African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — H1 2010 Earnings Presentation
24 slides from African Rainbow Minerals's earnings presentation, February 2010
Slide 1: Interim results for the six months ended 31 December 2009
Interim results for the six months ended 31 December 2009 “ARM’s financial position continues to be robust with net debt to equity q y of 8.4%. We are pleased about the significant increase in headline earnings compared to the preceding six months; as well as the increased sales volumes and reduced
Slide 2: Disclaimer
Disclaimer Certain statements in this report constitute forward looking statements that are neither reported financial results nor other historical information. They include but are not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, trends, pla
Slide 3: Overview and strategy: Salient features
Overview and strategy Patrice Motsepe, Executive Chairman Salient features Headline earnings of R454 million reflect a decline of R1.78 billion relative to the corresponding period but reflect an increase of R369 million over the headline earnings of the preceding six months Significant decline in c
Slide 4: Salient features; Earnings recovering after global economic collapse
Salient features ARM’s financial position remains robust with net debt to equity of 8.4% Khumani Iron Ore Mine ramping up to 10 million tonnes per annum Phase ase 2a a of o the e Nkomati o a Large a ge Sca Scale e Expansion pa s o pproject ojec commissioned co ss o ed Goedgevonden Coal Mine commissi
Slide 5: Robust financial position; Diversified revenues
Robust financial position Net cash/ (net debt) excluding partner loans (R million) 2000 1 575 1500 1000 879 500 174 0 -500 -1000 - 932 -1500 -1 307 -2000 -1 855 -2500 F2005 F2006 F2007 F2008 F2009 1H F2010 9 Diversified revenues 1H F2009 Revenue commodity contributions 1H F2010 Revenue commodity con
Slide 6: Divisional headline earnings; ARM strategy
Divisional headline earnings Contribution to headline earnings by commodity group 6 months ended 6 months ended 31 December 30 June 2009 2008 % change 2009 Platinum Group Metals 131 (293) (55) Nkomati Nickel and Chrome 36 24 50 5 Ferrous Metals 302 2 812 (89) 338 Coal 36 176 (80) (41) Exploration p
Slide 7: Investing in growth; Delivering quality growth projects
Investing in growth ARM’s Portion F2005 – F2009 F2009 – F2012 R10.8 bn F2005 – F2012 + R8.8 R8 8 bn Projects R19.6 bn completed Ramp up Partners’ Portion F2005 – F2009 F2009 – F2012 F2005 – F2012 R8.2 bn + R8.1 bn R16.3 bn Projected total investment over 8 years in growth ±R36bn 13 Delivering qualit
Slide 8: 2 x 2010 growth strategy
2 x 2010 growth strategy – attributable PGM in concentrate sales Thousand ounces 400 350 300 250 200 150 100 50 - F2005a F2006a F2007a F2008a F2009a F2010e F2011e F2012e Modikwa Two Rivers Nkomati Thermal coal Million tonnes 7 6 5 4 3 2 1 0 2005a 2006a 2007a 2008a 2009e 2010e 2011e 2012e GGV PCB The
Slide 9: 2 x 2010 growth strategy; Continuous focus on cost reduction
2 x 2010 growth strategy – 100% basis Manganese ore Thousand tonnes 4500 4000 3500 3000 2500 2000 1500 1000 500 0 F2005a F2006a F2007a F2008a F2009a F2010e F2011e F2012e Iron ore Thousand tonnes 12000 10000 8000 6000 4000 2000 0 F2005a F2006a F2007a F2008a F2009a F2010e F2011e F2012e Khumani Beeshoe
Slide 10: Safety and sustainable development; Outlook
Safety and sustainable development Zero fatalities in this period Modikwa achieves 6 million consecutive fatality-free man shifts worked ARM accepted t d as a member b off th the IInternational t ti lCCouncilil off Mi Mining i and Minerals 19 Outlook Commodity demand and prices improving China and A
Slide 11: Operational performance: Volumes
Operational review André Wilkens, Chief Executive Officer Operational performance: Volumes 29% increase in iron ore sales to 4.4 million tonnes 13% increase in external manganese ore sales to 1 1.5 5 million tonnes 71% increase in manganese alloy sales to 120 thousand tonnes 11% increase in PGMs pro
Slide 12: Solid EBITDA margins; Cash generated from operations
Solid EBITDA margins ARM EBITDA margin is 29% for the period Iron Ore Manganese Chrome * Coal Platinum Nickel -40% -20% 0% 20% 40% 60% 80% 100% 120% * Coal EBITDA margin is impacted by inventory increases and capitalisation of ramp up costs 23 Cash generated from operations ARM cash generated from o
Slide 13: Revenue drivers: Volumes and commodity prices
Revenue drivers: Volumes 1H F2010 compared to 1H F2009 volume changes 80% 70% 60% 50% 40% 30% 20% 10% 0% Palladium (oz) Platinum (oz) Rhodium (oz) Manganese ore Chrome (t) Iron ore (t) Nickel (t) Manganese (t) alloys (t) 25 Revenue drivers: Commodity prices 1H F2010 compared to 1H F2009 average pric
Slide 14: Unit operating costs; Mining costs
Unit operating costs Cost containment continues to be a key focus for ARM % change 1H F2010 vs 1H F2010 1H F2009 EBITDA Commodity group Unit cost (metric) (decrease)/increase margin (%) Nickel R/tonne milled (27.9) 29.9 Iron ore R/tonne (19.5) 44.6 Platinum R/PGMs (7.1) 32.7 Coal R/tonne (on mine, s
Slide 15: Growth projects continue; Completed projects
Growth projects continue Attributable capital expenditure by division R million 4,000 3 550 3,500 3 333 3,000 2 779 2 867 2 360 2,500 2,000 1,500 1,000 500 0 F2008a F2009a F2010e F2011e F2012e Modikwa Nkomati Two Rivers ARM Ferrous ARM Coal ARM Exploration F2005 – F2009: R>10bn F2010 – F2012: R>8bn
Slide 16: Projects in progress; Khumani expansion: additional 6 mtpa
Delivering company transforming internal growth projects Projects in progress > R8 bn* F2010 - F2012 • Khumani Iron Ore (+6 mtpa) • Nkomati Nickel (20 ktpa) • GGV Thermal Coal (6.7 mtpa) * Total attributable capital expenditure 31 Khumani expansion: additional 6 mtpa Total project cost R6.7 billion
Slide 17: Nickel growth; Nkomati Nickel Expansion Project
2 x 2010 growth strategy – Nickel Nkomati nickel (thousand tonnes) 20 18 16 14 12 10 8 6 4 2 - F2005a F2006a F2007a F2008a F2009a F2010e F2011e F2012e The “a” included in the x-axis refers to actual and the “e” to estimate 33 Delivering quality long-term growth projects: The Nkomati Nickel Expansion
Slide 18: Thermal coal growth; Goedgevonden Project
2 x 2010 growth strategy – Thermal coal Thermal coal * (million tonnes) 7 6 5 4 3 2 1 0 2005a 2006a 2007a 2008a 2009e 2010e 2011e 2012e GGV PCB * Tonnes attributable to African Rainbow Minerals The “a” included in the x-axis refers to actual and the “e” to estimate 35 Delivering quality long-term gr
Slide 19: Potential future projects; Financial position strength continues
Delivering company transforming internal growth projects Potential P t ti l Future F t Projects P j t • Konkola North Copper • Modikwa Platinum expansion • Smelter expansions • Thermal Coal • Kalplats Platinum 37 Financial position strength continues EBITDA excluding exceptional items Cash on statem
Slide 20: Questions; Appendix
Questions Interim results for the six months ended 31 December 2009 Appendix Interim results for the six months ended 31 December 2009 20
Slide 21: ARM operational summary
ARM operational summary 1H F2010 1H F2009 % change Modikwa PGMs in concentrate (6E) Ounces 183 449 181 968 1 Cash cost R/kg 133 551 145 748 (8) Cash operating margin % 29 (71) Two Rivers PGMs in concentrate Ounces 150 721 121 6783 24 ARM Cash cost R/kg 131 146 139 771 (6) Platinum (100% basis) Cash
Slide 22: Sufficient capacity to fund growth platforms; Summarised income statement
Sufficient capacity to fund growth platforms Net cash/ (Net debt) calculation Per statement of financial position December 2009 Dec 2008 June 2009 Cash and cash equivalents 2 271 3 660 3 513 Long-term interest bearing borrowings (2 743) Short-term interest bearing borrowings (929) Total interest bea
Slide 23: Summarised cash flow; Summarised statement of financial position
Summarised cash flow Unaudited Unaudited R million December 2009 December 2008 Cash generated by operations 895 4 553 Net finance costs 15 64 Dividends received 32 85 Dividends paid (371) (847) Tax paid (377) (1 057) 194 2 798 Capital expenditure (1 213) (1 776) Net borrowings raised / (repaid) (234
Slide 24: Manganese and iron ore market outlook
Manganese and iron ore market outlook Both manganese and iron ore are used in the steelmaking 2000 process 1800 Manganese is used as an alloy agent and for its properties as 1600 471 a sulphide and deoxidant 1400 453 Average g manganese g consumption per tonne of steel is 1200 490 estimated at
African Rainbow Minerals — H1 2010 Earnings Presentation on 6ix