African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — FY2022 Earnings Presentation
45 slides from African Rainbow Minerals's earnings presentation, Sep 1, 2022
Slide 1: Provisional results for the financial year ended 30 June 2022
Provisional results for the financial year ended 30 June 2022 1 September 2022 we do it better
Slide 2: Executive Chairman statement on results
“ ARM’s quality diversified portfolio enabled us to improve our financial position despite lower prices for iron ore and platinum group metals (PGMs). Net cash increased from R8.2 billion to R11.2 billion and we declared a final dividend of R20.00 per share. Dr Patrice Motsepe, Executive Chairman “
Slide 3: Disclaimer
Disclaimer Throughout this presentation a range of financial and non-financial measures are used to assess the company’s performance, including, but not limited to financial measures that are not defined under International Financial Reporting Standards (IFRS). These adjusted financial measures are
Slide 4: Overview of results
Overview of results Dr Patrice Motsepe Executive Chairman Modikwa Mine we do it better
Slide 5: Headline earnings decreased by 13%
Headline earnings decreased by 13% ARM Ferrous headline earnings Group headline earnings (R million) 16% to R6.7 billion 13% (F2021: R7.9 billion) ARM Platinum headline earnings 34% to 13 064 R3.1 billion 11 338 (F2021: R4.7 billion) 5 226 5 534 ARM Coal headline earnings 4 814 by R1.2 billion to R9
Slide 6: Dividends per share (cents)
Dividends per share (cents) Total dividend: 1 000 1 300 1 200 3 000 3 200 2 000 2 000 1 200 1 000 900 750 700 500 400 250 F2018 F2019 F2020 F2021 F2022 Interim dividend per share Final dividend per share We are committed to paying dividends whilst pursuing quality growth and maintaining a robust fin
Slide 7: Dividends received
Dividends received Dividends received from Assmang Dividends received from Modikwa Mine 38% to R5.5 billion 245% to R1.0 billion (F2021: R4.0 billion) (F2021: R290 million) Subsequent to the financial year end, ARM, received a dividend from Assmang of R3.5 billion. Dividends received from Two Rivers
Slide 8: Safety and health
Safety and health Total Recordable Injury Lost Time Injury Frequency Rate (LTIFR)* Frequency Rate (TRIFR)** 24% to 0.31 15% to 0.69 (F2021: 0.41) (F2021: 0.81) ** TRIFR includes the number of fatal injuries, number of lost time injuries and * LTIFR per 200 000-man hours number of medical cases Fatal
Slide 9: Strategy: deliver competitive returns and create sustainable value
STRATEGY Owner-operator DELIVER COMPETITIVE RETURNS AND CREATE Entrepreneurial SUSTAINABLE VALUE management FOR ALL STAKEHOLDERS Operate Investing in Focus on our portfolio our employees value-enhancing of assets safely, and integrated responsibly and efficiently growth Partnering with Allocate capi
Slide 10: Segmental EBITDA split by commodity (%)
Segmental EBITDA split by commodity (%) (R million) 8 042 9 336 11 009 24 321 17 839 1% 3% 2% 3% 4% 1% 5% 4% 19% 4% 29% 12% Other* 38% 46% 39% Coal (GGV) 46% Manganese 54% 37% Iron Ore 46% 42% 37% PGMs 19% 16% (3%) (4%) F2018 F2019 F2020 F2021 F2022 Significant segmental EBITDA contribution from PGM
Slide 11: Current and future growth projects
Current and future growth projects More than 90% complete Successfully commissioned Ramp up to 4.4 million tonnes Additional 40 000 tonnes per saleable product per annum in month milling capacity F2023 Black Rock Two Rivers and Gloria Plant projects Expansion Bokoni Two Rivers Platinum Merensky Mine
Slide 12: Bokoni is a significant value creating opportunity for ARM
Bokoni is a significant value creating opportunity for ARM Substantially increased resource base Strong improvement to portfolio Mineral Attractive Eastern Limb portfolio (100% basis) Resource grade Bokoni Modikwa (Moz 4E) (g/t 4E) Mine Two Rivers Close ■ 135% to by 0,8 g/t proximity to to 42 existi
Slide 13: Strong PGM growth
Strong PGM growth (thousand ounces 6E – attributable to ARM) 700 600 103% increase 500 196 96 22 400 138 141 143 134 300 128 103 96 73 90 200 100 179 183 171 176 175 0 F2023 F2024 F2025 F2026 F2027 Two Rivers - UG2 Two Rivers - Merensky Modikwa Bokoni The acquisition and development of Bokoni Platin
Slide 14: Creating multi-stakeholder value through the Bokoni Mine acquisition
Creating multi-stakeholder value through the Bokoni Mine acquisition ARM ARM has over many decades partnered with various stakeholders to create value and benefit all stakeholders. 100% Qualifying Host Black ARM Platinum Employees Communities Industrialists The development of Bokoni Mine will allow
Slide 15: Community investment
Community investment Community social investment by the operations (100% basis) R151 million (F2021: R170 million) Enterprise and supplier development by the operations (100% basis) • 1 792 jobs sustained • 192 SMEs supported • 372 jobs created • SMEs developed ARM Mining Consortium dividend to comm
Slide 16: Responsible environmental management
Responsible environmental management Carbon emissions Progress on decarbonisation Agreements signed* to build a 8% to 0.9 mtCO2e 100MW solar plant to power (F2021: 1.0 mtCo2) ARM’s platinum operations. * Agreements signed are subject to certain conditions precedent. Water withdrawn Management of tai
Slide 17: Operational review
Operational review Chief Executive Officer: Mike Schmidt Khumani Mine we do it better
Slide 18: Headline earnings/(loss) by division / operation
Headline earnings/(loss) by division / operation (R million) F2022 F2021 % change ARM Ferrous 6 682 7 927 (16) Iron ore division 4 654 7 522 (38) Manganese division 2 068 448 >200 Consolidation adjustment and other (40) (43) 7 ARM Platinum 3 066 4 666 (34) Two Rivers Mine 1 968 2 972 (34) Modikwa Mi
Slide 19: Headline earnings variance analysis
Headline earnings variance analysis (R million) 20 000 6% 18 000 16 000 14 000 13 064 12 910 2 676 12 146 12 000 ( 154) 11 338 ( 476) (1 719) ( 808) 10 000 (1 245) 8 000 6 000 4 000 2 000 F2021 headline Net re- F2021 adjusted Platinum Ferrous Coal Corporate F2022 adjusted Net re- F2022 headline earn
Slide 20: EBITDA margins by commodity (%)
EBITDA margins by commodity (%)* 13% Coal (GGV) 54% 11% Manganese alloy 29% 19% Manganese ore 30% 59% Iron ore 49% 64% PGMs 55% F2021 F2022 *Excludes any re-measurement adjustments 20
Slide 21: ARM Ferrous
ARM Ferrous Black Rock Mine we do it better
Slide 22: ARM Ferrous
ARM Ferrous Variance analysis – segment result (R million) Changes in average US Dollar INDEX prices (%) 12 000 11 028 8 76% 10 000 ( 839) 1 379 7 851 8 000 33% (2 784) 12% 6 000 ( 941) 4 000 2 000 (22%) High Carbon Export 44% Export 37 % Export iron ore*** 0 manganese alloys manganese ore manganese
Slide 23: Iron ore (100% basis)
Iron ore (100% basis) Operational performance Average realised US dollar export prices decreased by 22% as % Chinese steel output came under pressure. unit F2022 F2021 change Export sales volumes 000 tonnes 13 176 13 269 (1) Local sales volumes 000 tonnes 2 888 3 148 (8) Export sales lump:fines rati
Slide 24: Manganese ore (100% basis)
Manganese ore (100% basis) Operational performance The average US dollar index price for 44% manganese ore % increased by 33%. unit F2022 F2021 change Export sales volumes 000 tonnes 3 666 3 823 (4) Local sales volumes 000 tonnes 291 143 103 Change in on-mine production unit cash costs % (1) 18 Desp
Slide 25: Manganese alloys (100% basis)
Manganese alloys (100% basis) Operational performance US dollar index price for high carbon and medium carbon % ferromanganese increased by 76% and 101% respectively. unit F2022 F2021 change Sales Volumes: South African operations 000 tonnes 99 134 (26) Sakura 000 tonnes 192 218 (12) The impact of t
Slide 26: ARM Platinum
ARM Platinum Two Rivers Mine we do it better
Slide 27: ARM Platinum
ARM Platinum Variance analysis segment result* (R million) Changes in operating costs** (%) 12 000 117 10 000 782 230 8 000 10 272 (1 908) (746) 281 6 994 PGMs: Modikwa 2% 6 000 (2 034) 4 000 12% PGMs: Two Rivers 2 000 0 F2021 ZAR:USD USD Prices Volume Cash costs Non-cash Other Mark-to- F2022 costs
Slide 28: PGMs (100% basis)
PGMs (100% basis) Operational performance The US dollar PGM basket price was lower driven mainly by a drop in rhodium prices. The declining prices also resulted in unit F2022 F2021 % change negative mark-to-market adjustments. 6E PGM Modikwa production volumes 294 541 251 755 17 ounces 6E PGM Two Ri
Slide 29: PGM Mark-to-market adjustments
PGM Mark-to-market adjustments The sales price of PGM concentrate is determined on a provisional basis at the date of sale. Adjustments are made to the sales price based on movements in the discounted forward commodity prices up to the date of final pricing. Where there are any differences between t
Slide 30: Mark-to-market adjustments (R million)
Mark-to-market adjustments (R million) Two Rivers Mine F2022 F2021 Realised mark-to-market adjustments* (505) 1 259 Provisional sales value 10 696 8 856 Final sales value 10 191 10 115 Unrealised mark-to-market adjustments (203) (464) Initial provisional sales recognition 1 967 2 611 Period end prov
Slide 31: Bokoni is a large high-grade opportunity
Bokoni is a large high-grade opportunity The UG2 is of a much higher-grade than the Merensky (6.56 g/t 4E Bokoni Mine’s Mineral versus 4.94 g/t 4E) and Resource comprises of has a favourable prill approximately 64% UG2 split for palladium (49%) and 36% Merensky. and rhodium (8%). As of 31 December 2
Slide 32: Nkomati Mine update
Nkomati Mine update Nkomati Mine remains on care and maintenance while ARM and its joint venture partner are considering various options for the future of the mine. At 30 June 2022 the estimated undiscounted rehabilitation costs attributable to ARM were determined to be R771 million (30 June 2021: R
Slide 33: ARM Coal
ARM Coal Goedgevonden Mine we do it better
Slide 34: ARM Coal
ARM Coal Variance analysis – segment result (R million)* Changes in on-mine unit production costs (%) 2 000 1 683 91 1 500 ( 374) ( 21) Coal: PCB 22% 1 000 577 500 ( 957) 166 Coal: GGV 0% 0 ( 11) F2021 ZAR:USD USD Prices Volume Costs Other Re-measure- F2022 ment losses 0% 5% 10% 15% 20% 25% Changes
Slide 35: GGV and PCB (100% basis)
GGV and PCB (100% basis) Operational performance US dollar prices for thermal coal reached record levels in % F2022 mainly due to disruptions in the global coal supply unit F2022 F2021 change market. Export sales volumes Mt 13.72 11.89 15 Domestic sales volumes Mt 3.51 4.80 (27) GGV on-mine producti
Slide 36: GGV and PCB loan repayments and adjusted headline earnings
GGV and PCB loan repayments and adjusted headline earnings ARM Coal adjusted headline earnings The loans owing to GOSA were re-measured due to the accelerated repayments on the loans after the surge in thermal coal prices and significantly increased and cash R millions F2022 F2021 flows GGV adjusted
Slide 37: Capital allocation
Capital allocation Finance Director: Tsundzukani Mhlanga Two Rivers Mine we do it better
Slide 38: Capital allocation guiding principles
Capital allocation guiding principles Invest in existing business Maintenance and efficiency improvement capital expenditure to secure the sustainability of our business. Balancing re-investment, profitability and returns. Debt repayment Healthy gearing levels create a flexible platform for sustaina
Slide 39: Cash flow analysis (R million)
Cash flow analysis* (R million) Interest Investing in and debt Shareholder Sources of funds existing business repayments returns Other 5 550 (2 303) 555 8 508 (2 202) ( 109) (6 270) 11 643 (1 247) ( 198) ( 296) 9 655 Balance 1 July Cash generated Dividends Taxation paid Capital Net borrowing Net fin
Slide 40: Net cash and debt (R million)
Net cash and debt (R million) 30 June 2022 30 June 2021 Cash and cash equivalents per statement of financial position* 11 659 9 671 Cash and cash equivalents per statement of cash flows 11 643 9 655 Overdrafts 16 16 Total borrowings (484) (1 469) Long-term borrowings (305) (1 105) Short-term borrowi
Slide 41: Segmental capital expenditure (R million)
Segmental capital expenditure* (R million) 8 000 F2023e includes: 7 169 7 332 7 000 6 553 Two Rivers Merensky Project - R2 000 million 6 000 Bokoni Platinum Mine - R500 million 5 000 4 719 F2024e includes: 4 095 4 000 3 502 3 336 Two Rivers Merensky Project - R 2 100 million 3 000 Bokoni Platinum Mi
Slide 42: Thank you
Thank you www.arm.co.za we do it better
Slide 43: Additional slides
Additional slides Black Rock Mine we do it better
Slide 44: Re-measurement gains and losses
Re-measurement gains and losses ARM Coal partner loans accounting treatment: The ARM Coal loans are revalued at each period end based on the expected operational cash flows derived from the life of mine plans using the most relevant macro and operational assumptions. The higher thermal coal price ou
Slide 45: Summary of re-measurement and fair value gains / (losses)
Summary of re-measurement and fair value gains / (losses) (R million) F2022 F2021 ARM Mining Consortium (Modikwa) - (119) ARM Mining Consortium (Modikwa) - intercompany - (137) Anglo American Platinum - (6) Non-controlling interest - 24 ARM Coal (1 256) 242 Goedgevonden Mine (766) 206 PCB operations
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