Slide 1: Results Presentation for the year ended 31 December 2014
RESULTS PRESENTATION For the year ended 31 December 2014 Merafe Resources Limited
Slide 2: Slide 2
Slide 3: Results Presentation / Legal notice disclaimer
Results Presentation For the year ended 31 December 2014 Presented by Zanele Matlala (CEO) and Kajal Bissessor (FD) Legal notice/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 m
Slide 4: Key agenda
Key agenda 01. Key features 02. Operational review 03. Market review 04. Financial review 05. Outlook Annexures Merafe Resources Ltd | Results presentation for the year ended 31 December 2014 3 01 Key features 4
Slide 5: Key features
Key features Power and ore consumption efficiencies* OPERATIONAL MARKET • Ferrochrome production of 334kt • 7,5% increase in global stainless steel • TRIFR of 4.63 production • Cash production cost increases of 9% • 11% increase in global ferrochrome demand • 9% increase in global ferrochrome produc
Slide 6: Operational review
Operational review – Increase of 5% in ferrochrome production Project Lion II Additional maintenance in H2 2014 at Lydenburg smelter – Regrettably two fatalities – TRIFR of 4.63 – Platinum industry strike impacted chrome ore costs chrome ore sales volumes – Wage negotiations Western mines
Slide 7: Global market review
03 Market review 9 Global market review GLOBALSTAINLESSSTEEL GLOBALFERROCHROME GLOBALFERROCHROME PRODUCTION DEMAND PRODUCTION 7.5% increase 11%increase 9% increase to41.6mt (2013:38.7mt) to11.3mt(2013:10.2mt) to11.3mt (2013:10.4mt) 18%NAFTA 38%NAFTA 13% SouthAfrica 5%Japan 2,5%EU 6% EU 12%China 11%C
Slide 8: Ferrochrome market review; Chrome ore imports into China
Ferrochrome market review European benchmark ferrochrome prices Risingdemandin Europe,doubts aboutsecurityof 2013Usc/lb 2014 Usc/lb Change electricitysupplyin SAandthe Q1 112.5 118 +5% platinumstrike Q2 127 122 (4%) Q3 112.5 119 +6% Slowdowninsome regionsandsofter Q4 112.5 115 +2% ferrochromeprices
Slide 9: Key financial features
04 Financial review 13 Key financial features 3% 5% 22% REVENUE EBITDA HEPS EBITDA in R’millions 650 589 600 558 530 550 500 450 380 400 350 314 300 250 200 150 100 50 0 2010 2011 2012 2013 2014 Merafe Resources Ltd | Results presentation for the year ended 31 December 2014 14
Slide 10: Revenue up by 3%; ferrochrome cash production costs up 9%
Revenue up by 3% 1% 2% 13.5% 9% 31% Average European Average Ferrochrome Ferrochrome Chrome ore benchmark Rand/US$ sales tonnes revenue revenue ferrochrome exchange rate price 2014:316kt 2014:118.5USc/lb 2014:10.9 2014:R3270m 2014:R339m 2013:314kt 2013:116.1USc/lb 2013:9.6 2013:R3005m 2013:R492m Rev
Slide 11: EBITDA reconciliation to profit; HEPS comparison
EBITDA reconciliation to profit 700 651 600 (62) 500 400 R'm 300 (237) 214 (51) (39) 200 (48) 100 0 Merafe's20.5%of Corporatecosts* Depreciation Netfinancingcosts Currenttaxexpense Deferredtax Profit EBITDAfromthe expense Venture * Includes R17m restructuring costs (R13m severance pay and R4.5m shar
Slide 12: 2014 H1 to H2 comparison; Capital expenditure
2014 – H1 to H2 comparison H2/H1 variance % Ferrochrome sales volumes (15) Chrome ore sales volumes (35) Average European Benchmark Ferrochrome price (3) Chrome ore prices (3) Toughmarket conditionsin Mathematical discount to benchmark (6) secondhalf, lowernetprices Exchange rate 3 inChina Revenue (
Slide 13: Balance sheet
Balance sheet As at As at 31 December 2014 31 December 2013 Audited R’000 Audited R’000 Total non-current assets 3 252 680 3 112 960 Property, plant and equipment 3 239 162 3 099 988 Deferred tax assets 13 518 12 972 Total current assets 2 148 467 1 903 622 Inventories 1 435 799 1 132 986 Trade and
Slide 14: Debt and facilities
Debt and facilities NET OVERDRAFT MOVEMENT 400 306 300 200 100 35 0 -11 -28 -21 -100 -200 -162 -196 -300 -247 Net overdraft at Cash from Expansionary Sustaining Loans raised Dividend paid Other items Net overdraft at 31 Dec 2013 operating capex capex 31 Dec 2014 activities Utilised facilities at 31
Slide 15: Outlook
Outlook • Venturehasdevelopedsignificantcompetitiveadvantagesandiswell positionedforthefuture • Remainexcitedaboutourfutureinthisindustry • Nosignificantexpansionarycapitalgoingforward • Committedtoreturningcashtoshareholders Merafe Resources Ltd | Results presentation for the year ended 31 December
Slide 16: Annexures: Historic ferrochrome prices
Annexures 27 Historic ferrochrome prices Merafe Resources Ltd | Results presentation for the year ended 31 December 2014 28
Slide 17: Ferrochrome Producer Ranking 2014
Ferrochrome Producer Ranking 2014 Merafe Resources Ltd | Results presentation for the year ended 31 December 2014 29 Ferrochrome Currencies’ Exchange Rate Fluctuation Merafe Resources Ltd | Results presentation for the year ended 31 December 2014 30
Slide 18: Thank you
THANK YOU
Slide 19: Summarised consolidated financial statements: key features
SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2014 Merafe Resources Limited (incorporated in the Republic of South Africa) Company Registration Number: 1987/003452/06 Share code: MRF ISIN: ZAE000060000 (“Merafe” or “Company” or “Group”) KEY FEATURES 5% Cash from operati
Slide 20: Commentary
COMMENTARY Profit and total comprehensive income for the year was R214.1m (2013: R210.6m) after taking into account depreciation of R237.3m Basis of preparation (2013: R179.0m), an impairment loss of nil (2013: R74.0m), net On 3 March 2015, the board of directors (the Board) of Merafe financing cost
Slide 21: Events after reporting period; review of operations; outlook
Events after the reporting period settlement in five years. Despite the European benchmark price decrease, Chinese mills recently raised ferrochrome prices after cutting A new debt facility with Absa and Standard Bank was concluded in them monthly for almost a year, resulting in a narrowing of the r
Slide 22: Summarised consolidated statement of comprehensive income
Summarised consolidated statement of comprehensive income for the year ended 31 December 31 December 2014 31 December 2013 Audited Audited R’000 R’000 Revenue 3 609 066 3 496 983 EBITDA 589 265 561 271 Depreciation and impairment (237 335) (252 990) Net financing costsa (51 295) (20 902) Profit befo
Slide 23: Statement of changes in equity
Statement of changes in equity for the year ended 31 December 31 December 2014 31 December 2013 Audited Audited R’000 R’000 Issued share capital – ordinary shares 25 053 24 942 Balance at beginning of year 24 942 24 932 Share options exercised 111 10 Share premium – ordinary shares 1 269 578 1 262 8
Slide 24: Sponsor and company details
Sponsor: Merrill Lynch South Africa Proprietary Limited Executive Directors: Z Matlala (Chief Executive Officer), K Bissessor (Financial Director), Non-executive Directors: CK Molefe (Chairman)*, NB Majova*, A Mngomezulu*, K Nondumo*, B Harvey, M Mosweu, Z van der Walt* Company Secretary: Corporate