Valterra Platinum Limited · JSE:VAL
Valterra Platinum — H1 2019 Earnings Presentation
52 slides from Valterra Platinum's earnings presentation, Jul 22, 2019
Slide 1: Anglo American Platinum 2019 Interim Results Presentation
ANGLO AMERICAN PLATINUM 2019 INTERIM RESULTS PRESENTATION 22 July 2019 Mogalakwena mine
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT Disclaimer: This presentation has been prepared by Anglo American Platinum Limited (“Anglo American Platinum”) and comprises the written materials/slides for a presentation concerning Anglo American Platinum. By attending this presentation and/or reviewing the slides you agree t
Slide 3: 2019 Interim Results Agenda
2019 INTERIM RESULTS AGENDA 1. Safety and sustainability Chris Griffith 1. Operations Chris Griffith 2. Financials Craig Miller 2. PGM market Chris Griffith 3. Next phase of value delivery Chris Griffith 3
Slide 4: Delivering Value
DELIVERING VALUE… Safety performance Leading ESG(1) performance Robust PGM fundamentals Fatalities Rank by Sustainalytics(2) ZAR basket price up zero 1st 33% at managed operations of 55 peers in precious metals sector per platinum ounce sold Increasing returns Strong balance sheet Industry leading r
Slide 5: Safety & Sustainability
SAFETY & SUSTAINABILITY Chris Griffith Mototolo: Mareesburg tailings dam
Slide 6: Elimination of Fatalities Remains the Focus
ELIMINATION OF FATALITIES REMAINS THE FOCUS Fatalities & total recordable case injury frequency rate (TRCFR)(4) Fatalities TRCFR 4.52 zero at managed operations Improving safety indicators 3.00 2.83 2.83 TRCFR(4) down 6% on 2018 full year 6 • Focus on the elimination of fatalities • Robust operation
Slide 7: Tailings Storage Facility (TSF) Management
TAILINGS STORAGE FACILITY (TSF) MANAGEMENT Industry leading dam safety management with multiple levels of oversight Own-managed TSFs Group Technical 9 Specialists 4 upstream, 1 downstream, 1 hybrid, 3 dry stack Internal risk assurance Levels of assurance & oversight Independent Technical Review Pane
Slide 8: Mining Responsibly and Sustainably
MINING RESPONSIBLY AND SUSTAINABLY Carbon & emission reduction pathway (2018 vs 2017) Global ESG recognition(1)(7) GHG(6) emissions down Total energy down Energy intensity down 11% 7% 6% Renewable technology options Mogalakwena Solar PV plant Screening for opportunities 75MW Fuel cell trucks SO2 aba
Slide 9: Operations
OPERATIONS Chris Griffith Dishaba upgraded winder headgear
Slide 10: Steady Operational Performance
STEADY OPERATIONAL PERFORMANCE Own mine operational performance Record production from Unki H1 2019 production PGM production decreased Production increased Impacted by: • Eskom power outages 2% 3% • Unprotected strike at Mototolo Refined production incl. tolling H1 2019 refined production Lower All
Slide 11: Mogalakwena – Continues to Deliver
MOGALAKWENA – CONTINUES TO DELIVER Total PGM Production (’000 ounces) PGM production decrease 641 72 610 5% 71 off peak H1 2018 539 62 EBITDA(10) margin 296 281 251 57% and ROCE(3) of 47% Economic free cash flow(11) 273 258 226 R3.8bn at AISC(9) of $(292) per platinum ounce H1 2017 H1 2018 H1 2019 s
Slide 12: Amandelbult – Stronger Q2 Performance
AMANDELBULT – STRONGER Q2 PERFORMANCE Total PGM Production (’000 ounces) PGM production decrease 433 422 3% 398 but Q2 up 19% vs Q1 110 108 100 EBITDA(10) margin 94 103 99 26% and ROCE(3) of 33% 220 215 Economic free cash flow(11) 204 R504m at AISC(9) of $672 per platinum H1 2017 H1 2018 H1 2019 oun
Slide 13: Amandelbult – Turnaround Progressing
AMANDELBULT – TURNAROUND PROGRESSING Immediately available ore reserves (IMA)(12) Immediately stopeable reserves (IMS)(13) ore months available +6% ore months available +33% 7.3 6.9 24.8 26.2 23.8 5.2 23.7 24.3 8.7 Tumela 10.4 Tumela 30.3 6.3 26.3 28.4 3.9 5.0 Dishaba 14.0 Dishaba 2.7 Q1 2017 Q1 201
Slide 14: Unki – Record Production from Strategic Asset
UNKI – RECORD PRODUCTION FROM STRATEGIC ASSET Total PGM Production (’000 ounces) Total PGM production increase +3% 3% 96 93 85 16 16 EBITDA(10) margin 14 36 38 27% 33 and ROCE(3) of 12% Economic free cash flow(11) 38 41 42 R229m at AISC(9) of $456 per platinum ounce H1 2017 H1 2018 H1 2019 sold 14 P
Slide 15: Mototolo – Production Impacted by Unprotected Strike
MOTOTOLO – PRODUCTION IMPACTED BY UNPROTECTED STRIKE Total PGM Production (’000 ounces) Total PGM production decrease 157 21% excluding Bokoni treated material Bokoni 21 125 EBITDA(10) margin 34 Strike 32 9 impact 39 27 40% 35 and ROCE(3) of 40% 136 30 107 Economic free cash flow(11) 58 63 50 R443m
Slide 16: Financials
FINANCIALS Craig Miller Universal love by Nicki Böttcher – Winner PlatAfrika 2018
Slide 17: Strong Financials
STRONG FINANCIALS Headline earnings per share EBITDA(10) ROCE(3) (R per share) +120% 28.15 R12.4bn 45% increase of 82% doubled 27.34 Net cash Dividend declared 12.82 Underlying 11.99 R6.0bn R11.00 /share from net cash of R2.9bn 40% of headline earnings (R3.0bn) 0.82 0.81 Once-off H1 2018 accounting
Slide 18: Diversified PGM Prices Driving Earnings
DIVERSIFIED PGM PRICES DRIVING EARNINGS EBITDA(10) (R billion) H1 2019 vs. H1 2018 (0.7) Stock count 12.8 1.4 (0.2) gain (0.2) (0.2) 12.4 3.3 3.6 Sales volume (1.5) (0.1) 3.2 Pd 108 108 1.4 Rh 6.8 Minor PGMs 0.1 (1.0) Pt H1 2018 Price Currency CPI Royalties Ore Costs Volume H1 2019 18 stockpile
Slide 19: Increasing EBITDA Margins
INCREASING EBITDA MARGINS H1 2018 H1 2019 21% 32% 43% 43% 38% 38% 33% 33% 32% 28% 28% 21% 16% 16% 11% 11% POC JV mined share Own mines POC/Toll JV mined share Own mines 19
Slide 20: Unit Costs Impacted by Input Cost Inflation
UNIT COSTS IMPACTED BY INPUT COST INFLATION Unit cost - Rand per platinum ounce produced All-in sustaining unit cost(9) +13% 22,027 344 260 $517 per platinum ounce sold 1,539 312 versus achieved platinum price of $831 646 Mining inflation 893 CPI 2019 unit cost guidance 19,571 R21,000- R22,000 per p
Slide 21: Working Capital Increase Due to Temporary WIP Build-up
WORKING CAPITAL INCREASE DUE TO TEMPORARY WIP BUILD-UP & THE PAYMENT OF SIBANYE POC CREDITOR Working capital evolution (R billion) Working capital days (1.3) 8.2 23 days 8.2 2018: 15 days 3.3 0.7 0.7 0.4 WIP Expected WIP(14) release 0.5 4.9 4.9 1.0 (0.6) Stock count gain Refined metal H2 2019 Custom
Slide 22: Continued Disciplined Spend on Capex
CONTINUED DISCIPLINED SPEND ON CAPEX Capital expenditure (R billion) Sustaining capital expenditure (SIB) 5.7 – 6.3 0.8 SO₂ Abatement R1.7bn focused on SO2 abatement & Mogalakwena Heavy Mining Equipment Project capital 4.9 – 5.5 R0.3bn on low capex, fast payback projects 2.1 1.8 0.4 0.1 0.4 0.3 Capi
Slide 23: Strong Cash Flow Leading to Strong Balance Sheet
STRONG CASH FLOW LEADING TO STRONG BALANCE SHEET Stronger free cash flow(15) from operations (R billion) Net cash (R billion) R4.3bn R3.1bn improvement 126% up from H1 2018 3.1 6.0 6.0 0.1 1.3 2.3 0.2 1.1 4.3 2.9 2.9 1.9 (0.9) (2.0) 0.5 0.5 (0.6) H1 2018 2018 H1 2019 H1 2018 H1 2019 Free cash flow I
Slide 24: Disciplined Capital Allocation
DISCIPLINED CAPITAL ALLOCATION Capital allocation framework H1 2019 allocation of capital • Attributable free cash flow(15) of R5.1bn 5.4 • Add back discretionary spend of R0.3bn • Paid H2 2018 dividend of R2.0bn 2.0 • H1 2019 dividend declared of R3.0bn 3.1 • Strengthening balance sheet Discretiona
Slide 25: PGM Market
PGM MARKET Chris Griffith Fuel cell vehicle
Slide 26: Stronger Basket Price, Supported by Palladium and Rhodium
STRONGER BASKET PRICE, SUPPORTED BY PALLADIUM AND RHODIUM Indexed achieved price (2 Jan 2018 = 100) USD basket price increase 225 16% per platinum ounce sold, vs H1 2018 200 175 Rand/Dollar decrease 150 15% from 12.38 to 14.26 ZAR/USD 125 100 Rand basket price increase 75 Jan 2018 JunJul 2018 2018 J
Slide 27: Overall Outlook for 3E Demand Positive
OVERALL OUTLOOK FOR 3E DEMAND POSITIVE Platinum (net demand)(16) Palladium (net demand)(16) Rhodium (net demand)(16) Industrial Industrial Investment Autocat 21% 22% 14% 26% Jewellery Autocat Autocat 24% 79% 78% Industrial 36% • Strong investment demand • Automotive consumption very strong • Automot
Slide 28: Next Phase of Value Delivery
NEXT PHASE OF VALUE DELIVERY Chris Griffith Bulk ore sorter
Slide 29: Our Differentiated Value Proposition
OUR DIFFERENTIATED VALUE PROPOSITION Quality assets and Capital discipline and Long term sustainability operational excellence shareholder returns ~70% production in H1 Strong balance sheet Project studies on value-add of the cost curve and cashflow growth optionality Only open-pit PGM mine Discipli
Slide 30: Progressing Strategy to Unlock Further Value
PROGRESSING STRATEGY TO UNLOCK FURTHER VALUE P101 & FutureSmartTM Fast Payback Projects • Achieve and beat world best practice - P101 • Chrome expansions (Amandelbult & Modikwa) • FutureSmartTM technology and innovation • Modernisation (15E Amandelbult) • Digitalisation and modernisation • Concentra
Slide 31: P101 & FutureSmart Technology Advancing
P101 & FUTURESMARTTM TECHNOLOGY ADVANCING Mining Bulk Sorting Shock-break Shovel Performance Modernisation Evaluation progressing at Evaluation unit installed at In progress at Mogalakwena Development of section Mogalakwena Baobab Concentrator underway at Amandelbult Processing Coarse Particle Rejec
Slide 32: Continuous Focus on the Next Phase of Value
CONTINUOUS FOCUS ON THE NEXT PHASE OF VALUE Driving an uplift in EBITDA(10) margin (excluding expansion projects) Margin uplift +5-8pp 5-8 25%-28% percentage points Time to implement 20% 3-5 years 11% Driven by • Fast payback, value enhancing project delivery • Operational efficiency to beat best in
Slide 33: Guidance & Conclusion
GUIDANCE & CONCLUSION Chris Griffith Amandelbult Chrome Plant
Slide 34: 2019 Guidance Maintained – Stronger H2 Expected
2019 GUIDANCE MAINTAINED – STRONGER H2 EXPECTED Production M&C (million ounces) Refined production (million ounces) Sales volumes (million ounces) PGMs 4.2 – 4.5 PGMs 4.6 – 4.9 PGMs 4.6 – 4.9 Pt: 2.0 – 2.1 Pt: 2.2 – 2.3 Pt: 2.2 – 2.3 Pd: 1.3 – 1.4 Pd: 1.4 – 1.5 Pd: 1.4 – 1.5 Other: 0.9 – 1.0 Other:
Slide 35: To Conclude…
TO CONCLUDE… ✓ Zero fatalities and safe production ✓ ESG performance improving and receiving global recognition ✓ Steady production – higher H2 performance expected ✓ Robust fundamentals leading to strong PGM basket ✓ Strong financial position ✓ Increased returns to shareholders ✓ Continuous focus o
Slide 36: Q&A
Q&A Mogalakwena North Concentrator - Rougher cells section
Slide 37: Appendix
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Slide 38: Net Cash Flow by Mine
NET CASH FLOW BY MINE (2.8) (0.3) 0.2 (1.4) 7.2 (0.6) 8.8 1.3 (0.1) (2.0) 6.0 2.9 R4.3bn Investment Net Cash 100% Economic Economic Cash tax and in Cash from SIB and Project Free cash Customer Net proceeds IFRS 16 Net cash Jun Operation December Operating interest free net interest associates, Divid
Slide 39: Cost Breakdown
COST BREAKDOWN Costs reflective of Anglo American Platinum own mined and joint venture share of production and costs at operations. Excludes all purchase of concentrate costs and volume, overhead and marketing expenses H1 2019 Cost base (Rbn) Volum e % PGM volum e (koz) Labour Contractors Materials
Slide 40: Platinum Demand Balanced Across 3 Key Demand Segments
PLATINUM DEMAND BALANCED ACROSS 3 KEY DEMAND SEGMENTS Forecast net demand 2019 (000 ounces)(16) Net platinum demand increase Pt Pd 10% year-on-year Investment 14% Autocat Industrial 26% 21% Net palladium demand increase 10% year-on-year Jewellery 24% Industrial Autocat 36% 79% Net rhodium demand inc
Slide 41: Industrial Demand Remains Strong
INDUSTRIAL DEMAND REMAINS STRONG Forecast net demand 2019 (000 ounces)(19) Platinum outlook Pt Pd healthy following 14% growth in 2018 Other Chemical Chemical 15% 25% 35% Other 40% Palladium outlook neutral Glass 15% Electrical Fuel 25% Rhodium outlook Electrical Dental cells Petroleum & 25% 2% gas-
Slide 42: Jewellery: 2019 Forecast Mixed
JEWELLERY: 2019 FORECAST MIXED Forecast net demand 2019 (000 ounces)(20) China still challenging Japan ROW 5% short term 8% negative India 12% Europe, Japan, North America China 48% neutral Europe 12% Strong growth from India North America 15% strong positive 42
Slide 43: Platinum Demand from Automotive Sector Resilient
PLATINUM DEMAND FROM AUTOMOTIVE SECTOR RESILIENT Platinum auto demand split(21) Forecast platinum auto demand(22) Total platinum demand decrease 0.1% Europe Light CAGR over 2019-2025, excluding Global Heavy Duty Diesel impact of substitution Duty Diesel 43% c.3 Moz 19% Global Heavy duty diesel outlo
Slide 44: Automotive PGM Demand to Continue to Grow
AUTOMOTIVE PGM DEMAND TO CONTINUE TO GROW Forecast 3E light duty gasoline PGM loadings(23) Average global loadings increase 15% between 2018 and 2025 3E Automotive PGM demand forecast to increase despite falling vehicle sales Total light duty 3E outlook strong positive tighter emissions legislations
Slide 45: Automotive PGM Demand to Continue to Grow
AUTOMOTIVE PGM DEMAND TO CONTINUE TO GROW Global light duty automotive sales outlook (million units)(21) Diesel car sales decline 94 million 111 million Fuel cell electric 28k 2.6% Pt 5k CAGR over 2018-2025 8m 1m Pd Hybrid 19m 4m Gasoline/hybrid sales increase Rh Pd 2.3% 71m Gasoline 69m CAGR over 2
Slide 46: Fuel Cell Development Accelerating
FUEL CELL DEVELOPMENT ACCELERATING • Hyundai Motor to invest €64m & Kia Motors to invest €16m in collaboration on high- performance EV and FCEV prototypes by 2020 OEMs • Audi to invest additional resources in hydrogen fuel-cell development to meet future continue zero-emission transportation needs,
Slide 47: Net Investment Continues
NET INVESTMENT CONTINUES Net platinum investment demand(’000 ounces)(24) Total platinum investment ~750koz in H1 2019 Total palladium disinvestment 140koz in H1 2019 Platinum growth outlook 2019F positive 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 (f) d
Slide 48: Overall Outlook for 3E PGM Demand Positive
OVERALL OUTLOOK FOR 3E PGM DEMAND POSITIVE Short to medium term… …longer term Growth in Substitution Electrification heavy duty & Hydrogen into gasoline through fuel stricter economy autocatalyst cell vehicles emissions Platinum Industrial Global Jewellery Jewellery applications economic growth in g
Slide 49: 3E Primary Supply to Remain Stable
3E PRIMARY SUPPLY TO REMAIN STABLE 3E Primary supply (’000 ounces)(25) Current production outlook stable between 2018 to 2030 13,548 Probable projects replace 13548 14268 13978 12818 depleting supply Processing capacity, water and mine economics likely to constrain further 2018 2020 2025 2030 expans
Slide 50: All-in Sustaining Cost (AISC)
ALL-IN SUSTAINING COST (AISC) Joint ventures Company Mogalakwena Amandelbult Unki Mototolo (AAP share) (ex-trading)(26) US$ Costs (million) Cash operating costs 322 380 77 79 161 1,769 Other costs and marketing 54 49 28 9 14 176 Capitalised waste costs 80 - - - - 80 Sustaining capital 59 19 7 11 10
Slide 51: Rand Basket Price
RAND BASKET PRICE Company Mogalakwena Amandelbult Unki Mototolo JVs (AAP share) Other(27) (ex-trading)(28) Net sales revenue ($ million) from platinum 192.7 161.7 33.0 41.8 79.8 330.5 839.6 from palladium 400.5 142.4 55.8 49.5 100.1 324.7 1,073.0 from rhodium 48.5 102.2 11.9 26.2 55.2 179.4 423.3 ba
Slide 52: Foot Notes
FOOT NOTES (1) ESG stands for environmental, social and governance (2) Sustainalytics is a global leader in ESG and Corporate Governance research and ratings. Over the last 25 years, they have brought together leading ESG research and client servicing professionals. Today, Sustainalytics supports hu