Slide 1: Half Year 2015 results
Half Year 2015 results 19 August 2015 Main pipe Satellite pipe The Letšeng mine - Lesotho
Slide 2: Disclaimer
Disclaimer 2 The following presentations are confidential and are being made only to, and are No statement in this presentation is intended as a profit forecast or profit only directed at, persons to whom such presentations may lawfully be estimate and no statement in the presentation should be inte
Slide 3: Agenda
Agenda 3 Half Year 2015 highlights Operations HSSE Sales, marketing and manufacturing Financial results Diamond market Outlook
Slide 4: Half Year 2015 highlights
Half Year 2015 highlights 4 REVENUE UNDERLYING EBITDA US$118 million US$46 million 200 80 63 149 150 60 122 USD Millions 118 USD Millions 116 44 46 97 41 100 40 33 50 20 0 0 H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 BASIC EPS CASH GENERATED BY OPERATIONS 10.69 U
Slide 5: Operations
Operations Alan Ashworth The Letšeng mine – Satellite and Main pipes The Ghaghoo mine – processing plant
Slide 6: Letšeng operational overview
Letšeng operational overview Alan Ashworth Letšeng’s new Coarse Recovery Plant
Slide 7: Letšeng operational overview
Letšeng operational overview 7 Strong operational performance Waste tonnes mined 15 (millions) 11.4 9.9 10.0 Production targets achieved 10 9.2 9.9 19 day shutdown for Plant 2 Phase 1 implementation* 5 Continual improvements: 0 H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 Improved blasting tech
Slide 8: Letšeng operational overview: optimised Life of Mine plan
Letšeng operational overview 8 Optimised Life of Mine plan Increased Satellite contribution - (1.65 mt in 2015; 2.0 mt from 2020 to 2031) Optimal waste profile – (peak of 36 mtpa in 2024) Steeper slope angles (resulting in less waste) Improved NPV Optimised Life of Mine plan: Optimised Lif
Slide 9: Letšeng operational overview: frequency of +100 carat recoveries
Letšeng operational overview 9 Frequency of +100 carat recoveries 3 12 Letšeng +100 carat diamonds 10 2 8 +100 carats per tender +100 carats annually 6 1 4 2 0 0 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 2011 2012 2013 2014 2015 +100 ct diamonds
Slide 10: Letšeng project update
Letšeng project update 10 Coarse Recovery Plant Plant 2 Phase 1 upgrade Capital - Maloti 140.0m (US$11.7m) Capital - Maloti 50.0m (US$4.3m) Optimising treatment of high value, coarse Additional capacity of 250ktpa fraction Delivered on time and within budget Commissioning commenced Pro
Slide 11: Ghaghoo operational overview
Ghaghoo operational overview Alan Ashworth Processing plant, sort house and tailings dump at Ghaghoo
Slide 12: Ghaghoo - Progress
Ghaghoo - Progress 12 35 283 carats recovered in H1 2015 132 125 ore tonnes treated in H1 2015 Average grade 29 cpht for May and June (above 27 cpht reserve grade) 5 production tunnels completed Slot tunnel completed between Tunnels 1 and 5 allowing retreat stoping to commence 825 metres
Slide 13: Ghaghoo - Grade
Ghaghoo - Grade 13 Proving up of grade achieved with potential upside Grade improved to 29 cpht, above reserve grade of 27 cpht Mining mainly conducted in lower grade portion of VKSE with dilution near margins – upside Ghaghoo Grade Performance Diluted marginal ore 40 35 30 Higher grade 25 ore 2
Slide 14: Ghaghoo – Diamond price
Ghaghoo – Diamond price 14 Proving up diamond price Sale 1 achieved US$210 per carat Sale 2 achieved US$165 per carat Ghaghoo diamond prices Ghaghoo diamond size frequency Diamonds per category interval Price per category US$/carat +11 10¢ +30¢ +15¢ +20¢ +45¢ +5 +7 +9 5grn 3¢ 4¢ 5¢ 6¢ 7¢ 8¢ 9¢ 3
Slide 15: Ghaghoo – Milling technology
Ghaghoo – Milling technology 15 Ghaghoo ore suitable for milling Successful liberation of fine diamonds Mill product to DMS 25% of headfeed Very low diamond damage Ghaghoo’s autogenous mill Successful liberation of fine diamonds through the mill
Slide 16: Ghaghoo - Production ramping up
Ghaghoo - Production ramping up 16 Ore tonnes treated 80 000 70 000 60 000 Tonnes per month 50 000 40 000 Actuals 30 000 Forecast 20 000 10 000 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Production ramping up Challenging water and ground conditions Development targeting flexibility and
Slide 17: HSSE
HSSE Alan Ashworth Re-vegetation rehabilitation trials at Letšeng
Slide 18: HSSE
HSSE 18 No Lost Time Injuries LTIFR 0.00 (2014 LTIFR 0.20) AIFR 3.26 (2014 AIFR 3.01) Invested US$0.4m in CSI initiatives Zero major stakeholder or environment incidents Continued implementation of international best practice in respect of environmental and social responsibility 0.35 LTI
Slide 19: Group CSI initiatives
Group CSI initiatives 19 Lesotho Classrooms and office donated to Pae la itlhatsoa Butha Buthe vegetable project in Lesotho Lesotho community health workers School in Lesotho Botswana Educational School tours at Ghaghoo New Xade Primary School donation ceremony in Botswana Kaudwane Primary school ad
Slide 20: Sales, marketing and manufacturing
Sales, marketing and manufacturing Clifford Elphick 357ct Type IIa white diamond recovered in July 2015
Slide 21: Sales, marketing and manufacturing
Sales, marketing and manufacturing 21 Sales and Marketing Robust prices achieved for Letšeng's high quality production - average of US$2 264 per carat, down 3% from H2 2014 Multiple marketing channels used to achieve maximum value - rough tender, partnering, manufacturing 13 rough diamonds ach
Slide 22: Financial results
Financial results Michael Michael
Slide 23: Financial results
Financial results 23 % Variance % Variance (H1 2015 vs (H1 2015 vs US$ millions H1 2015 H2 2014 H2 2014) H1 2014 H1 2014) Revenue 118.0 122.0 (3%) 148.9 (21%) Royalty and selling costs (9.7) (11.3) (13.4) Cost of sales (56.1) (63.7) (65.8) Corporate expenses (6.1) (6.4) (6.2) Underlying EBITDA 46.1
Slide 24: Financial results – Letšeng mining operations
Financial results – Letšeng mining operations 24 % Variance % Variance (H1 2015 vs (H1 2015 vs H1 2015 H2 2014 H2 2014) H1 2014 H1 2014) Average price per carat (US$) 2 264 2 338 (3%) 2 747 (18%) Carats sold 46 961 55 164 (15%) 53 799 (13%) % Variance % Variance (H1 2015 vs (H1 2015 vs US$ millions
Slide 25: Financial results – Manufacturing
Financial results – Manufacturing 25 % Variance % Variance (H1 2015 vs (H1 2015 vs US$ millions H1 2015 H2 2014 H2 2014) H1 2014 H1 2014) Polished (gross value achieved) 14.5 5.4 13.6 Rough value of extraction (11.3) (2.7) (11.2) Margin – own extractions 3.2 2.7 8% 2.4 32% Margin – 3rd party 0.1 0.3
Slide 26: Group cash and funding
Group cash and funding 26 Cash: Group cash of US$83.8m (US$70.5m attributable to Gem Diamonds) Net cash of US$49.6m after debt of US$34.2m Funding: Total Group facilities of US$77.1m of which US$40.6m is available for draw down at period end US$ millions 200 180 28 160 74 23 140 120 15 11
Slide 27: Diamond market
Diamond market Clifford Elphick A sample of Ghaghoo white diamonds
Slide 28: Diamond market
Diamond market 28 Letšeng’s high value production remained resilient during H1 2015, achieving US$2 264* per carat Inventory and liquidity concerns Challenging market conditions had a negative effect on pricing achieved for Ghaghoo’s production Medium to long term outlook remains strong Re
Slide 29: Diamond pricing
Diamond pricing 29 Diamond Price Indices 1.6 1.5 1.4 Letšeng price levels 1.3 maintained due to 1.2 resilience in +10.8 carat Type II diamonds 1.1 Ghaghoo - only two sales, 1 has dropped in line with 0.9 WWW Overall index 0.8 0.7 0.6 2011 2011.5 2012 2012.5 2013 2013.5 2014 2014.5 2015 2015.5 20
Slide 30: Outlook
Outlook Clifford Elphick The access decline at Ghaghoo
Slide 31: Outlook
Outlook 31 Ghaghoo ramp up to full production Continued operational efficiency, performance improvements and cost control Difficult market conditions, but favourable market fundamentals remain; strong diamond market/prices anticipated over medium to long term Capex discipline Dividend 20
Slide 32: Appendix – Letšeng guidance for 2015 (unchanged from March 2015)
Appendix 1 – Letšeng guidance for 2015 (unchanged from March 2015) 32 FY 2015 Waste tonnes mined (Mt) 22 - 24 Ore treated (Mt) 6.3 – 6.5 Carats recovered (Kct) 102 - 107 Carats sold (Kct) 102 - 107 Direct cash costs (before waste) per tonne treated (Maloti) 145 – 155 Mining waste cash costs per tonn
Slide 33: Appendix - Gem Diamonds capital structure
Appendix 2 - Gem Diamonds capital structure 33 Gem Diamonds shareprice performance since 1 January 2015 as at Major shareholders 14 August 2015 Price (GBp) Volume (‘000) 200 2,400 180 2,200 Graff Diamonds International Limited 15.11% 2,000 160 140 1,800 Lansdowne Partners Ltd 14.98% 1,600 120 1,400
Slide 34: Thank you
GEM pIAMONDs Thank you