Merafe Resources Limited · JSE:MRF
Merafe Resources — FY2013 Earnings Presentation
26 slides from Merafe Resources's earnings presentation, March 2014
Slide 1: Results Presentation for the year ended 31 December 2013
Zanele Matlala (CEO) and Ditabe Chocho (CFO) Results Presentation For the year ended 31 December 2013 Merafe Resources Results Presentation for the year ended 31 December 2013
Slide 2: Legal notice/disclaimer
Legal notice/disclaimer This presentation is published solely for informational purposes and does not constitute investment, legal, tax or other advice nor is it to be relied upon in making an investment decision. Information contained herein has been taken from sources considered by Merafe Resource
Slide 3: Key agenda
Key agenda 1. Year in review 2. Operational review 3. Market review 4. Financial review 5. Future outlook Annexures Merafe Resources Results Presentation for the year ended 31 December 2013
Slide 4: Year in review
01 Year in review Merafe Resources Results Presentation for the year ended 31 December 2013
Slide 5: Year in review
Year in review Merafe Resources Results Presentation for the year ended 31 December 2013 5
Slide 6: Operational review
02 Operational review Merafe Resources Results Presentation for the year ended 31 December 2013
Slide 7: Operational review
Operational review Ferrochrome production • 32% increase in production to a record 319kt • Excellent performance of Lion I and Rustenburg smelters • Eskom buy-back agreements in H1 2013 Employee relations and safety • Wage negotiations successfully concluded • TRIFR improved by 5% Projects Lion II •
Slide 8: Market review
03 Market review Merafe Resources Results Presentation for the year ended 31 December 2013
Slide 9: 8% increase in stainless steel production
8% increase in stainless steel production 45 000 40 000 8% 35 000 30 000 25 000 17% 20 000 15 000 10 000 5% 5 000 1% 2% 4% 6% 8% - 1 124/1 212 1 978/2 056 2 469/2 607 3 132/3 149 3 273/3 217 7 461/7 095 16 372/19 211 35 809/38 547 Others NAFTA India Japan S Korea / Taiwan EU China Total Source: Hein
Slide 10: 6% increase in ferrochrome demand
6% increase in ferrochrome demand 6 000 6% 5 000 4 000 3 000 15% - 2 000 1 000 7% 9% 5% 7% 4% 2% 0- 465/486 548/510 653/680 765/697 749/767 1 695/1 577 4 842/5 557 9 717/10 274 NAFTA India Japan Others S Korea / Taiwan EU China Total Source: Heinz Pariser/Jan 2014 2013 estimated tonnes in ‘000 2012
Slide 11: 8% increase in ferrochrome production
8% increase in ferrochrome production 12 000 8% 10 000 8 000 6 000 13% 4 000 2% 2 000 4% 2% 3% 9% 70% - 347/337 285/312 286/486 947/988 1 114/1 138 3 320 /3 750 3 175/3 234 9 474/10 245 Others Russia / Turkey / EU India Kazakhstan China South Africa Total Albania Source: Heinz Pariser/Jan 2014 2013
Slide 12: 2013 market overview
2013 market overview Ferrochrome price overview Q1 – 2013 112.5 USc/lb Positive signs in the Chinese, North American and European markets coupled Q2 – 2013 127 Usc/lb with further Eskom buy-back arrangements Global economic uncertainty, weakening Rand, concerns about Chinese Q3 – 2013 112.5 USc/lb g
Slide 13: Financial review
04 Financial review Merafe Resources Results Presentation for the year ended 31 December 2013
Slide 14: Key financial features
Key financial features Revenue 38% H1 2013 H2 2013 FY 2013 FY 2012 Revenue (R'm) 1 469 2 028 3 497 2 542 EBITDA 78% EBITDA (R'm) 210 348 558 314 HEPS 112% HEPS (cents) 3.8 7.0 10.8 5.1 Capex Capex (R'm) 280 325 605 603 Net Debt 37% Net Debt (R'm) 525 606 606 441 Merafe Resources Results Pres
Slide 15: Revenue
Revenue FY 2013 FY 2012 Ferrochrome sales tonnes 23% Ferrochrome 314 255 sales (kt) Average ferrochrome price 4% Average European Rand/US$ exchange rate 17% benchmark 116 121 ferrochrome price (Usc/lb) Ferrochrome revenue 36% Rand/US$ 9.6 8.2 exchange rate Chrome ore revenue 49% Ferrochrom
Slide 16: Venture year-on-year EBITDA movement – Merafe's share
Venture year-on-year EBITDA movement – Merafe’s share 700 310 88 583 600 (30) 500 (117) (17) 400 349 R'm 300 200 100 0 2012 Actual Venture Impact of EBITDA higherof impact Costs impact Foreign exchange Standing charges Other 2013 Actual Venture EBITDA higher ferrochrome ferrochrome and and impact im
Slide 17: EBITDA reconciliation to profit
EBITDA reconciliation to profit 700 600 583 (25) 500 400 R'm 300 (253) (17) (17) 211 200 (60) 100 0 Merafe's 20.5% of Corporate costs Depreciation Net financing costs Current tax expense Deferred tax expense Profit EBITDA from the and impairment Venture Merafe Resources Results Presentation for the
Slide 18: Capital expenditure
Capital expenditure Project Lion II 603 605 • At 31 December 2013, the project was 87% complete. 404 • Approximately R170m will be spent in 2014 to complete the project. Expansionary (Rm) Sustaining (Rm) Note: Capital expenditure in the last three years comprises primarily Project Lion II and Projec
Slide 19: Balance sheet
Balance sheet As at As at 31 December 2013 31 December 2012 Audited R’000 Audited R’000 Total non-current assets 3 099 988 2 677 308 Property, plant and equipment 3 099 988 2 677 308 Total current assets 1 903 622 1 614 804 Inventories 1 132 986 1 088 885 Trade and other receivables 677 649 344 725
Slide 20: Balance sheet (continued)
Balance sheet (continued) As at As at 31 December 2013 31 December 2012 Audited R’000 Audited R’000 Total non-current liabilities 1 313 866 1 132 929 Loans and borrowings 576 311 523 872 Provision for close down and restoration costs 111 456 57 892 Deferred tax 626 099 551 165 Total current liabilit
Slide 21: Debt and facilities
Debt and facilities Net debt movement R’m Facilities R'm Utilised facilities at 31 December 2013 ABSA loan 581 Overdraft facilitiesa 96 Total 677 Headroom at 31 December 2013 ABSA loan 219 Net debt at Cash flows Exchange rate Other Expan- Sustaining Net debt at 31 December from fluctuations on siona
Slide 22: Future outlook
05 Future outlook Merafe Resources Results Presentation for the year ended 31 December 2013
Slide 23: Future outlook
Future outlook • Demand fundamentals for ferrochrome remain strong • Investments in energy efficient technology provide us with a significant advantage • Strong balance sheet, healthy cash flows and the lowest cost producer in South Africa leave us well positioned to grow our market share • No immed
Slide 24: Annexures
06 Annexures Merafe Resources Results Presentation for the year ended 31 December 2013
Slide 25: Chrome ore imports into China
Chrome ore imports into China 2011 2012 2013 % change ‘000t ‘000t ‘000t 2013/2012 South Africa 4 675 4 490 6 736 50.0 Turkey 1 612 1 840 1 988 8.0 Oman 645 426 687 61.3 India 439 310 168 (45.8) Pakistan 440 472 482 2.1 Albania 357 305 677 122.0 Iran 330 448 428 (4.5) Zimbabwe 212 1 – (100.0) Madagas
Slide 26: Globally rising power prices
Globally rising power prices Merafe Resources Results Presentation for the year ended 31 December 2013 26