading, empowered mid-tier mining and materials supply company
Slide 4: What we do
What we do Growth through structured diversification Construction Industrial Bulk Future Materials Minerals Commodities Materials and Metals Aggregates | readymix | Limestone | dolomite | Iron ore | anthracite Phosphate | vermiculite | concrete products industrial sands rare earth elements ▪ 26 comm
Slide 5: Rationale for and result of diversified structure
Rationale for and result of diversified structure Profit history with and without acquisitions ▪ Good blend of locally and internationally priced 600 commodities 500 ▪ Exposure to different currencies 400 1. Glen Douglas ▪ Exposure to different economic 2. Clinker Group Cents cycles 300 3. Infrasors
Slide 6: Deeper segmental diversification
Deeper segmental diversification A more sustainable mix in bulk commodities 2023 revenue contribution 2023 operating profit contribution Nkomati - anthracite Nkomati - 12% anthracite (2022: 8%) 2% (2022: -4%) (2022: 14%) IM (2022: CM 5% 8%) CM Jenkins - 13 % 37% iron ore (local) (2022: 37%) (2022: 1
Slide 7: Afrimat's moats
Afrimat’s moats 1 Unique competitive advantage 3 Execution ▪ Geographic location ▪ Multi-discipline approach to project ▪ Unique metallurgy execution ▪ Structural cost advantage • Business development ▪ Culture ▪ All teams provide input and backup in their respective areas of expertise • Finance, le
Slide 8: Strategic focus F2024
Strategic focus F2024 ▪ Continuously improve performance from existing assets – operational efficiency ▪ Ensure sustainable value from Nkomati Anthracite mine ▪ Implement a well-designed life-of-mine plan ▪ Further increase the value from the Coza transaction ▪ Increase volumes from Jenkins ▪ Commis
Slide 9: Fleet efficiency drive: Tonnes per machine hour
Fleet efficiency drive: Tonnes per machine hour Average Efficiency Average Average Efficiency Average Average Efficiency Average before project improvement after project before project improvement after project before project improvement after project 9
Slide 10: How we do it
2 HOW WE DO IT Culture of care in all that we do and a thriving entrepreneurial spirit
Slide 11: Sustainability and ESG
Sustainability and ESG Active community Focus on job relations with creation, training investment in staff and ensuring a education, youth high standard of employment and health and safety infrastructure ESG focus across 44 mining licenses, rehabilitation and carbon neutrality strategy 11
Slide 12: People management
People management 11,836 486 new 81 bursaries Staff wellness 2,668 employees training days employees hired awarded to staff programme Absenteeism Attrition Staff composition 5.0% 4.3% 12.0% 11.2% 80% 71% 4.0% 10.0% 70% 10.0% 8.1% 60% 7.8% 3.0% 8.0% 50% 2.3% 6.0% 40% 2.0% 6.0% 1.3% 1.4% 1.3% 30% 4.0%
Slide 13: Health, safety and environment
Health, safety and environment LTIFR progress ASPASA ISHE Audits ASPASA environmental compliance audits 0.9 0.8 0.77 0.66 95.0% 0.7 93.8% 94.0% 93.0% 0.6 0.55 0.58 92.9% 93.0% 92.4% 92.8% 92.7% 0.5 0.44 92.2% 92.0% 91.7% 0.4 0.34 92.6% 0.3 91.0% 90.5% 92.4% 0.2 90.0% 92.2% 92.0% 0.1 89.0% 92.0% 0 88
Slide 14: Carbon neutral strategy
Carbon neutral strategy Reduce carbon emissions by 32% by 2030 179 285 114 428 ▪ Reduction in line with UN (44 570) (15 048) (208) (2 724) (2 307) SDG’s ▪ 2050 target carbon neutrality across operations Opening total 2022 10% from coal replacement 100% renewable energy 5% hemp farming offset 30% mor
Slide 15: Financial outcomes
3 FINANCIAL OUTCOMES The financial scorecard supports and encompasses the way we diligently and methodically do things
Slide 16: Financial highlights
Financial highlights Up 4,9% to R4,9 billion 457,6 cents Core financial discipline to support growth Group revenue HEPS Entrenched 110,0 cents per share 19,6% diversification Strong cash strategy supported generation Final dividend Operating profit margin by prudent capital allocation 19,4% up to 2
Slide 17: PBIT movement
PBIT movement * AFRIMAT PBIT movement (Feb 2023 vs Feb 2022) R'000 increase Ml Decrease ll Total 1.200 000 1.000 000 23.906 800 000 600 000 1108 911 961561 400 000 200 000 PBIT 2022 Demaneng PBIT Rest of Business - Fuel Nkomati PBIT Jenkins PBIT Rest of Business - Other PBIT 2023
Slide 18: Solid metrics
Solid metrics HEPS (full year) Net cash from operating activities (full year) 600.0 CAGR – 18.24% 1,200,000 CAGR – 24,54% (2019 – 2023) (2019 – 2023) 500.0 987,319 1,000,000 951,655 215 100 400.0 767,580 800,000 Cents per share 676,810 R’000 300.0 542.9 600,000 457.6 441.7 410,484 200.0 347.7 400,00
Slide 19: Total capital expenditure
Total capital expenditure Capital expenditure 2016 - planned 2023 (R'000) Improvement capital Feb 2023 Feb 2022 1,200,000 Nkomati (developing of underground mine and other mine R432 m R54 m 1,000,000 963,093 development, etc.) 782,446 800,000 Jenkins R62 m R400 m* 600,000 Demaneng (further opening o
Slide 20: Segmental performance
4 SEGMENTAL PERFORMANCE The value of diversification
Slide 21: Bulk Commodities
Bulk Commodities Another excellent performance based on product diversification Revenue Operating profit and margin 3 000 880 35,7% 860 2 500 840 820 31,8% 2 000 R’million R’million 800 1 500 780 760 46,4% 860 2 409 2 480 1 000 740 1 584 720 788 500 700 735 680 - 660 Feb '21 Feb '22 Feb '23 Feb '21
Slide 22: Nkomati Anthracite mine
Life of mine: 20 years Market: Domestic Nkomati Anthracite mine Location: Mpumalanga Volumes achieved (tonnes) ▪ Profitable with increased volumes to come ▪ Contributed 23,1% to the segment revenue Steady-state target – 540 000tpa ▪ Long-term life of mine enhanced by opening two opencast pits and un
Slide 23: Jenkins Iron Ore mine
Life of mine: 11 years Market: Domestic Jenkins Iron Ore mine Location: Northern Cape Volumes achieved (tonnes) ▪ Fully operational ▪ Producing at required capacity ▪ Innovative technology solutions to optimise mine fleet efficiencies 305,661 Amount (R m) 233,815 Remaining planned capex 30 295,748 C
Slide 24: Demaneng Iron Ore mine
Life of mine: 4 years Market: International export Demaneng Iron Ore mine Location: Northern Cape Volumes achieved (tonnes) ▪ Approaching end of LOM with slightly higher strip ratio Targeted volumes – 870 000tpa ▪ Remain pleased with the performance $155 * ▪ Transnet provision of trains more consist
Slide 25: Industrial Minerals
Industrial Minerals Delivered satisfactory results across all regions Revenue Operating profit and margin 580 90 18,0% 560 80 540 70 520 60 10,8% 8,9% R’million R’million 500 50 480 554 40 85 460 514 30 55 440 20 49 471 420 10 400 - Feb '21 Feb '22 Feb '23 Feb '21 Feb '22 Feb '23 ▪ Revenue increased
Slide 26: Construction Materials
Construction Materials Suffered impact of economic slowdown Revenue Operating profit and margin 1 800 180 9,0% 160 1 700 140 7,2% 120 6,6% R’million R’million 1 600 100 1 809 1 500 1 751 80 158 60 129 1 595 105 1 400 40 20 1 300 - Feb '21 Feb '22 Feb '23 Feb '21 Feb '22 Feb '23 ▪ Revenue increased b
Slide 27: Lafarge acquisition: Assets
Lafarge acquisition Assets ▪ Excellent quarries ▪ Very good fly-ash business ▪ Well positioned cement grinding plants and depots ▪ Integrated cement plant ▪ Readymix batching plants Long life-of-mine assets Well-designed, good quality plants and equipment 27
Slide 28: Lafarge acquisition: Transaction
Lafarge acquisition Transaction ▪ Purchase consideration: $6 million ▪ Net asset value: R1.4 billion ▪ R500 million loan repayment on closing date ▪ R400 million loan repayment after 12 months ▪ Conditions precedent: * • Competition Commission approval • Section 11 approval from DMRE • Reserve Bank
Slide 29: Lafarge acquisition: Rationale
Lafarge acquisition Rationale ▪ Good time to act – market low but turning ▪ Good synergies exist ▪ Good investment return expected ▪ Very good assets, especially quarries and fly-ash 29
Slide 30: Afrimat and Lafarge combined national footprint
Afrimat and Lafarge combined national footprint Combined footprint ▪ 37 active quarries ▪ 8 mothballed ▪ 43 readymix concrete sites ▪ 8 brick-and-block operations ▪ 2 clinker sources ▪ 7 sand mines ▪ Cement ▪ 1 integrated plant ▪ 2 grinding plants ▪ 2 depots ▪ Fly-ash ▪ Lethabo ▪ Matla
Slide 31: Future Materials and Metals
Future Materials and Metals Ramp up of operation in progress Revenue Operating profit and margin 30.0 Feb '22 Feb '23 25.0 0.0 20.0 (2.2) R’million R’million 15.0 25.2 (8.0) 10.0 -5.0 5.0 0.0 3.0 Feb '22 Feb '23 -10.0 ▪ Increase in revenue ▪ Start-up losses of R10,2 million ▪ Site establishment comp
Slide 32: Rationale and overview
Rationale and overview ▪ Aligned with long term global trends (growth sectors) ▪ Energy transition ▪ Food security (agriculture) ▪ Enhance the diversification strategy ▪ Commodity/product (multiple commodities) ▪ Processing (innovation) ▪ Foreign currency revenue ▪ Good inherent resource characteris
Slide 33: Glenover (stage 1)
Glenover (stage 1) ▪ High Grade Phosphate (agriculture) ▪ Market development underway ▪ Granulation facility commissioned ▪ High Grade plant commissioned ▪ Phosphate Concentrate production (SSP feed, potential export opportunities and strategic partnerships) ▪ Single Super Phosphate (agriculture) ▪
Slide 34: Glenover (stage 2)
Glenover (stage 2) ▪ Optimising business case ▪ Evaluating various technologies ▪ Investigating strategic partnerships 34
Slide 35: Future outlook
5 FUTURE OUTLOOK An increase in volumes and bedding down of acquisitions
Slide 36: Looking ahead
Looking ahead ▪ Remain vigilant, react quickly and keep employees safe ▪ Ensure good project execution at Nkomati and Driehoekspan ▪ Drive Glenover strategy and commission P-Concentrate and SSP production ▪ Integration of Lafarge acquisition ▪ Industrial Minerals to maintain momentum with market and
Slide 37: Core message
Core message Strategy is working and providing a Substantial progress trajectory for made on strategic sustained long-term projects growth Company culture and high standard of execution supports Group moats 37
Slide 38: Investor relations
Investor relations Interim results | Johannesburg 26 October 2023 In-person and via webinar Andries van Heerden Interim results | Cape Town Chief Executive Officer 30 October 2023 021 917 8853 In-person Vanessa Rech Keyter Rech Investor Solutions vrech@kris.co.za 083 307 5600 38
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