African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — FY2017 Earnings Presentation
31 slides from African Rainbow Minerals's earnings presentation, 2017
Slide 1: Headline earnings increased by 204% to R3 196 million
“Headline earnings increased by 204% to R3 196 million. Dividend declared increased by 189% to R6.50 per share. This is the highest dividend to date. ARM announced the disposal of its interest in Lubambe Mine and is restructuring the loss-making operations.” Patrice Motsepe Executive Chairman
Slide 2: Overview and strategy
New load-out facility at Black Rock Manganese Ore Mine Overview and strategy Patrice Motsepe, Executive Chairman
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, p
Slide 4: Group structure
Group structure 100% 100% 10% 51% 100% 14.5% Gold: Platinum Ferrous Coal Copper Harmony PGMs Iron Ore Coal Copper 41.5% Modikwa1 50% Khumani 20% Participating Coal 40% Lubambe and 51% Two Rivers 2 50% Beeshoek Business (PCB) 3 Lubambe Extension Area 4 Nickel, PGMs & Chrome Manganese Ore Coal 50% Nko
Slide 5: Salient features
Salient features Headline earnings increased by 204% to R3 196 million (F2016: R1 051 million). Headline earnings per share were 1 684 cents compared to 494 cents in the previous corresponding financial year. Dividend declared increased by 189% to 650 cents per share (F2016: 225 cents per share). Th
Slide 6: Salient features
Salient features Higher US Dollar prices were realised for all the commodities in ARM’s portfolio. Realised Rand prices were higher for all commodities except platinum. Cost containment initiatives yielded good results. The iron ore, manganese ore, manganese alloy, nickel, copper and Participating C
Slide 7: Salient features
Salient features ARM and Vale announced the disposal of their 80% interest in Lubambe Mine for a purchase consideration of US$97 million. Completion of the disposal is subject to the fulfilment of conditions precedent. ARM’s interest in Two Rivers to increase to 54% on execution of Two Rivers’ amend
Slide 8: Safety
Safety There were no fatalities at any of the operations in the financial year under review. ARM has been fatality-free for the past two financial years. The Lost Time Injury Frequency Rate (LTIFR) improved by 14% from 0.32 per 200 000 man-hours in F2016 to 0.28 in F2017. The Ferrous and Platinum di
Slide 9: Annual headline earnings (R million)
Annual headline earnings (R million) 4 500 4 108 4 000 3 737 3 451 3 500 3 196 3 000 2 500 2 000 1 744 1 500 1 051 1 000 500 0 F2012 F2013 F2014 F2015 F2016 F2017 9
Slide 10: Six-monthly headline earnings (R million)
Six-monthly headline earnings (R million) 2 500 2 331 2 341 1 997 2 000 1 767 1 693 * 1 454 1 503 1 500 1 406 1 026 1 000 718 507 544 500 0 F2012 F2013 F2014 F2015 F2016 F2017 First half (1H) Second half (2H) * R1 833 million excluding the R330 million provision for a possible settlement of the sili
Slide 11: Headline earnings and dividends per share (cents)
Headline earnings and dividends per share (cents) 2 000 1 900 1 800 1 735 1 684 1 615 1 600 1 400 1 200 1 000 803 800 650 600 600 510 475 494 400 350 225 200 0 F2012 F2013 F2014 F2015 F2016 F2017 Headline earnings per share Dividends per share 11
Slide 12: EBITDA margins
EBITDA margins Segmental EBITDA margins by commodity (%) 37% Iron ore 45% 16% Manganese 37% 26% Coal (GGV) 26% 22% PGMs 23% (5%) Nickel 15% 9% Chrome* (6%) (40%) Copper (21%) (50%) (40%) (30%) (20%) (10%) 0 10% 20% 30% 40% 50% F2016 F2017 * The Chrome EBITDA margin for F2016 includes the Dwarsrivier
Slide 13: ARM strategy
ARM strategy Quality growth continues in Operational ARM’s existing efficiencies 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
Slide 14: Operational efficiencies
Operational efficiencies ARM’s objective is to ensure that all operations are below the 50th percentile Lubambe Two Rivers Copper * Platinum Cato Ridge PCB Coal Ferromanganese Operations GGV Modikwa Sakura Platinum Coal Ferroalloys (F2021) Manganese Ore Operations Beeshoek Khumani Iron Ore Iron Ore
Slide 15: Operational review
Two Rivers Platinum Mine Operational review Mike Schmidt, Chief Executive Officer
Slide 16: Headline earnings/(loss) by division/operation
Headline earnings/(loss) by division/operation 12 months ended 30 June R million 2017 2016 % change ARM Platinum 350 (10) >200 Two Rivers Mine 325 318 2 Modikwa Mine (66) (84) (21) Nkomati Mine 91 (244) 137 ARM Ferrous 3 709 1 441 157 Iron ore division 2 187 1 215 80 Manganese division 1 161 198 >20
Slide 17: Segmental EBITDA split by commodity (%)
Segmental EBITDA split by commodity (%) 110% 5% 6% 4% 4% 8% 90% 12% 5% 11% 14% 12% 13% 31% 70% 57% 44% 50% 59% 56% 71% 57% 30% 8% 10% 8% 5% 24% 29% 10% 19% 19% 13% 16% (6%) -10% F2012 F2013 F2014 F2015 F2016 F2017 PGM Nickel Iron Ore Manganese Chrome Coal (GGV) Copper 17
Slide 18: Changes in sales volumes
Changes in sales volumes F2017 versus F2016 sales volume changes (%) 73% Increase Decrease 4% 2% (4%) (4%) (3%) (13%) (12%) (11%) (26%) Nickel Copper Nkomati Export PGMs Manganese Two Rivers Iron Eskom Manganese chrome coal ore * chrome ore coal alloys** concentrate concentrate *External sales only.
Slide 19: Changes in average realised US Dollar prices
Changes in average realised US Dollar prices F2017 versus F2016 average realised US Dollar prices changes (%) 93% Increase 65% 50% 45% 27% 24% 14% 6% 7% 4% Platinum Copper Nickel Rhodium Manganese Palladium Export Export Chrome Export ($/oz) ($/lb) ($/lb) ($/oz) alloys ($/oz) iron ore thermal concen
Slide 20: Changes in average realised Rand prices
Changes in average realised Rand prices F2017 versus F2016 average realised Rand prices changes (%) 81% Increase Decrease 55% 40% 36% 19% 16% 7% - (1%) (3%) Platinum Copper Nickel Rhodium Manganese Palladium Export Export Chrome Export (R/oz) (R/lb) (R/lb) (R/oz) alloys (R/oz) iron ore thermal conce
Slide 21: Unit cost changes by operation
Unit cost changes by operation F2017 versus F2016 on-mine unit production costs per tonne (%) Increase Manganese ore 1% Inflation (CPI) at 6% Copper * 2% Coal: PCB 2% Iron ore 3% Manganese alloys 5% PGM: Modikwa 7% PGM: Two Rivers 7% Nickel 9% Coal: GGV 35% 0% 5% 10% 15% 20% 25% 30% 35% 40% * The ch
Slide 22: ARM Ferrous: Iron ore
ARM Ferrous: Iron ore Operational performance - 100% basis % F2017 F2016 change Record production volumes of 17.7 million Export sales 000 14 061 14 103 - volumes tonnes tonnes. This level of production is Local sales 000 sustainable. volumes tonnes 3 214 2 905 11 Change in on-mine unit production %
Slide 23: ARM Ferrous: Manganese ore
ARM Ferrous: Manganese ore Operational performance – 100% basis % F2017 F2016 change Black Rock Project is progressing well and is Export sales 000 2 871 3 001 (4) expected to ramp up to 4mtpa by F2020. volumes tonnes Local sales 000 103 89 16 volumes* tonnes Change in unit % 1 (6) production costs
Slide 24: ARM Ferrous: Manganese alloys
ARM Ferrous: Manganese alloys Operational performance – 100% basis % F2017 F2016 change Sakura Project was completed on budget. 000 Sales volumes 303 175 73 Ramp up was slowed down in response to tonnes adverse market conditions. Change in unit % 5 9 production costs Both furnaces at Sakura are now
Slide 25: ARM Platinum: PGM
ARM Platinum: PGM Operational performance - 100% basis % F2017 F2016 change ARM’s interest in Two Rivers to increase to 54% on execution of Two Rivers’ amended Production 6E PGM ounces 815 188 851 924 (4) mining right which is imminent. Modikwa cash cost R/oz 6E 8 463 8 244 3 Two Rivers cash cost R/
Slide 26: ARM Platinum: Nickel
ARM Platinum: Nickel Operational performance - 100% basis Nickel C1 cash costs net of by-products The Nkomati F2017 headline earnings were F2017 F2016 % change R91 million mainly due to increased chrome On-mine cash cost US$/lb 6.60 4.49 47 prices. Off-mine cash cost US$/lb 2.84 2.79 2 By-product cr
Slide 27: ARM Coal: GGV and PCB
ARM Coal: GGV and PCB Operational performance - 100% basis % F2017 F2016 change ARM and Glencore Operations South Africa Total export sales volumes Mt 16.60 18.67 (11) are in discussions concerning the restructuring of the ARM Coal partner loans to Total Eskom sales Mt 4.56 5.21 (12) improve ARM’s d
Slide 28: ARM Copper
ARM Copper Operational performance - 100% basis F2017 F2016 % change ARM and Vale announced the disposal of their Milled tonnes 000t 1 013 1 277 (21) 80% interest in Lubambe Mine for a purchase Mill head grade % Cu 2.13 2.01 6 consideration of US$97 million. Concentrator recovery % 84.6 81.5 4 Coppe
Slide 29: Capital allocation: segmental analysis
Capital allocation: segmental analysis Capital expenditure (R million)* 4 000 3 500 3 489 3 326 2 918 3 000 2 800 2 800 2 600 2 500 2 352 2 383 2 000 1 500 1 000 500 0 F2013a F2014a F2015a F2016a F2017a F2018e ** F2019e ** F2020e ** ARM Platinum ARM Ferrous ARM Coal ARM Copper * Capital expenditure
Slide 30: Net debt to equity ratio
Net debt to equity ratio R million F2017 F2016 Cash and cash equivalents 1 488* 1 316 Total borrowings (2 759) (5 551) Long-term borrowings (2 002) (4 171) Short-term borrowings (757) (1 380) Net debt (1 271) (4 235) Net debt to equity ratio 5% 17% Less: Partner loans (1 719) (2 356) ARM Coal loans
Slide 31: Thank you
We do it better FaxtM African Rainbow Minerals ES EE ES Thank you 31
African Rainbow Minerals — FY2017 Earnings Presentation on 6ix