Slide 1: Merafe Resources Limited
MERAFE RESOURCES LIMITED Delivering today. Investing in tomorrow.
Slide 2: Legal Notice
LEGAL NOTICE 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 rel
Slide 3: Agenda
01 YEAR IN REVIEW AGENDA 02 MARKET REVIEW 03 OPERATIONAL REVIEW 04 FINANCIAL REVIEW 05 DIVIDEND 06 OUTLOOK 3
Slide 4: Year in Review
01 YEAR IN REVIEW 4
Slide 5: Weaker financial performance indicative of a tough environment
WEAKER FINANCIAL PERFORMANCE INDICATIVE OF A TOUGH ENVIRONMENT HEALTH AND SAFETY OPERATIONAL MARKET FINANCIAL § 1 fatality § Lower chrome ore production § Global market uncertainty § Revenue down by 9% § TRIFR decreased by 1% § Marginally higher ferrochrome § Increase in global stainless period-on-p
Slide 6: Market Review
02 MARKET REVIEW 6
Slide 7: Increase in stainless steel production and ferrochrome demand
INCREASE IN STAINLESS STEEL PRODUCTION AND FERROCHROME DEMAND Global stainless steel production (mt) Global ferrochrome demand (mt) 63.3 15.9 60.4 15.1 56.9 14.1 3.0 12.0 3.0 12.0 12.2 3.1 40.7 10.9 33.6 38.3 10.2 8.9 2.8 2.2 2.3 0.6 0.5 0.5 6.5 6.2 6.3 1.2 1.1 1.1 1.9 1.7 1.9 0.3 0.3 0.3 FY 2022 FY
Slide 8: China's industry dominance continues
CHINA’S INDUSTRY DOMINANCE CONTINUES Global stainless steel production (%) Global ferrochrome demand (%) 3.1 2.9 1.8 1.8 10.3 7.2 9.9 7.4 19.0 19.0 19.8 3.4 19.7 3.4 3.7 3.7 FY2024 FY2023 FY FY2024 FY2023 2024 64.4 63.4 68.6 67.6 USA Europe Japan China Other Source for all charts: CRU Dec 2024 Marke
Slide 9: China's ferrochrome production growth; increase in ore imports into China
CHINA’S FERROCHROME PRODUCTION GROWTH; INCREASE IN ORE IMPORTS INTO CHINA Global ferrochrome production (mt) Chrome ore imports into China (mt) 17.5 20.9 1.2 15.1 15.5 1.6 18.3 1.3 0.8 0.4 1.1 1.3 1.2 1.0 1.4 15.0 0.7 0.8 0.8 0.4 1.1 1.3 1.4 1.4 0.9 0.4 0.5 1.6 1.6 0.9 3.3 3.9 3.2 17.0 14.9 12.3 9.0
Slide 10: Resilient chrome ore prices & softer ferrochrome prices
RESILIENT CHROME ORE PRICES & SOFTER FERROCHROME PRICES Ferrochrome Merchant prices European ferrochrome UG2 Merchant prices (USD/t) 48%–63% (USc/lb) benchmark price# (USc/lb) 350 140 250 300 120 200 250 100 200 80 150 150 60 100 100 40 50 50 20 0 0 - Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2
Slide 11: Operational Review
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Slide 12: Health and safety of employees central to operations
HEALTH AND SAFETY OF EMPLOYEES CENTRAL TO OPERATIONS Total Recordable Injury Frequency Rate (TRIFR) § Regrettably 1 fatality in January 2024. 3.91 § TRIFR improved to 2.31 from 2.34 in December 2023. 2.80 2.40 2.34 2.31 § Safety of our employees remains a critical focus area with the goal of achievi
Slide 13: Eskom update
ESKOM UPDATE Power supply stable for most of the period to date. Above inflation tariff increases remain a concern. The Negotiated Pricing Agreement terms implemented at operations effective from 1 January 2024. This gives the Venture certainty of electricity pricing. 13
Slide 14: Renewable energy
RENEWABLE ENERGY Co-Generation Alternative technologies for producing electricity from off-gas are being considered. Renewable Energy Renewable energy from solar and wind sources under consideration for use by the Venture. The development of onsite (behind the meter) project is at advanced stages. P
Slide 15: Production volumes maintained
PRODUCTION VOLUMES MAINTAINED § Ferrochrome production marginally increased to 301kt Ferrochrome production – Installed capacity utilisation of 63%. (kt) – 98% utilisation of operating capacity. 379 384 § Rustenburg smelter: 300 301 – On care and maintenance. 265 – Section189 process completed in De
Slide 16: Persistent cost pressure
PERSISTENT COST PRESSURE § Total production cost per tonne increased by 2% year-on-year. This was below inflation but off a higher base. Increase influenced by: – Higher chrome ore prices – Higher fixed costs absorbed – General price inflation. § Higher costs were mainly offset by lower reductant an
Slide 17: Platinum Group Metals (PGMs) operations
PLATINUM GROUP METALS (PGMs) OPERATIONS § The Eastern PGMs operation continues to perform well. § PGMs production increased due to additional capacity from Eastern PGMs operation and PGMX plant. § Merafe’s share of PGMs revenue for the reporting period was R267 million. § PGMs production volumes hig
Slide 18: Chrome ore agreements
CHROME ORE AGREEMENTS § Post year end, the following mutually beneficial agreements were entered into with Sibanye Stillwater plc: – An agreement enhancing the terms to the historical agreement with Lonmin plc. – A chrome management agreement (CMA). § The agreements will result in increased feed and
Slide 19: Review of smelting operations
REVIEW OF SMELTING OPERATIONS § Highest global ferrochrome production surplus in 2024. § A function of China’s increased ferrochrome production in 2024. § Consequence: ferrochrome supply exceeding demand and pressure on prices. § Venture’s smelters not profitable at these levels. § 3-month review in
Slide 20: Financial Review
4 FINANCIAL REVIEW 20
Slide 21: Revenue
REVENUE Increase in revenue year-on-year (YoY) § Total revenue decreased by 9% YoY to R8 443 million. § PGMs revenue increased from R133 million to R267 million. § Ferrochrome revenue decreased by 14% YoY to R5 909 million. § Market dynamics led to marginally higher chrome ore prices and volume sold
Slide 22: Earnings
EARNINGS § Headline earnings per share of HEPS and Basic EPS (cents) 42.9c for the year. 70.1 § Key contributors to earnings were 67.0 66.8 resilient chrome ore prices and 56.4 56.4 60.1 60 higher volumes sold. 42.9 § Boshoek smelter’s impairment 40 26.7 contributed to the slump in basic earnings pe
Slide 23: EBITDA
EBITDA EBITDA from the Venture variance analysis: FY 2024 vs FY 2023 (%) 15 (5) 2 3 (14) (17) (5) (3) (3) 100 73 EBITDA Revenue & cost Revenue Unit cost Inflation & cost Foreign Standing charges Retrenchments Inventory write Other EBITDA FY 2023 volumes prices in real terms creeps exchange effect do
Slide 24: EBITDA reconciliation to profit
EBITDA RECONCILIATION TO PROFIT Venture’s EBITDA reconciliation to Merafe’s profit after tax (R’m) (84) (354) 1 815 (575) 65 (219) 20 667 Adjusted Merafe's Corporate costs Depreciation & Impairments Income from equity Net financing income Current & deferred tax Profit after tax share of Venture's am
Slide 25: Financial performance overview
FINANCIAL PERFORMANCE OVERVIEW Ferrochrome revenue 31 Dec 2024 31 Dec 2023 R’m R’m § Impacted by lower prices and volumes sold. For the year ended Chrome ore revenue Ferrochrome revenue 5 909 6 885 § Driven by resilient prices and increased sales volumes. Chrome ore revenue 2 262 2 222 PGMs revenue
Slide 26: Financial performance overview
FINANCIAL PERFORMANCE OVERVIEW 31 Dec 2024 31 Dec 2023 Non-current assets As at R’m R’m Impacted by the full impairment of Boshoek smelter. Total non-current assets 1 261 1 479 Inventories Current assets Decrease due to market dynamics and the write down of ferrochrome Inventories 1 794 1 916 invent
Slide 27: Reconciliation of cash
RECONCILIATION OF CASH Reconciliation of cash (R’m) 1 777 ( 54) ( 600) (1 050) ( 7) 72 1 656 1 795 Opening cash Net cash from Expansionary capex Sustaining capex (net Dividend payment Repayment of capital Foreign exchange Closing cash operating activities sale proceeds) portion of leases & effects s
Slide 28: Sufficient headroom under facilities
SUFFICIENT HEADROOM UNDER FACILITIES Venture & Unicorn Merafe Merafe (Merafe’s share)1 head office total As at 31 December 2024 R’m R’m R’m Closing cash 1 192 603 1 795 Venture Interest bearing Merafe facilities debt2 total As at 31 December 2024 R’m R’m R’m Total facilities in place Unspecified 300
Slide 29: Dividend
5 DIVIDEND 29
Slide 30: Dividend
DIVIDEND 1 2 3 4 The Board The final dividend This brings the The full year dividend has declared amounts to full year dividend works out a final ordinary 8 cents per share to R700 million to 65% of cash dividend before dividend tax amounting to headline earnings of R200 million 28 cents per share b
Slide 31: Outlook
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Slide 32: Outlook
OUTLOOK § Anticipated 2025 business context – Volatile, uncertain, complex and ambiguous environment characterised by § Geopolitical tensions. § Protectionist policies. § Regional conflicts. § Macro-economic risks. – Stainless steel demand growth forecast. – China’s dominance to persist in stainless
Slide 33: Thank you
THANK YOU Delivering today. Investing in tomorrow.