African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — FY2015 Earnings Presentation
36 slides from African Rainbow Minerals's earnings presentation, 2015
Slide 1: Chairman's statement on ARM's financial position and dividend
“ARM’s financial position remains robust despite a significant decline in US Dollar commodity prices. Very good unit cost control was achieved at most operations. ARM is committed to continue paying dividends and declares a dividend of 350 cents per share.” Patrice Motsepe Executive Chairman 1
Slide 2: Overview and strategy
Nchwaning Manganese Ore Mine Overview and strategy Patrice Motsepe, Executive Chairman 2
Slide 3: Disclaimer
Disclaimer Certain statements in this report constitute forward looking statements that are neither reported financial results nor other historical information. They include but are not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, trends, pla
Slide 4: Group structure
Group structure 100% 100% 10% 51% 100% 100% 14.6% Gold: Platinum Ferrous Coal Copper Exploration Harmony PGMs Iron Ore Coal Copper PGMs 41.5% Modikwa 50% Khumani 20% Participating Coal 40% Lubambe and 51% Two Rivers1 50% Beeshoek Business Lubambe Extension Area Manganese Ore Nickel, PGMs & Chrome Ma
Slide 5: Salient features
Salient features Headline earnings decreased by 58% to R1 744 million (F2014: R4 108 million). Headline earnings per share were 803 cents (F2014: 1 900 cents). ARM’s financial position remains robust despite a significant decline in US Dollar commodity prices. The decline in commodity prices was par
Slide 6: Salient features
Salient features Cash generated from operations increased to R2 508 million (F2014: R2 073 million) while the dividend from Assmang was R1 500 million (F2014: R1 750 million). Basic earnings were 97% lower at R104 million (F2014: R3 289 million) largely as a result of: - impairments of R292 million
Slide 7: Salient features
Salient features Increased focus on cost reduction yielded good results at all operations with the exception of the Modikwa and Black Rock mines. Attributable segmental capital expenditure guidance for F2016 was reduced by R500 million (from R2 900 million to R2 400 million). The Lubambe Copper Mine
Slide 8: Salient features
Salient features Additional uneconomical manganese alloy furnaces were placed on care and maintenance in the financial year. Disposal of ARM’s 50% effective interest in Dwarsrivier Chrome Mine for R450 million was concluded subject to regulatory approval. 8
Slide 9: Safety
Safety ARM is committed to creating a safe and healthy work environment for all our employees. Despite ongoing efforts to ensure that the highest safety standards are maintained, two Khumani Mine employees were fatally injured in an accident on 12 April 2015. ARM’s Lost Time Injury Frequency Rate (L
Slide 10: Annual headline earnings
Annual headline earnings Annual headline earnings (R million) 4 500 4 108 4 013 4 000 3 737 3 500 3 451 3 374 3 000 2 500 2 317 2 000 1 714 1 744 1 500 1 000 500 0 F2008 F2009 F2010 F2011 F2012 F2013 F2014 F2015 Headline earnings were impacted by a significant decline in US Dollar commodity prices.
Slide 11: Six monthly headline earnings
Six monthly headline earnings Six monthly headline earnings (R million) 2 500 2 331 2 341 1 997 2 000 1 812 1 767 1 562 1 500 1 454 1 406 1 026 1 000 718 500 0 F2011 F2012 F2013 F2014 F2015 First half (1H) Second half (2H) 11
Slide 12: Headline earnings per share and dividends per share
Headline earnings per share and dividends per share Headline earnings per share and dividends per share (cents) 2 000 1 900 1 800 1 735 1 585 1 615 1 600 1 400 1 200 1 000 803 800 600 600 510 450 475 400 350 200 0 F2011 F2012 F2013 F2014 F2015 Headline earnings per share Dividends per share ARM is c
Slide 13: EBITDA margins
EBITDA margins EBITDA margins by commodity 39% Coal (GGV) 40% 54% Iron Ore 37% 34% Manganese ore 27% 32% PGM 26% 16% Chrome * 20% 27% Nickel 15% 5% Manganese alloys (9%) (6%) Copper ** (16%) -30% -10% 10% 30% 50% 70% F2014 F2015 * The Chrome Division includes Dwarsrivier Chrome Mine which is reflect
Slide 14: ARM strategy
ARM strategy Quality growth Operational continues in efficiencies ARM’s portfolio of commodities Acquisitions and Africa partnerships Entrepreneurial Profit and cash flow Owner operator Partner of choice management focused World-class Partnering with communities, workers Employer of choice managemen
Slide 15: Operational efficiencies
Operational efficiencies ARM’s objective is that all operations should be below the 50th percentile Two Rivers Platinum Lubambe Copper ** Goedgevonden Coal PCB Operations Manganese Ore Cato Ridge Ferromanganese * Nkomati Nickel Khumani Iron Ore Beeshoek Iron Ore Modikwa Platinum Commodity Unit cash
Slide 16: Pipeline of projects and operations
Pipeline of projects and operations Quality growth in ARM’s portfolio of commodities Exploration/ Project development Steady state Declining feasibility and ramp-up (>15 years life-of-mine) operations Beeshoek Iron Ore Mine Thermal coal mines (being Manganese smelters replaced by 6 the Beeshoek Mang
Slide 17: Lubambe Mine - Growth
Lubambe Mine - Growth Lubambe Mine production profile (tonnes contained copper) 50 000 45 000 45 000 45 000 40 000 40 000 35 000 34 000 30 000 28 000 25 506 25 000 23 791 20 000 14 871 15 000 10 000 5 000 0 F2013 F2014 F2015 F2016 F2017 F2018 F2019 F2020 Actual Planned Lubambe Mine ramp up profile h
Slide 18: Sakura Ferroalloys Project
Sakura Ferroalloys Project Sakura Ferroalloys Project production profile (tonnes) 180 000 160 000 140 000 60 000 60 000 120 000 100 000 80 000 8 000 60 000 110 000 110 000 40 000 70 000 20 000 0 F2016 F2017 F2018 High Carbon Ferromanganese (Furnace 1) Silica Manganese (Furnace 2) Sakura is expected
Slide 19: Acquisitions and partnerships
Acquisitions and partnerships Continuing to assess acquisitions and joint venture opportunities Two Rivers life of mine was increased by approximately 30 years through: - the transfer of Kalkfontein and Buffelshoek prospecting rights from Impala Platinum and - ARM’s acquisition of Tamboti Platinum (
Slide 20: Operational review
Two Rivers Chrome Treatment Plant Operational review Mike Schmidt, Chief Executive Officer 20
Slide 21: Divisional headline earnings
Divisional headline earnings R million 12 months ended 30 June 2015 2014 % change ARM Platinum 405 883 (54) ARM Ferrous 1 588 3 736 (57) ARM Coal (93) (120) 23 ARM Copper (430) (309) (39) ARM Strategic Services and Exploration (50) (81) 38 Gold - - - Corporate and other 324 (1) >250 ARM headline ear
Slide 22: Contribution of commodities in our diversified portfolio
Contribution of commodities in our diversified portfolio EBITDA split by division 110% 3% 3% 5% 4% 6% 8% 90% 12% 11% 20% 14% 32% 11% 70% 57% 45% 50% 33% 59% 55% 71% 30% 11% 8% 10% 5% 8% 28% 24% 10% 17% 19% 13% 16% -10% F2010 F2011 F2012 F2013 F2014 F2015 Copper Coal (GGV) Chrome Manganese Iron Ore N
Slide 23: Segmental profit variance analysis
Segmental profit variance analysis Unaudited profit variance analysis – Profit from operations before special items (R million) Factors subject to market conditions Factors subject to management’s control 9 000 Increase 1 800 (4 905) Decrease 8 000 7 000 6 618 6 000 5 000 4 000 (955) 243 (152) 195 3
Slide 24: Changes in average US Dollar realised prices and average exchange rate
Changes in average US Dollar realised prices and average exchange rate F2015 versus F2014 average US Dollar realised prices and average exchange rate (%) 20% Increase Decrease 11% 10% 6% 4% 4% 0% (2%) (10%) (10%) (13%) (20%) (21%) (24%) (30%) (40%) (42%) (50%) Iron Export Manganese Platinum Copper N
Slide 25: Changes in sales volumes
Changes in sales volumes F2015 versus F2014 sales volumes (%) 60% 49% 50% Increase 40% Decrease 30% 24% 20% 10% 10% 8% 3% 1% 0% -5% -10% -8% -7% -20% -20% -22% -30% Copper * Manganese PGMs Nickel Eskom Manganese Iron Dwarsrivier Nkomati Export Two Rivers alloys ** coal ore ore chrome ore chrome coal
Slide 26: Unit cost changes by commodity
Unit cost changes by commodity F2015 versus F2014 on-mine unit production costs (%) (16%) Increase Coal: PCB Decrease Coal: GGV (9%) Nickel (4%) Inflation (CPI) at 6% Iron ore (3%) PGM: Two Rivers (1%) Copper (0%) Manganese alloys 1% Chrome ore 5% Manganese ore 17% PGM: Modikwa 18% -20% -15% -10% -5
Slide 27: ARM Ferrous: Iron ore
ARM Ferrous: Iron ore Iron ore operational performance - 100% basis Record iron ore sales volumes of 16.19 million tonnes achieved. Iron ore lumpy % F2015 F2014 to fines ratio increased from 50:50 to change 55:45. Export sales 000 13.69 13.40 2 volumes tonnes 000 Local sales volumes 2.53 2.20 15 ton
Slide 28: ARM Ferrous: Manganese ore
ARM Ferrous: Manganese ore Manganese ore operational performance - 100% basis Unit production costs were 17% higher mainly due to lower production, increased % F2015 F2014 hauling distances and ageing change infrastructure. Export sales 000 2.68 2.67 - volumes tonnes 000 Local sales volumes 0.06 0.0
Slide 29: ARM Ferrous: Manganese alloys
ARM Ferrous: Manganese alloys Manganese alloy operational performance - 100% basis Additional uneconomical furnaces were % F2015 F2014 placed on care and maintenance. change 000 Sales volumes 223 279 (20) tonnes Change in % 1 12 production unit cost Capital expenditure Rm 111 73 52 Production and sa
Slide 30: ARM Platinum: PGM
ARM Platinum: PGM PGM operational performance - 100% basis Two Rivers Mine continues to be the lowest cost underground PGM producer in the % F2015 F2014 world with unit production costs of US$469 change per 6E PGM ounce. Production oz 776 996 841 581 (8) 6E Modikwa cash cost 8 481 7 545 12 R/oz 6E T
Slide 31: ARM Platinum: Nickel
ARM Platinum: Nickel Nickel C1 cash costs net of by-products Nickel produced decreased to 21 298 tonnes (F2014: 22 874) due to lower grade % areas being mined in the pit, consistent F2015 F2014 change with the mine plan. On-mine cash cost US$/lb 5.97 5.93 1 Off-mine cash cost US$/lb 2.48 2.70 (8) By
Slide 32: ARM Coal: GGV and PCB
ARM Coal: GGV and PCB GGV and PCB operational performance - 100% basis Tweefontein Optimisation Project successfully commissioned R600 million F2015 F2014 % below budget and is delivering a reduction change in unit costs. Total export sales Mt 15.89 12.83 24 volumes Total Eskom/ local Mt 5.87 5.76 2
Slide 33: ARM Copper: Lubambe
ARM Copper: Lubambe Lubambe Mine operational performance - 100% basis New revised mine plan was implemented from April 2015. The South Limb shaft Annual has been placed on temporary care and 1H F2015 2H F2015 steady state maintenance. F2019 Milled tonnes 000t 860 790 2 400 Mill head grade % Cu 1.83
Slide 34: Lubambe Mine progress
Lubambe Mine progress Tonnes milled (tonnes) Head grade (%) 180 161 2.20% 2.12% 160 2.10% 140 130 2.00% 120 100 1.90% 1.87% 80 1.80% 60 1.70% 40 20 1.60% 0 1.50% Jul-14 Oct-14 Jan-15 Apr-15 Jun-15 Jul-14 Oct-14 Jan-15 Apr-15 Jun-15 Concentrator recoveries (%) C1 unit cash costs (US$/lb) 88.0% 4.00 8
Slide 35: Capital expenditure: segmental analysis
Capital expenditure: segmental analysis Capital expenditure (R million)* 5 000 4 500 4 321 4 000 3 489 3 500 3 326 3 000 2 918 2 500 2 400 2 300 2 200 2 000 1 500 1 000 500 0 F2012a F2013a F2014a F2015a F2016e F2017e F2018e ARM Platinum ARM Ferrous ARM Coal ARM Copper * Capital expenditure includes
Slide 36: Thank you
FaxtM African Rainbow Minerals ED es ee ee eee Thank you We do it better
African Rainbow Minerals — FY2015 Earnings Presentation on 6ix