Gem Diamonds Limited · LSE:GEMD

Gem Diamonds — FY2014 Earnings Presentation

29 slides from Gem Diamonds's earnings presentation, Mar 17, 2015

  1. Slide 1: Full year 2014 results

    Full year 2014 results 17 March 2015

  2. Slide 2: Disclaimer

    Disclaimer 2 The following presentations are confidential and are being made only to, and are No statement in this presentation is intended as a profit forecast or profit only directed at, persons to whom such presentations may lawfully be estimate and no statement in the presentation should be inte

  3. Slide 3: Agenda

    Agenda 3  Full year 2014 results highlights  Diamond market  Operational performance  HSSE  Letšeng  Ghaghoo  Sales, marketing and manufacturing  Group financial performance  Outlook  Letšeng  Ghaghoo  Group outlook

  4. Slide 4: Full Year 2014 results highlights

    Full Year 2014 results highlights 4 REVENUE EBITDA US$271m up 27% US$104m up 35% 180 167 350 306 160 300 271 140 250 213 120 US$ Millions 202 104 US$ Millions 189 100 200 77 80 72 65 150 60 100 40 50 20 - - 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 BASIC EPS FREE CASH FLOW US cents 24 up 57%

  5. Slide 5: 2014 Achievements

    2014 Achievements 5  Delivered robust performance with strong cash flows  Operations expanded from single producing mine to two producing mines  Improved Letšeng revenue line and plant optimisation  Ghaghoo capital project completed on time and on budget – commissioning commenced  Continued exc

  6. Slide 6: Diamond market - a strong end to 2014

    Diamond market - a strong end to 2014 6  Liquidity concerns  Letšeng’s high value production remained resilient during Q4 2014  US$2 799/ct achieved at the December 2014 tender  Medium to long term outlook remains strong Letšeng rolling US$ per carat 3 000 2 700 2 540 2 400 2 338 2 100 1 800 6 m

  7. Slide 7: Operational performance

    Operational performance Alan Ashworth

  8. Slide 8: Group HSSE performance

    Group HSSE performance 8  Letšeng maintained 5-star IRCA rating for a second year  Ghaghoo maintained 4-star IRCA rating for a second year  Group LTIFR 0.20 (2013 LTIFR 0.13)  Group AIFR 3.01 (2013 AIFR 2.40)  Group invested US$ 0.6m in CSR initiatives  Group-wide zero major stakeholder or env

  9. Slide 9: Letšeng mine - Lesotho

    GEM ee i LetSeng mine - Lesotho

  10. Slide 10: Letšeng operational performance

    Letšeng operational performance 10 Waste tonnes mined (millions) Ore treated (millions) Carats recovered ('000s) 25 6.6 6.4 140 7 6.2 19.1 19.9 120 114 109 20 17.4 6 100 95 5 15 80 4 10 3 60 2 40 5 1 20 0 0 - 2012 2013 2014 2 012 2 013 2 014 2 012 2 013 2 014  Increased tonnage of higher value Sate

  11. Slide 11: Letšeng project update

    Letšeng project update 11 Coarse Recovery Plant Plant 2 Phase 1 upgrade  Capital - Maloti 140.0m (US$ 12.1m)  Capital - Maloti 50.0m (US$ 4.3m)  Optimising treatment of high value, coarse  Additional 250k tpa fraction  Further reduce diamond damage - improve  XRT technology – total recovery of

  12. Slide 12: Ghaghoo mine - Botswana

    GEM ore i Ghaghoo mine - Botswana

  13. Slide 13: Ghaghoo development

    Ghaghoo development 13  The Phase 1 capital project completed on time and on budget  Commissioning and optimisation of the plant in progress  Largest diamonds recovered – 35 ct, 20 ct, 17 ct  Coloured diamond recovered – 3 ct orange  Sealing of fissure water completed - 6 de-watering boreholes

  14. Slide 14: Sales, marketing and manufacturing

    Sales, marketing and manufacturing Clifford Elphick

  15. Slide 15: Sales, marketing and manufacturing

    Sales, marketing and manufacturing 15  Average of US$ 2 540/ct achieved for Letšeng’s high value production  59 rough diamonds achieved >US$1m each, including a 162ct white diamond which sold for US$ 11.1m (US$ 68 687/ct)  5 diamonds achieved total sales value of US$ 37.4 million, representing 14

  16. Slide 16: Group financial performance

    Group financial performance Michael Michael

  17. Slide 17: Group financial performance

    Group financial performance 17 US$ millions 2014 2013 % Increase Revenue 270.9 212.8 27% Royalty and selling costs (24.7) (18.5) Cost of Sales (129.6) (103.1) Corporate expenses (12.4) (13.8) Underlying EBITDA 104.2 77.4 35% Depreciation and Amortisation (15.2) (17.3) Non cash and other items 3.7 0.

  18. Slide 18: Financial performance – Letšeng mining operations

    Financial performance – Letšeng mining operations 18 2014 2013 % Variance Average price per carat (US$) 2 540 2 043 24% Carats sold 108 963 97 294 12% US$ millions 2014 2013 % Variance Revenue 276.8 198.8 39% EBITDA 123.5 78.9 57% EBITDA margin 45% 40% Exchange rate – Average to US$ Maloti 10.85 Mal

  19. Slide 19: Financial performance – manufacturing

    Financial performance – manufacturing 19 US$ millions 2014 2013 Polished (gross value achieved) 19.0 29.7 Rough value of extraction (13.9) (24.2) Margin – own extractions 5.1 5.5 Margin – 3rd party 0.7 0.6 Total margin 5.8 6.1 Direct manufacturing costs (1.9) (1.9) EBITDA generated 3.9 4.2 Value of

  20. Slide 20: Group cash and funding

    Group cash and funding 20  Cash:  Group cash of US$ 110.7m (US$ 99.4m attributable)  Net cash of US$ 73.6m after debt of US$ 37.1m  Funding: Amount Drawn Available Term/ Expiry/ (US$ down (US$ (US$ Company description Lender Re-negotiation millions) millions) millions) 3 year revolving Gem Diamo

  21. Slide 21: Dividend

    Dividend 21 Background Policy considerations  Robust balance sheet  Cash position  Group well funded  Expected capital commitments  Capital and cash management discipline  Earnings generated  Strong financial performance  Pay out – proportion of sustainable net earnings 2014 Dividend  Recom

  22. Slide 22: Outlook

    Outlook Clifford Elphick

  23. Slide 23: Outlook – Letšeng 2015 LoM plan

    Outlook – Letšeng 2015 LoM plan 23 Objectives Basis  Optimise/defer waste  2014 Reserve grades and prices  Optimise/maximise Satellite contribution  6mtpa of ore treated through Plants 1 & 2  Incorporate steeper slopes in pit design (70º v 65º)  Contractor operation (AV) to continue - end of 2

  24. Slide 24: Outlook - Letšeng 2015 LoM plan tonnage profile

    Ore Tonnes Treated- Millions 0 1 2 3 4 5 6 7 2015 2016 2017 2018 2019 2020 2021 2022 2023 Outlook - Letšeng 2015 LoM plan 2024 Total Waste Mined 2025 2026 2027 Main Pit Ore Tonnage Profile 2028 2029 2030 Satellite Ore 2031 2032 2033 2034 2035 2036 2037 0 5 10 15 20 25 30 35 40 Waste tonnes Mined - M

  25. Slide 25: Outlook - Ghaghoo

    Outlook - Ghaghoo 25  Background – Phase 1 to prove up grade, price and operating costs whilst:  Profitably mining VKSE portion of pipe  Sampling remainder of pipe  Determining the optimal way forward for medium to long term mining  Progress: Grade Price Operating cost Reserve – 27.8 cpht Reser

  26. Slide 26: Group outlook

    Group outlook 26  Commissioning of Plant 2 Phase 1 upgrade underway  Delivery of Coarse Recovery Plant project by end Q2 2015  Continued operational efficiency, performance improvements and cost control  Anticipated strong diamond market/prices over medium to long term

  27. Slide 27: Appendix – Letšeng updated guidance for 2015

    Appendix 1 – Letšeng updated guidance for 2015 27 FY 2015 Waste tonnes mined (Mt) 22 - 24 Ore treated (Mt) 6.3 – 6.5 Carats recovered (Kct) 102 - 107 Carats sold (Kct) 102 - 107 Direct cash costs (before waste) per tonne treated (Maloti) 145 – 155 Mining waste cash costs per tonne of waste mined (Ma

  28. Slide 28: Appendix - Gem Diamonds capital structure

    Appendix 2 - Gem Diamonds capital structure 28 Gem Diamonds shareprice performance since March 2014 as at Major shareholders Price 6 March 2015 240 Volume 1,600 (GBp) (‘000) 220 1,400 Graff Diamonds International Limited 15.12% 200 180 1,200 Lansdowne Partners Ltd 14.99% 160 1,000 140 Gem Diamonds H

  29. Slide 29: Thank you

    Thank you

Gem Diamonds — FY2014 Earnings Presentation on 6ix