Slide 1: Results presentation for the year ended 31 December 2011
Results presentation For the year ended 31 December 2011 Stuart Elliot (CEO) and Zanele Matlala (CFO) 1 Merafe Resources Results presentation for the year ended 31 December 2011 Merafe Resources Limited
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Slide 3: Legal notice/disclaimer
1 Results presentation for the year ended 31 December 2011 Stuart Elliot (CEO) and Zanele Matlala (CFO) Merafe Resources Limited Merafe Resources Results presentation for the year ended 31 December 2011 2 Legal notice/disclaimer This presentation is published solely for informational purposes and do
Slide 4: Agenda / Key features for the period
3 Agenda 1. Key features 2. Sustainability 3. Market review 4. Financial review 5. Project pipeline 6. Recent developments 7. Outlook Appendices Merafe Resources Results presentation for the year ended 31 December 2011 Merafe Resources Results presentation for the year ended 31 December 2011 4 1. Ke
Slide 5: Sustainability remains a key focus area
5 2. Sustainability remains a key focus area • Safety Two fatalities at Wonderkop and Lydenburg smelters (January 2011) Safety Summit 15% improvement in TRIFR to 3,90 • Labour and community unrest Strikes relating to: Wage negotiations Disputes around the terms of Xstrata’s ESOP Reduced production b
Slide 6: Increase in stainless steel production and ferrochrome demand
7 5% increase in stainless steel production – primarily driven by China 40,000 2010 December YTD Actual tonnes in '000 35,000 2011 December YTD Estimated tonnes in '000 30,000 25,000 20,000 15,000 10,000 6% 5,000 0 1,143 / 1,143 2,201 / 2,074 3,427 / 3,338 5,774 / 5,555 7,497 / 7,579 12,350 / 14,240
Slide 7: 2011 ferrochrome supply and market overview
9 2011 ferrochrome supply remains the same as 2010 – 9% decrease in SA and 13% increase in China 10,000 9,000 2010 Dec YTD Actual tonnes in '000 8,000 2011 Dec YTD Estimated tonnes in '000 7,000 6,000 5,000 4,000 3,000 2,000 3% 1,000 6% 0 179 / 202 172 / 144 297 / 310 325 / 343 1,000 / 1,025 1,114 /
Slide 8: Financial review
11 4. Financial review Merafe Resources Results presentation for the year ended 31 December 2011 12 Increase in production costs and lower sales volumes results in lower profits • Profit of R117m compared to profit of R279m for the last comparative period • Production costs increased by 14% in Rand
Slide 9: EBITDA reconciliation and revenue decreased by 5%
13 Reconciliation of EBITDA to profit 500 464 450 400 350 - 85 300 R'millions 250 200 -153 - 21 150 117 - 47 100 - 37 -4 50 0 Merafe Resources Results presentation for the year ended 31 December 2011 14 Revenue decreased by 5% in 2011 compared to 2010 2011 2010 % Change Ferrochrome 254 000 291 000 (
Slide 10: Production costs contained at 14% increase; balance sheet
15 Production costs contained at an overall increase of 14% in Rand terms • Above inflation cost increases for ore – 24% • Electricity costs increased by 23% • Ongoing initiatives to optimise reductant mixes resulted in a 6% reduction in average reductant costs Mitigated the effect of the above-infl
Slide 11: Balance sheet, cash position and dividend decision
17 Balance sheet remains strong As at As at 31 December 2011 31 December 2010 Audited R’000 Audited R’000 Total non-current liabilities 867 378 821 759 Loans and borrowings 312 778 312 786 Provision for close down and restoration costs 48 396 39 439 Deferred tax 506 204 469 534 Total current liabili
Slide 12: New R800m ABSA debt
19 New R800m ABSA debt • Merafe negotiated and signed debt facilities with ABSA of R800m during December 2011 which included refinancing of its existing R300m debt • Key features are as follows: R400m Revolving Credit Facility (RCF) General working capital requirements Renewable yearly with notice g
Slide 13: Update on pipeline of projects
21 Update on pipeline of projects Project Cost Description (Merafe’s portion Completion Progress at 20.5%) Date Lonmin UG2 Plants Completed within 1 1,5million tonnes UG2 chrome ore per annum R44m H1 2011 schedule/budget Waterval mine development Completed within 2 360 000 tonnes of chrome ore per a
Slide 14: Recent developments; Chrome ore exports
23 Recent developments Carbon tax • Pleased to see there was no Carbon Tax in February 2012 Budget • “ Sneak preview” suggests: Treasury will proceed with caution Rates will be lowered Phased in over a longer period • Still a number of issues the Industry Task team will engage Treasury on Eskom agre
Slide 15: Outlook
25 7. Outlook • We expect stainless steel production to grow by 6% in 2012 driven mainly by China, Taiwan, North America and India • Closure of approximately 30% of ferrochrome capacity in South Africa as a result of industry power buy-back arrangements with Eskom, followed by expected winter closur
Slide 16: Power prices and Lion II energy consumption
27 Lion II uses significantly less electricity compared to other available smelting technologies Xstrata-Merafe Venture continues to invest in energy efficiencies Specific Energy Consumption (MWh/T) 2.4 Lion I & II (Proprietary) Merafe Resources Results presentation for the year ended 31 December 20
Slide 17: China: Chrome ore imports by source
29 China: Chrome ore imports by source 2009 2010 2011 Change ‘000t ‘000t ‘000t in % South Africa 2 904 3 100 4 675 50.8 Turkey 1 287 1 933 1 612 (16.6) Oman 688 902 645 (28.5) India 414 389 439 12.6 Pakistan 296 512 440 (14.0) Albania 220 363 357 (1.6) Iran 255 350 330 (5.7) Zimbabwe 31 160 212 32.5
Slide 18: Abridged Audited Group Annual Financial Statements
Abridged Audited Group Annual Financial Statements For the year ended 31 December 2011 Merafe Resources LIMITED (incorporated in the Republic of South Africa) Company Registration Number: 1987/003452/06 Share code: MRF ISIN: ZAE000060000 (Merafe or the Company or the Group) Concluded TRIFR improved
Slide 19: Commentary
Commentary Basis of preparation On 1 March 2012, the board of directors (the Board) of the Company approved the annual financial statements of the Group and the Company for the year ended 31 December 2011. These abridged group annual financial statements have been prepared in accordance with the fra
Slide 20: JSE SRI Index, Safety, Market review
JSE Socially Responsible Investment (SRI) Index Merafe was one of only 22 companies to be recognised as Best Performers out of the 74 companies who qualified for the Index in 2011 and one of only six companies who have been recognised as Best Performers for the past five years. The Index assesses co
Slide 21: Project update, events after reporting date, outlook
Project update The Venture commenced construction of the Phase II expansion of the Lion ferrochrome smelter complex and associated Magareng mine development in South Africa. The bulk earthworks are almost complete and all the long lead items have been ordered with some of the kiln components already
Slide 22: Abridged consolidated statement of comprehensive income
Abridged consolidated statement of comprehensive income Year ended Year ended 31 Dec 2011 31 Dec 2010 Audited Audited R‘000 R‘000 Revenue 2 426 755 2 558 441 EBITDA 379 825 529 815 Depreciation and impairment (153 113) (113 535) Net financing costs (21 565) (24 997) Profit before taxation 205 147 39
Slide 23: Abridged consolidated statement of financial position
Abridged consolidated statement of financial position As at As at 31 Dec 2011 31 Dec Audited 2010 Audited R‘000 R‘000 Assets Property, plant and equipment 2 372 768 2 192 600 Total non-current assets 2 372 768 2 192 600 Inventories 1 065 932 865 251 Trade and other receivables 262 979 435 514 Curren
Slide 24: Statement of changes in equity
Statement of changes in equity Year ended Year ended 31 Dec 31 Dec 2011 2010 Audited Audited R‘000 R‘000 Issued share capital – ordinary shares 24 932 24 767 Balance at beginning of year 24 767 24 593 Share options exercised 165 174 Share premium – ordinary shares 1 262 481 1 253 568 Balance at begi
Slide 25: Abridged consolidated statement of cash flow
Abridged consolidated statement of cash flow Year ended Year ended 31 Dec 2011 31 Dec Audited 2010 Audited R‘000 R‘000 Profit before taxation 205 147 391 283 Interest paid 32 853 33 853 Interest received (11 288) (8 856) Depreciation and impairment 153 113 113 535 Adjusted for non-cash items 7 368 2
Slide 26: Sponsor
Sponsor Executive directors: S Elliot (Chief Executive Officer), Z Matlala, B McBride Non-executive directors: CK Molefe (Chairman)*, NB Majova*, M Mamathuba, A Mngomezulu*, K Nondumo*, M Salanje*, S Phiri, M Mosweu, Z van der Walt*, Company secretary: A Mahendranath Registered office: First Floor,
Slide 27: Notes
Notes
Slide 28: Notes
Notes
Slide 29: www.meraferesources.co.za
www.meraferesources.co.za