Mmg Ltd. · HKEX:1208
Mmg — FY2013 Earnings Presentation
32 slides from Mmg's earnings presentation, Mar 12, 2014
Slide 1: Earning the right to grow
HKEx: 1208 EARNING ~ THE RIGHT _ STO GROW,
Slide 2: Important Information
Important Information The information contained in this presentation is intended solely for your personal reference and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person (whether within or outside your organisation/firm) or published, in whole or in part,
Slide 3: Highlights
Highlights Foreign exchange and commodity price Safety remains a core value – performance TRIFR1 2.4. Indexed, 2012=100 2013 2012 Delivered Earnings Before Interest 94 and Tax (EBIT) of US$278.3m. A$ / US$ 100 Mining and processing records achieved at Kinsevere, Rosebery 98 and Century. Zinc (
Slide 4: EBIT variance analysis
EBIT variance analysis EBIT variance Price variance US$ million US$ million 500 450 Lead 0.4 400 Sepon 350 (66.5) Copper (138.8) 300 Kinsevere 250 (60.3) 200 Century Price Zinc (27.3) (233.6) (27.6) 150 Rosebery Gold (34.0) FY12 EBIT (30.3) 100 429.2 Golden Grove Silver (45.5) 50 (37.3) 0 4
Slide 5: EBIT variance analysis
EBIT variance analysis EBIT variance US$ million Volume variance US$ million 500 Silver 10.6 450 Lead Volume 222.8 52.8 Sepon 400 6.5 Century 350 7.9 Copper Rosebery 333.4 24.8 300 Kinsevere 235.7 250 200 Zinc Golden Grove Price (100.2) (52.1) (233.6) TC/RC Gold 150 (18.8) (73.8) FY12 EBIT 100 429.2
Slide 6: EBIT variance analysis
EBIT variance analysis EBIT variance US$ million 500 Operating expense variance includes: 450 US$108.1m increase at Kinsevere reflecting Volume 222.8 inclusion of 12 months of expenses and 400 production ramp up. Operating US$98.4m saving at Golden Grove due to 350 expenses (6.6) operational res
Slide 7: EBIT variance analysis
EBIT variance analysis EBIT variance US$ million 500 450 Volume 222.8 400 Operating 350 expenses (6.6) 300 250 200 Price (233.6) TC/RC 150 (18.8) FY12 EBIT 100 429.2 50 0 7
Slide 8: EBIT variance analysis
EBIT variance analysis EBIT variance US$ million 500 Administration Other 41.2 2.6 450 Exploration Volume 222.8 5.4 400 Operating 350 expenses (6.6) 300 250 200 Price (233.6) TC/RC 150 (18.8) FY12 EBIT 100 429.2 50 0 8
Slide 9: EBIT variance analysis
EBIT variance analysis EBIT variance US$ million 500 Administration Other 41.2 2.6 450 Exploration Volume 222.8 5.4 400 Operating 350 expenses (6.6) 300 D&A 250 (163.9) 200 Depreciation and amortisation Price US$ million FY12 (233.6) TC/RC 200 150 172.7 (18.8) FY13 FY12 EBIT 150 126.1 120.7 100 429.
Slide 10: EBIT variance analysis
EBIT variance analysis EBIT variance US$ million 500 Administration Other 41.2 2.6 450 Exploration Volume 222.8 5.4 400 Operating 350 expenses (6.6) 300 D&A 250 (163.9) 200 Price (233.6) TC/RC 150 FY13 EBIT (18.8) FY12 EBIT 278.3 100 429.2 50 0 10
Slide 11: Analysis of cash flow
Analysis of cash flow Inflows 2013 Cash flow summary US$ million Net cash generated from operating activities of Operations Financing US$554.5m. $554.5m $147.0m Net cash generated from Inflows financing activities of US$147.0m. Outflows PP&E Others $558.2m $102.4m Purchase of property, plant a
Slide 12: Financial resources and liquidity
Financial resources and liquidity Repayment of borrowings Drawdown of US$250.0m in June 2013 as at 31 December 2013 under the US$1.0 billion Dugald River 8% facility. within one year 21% US$338.0m raised in August 2013 via the one - two years two - five years issuance of Convertible Redeemable 5
Slide 13: MMG's growth strategy
MMG’s growth strategy Our growth strategy is focused on: Identifying opportunities to extract potential from our existing assets. Pursuing organic growth opportunities through our projects and exploration pipelines. Pursuing external growth such as targeting value-focused acquisitions. Primary
Slide 14: Committed to world-class operating standards
Committed to world-class operating standards 2013 TRIFR1 2013 TRIFR1 2.4, 20% improvement. Per million hours worked Continue to strengthen our commitment 0.9 Sepon to the safety of our people - one fatality 0.5 2012 in 2013 is unacceptable to our 2013 business. 3.5 Kinsevere 1.7 An Internation
Slide 15: Mining performance
Mining performance Highlights EBITDA1 Ore mined increased 33% and ore milled 18%, while US$ million 2013 2012 % operating expenses decreased by US$6.6 million. Sepon 396.5 491.4 (19) Total copper production in FY13 of 187,738 tonnes - 23% above FY12. Kinsevere2 198.0 131.1 51 Total zinc produc
Slide 16: Kinsevere – opportunities to extract more value
Kinsevere – opportunities to extract more value C1 cost Kinsevere Kinsevere commissioned in May 2011, acquired by (Copper) MMG in February 2012. US$ / lb Exceeded nameplate capacity in first full year of MMG 2.00 6% operation following installation of diesel generators. Current Kinsevere power
Slide 17: Higher volumes – well managed costs
Higher volumes – well managed costs Ore mined and milled Production expenses (tonnes million) (US$ million) Mined Milled 8.1 266.6 Sepon Sepon 7.7 262.9 1.7 133.9 Kinsevere1 Kinsevere1 4.2 193.2 10.6 462.8 Century Century 14.0 445.7 1.7 150.0 Rosebery Rosebery 1.8 144.3 3.4 266.9 Golden Grove Golden
Slide 18: Copper – solid long-term market fundamentals
Copper – solid long-term market fundamentals Base Case x2 to meet future demand Base Case Copper Supply Short – term volatility 18 Source: Wood Mackenzie
Slide 19: Zinc – future supply remains uncertain
Zinc – future supply remains uncertain Last production from Century’s open pit expected mid 2015. (~500kt) Initial Dugald River mine plan difficult to achieve – trialling of mining methods to continue in 2014. Grade % 16 14 Perseverance Lisheen 12 Dairi Dugald River Bracemac McLeod Century Prair
Slide 20: Earning the right to grow
Earning the right to grow Significant safety improvements in 2013. Track record of delivering to production and cost guidance. Commitment to continuously improve processes, quality and costs. Supported by majority shareholder – China Minmetals. Sepon celebrating an annual production record i
Slide 21: Appendix
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Slide 22: Overview of assets
Overview of assets Izok Corridor copper / lead / silver / zinc Sepon copper Century Kinsevere lead / silver / zinc copper Dugald River Golden Grove lead / silver / zinc copper / gold / lead / silver / zinc Legend: Rosebery Operating assets copper / gold / lead / silver / zinc Development assets Expl
Slide 23: Financial dashboard
Financial dashboard Revenue by commodity Revenue by customer location 22% 30% Zinc Australia Copper 19% 12% Europe Gold Rest of world 55% Silver 6% Other Asia Lead 18% 4% China 5% 29% EBITDA by operating segment Operating expenses (Sites) 5% People 43% Sepon 8% 23% External Services Kinsevere 7% Ene
Slide 24: Sepon
Sepon Highlights Financials Outstanding production results with 90,030 tonnes of copper US$ million 2013 2012 % cathode produced in 2013. Revenue 746.2 806.2 (7) Copper sales increased 9%, revenue decreased 7% due to lower average realised copper price. EBITDA1 396.5 491.4 (19) Transition of S
Slide 25: Kinsevere
Kinsevere Highlights Financials2 An annual production record of 62,076 tonnes of copper US$ million 2013 2012 % cathode produced in its first full year under MMG ownership. Revenue 455.3 279.9 63 Well controlled mining and processing costs. In 2013 approximately 57% of power requirements were
Slide 26: Century
Century Highlights Financials Record mining rates achieved in 2013, the current mine plan US$ million 2013 2012 % imply last production from Century ‘s open pit is expected to be in mid-2015. Revenue 721.0 752.9 (4) Average zinc grade of ore mined decreased from 11.9% in EBITDA1 176.5 192.6 (8)
Slide 27: Rosebery
Rosebery Highlights Financials Annual production record of 88,369 tonnes of zinc metal US$ million 2013 2012 % produced in 2013, a 26% increase compared to 2012. Revenue 253.3 267.5 (5) Revenue decreased US$14.2 m due to the lower average realised prices for all commodities except lead. EBITDA1
Slide 28: Golden Grove
Golden Grove Highlights Financials Total copper production increased by 19% and zinc US$ million 2013 2012 % production decreased by 37% compared to 2012. Revenue 294.0 392.9 (25) Despite a 20% increase in copper sales, total revenue decreased 25% compared to 2012. EBITDA1 73.0 67.9 8 Cost sav
Slide 29: 2014 Guidance
2014 Guidance Sepon Rosebery Copper – production 88,000 – 93,000 tonnes Zinc – production 85,000 – 90,000 tonnes Copper – C1 costs US$0.95 – US$1.05 / lb Zinc – C1 costs US$0.20 – US$0.25 / lb Lead – production 22,000 – 24,000 tonnes Kinsevere Copper – production 61,000 – 66,000 tonnes Golden Grove
Slide 30: Condensed consolidated income statement
Condensed consolidated income statement Year ended 31 December 2013 2012 Variance US$ million Unaudited Audited and % restated Revenue 2,469.8 2,499.4 (1) Other income 0.6 8.1 (93) Expenses (excluding depreciation, amortisation and impairment expenses) (1,719.5) (1,769.6) 3 EBITDA 750.9 737.9 2 Depr
Slide 31: Condensed consolidated balance sheet
Condensed consolidated balance sheet 31 December 2013 31 December 2012 US$ million Unaudited Audited and restated Non-current assets 3,849.9 3,658.6 Current assets – cash and cash equivalents 137.4 95.7 Current assets – other 696.2 807.4 Total assets 4,683.5 4,561.7 Total equity 1,816.8 1,588.3 Non-
Slide 32: Consolidated financial performance: Cash flow statement
Consolidated financial performance: Cash flow statement Year ended 31 December 2013 2012 Unaudited Unaudited and restated US$ million Receipts from customers 2,523.5 2,463.1 Payments to suppliers (1,786.2) (1,703.9) Payments for exploration expenditure (71.9) (77.3) Income tax paid (110.9) (124.0) N