African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — H1 F2017 Earnings Presentation
31 slides from African Rainbow Minerals's earnings presentation, 2017
Slide 1: Headline earnings increase by 234% to R1.69 billion
“Headline earnings increase by 234% to R1.69 billion mainly due to strong earnings from iron ore, manganese ore and Two Rivers. Improved results for Nkomati, Lubambe and PCB Coal.” Patrice Motsepe Executive Chairman
Slide 2: Overview and strategy
Khumani Iron Ore Mine Overview and strategy Patrice Motsepe, Executive Chairman
Slide 3: 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 4: Group structure
Group structure 100% 100% 10% 51% 100% 100% 14.6% Gold: Ferrous Coal Copper Strategic Harmony Platinum Services and Exploration PGMs Iron Ore Coal Copper PGMs 41.5% Modikwa1 50% Khumani 20% Participating Coal 40% Lubambe and 51% Two Rivers2 50% Beeshoek Business (PCB) 3 Lubambe Extension Manganese O
Slide 5: Salient features
Salient features Headline earnings increased by 234% to R1 693 million (1H F2016: R507 million). Headline earnings per share increased by 283% to 893 cents compared to 233 cents in the corresponding period last year. Basic earnings were a loss of R254 million (1H F2016: R996 million loss) and were m
Slide 6: Salient features
Salient features US$ prices for the ARM suite of commodities increased significantly during the last quarter of the reporting period. Good cost containment achieved at all mines except Goedgevonden (GGV) and Nkomati where unit costs increased as a result of lower production. Attributable segmental c
Slide 7: Salient features
Salient features Cash dividends received from the Assmang joint venture increased to R988 million (1H F2016: R500 million). ARM’s financial position continues to be robust with a net debt to equity ratio of 15.4%. Since the period end, ARM received a dividend of R1.5 billion from Assmang. 7
Slide 8: Safety
Safety All operations remain fatality free. The Lost Time Injury Frequency Rate (LTIFR) for the financial year-to-date was 0.33 per 200 000 man-hours (compared to 0.32 at end December 2015). Black Rock and Modikwa mines achieved five million and three million fatality-free shifts respectively. 8
Slide 9: Six-monthly headline earnings
Six-monthly headline earnings Headline earnings (R million) 2 500 2 331 2 341 1 997 2 000 1 767 1 693 1 454 1 406 1 500 1 026 1 000 718 507 544 500 0 F2012 F2013 F2014 F2015 F2016 F2017 First half (1H) Second half (2H) 9
Slide 10: Six-monthly headline earnings per share
Six-monthly headline earnings per share Headline earnings per share (cents) 1200 1 081 1 084 1000 893 816 800 654 600 473 400 330 261 233 200 0 F2013 F2014 F2015 F2016 F2017 First half (1H) Second half (2H) 10
Slide 11: EBITDA margins
EBITDA margins Segmental EBITDA margins by commodity / division (%) 36% Iron Ore 44% 30% Coal (GGV) 30% 14% Manganese 30% 22% PGMs 24% (3%) Nickel 18% (41%) Copper (7%) (50%) (40%) (30%) (20%) (10%) 0% 10% 20% 30% 40% 50% 1H F2016 1H F2017 11
Slide 12: ARM strategy
ARM strategy Quality growth continues in Operational ARM’s existing efficiencies portfolio of commodities Acquisitions and Africa partnerships World-class Entrepreneurial Profit and cash flow Owner operator management team management focused Partnering with communities, workers Employer of choice Pa
Slide 13: Operational efficiencies
Operational efficiencies Objective is to ensure that all operations are below the 50th percentile Two Rivers Platinum Lubambe Copper Goedgevonden Coal PCB Coal Operations Cato Ridge Ferromanganese * Manganese Ore Modikwa Khumani Iron Ore Platinum Beeshoek Iron Ore Nkomati Nickel Commodity Unit cash
Slide 14: Operational review
Two Rivers Platinum Mine Operational review Mike Schmidt, Chief Executive Officer
Slide 15: Headline earnings / (loss) by division / operation
Headline earnings / (loss) by division / operation 6 months ended 31 December R million 2016 2015 % change ARM Platinum 179 (9) - Two Rivers Mine 205 155 32 Modikwa Mine (54) (47) (15) Nkomati Mine 28 (117) - ARM Ferrous 1 779 599 197 Iron ore division 1 023 478 114 Manganese division 378 97 >200 Ch
Slide 16: Segmental EBITDA split by commodity (%)
Segmental EBITDA split by commodity (%) Contribution of commodities 100% 5% 6% 4% 5% 8% 12% 11% 5% 14% 23% 80% 12% 13% 60% 57% 44% 59% 56% 55% 71% 40% 8% 20% 10% 5% 8% 24% 29% 16% 19% 22% 13% 0% -6% -20% F2012 F2013 F2014 F2015 F2016 1H F2017 PGM Nickel Iron Ore Manganese Chrome Coal (GGV) Copper 16
Slide 17: Segmental profit variance analysis
Segmental profit variance analysis Unaudited profit variance analysis – Profit from operations before special items (R million) Factors subject to market conditions Factors subject to management’s control 3 000 2 230 (641) 2 500 (140) 112 (15) 2 100 2 000 1 500 Increase 121 (618) 1 051 Decrease 1 00
Slide 18: Changes in sales volumes
Changes in sales volumes 1H F2017 versus 1H F2016 sales volume changes (%) Increase 21% Decrease 11% 1% -4% -7% -6% -14% -21% -20% -43% Nickel Copper Nkomati GGV PGM GGV Eskom Manganese Two Iron Manganese chrome export coal ore* Rivers ore alloys concentrate coal chrome concentrate *External sales o
Slide 19: Changes in average realised US Dollar prices
Changes in average realised US Dollar prices 1H F2017 versus 1H F2016 average realised US Dollar prices changes (%) 73% Increase Decrease 61% 44% 37% 18% 9% 11% 6% 7% -2% -8% Rhodium Copper Nickel Platinum Manganese Palladium Gold Export Export Chrome Export ($/oz) ($/lb) ($/lb) ($/oz) alloys ($/oz)
Slide 20: Changes in average realised Rand prices
Changes in average realised Rand prices 1H F2017 versus 1H F2016 average realised Rand prices changes (%) Increase Decrease 77% 65% 48% 41% 21% 12% 14% 8% 10% 1% -5% Rhodium Copper Nickel Platinum Manganese Palladium Gold Export Export Chrome Export (R/oz) (R/lb) (R/lb) (R/oz) alloys (R/oz) (R/oz) t
Slide 21: Unit cost changes by commodity
Unit cost changes by commodity 1H F2017 versus 1H F2016 on-mine unit production costs Rand per tonne basis (%) Increase Decrease Manganese ore (11%) Copper * (7%) Inflation (CPI) at 6.8% Coal: PCB (7%) Iron ore 4% Manganese alloys 7% PGM: Modikwa 7% PGM: Two Rivers 9% Coal: GGV 34% Nickel * 37% (20%
Slide 22: ARM Ferrous: Iron ore
ARM Ferrous: Iron ore Iron ore operational performance - 100% basis Sales of 8.8 million tonnes at 11% higher 1H 1H % F2017 F2016 change prices. Export sales 000 7 288 6 558 11 volumes tonnes Local sales 000 1 517 1 362 11 volumes tonnes Change in on-mine Khumani lumpy ore increased from 54% to unit
Slide 23: ARM Ferrous: Manganese ore
ARM Ferrous: Manganese ore Manganese ore operational performance -100% basis 1H 1H % F2017 F2016 change Export sales 000 1 348 1 433 (6) volumes Nchwaning 2 shaft upgrade completed in 1H tonnes F2017. Local sales 000 69 38 82 volumes* tonnes Change in unit % (11) 4 - production costs Capital R milli
Slide 24: ARM Ferrous: Manganese alloys
ARM Ferrous: Manganese alloys Manganese alloys operational performance (100% basis) 1H 1H % F2017 F2016 change Sales volumes 000 Both furnaces at Sakura commissioned (South Africa) tonnes 97 80 21 successfully and achieving product Sales volumes 000 specifications. (Sakura) tonnes 42 - - Change in u
Slide 25: ARM Platinum: PGMs
ARM Platinum: PGMs PGM operational performance (100% basis) 1H 1H % F2017 F2016 change 6E PGM Production 407 846 437 207 (7) Modikwa South 2 shaft production ramp up ounces was slower than planned due to a delay in Modikwa cash cost R/oz 6E 8 559 7 970 7 the infrastructure. Two Rivers cash cost R/oz
Slide 26: ARM Platinum: Nickel
ARM Platinum: Nickel Nickel C1 cash costs net of by-products Low waste stripping over past 2 years has 1H F2017 1H F2016 % change limited mining availability of high grade ore. On-mine cash cost US$/lb 7.02 4.54 55 Off-mine cash cost US$/lb 3.34 2.78 20 By-product credits US$/lb (4.31) (2.92) 48 C1
Slide 27: ARM Coal: GGV and PCB
ARM Coal: GGV and PCB GGV and PCB operational performance (100% basis) 1H 1H % F2017 F2016 change Total export sales Mt 8.33 8.93 (7) volumes GGV saleable production down 8% resulting in high unit costs. Total Eskom sales Mt 2.44 2.44 - volumes GGV on-mine R/t 289.4 215.50 34 saleable cost PCB on-mi
Slide 28: ARM Copper
ARM Copper Lubambe Mine operational performance (100% basis) 1H F2017 1H F2016 % change Milled tonnes 000t 545 715 (24) Restructuring, dewatering facilities and cost Mill head grade % Cu 2.09 2.00 4 reduction initiatives completed successfully. Concentrator recovery % 84.6 81.1 4 Copper produced ton
Slide 29: Net debt to equity ratio
Net debt to equity ratio R million 1H F2017 1H F2016 F2016 Cash and cash equivalents 1 335 1 444 1 316 Total borrowings (4 843) (4 124) (5 551) Long-term borrowings (3 618) (2 767) (4 171) Short-term borrowings (1 225) (1 357) (1 380) Net debt (3 508) (2 680) (4 235) Total equity 22 781 24 539 24 58
Slide 30: Capital allocation: segmental analysis
Capital allocation: segmental analysis Capital expenditure (R million)* 4 000 Actual 1H F2017: R1 159 million 3 489 3 500 3 326 3 000 2 918 2 650 2 500 2 352 2 250 2 100 2 000 1 500 1 000 500 0 F2013a F2014a F2015a F2016a F2017e ** F2018e ** F2019e ** ARM Platinum ARM Ferrous ARM Coal ARM Copper * C
Slide 31: Thank you
We do it better FaxtM African Rainbow Minerals ES Thank you 31
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