Merafe Resources Limited · JSE:MRF
Merafe Resources — H1 2024 Earnings Presentation
31 slides from Merafe Resources's earnings presentation, August 2024
Slide 1: Interim Results Presentation for the Six Months Ended 30 June 2024
INTERIM RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 30 JUNE 2024
Slide 2: Legal Notice/Disclaimer
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 making an investment decision. Information contained herein has been taken from sources considered by Merafe Resourc
Slide 3: Agenda
AGENDA 3 5 10 KEY MARKET OPERATIONAL FEATURES REVIEW REVIEW 18 27 29 FINANCIAL DIVIDEND OUTLOOK REVIEW MERAFE RESOURCES LIMITED RESULTS PRESENTATION FOR SIX MONTHS ENDED 30 JUNE 2024 2
Slide 4: Key Features
KEY FEATURES MERAFE RESOURCES LIMITED RESULTS PRESENTATION FOR SIX MONTHS ENDED 30 JUNE 2024 3
Slide 5: Weaker financial performance indicative of a tough environment
WEAKER FINANCIAL PERFORMANCE INDICATIVE OF A TOUGH ENVIRONMENT HEALTH AND OPERATIONAL MARKET FINANCIAL SAFETY 1 fatality Lower ferrochrome and Global market uncertainty Revenue up by 0.4% TRIFR increased by 8% chrome production Increase in global period-on-period (from December 2023) S
Slide 6: Market Review
MARKET REVIEW MERAFE RESOURCES LIMITED RESULTS PRESENTATION FOR SIX MONTHS ENDED 30 JUNE 2024 5
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) 35,0 9,0 30.7 31.3 7.9 28.8 7.7 8,0 7.2 30,0 6,2 6,7 7,0 1,7 1,6 5,9 1,5 25,0 6,0 20,0 5,0 15,0 4,0 17,7 19,7 19,8 5,3 5,3 4,8 3,0 10,0 2,0 5,0 1,1 1,1 1,2 1,0 3,2 2,9
Slide 8: China's industry dominance continues
CHINA’S INDUSTRY DOMINANCE CONTINUES Global stainless steel production (%) Global ferrochrome demand (%) 2,9 3,3 1,7 2,0 6,0 7,3 8,9 11,0 21,3 20,4 21,7 3,2 20,6 3,2 3,7 3,8 H1 H1 H1 H1 2024 2023 2024 2023 63,2 61,6 67,3 66,9 USA Western Europe Japan China Other MERAFE RESOURCES LIMITED RESULTS PRES
Slide 9: China's ferrochrome production growth; increase in ore imports
CHINA’S FERROCHROME PRODUCTION GROWTH; INCREASE IN ORE IMPORTS INTO CHINA Global ferrochrome production (mt) Chrome ore imports into China (mt) 18,0 15.4 16.1 12,0 10.1 15.1 8.5 16,0 6.7 1,3 1,3 10,0 0,6 1,3 0,5 14,0 0,6 1,4 0,4 0,6 0,2 1,3 1,4 0,6 12,0 1,4 8,0 0,5 1,6 0,1 0,4 1,6 0,3 10,0 3,1 0,5 3
Slide 10: Resilient chrome ore prices & softer ferrochrome prices
RESILIENT CHROME ORE PRICES & SOFTER FERROCHROME PRICES UG2 Merchant prices Ferrochrome Merchant prices 49%– European benchmark ferrochrome (USD/t) 70% (USc/lb)* price (USc/lb) 350 140 250 300 120 200 250 100 150 200 80 150 60 100 100 40 50 50 20 0 0 - Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4
Slide 11: Operational Review
OPERATIONAL REVIEW MERAFE RESOURCES LIMITED RESULTS PRESENTATION FOR SIX MONTHS ENDED 30 JUNE 2024 10
Slide 12: Health and safety of employees central to operations
HEALTH AND SAFETY OF EMPLOYEES CENTRAL TO OPERATIONS Total Recordable Injury Frequency Rate (TRIFR) • Sadly, we had a fatality in January 2024 4,0 • TRIFR increase to 2.52 from 3,5 2.34 in December 2023 3,0 • Safety of our employees remains 2,5 a critical focus area with the goal 2,0 of achieving ze
Slide 13: Eskom update
ESKOM UPDATE • New Eskom leadership appointed • Power supply stability for most of the period to date • No significant load curtailment experienced over the reporting period • The Negotiated Pricing Agreement terms implemented at operations effective from 1 January 2024. This gives the Venture certa
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 both on-site (behind the meter) and off-site (wheeling
Slide 15: Production further scaled back
PRODUCTION FURTHER SCALED BACK • Ferrochrome production decreased Ferrochrome production (kt) to 154kt 450 – Installed capacity utilisation of 64% 400 – 78% utilisation of available capacity 350 300 • Rustenburg smelter has not operated since June 2023 250 200 384 • Lydenburg smelter, Rustenburg fur
Slide 16: Persistent cost increases
PERSISTENT COST INCREASES Breakdown of C3 production costs • Total production cost per tonne increased by 0.4% (from 10% 13% December 2023), influenced by: – Higher chrome ore prices 43% – Higher fixed costs absorbed 15% 45% 12% – General price inflation H1 FY • The increase in costs was 2024 2023 o
Slide 17: Platinum Group Metals (PGMs) operations
PLATINUM GROUP METALS (PGMs) OPERATIONS • The Eastern PGMs operation continues to perform well • PGMs production increased due additional capacity from the Eastern PGMs operation • Merafe’s share of revenue for the reporting period was R131 million • PGMs production volumes higher – Venture’s feed v
Slide 18: Financial Review
FINANCIAL REVIEW MERAFE RESOURCES LIMITED RESULTS PRESENTATION FOR SIX MONTHS ENDED 30 JUNE 2024 17
Slide 19: Revenue
REVENUE Increase in revenue period-on-period (PoP) • Total revenue decreased by 0.4% PoP to R4 744 million • PGMs revenue increased from R35 million to R131 million • Ferrochrome revenue decreased by 10% PoP to R3 397 million • Market dynamics led to higher chrome ore volumes sold • Chrome ore reven
Slide 20: Earnings per share
EARNINGS PER SHARE HEPS and Basic EPS (cents) • Headline earnings per share of 28.2c for the period 60 • Key contributors to earnings 37,0 42,0 42,0 were higher chrome ore and 37,0 40 28,8 19,4 28,1 28,2 PGMs volumes sold plus a 19,4 18,1 20 weaker ZAR:USD exchange rate 0 (20) (40) (60) (80) H1 2022
Slide 21: EBITDA
EBITDA EBITDA from the Venture variance analysis: H1 2024 vs H1 2023 (%) 9 (23) (8) (3) (3) 4 100 74 EBITDA Revenue & cost Revenue Inflation & cost Foreign Standing Other EBITDA H1 2023 volumes prices creeps exchange effect charges H1 2024 * = Excludes the gain on acquisition of joint operation MERA
Slide 22: EBITDA reconciliation to profit
EBITDA RECONCILIATION TO PROFIT PSV’s EBITDA reconciliation to Merafe’s profit after tax (R’m) 1 200 (45) (169) 30 (0,7 ) 1 000 11 (213) (71) 800 600 1 176 400 720 200 0 Adjusted Corporate Depreciation Income from Finance Finance Current tax Deferred tax Profit after Merafe's costs & equity income e
Slide 23: Financial performance overview
FINANCIAL PERFORMANCE OVERVIEW H1 2024 H1 2023 H2 2023 Ferrochrome revenue For the year ended R’m R’m R’m • Impacted by lower prices and volumes sold and a weaker ZAR: USD exchange rate Ferrochrome revenue 3 397 3 792 3 093 Chrome ore revenue Chrome ore revenue 1 213 936 1 286 • Driven by resilient
Slide 24: Financial position
FINANCIAL POSITION 30 Jun 2024 31 Dec 2023 Non-current assets R’m R’m • Include property, plant and equipment & intangible assets As at Inventories Total non-current assets 1 573 1 479 • Decrease due to inventory drawn down due to Rustenburg smelter being idle Current assets • Closing FeCr finished
Slide 25: Reconciliation of cash
RECONCILIATION OF CASH Reconciliation of cash - YTD (R’m) 3 000 (27) (226) 2 500 2 000 852 (549) 6 6 1 500 1 000 1 656 1 717 500 0 Opening cash Net cash from Expansionary Sustaining Dividend Various other Foreign Closing cash operating capex capex payment exchange activities effects MERAFE RESOURCES
Slide 26: Sufficient headroom under facilities
SUFFICIENT HEADROOM UNDER FACILITIES Venture & Unicorn Merafe Merafe (Merafe’s share)1 head office total As at 30 June 2024 R’m R’m R’m Closing cash 1 167 550 1 717 Venture Interest bearing Merafe facilities debt2 total As at 30 June 2024 R’m R’m R’m Total facilities in place Unspecified 300 300 Tot
Slide 27: Dividend
DIVIDEND MERAFE RESOURCES LIMITED RESULTS PRESENTATION FOR SIX MONTHS ENDED 30 JUNE 2024 26
Slide 28: Dividend
DIVIDEND 1 2 3 The Board The interim dividend The dividend has declared amounts to works out an interim ordinary 20 cents per share to 71% of cash dividend before dividend tax headline earnings of R500 million MERAFE RESOURCES LIMITED RESULTS PRESENTATION FOR SIX MONTHS ENDED 30 JUNE 2024 27
Slide 29: Outlook
OUTLOOK MERAFE RESOURCES LIMITED RESULTS PRESENTATION FOR SIX MONTHS ENDED 30 JUNE 2024 28
Slide 30: Outlook
OUTLOOK • 2024 is broadly speaking playing out as expected in terms of challenges and opportunities • Challenges anticipated included economic slowdown, cost pressures, geopolitical tensions, ESG concerns and price volatility • Opportunities included slowing down inflation and recovery in Europe • A
Slide 31: Thank you
THANK YOU MERAFE RESOURCES LIMITED RESULTS PRESENTATION FOR SIX MONTHS ENDED 30 JUNE 2024 30