Merafe Resources Limited · JSE:MRF
Merafe Resources — Investor Presentation (November 2010)
21 slides from Merafe Resources's investor presentation, Nov 10, 2010
Slide 1: Merafe Workshop on Ferrochrome and its related Industries
Merafe Workshop on Ferrochrome and its related Industries 9 and 10 November 2010
Slide 2: Disclaimer
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 Resources to be relia
Slide 3: Itinerary
ITINERARY 8:00am Arrival tea / coffee with snacks 8:30am - 9:00am Presenter - Stuart Elliot 9:00am - 10:15am Presenter - Heinz Pariser 10:15am - 10:30am Question & Answer Session 10:30am - 11:00am Mid-morning break with snacks 11:00am - 12:15pm Presenter - Heinz Pariser 12:15pm -12:30pm Question & A
Slide 4: Workshop Agenda
Workshop Agenda 1. Overview of Merafe Resources 2. Recent Developments - Lion II 3. Ferrochrome Industry - Barriers to Entry 4. Stainless Steel and Ferrochrome outlook 5. Introduction to Heinz H Pariser 6. The Effect of Chrome 7. South Africa – A Sleeping Cr Giant 8. Support for the Global Stainless
Slide 5: Seminar Goals
Seminar Goals • Obtain a broad understanding of Merafe and its strategic objectives • Understand the structure and operations of the ferrochrome industry • Key issues in the ferrochrome and Stainless Steel market • Ferrochrome market outlook • Enable investors to understand key drivers that impact o
Slide 6: 1. Overview of Merafe Resources
1. Overview of Merafe Resources 6
Slide 7: Management Team
Management Team Stuart Elliot CA(SA) – Chief Executive Officer • Appointed CEO in April 2010; Formerly CFO for 9 years • Extensive experience in the accounting and corporate finance • Formerly worked as an Audit Manager at KPMG and then in Mining Corporate Finance at FirstCorp, Gencor and Deutsche B
Slide 8: Largest Ferrochrome Producer in the World
Largest Ferrochrome Producer in the World Investor Profile Ticker: MRF Market Cap* (R): 3.4bn Share price* (R): 1.39 20.5% of EBITDA 79.5% of EBITDA 52 week high (R): 1.90 52 week low (R): 1.17 * As at 4 Nov 2010 Xstrata-Merafe Venture (The Venture) > 6 years old Formed 1 July 2004 Second quartile o
Slide 9: The Xstrata-Merafe Chrome Venture
The Xstrata-Merafe Chrome Venture: 5 smelter complexes, 20 furnaces, 8 chrome mines, 6 UG2 locations Chrome Mines Smelters UG2 Plants Lion II New projects Boshoek smelter Helena Lion smelter Impala UG2 Magareng Thorncliffe Rustenburg smelter Motololo UG2 Lydenburg smelter Horizon mine Wonderkop smel
Slide 10: Salient Features of the Venture
Salient Features of the Venture • World’s largest ferrochrome producer (capacity 1,970kt Ferrochrome p.a.) • Lowest cost producer in South Africa • Large chrome ore reserve base • Fully integrated business from mining to smelting • Geographically positioned to take advantage of all 3 major ports in
Slide 11: Our competitive advantage
Our competitive advantage 1. Lowest cost producer in SA with gap widening 2. Energy saving initiatives • Lion I – Premus Technology is the most sophisticated in the world, proven as the lowest cost technology due to energy efficiency • Bokamoso sinter plant (completed at Wonderkop Smelter) • Tswelop
Slide 12: Recipe for Ferrochrome
Recipe for Ferrochrome Chrome ore 2.1 – 3.1 t Reductants 0.4 – 0.8 t Electricity 2.4 – 4.2 MWh Furnace Ferrochrome Water 1.0t 2.5m³/t FeCr Transport (Internal) 1.25t Slag Fixed Costs (Primarily Salaries) 12
Slide 13: Xstrata-Merafe Venture well Placed to Handle Higher Energy Tariffs
Xstrata-Merafe Venture well Placed to Handle Higher Energy Tariffs Xstrata-Merafe Venture anticipated the changes in the South African electricity tariffs and invested in efficiencies: Lion Ferrochrome Bokamoso Specific Energy Consumption (MWh/T) 4.5 4.1 4.0 3.5 3.5 3.0 3.0 2.5 2.3 2.0 Conventional
Slide 14: 2. Recent developments
—_——! MERAFE 2. Recent developments 14
Slide 15: Recent Developments – Lion II
Recent Developments – Lion II • Background – Xstrata approved a 360,000 tonne per annum ferrochrome smelter to be constructed in Steelpoort Limpopo – Will increase the Venture’s capacity to over 2.3 million tonnes per annum – Will reduce overall cost of Venture’s production by 6% and uses energy eff
Slide 16: 3. Ferrochrome Industry – Barriers to Entry
3. Ferrochrome Industry – Barriers to Entry 16
Slide 17: Limited access to power and economically mineable chromite reserves
Limited access to power and economically mineable chromite reserves, amongst other barriers • Capital cost of building smelters increased significantly • Long lead time for critical items • Shortage of available quality ore reserves • Shortage of artisans and skilled labour • Escalating production c
Slide 18: 4. Stainless steel and Ferrochrome outlook
4. Stainless steel and Ferrochrome outlook 18
Slide 19: Stainless Steel and Ferrochrome Outlook
Stainless Steel and Ferrochrome Outlook Stainless Steel • The forecasted medium to long term growth remains strong – expected CAGR 5% • Production in 2010 is expected to reach record levels • Production will remain strong in Asia, due primarily to China estimated to be above the 10m tonnes mark. Fer
Slide 20: 5. Introduction to Heinz H Pariser
5. Introduction to Heinz H Pariser 20
Slide 21: Introduction to Heinz H Pariser / Alloy Metals & Steel Market Research
Introduction to Heinz H Pariser / Alloy Metals & Steel Market Research Company Background Heinz H. Pariser Alloy Metals & Steel Market Research was founded in 1981 by Heinz Pariser & Beatrix Nowak with – at that time – a background of nearly 20 years of experience in the world of Special Steels & Al
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