Valterra Platinum Limited · JSE:VAL
Valterra Platinum — Anglo American Platinum — H1 2016 Earnings Presentation
38 slides from Valterra Platinum's earnings presentation, Jul 25, 2016
Slide 1: Anglo American Platinum 2016 Interim Results Presentation
PLATINUM ANGLO AMERICAN PLATINUM 2016 INTERIM RESULTS PRESENTATION 25 JULY 2016 Miss South Africa Platinum Crown 2013 - 2015
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT Disclaimer: This presentation has been prepared for Anglo American Platinum Limited and the entities in the Anglo American Platinum group (“Anglo American Platinum”) and comprises the written materials/slides for a presentation concerning Anglo American Platinum. By attending th
Slide 3: Agenda
PLATINUM AGENDA • Overview of H1 2016 • Operations • Financials • Markets • Strategy • Outlook
Slide 4: Overview of H1 2016
PLATINUM OVERVIEW OF H1 2016 CHRIS GRIFFITH, CHIEF EXECUTIVE OFFICER Valcambi Suisse 500g Platinum Bar
Slide 5: Overview of H1 2016: Managing the business
OVERVIEW OF H1 2016 Managing the business… Net debt profile (R billion) • Zero harm remains the priority 14.6 12.8 • PGM pricing remained weak 9.9 • Strong operational performance • R3.2 billion of free cash flow generated from operations 31 Dec 2014 31 Dec 2015 30 Jun 2016 • R400 million overhead s
Slide 6: Operational Review
PLATINUM OPERATIONAL REVIEW CHRIS GRIFFITH, CHIEF EXECUTIVE OFFICER Hydraulic shovel - Mogalakwena Mine, Limpopo
Slide 7: Safety, Health & Environment
SAFETY, HEALTH & ENVIRONMENT Zero harm remains the priority… SAFETY Number of fatalities • Tragically, 4 fatalities occurred during H1 2016 • Record fatality free period of 323 days ended 25 31 March 2016 6 3 4 • LTIFR reduced by 28% to 0.75 2 2007 2013 2014 2015 H1 2016 • S54 stoppages continue to
Slide 8: Operational Performance in H1 2016
OPERATIONAL PERFORMANCE IN H1 2016 Loss-making ounces cut since 2013… efficiencies improving at operations… Total platinum production (‘000 ounces) (3) • Total platinum production up 2% to 1,153 koz 2,355 2,337 • Retained own mine operations up 8% to 458 koz: 1,875 1,160 1,212 – Mogalakwena up 2% to
Slide 9: Mogalakwena
MOGALAKWENA Another record performance… Platinum production (‘000 ounces) (3) (4) • Strong safety performance – 4 years fatality free 375 392 341 305 • Record production performance 188 188 142 174 – Total tonnes milled increased 6% – Return to lower normalised grade in Q2 163 167 188 204 208 2012 2
Slide 10: Amandelbult
AMANDELBULT Focusing on making Amandelbult investable again… • Tragically 2 fatalities in H1 2016 Platinum production (‘000 ounces) (3) • Strong production performance due to: 373 437 – Operational efficiencies in underground mining 192 218 248 – New opencast area added 18 koz 182 217 181 189 36 • U
Slide 11: Joint Venture Operations
JOINT VENTURE OPERATIONS Maintained strong performance… SAFETY Lost time injury frequency rate (LTIFR) (1) 0.84 • LTIFR improved 10% to 0.56 0.69 0.62 0.56 PRODUCTION (3) • Strong mining performance up 8% to 388koz: 2013 2014 2015 H1 2016 – Modikwa up 19% to 56 koz Platinum production (‘000 ounces)
Slide 12: Non-Core Operations - Rustenburg & Union
NON-CORE OPERATIONS - RUSTENBURG & UNION Focussed operational improvement… RUSTENBURG (including WLTR) Production (‘000 ounces) (3) Operating FCF (R million) (7) H1 653 • Platinum production down 10% to 219koz impacted by 578 H2 fatalities and difficult mining conditions 485 439 244 • Tailings Retre
Slide 13: Refined Production & Sales Volume in H1 2016
REFINED PRODUCTION & SALES VOLUME IN H1 2016 Refined production impacted by the Section 54 stoppage and stock take at the PMR… PMR Total refined platinum production (million ounces) • Planned stock take and Section 54 stoppage impacted 2.32 2.46 the PMR for 12 days with a further 37 day impact 1.89
Slide 14: Financial Review
PLATINUM FINANCIAL REVIEW IAN BOTHA, FINANCE DIRECTOR Vienna Philharmonic Orchestra Platinum Coin & American Eagle Platinum Bullion Coins
Slide 15: Summary of H1 2016 Results
SUMMARY OF H1 2016 RESULTS Lower stock gain impacting results… Headline earnings per share (Rand / share) Key financials 0.41 R billion H1 2015 H1 2016 9.45 Basket price (Rand / Pt ounce) 25,748 25,100 5.99 Sales revenue 29.9 30.7 3.99 3.01 1.62 2.41 EBITDA 6.2 4.3 4.22 0.60 3.29 EBIT(9) 3.5 2.1 0.3
Slide 16: EBIT
EBIT Earnings impacted by lower stock gain and weak US Dollar prices… H1 2016 vs. H1 2015 (R billion) Once-off Uncontrollable Controllable Once-off 3.5 (2.2) 2.1 0.6 1.5 1.3 (1.2) 1.4 5.0 0.5 (4.6) (0.4) (11) (12) (13) (14) H1 2015 2015 Price Currency CPI Basket Costs 2016H1 2016 H1 2016 Stock gain
Slide 17: Unit Cost
UNIT COST Management intervention keeping unit cost escalation below mining inflation… Unit cash cost escalation below mining inflation AAP’s mining inflation (%) R/Pt oz % of 12% 3% 48% 26% 1.8% cash cost 11.0% (401) 9.1% 1,454 (712) 8.1% AAP mining inflation: 19,436 2016 guidance 2016: 7.6% (2015:
Slide 18: Capital Expenditure
CAPITAL EXPENDITURE Disciplined capital allocation continues… Capital expenditure (R billion) (10) • Delivering value through reducing capital 2014 intensity, without introducing risk Full year 5.8 • Increased SIB in own mine portfolio 2015 Full year • Strong SIB governance 3.7 3.5 - 4.0 0.8 - 1.0 V
Slide 19: Net Debt Profile
NET DEBT PROFILE Improved cash from operations and working capital reduction… Net debt (R billion) Net debt profile (R billion) Opening net debt 1 January 2016 12.8 14.6 12.8 Cash flow from operations (5.4) 9.9 Working capital (1.3) Capex and capitalised waste stripping 2.0 Cash tax paid 0.4 31 Dec
Slide 20: Markets Review
PLATINUM MARKETS REVIEW CHRIS GRIFFITH, CHIEF EXECUTIVE OFFICER Honda Clarity Toyota Mirai Mercedes GLC Hyundai ix35 Fuel Cell Electric Vehicle Hyundai ix35
Slide 21: Market Prices
MARKET PRICES PGM prices were lower year-on-year in H1 2016… US Dollar platinum price (USD / oz) US DOLLAR PLATINUM PRICE REMAINS BELOW 1,300 2015 LEVELS Y-o-y (17)% YTD +14% US Dollar per ounce 1,200 • The US Dollar platinum price regained some ground, 1,100 H1 2015: $1,160/oz 1,000 up 14% in H1 20
Slide 22: Platinum Market
PLATINUM MARKET 2012, 2013, 2014 deficits dominated by once-off events… DEMAND (+2%) JM platinum market balance (‘000 ounces) (16) • Global autocat demand forecast to grow slowly (185) • Net jewellery demand expected to be steady. Growth expected in India with China set to stabilise (659) • Industri
Slide 23: Platinum Market - Automotive
PLATINUM MARKET - AUTOMOTIVE Strong European sales momentum in the first half of the year… • Autocat demand is expected to grow for the full year: Global light duty vehicle sales (H1 2016 vs H1 2015) 9% – Sales in Western Europe up 9% 8% – Slightly higher loadings due to Euro 6b legislation – Diesel
Slide 24: Platinum Market – Automotive Continued
PLATINUM MARKET – AUTOMOTIVE CONTINUED Trend towards greater electrification of the drivetrain will continue… Forecast annual light duty vehicle production (millions) (17) AUTOMOTIVE MARKET EXPECTED TO GROW 120 11m • Internal combustion engine market expected to grow 100 3m despite lower market shar
Slide 25: Platinum Market - Jewellery
PLATINUM MARKET - JEWELLERY Focus on China’s ability to return to growth… Platinum Guild International performance 2015 YoY • Global jewellery demand expected to improve in 2016 • SGE volumes give insight into Chinese jewellery performance: – Suggests some recovery underway 24% 25% – H1 2016 platinu
Slide 26: Market – Investment
PLATINUM MARKET – INVESTMENT Exchange Traded Funds (ETF) liquidation slows and physical investment steady… Platinum ETF holdings (million ounces) • Overall investment flows healthy in 2015 and again in 3.0 H1 2016 2.5 – Improved sentiment in platinum market Million Ounces 2.0 – Platinum ETF holdings
Slide 27: Strategy Review
PLATINUM STRATEGY REVIEW CHRIS GRIFFITH, CHIEF EXECUTIVE OFFICER Johnson Matthey platinum-bearing autocatalyst filter
Slide 28: Strategy Review: Three key areas of our strategy
STRATEGY REVIEW Three key areas of our strategy… Our value driven strategy is built around three key deliverables: 1 Repositioning our assets into a value maximising portfolio ˗ Positioned in the first half of the cost curve ˗ At least 70% mechanised mining ˗ More highly skilled work force ˗ Safer o
Slide 29: Repositioning the Portfolio
1 REPOSITIONING THE PORTFOLIO Restructuring largely complete…repositioning of the portfolio progressing… Restructuring since 2013… …now repositioning the …and rightsizing the overhead portfolio… 1. RESHAPE RUSTENBURG • Optimised and integrated 5 mines to 3 in 2013 5.4 • Further consolidation to 2 in
Slide 30: Repositioning the Portfolio: Retained Portfolio
1 REPOSITIONING THE PORTFOLIO Focus remains on repositioning the portfolio… Anglo American Platinum retained portfolio Retained assets Optionality - projects • For now – high value, capital • Mogalakwena light, short payback • Amandelbult + Amandelbult Chrome Plant 1 High quality assets + Mogalakwen
Slide 31: Operational Excellence
2 OPERATIONAL EXCELLENCE A key focus ensuring all assets are optimised…… Mogalakwena Amandelbult Platinum production • 95 koz additional production – (’000 ounces) • Extracting the full potential of Platinum production (‘000 ounces) no major capex the resource – chrome 450+ recovery plant 430 • Stud
Slide 32: Develop Market for PGMs & Prepare for the Future
3 DEVELOP MARKET FOR PGMS & PREPARE FOR THE FUTURE Focussed investment in key areas… • Automotive – fuel cell market development, hydrogen a infrastructure development through PGM Investment Market Fund Development • Jewellery – PGI focus on China and India • Investment – product availability throug
Slide 33: Outlook
PLATINUM OUTLOOK CHRIS GRIFFITH, CHIEF EXECUTIVE OFFICER Connecticut Transit Hydrogen Fuel Cell Bus
Slide 34: 2016 Outlook
2016 OUTLOOK All previous guidance remains in place… • Platinum production expected to be at the upper end of guidance of 2.3 - 2.4 Moz • Unit cash cost guidance unchanged at between R19,250 – R19,750 / platinum ounce • Direct overhead / indirect savings of R1.0 billion targeted to be achieved by Q4
Slide 35: Appendices
PLATINUM APPENDICES Real Mining. Real People. Real Difference.
Slide 36: Net Debt and Cash Flow by Mine
NET DEBT AND CASH FLOW BY MINE Despite weaker Rand basket price… R5.0bn (R1.8bn) (1.7) (0.3) (7.7) (1.1) 6.7 (0.3) (0.1) (0.3) (9.6) (9.9) (12.8) R3.2bn Net Debt Operating Current Net Debt Net Debt December Cash from SIB & Waste Free cash Project Taxation & Funding of before one-off Restructuring Ju
Slide 37: Cost Breakdown
COST BREAKDOWN Labour & Consumables Diesel Electricity Sundries & Water Contractors Conventional 67% 17% 1% 8% 7% Mechanised 65% 19% 4% 3% 9% Open Pit 23% 44% 10% 10% 13% Company 48% 26% 3% 12% 11% • Non ZAR – 10% of total costs ˗ 100% at Unki ˗ 25% at Mogalakwena 37
Slide 38: Footnotes
FOOTNOTES (1) Lost time injury frequency rate per 200,000 hours worked (2) 2014 LTIFR normalised for the 5 month long strike (3) Platinum production: platinum in concentrate produced and purchased (4) Mogalakwena production includes ounces treated at Baobab concentrator (5) Calculated as (revenue le
Anglo American Platinum — H1 2016 Earnings Presentation on 6ix