Impala Platinum Holdings Limited · JSE:IMP
Impala Platinum — FY2004 Earnings Presentation
28 slides from Impala Platinum's earnings presentation, Aug 27, 2004
Slide 1: Results for the year ended 30 June 2004
Results for the year ended 30 June 2004 Today’s presentation • Highlights • Market Review • Finance Review • Operational Review • Corporate Issues • Prospects 2 1
Slide 2: Highlights – financial
Highlights – financial …. (1) • Dollar basket price per platinum ounce 19% higher • Rand/dollar exchange rate 24% stronger • Rand basket price per platinum ounce 9% lower • Platinum sales volumes up 9% • Sales revenue maintained at R11.81 billion 3 Highlights – financial … (2) Earnings Profit EPS %
Slide 3: Gross profit analysis; Rand revenue/Pt oz versus costs
Gross profit analysis (Rm) FY2003 versus FY2004: 10000 2 582 (700) (326) (3 594) 8000 1 014 6000 5 284 4 260 4000 2000 0 FY2003 Volume Increase Cost of Inflation Exchange FY2004 growth in metal volume costs rate prices increases impact 5 Rand revenue/Pt oz versus costs 12000 10000 8000 R/oz 6000 400
Slide 4: Highlights – financial (US$) and operational
Highlights – financial (US$) • Sales revenue up 32% to $1.72 billion • Profit up 15% to $428 million • Dividend of $3.06 – up 4% 7 Highlights - operational • Improved safety performance: • Fatal accidents declined by 23% • Lost-time injuries down 15% • Gross platinum production up 17% to 1.96 Moz •
Slide 5: Highlights – corporate
Highlights – corporate • Zimplats acquisition • Sale of Barplats for R389 million • Lonplats transaction • Corporate structure Implats • New board 100% Mine to market Impala Refining Strategic appointments operations Services (IRS) holdings Impala 100% 27% Lonplats* Platinum Concentrate offtake 25%
Slide 6: Sales volumes rise; average dollar prices achieved
Sales volumes rise FY2004 FY2003 % change Platinum (000oz) 1 495 1 373 9 Palladium (000oz) 733 688 7 Rhodium (000oz) 179 193 (7) Nickel (000t) 15.8 13.9 14 11 Average dollar prices achieved … FY2004 FY2003 % change Platinum ($/oz) 773 597 29 Palladium ($/oz) 223 264 (16) Rhodium ($/oz) 548 646 (15)
Slide 7: Platinum market remains robust
Platinum market remains robust … • Strong support for platinum price • Demand fundamentals sound • Weak dollar and equity markets • Perception that supply may not meet demand • Increased global speculative activity 13 Platinum supply and demand (000oz) Calendar years 2004 2003 2002 2001 2000 Automob
Slide 8: Platinum jewellery, automotive and industrial demand
Platinum …. (1) Jewellery sector: • Remains resilient in the face of high prices, but • Another year of decline expected in China • Other markets steady • Recovery anticipated in lower price environment as witnessed by Shanghai buying patterns 15 Platinum …. (2) • Automotive sector • Diesel applicat
Slide 9: Other metals
Other metals … Palladium • Automotive • CY2003 the last year of volume decline • Potential palladium substitution in diesel – muted impact • Price and supply stability positive for demand in the longer term Rhodium • Market in surplus • Short-term speculative activity Nickel • Strong demand and limi
Slide 10: Income statement; Profit by entity
Income statement R million FY2004 FY2003 % change Sales 11 809 11 807 0 Cost of sales (7 549) (6 523) (16) Gross profit 4 260 5 284 (19) Gross margin 36% 45% (20) Net forex transaction (losses) (216) (329) 34 Share of results of associates after tax 328 725 (55) Royalty expense (414) (598) 31 Profit
Slide 11: Exchange rate; Cost of sales
Exchange rate R/$ R/$ 14 14 12 12 10 10.32 10 24% 8 8 9.06 7.52 6 6.17 6 6.88 4 4 2 2 0 0 Jun 02 Jun 03 Jun 04 FY03 FY04 Exchange rate at Average exchange balance sheet date rate achieved 21 Cost of sales Rm FY2004 FY2003 % change On-mine operations 3 668 3 251 (13) Concentrating and smelting 967 80
Slide 12: Group capex; Gross cash position at year-end
Group capex Rm 3500 3000 2500 2000 1500 1000 500 0 FY04 FY05 FY06 FY07 FY08 Impala Marula Zimbabwe 23 Gross cash position at year-end Rm 3500 3000 2500 2000 1500 1000 500 0 FY00 FY01 FY02 FY03 FY04 Group Cash Barplats sale 24 12
Slide 13: Cash flows
Cash flows Rm FY2004 FY2003 From operating activities 1 813 2 491 From investing activities (1 744) (826) From financing activities (1 207) (2 491) Net decrease in cash (1 138) (826) Cash at year end 1 187 2 325 Cash net of short-term debt 636 2 120 25 Operational Review 13
Slide 14: Group safety; Safety comparison (1)
Group safety FIFR – per million man hours LTIFR - per million man hours 0.18 14 0.16 12 0.14 23% 10 0.12 0.1 8 0.08 15% 6 0.06 4 0.04 0.02 2 0 0 FY00 FY01 FY02 FY03 FY04 FY00 FY01 FY02 FY03 FY04 27 Safety comparison … (1) A comparison of lost-time injury rates: LTIFR – per million man hours 12 10 8
Slide 15: Safety comparison (2); Refined platinum production
Safety comparison … (2) A comparison of fatal injury rates: FIFR – per million man hours 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 BHP Billiton Rio Tinto FY03 Anglo plc CY03 Implats FY04 SA Pt industry FY03 CYTD04 29 Refined platinum production 000oz FY2004 FY2003 % change Headline production 1 729 1 514
Slide 16: Group statistics; Group unit costs
Group statistics FY2004 FY2003 % change Tonnes milled (000 t) 19 065 17 483 9 Pt produced (000oz) 1 961 1 673 17 On-mine cost per tonne (R) 192 186 3 Unit cost (R/Pt oz) 4 132 3 970 4 31 Group unit costs (R/Pt oz) FY2004 FY2003 % change On-mine operations1 2 987 2 859 (4.5) Concentrating1 569 513 (1
Slide 17: Impala Platinum – Impala performs (1)
Impala Platinum 33 Impala performs … (1) • LTIFR improved by 13% • Tonnes milled up 4% to 15.6 Mt • Mechanised tonnage ramping up - additional 600 000 tonnes 34 17
Slide 18: Impala performs (2) and (3)
Impala performs … (2) • Concentrator recoveries improved by 1.5% to 83.2% • Tailings plant commissioned in December 2003 • UG2 recoveries improved by 3% • Headcount reduced by 900 people • Platinum ounces per employee up 8% • Mining efficiencies declined by 4% due to reduced panel length 35 Impala p
Slide 19: Refineries on track; Sustaining operations
Refineries on track …. • World-class performance – 17% increase in production • Gross unit costs declined by 1% per platinum ounce • Capital expansion to achieve 2 Moz annually underway 37 Sustaining operations … • Production from the Impala lease area to be maintained at between 1 Moz and 1.1 Moz/a
Slide 20: Marula Platinum
Marula Platinum 39 Marula …. (1) • Platinum-in-concentrate production of 13 280 oz for FY2004 • Metallurgical plant and surface infrastructure commissioned and fully operational • Mechanised mining ramp-up behind schedule • Hampered by geological conditions and inappropriate mining method • Main dec
Slide 21: Marula (2) and (3)
Marula …. (2) • Revised mining plan developed • “Hybrid” mining method adopted View down the panel towards the drive 41 Marula …. (3) • Declines developed in footwall • Additional capex required but higher grade will increase production to 125 000 oz platinum pa • Full production during FY2007 @ 210
Slide 22: Zimplats – expansion potential
Zimplats 43 Zimplats – expansion potential … • LTIFR improved by 77% • Tonnes mined rose by 4% to 2.1Mt • Refined platinum production up 17% to 84 300 oz • Potential for significant expansion • Orebody, mine and processing method now proven • Country-specific issues necessitate phased approach to ex
Slide 23: Zimplats – way forward and the plan
Zimplats – way forward … • Funds approved for infrastructure • Awaiting • Approval of amendments to special mining licence (incorporates indigenisation requirements) • Signing of bilateral accord between Zimbabwe and South Africa 45 Zimplats – the plan … $200m - $300m Phase 3 onwards: $200m - $300m
Slide 24: Mimosa – low-cost benchmark
Mimosa Platinum 47 Mimosa – low-cost benchmark … • LTIFR improved by 45% • Expansion complete – 65 000 Pt oz • Recoveries rise from 76% to 79% • One of the lowest cost, primary producer operations in the world • Geological evaluation underway for expansion 48 24
Slide 25: Strategic interests
Strategic interests …. 49 Strategic interests Aquarius Platinum • Kroondal operation satisfactory • Marikana – low recoveries affect output • Everest South project pending • BEE deal nearing completion Two Rivers • Trial mining currently in progress • Ore stockpile being built-up • Planned annual pr
Slide 26: Corporate issues; Platinum growth outlook
Corporate issues • Conversion of mineral rights • Transformation of group a priority • Lonplats transaction – to be completed in 4-8 weeks • Possible listing on NYSE in USA 51 Platinum growth outlook ‘000oz 2500 2000 1500 1000 500 0 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 Mine to market 3r
Slide 27: Conclusions; Finally
Conclusions • Continued focus on safety and health • Market fundamentally sound • Implats in good shape operationally • Good prospects for growth • Strong cash flows • Attractive dividend yield • Lonplats proceeds to be used to deliver optimum value to shareholders 53 Finally …. While profit should
Slide 28: Results for the year ended 30 June 2004
Results for the year ended 30 June 2004 28
Impala Platinum Holdings — FY2004 Earnings Presentation on 6ix