African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — FY2009 Earnings Presentation
27 slides from African Rainbow Minerals's earnings presentation, September 2009
Slide 1: The future looks bright
The future looks bright Provisional results for the year ended 30 June 2009 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 predict
Slide 2: Corporate structure
Corporate structure 3 Overview and strategy Patrice Motsepe, Executive Chairman
Slide 3: Salient features
“ARM is financially robust and continues to invest significant funds to grow the company despite the massive global economic crisis.” Patrice Motsepe ARM Executive Chairman Salient features Headline earnings decreases by 42% from R4.0 billion to R2.3 billion, impacted by the global economic recessio
Slide 4: Salient features and headline earnings over 6 years
Salient features ARM corporate loan of R967 million refinanced; new facility increased to R1.75 billion and extended for three years Khumani 10 mtpa mine completed on time and within budget; a further 6 mtpa expansion approved Goedgevonden and Nkomati expansion projects commence commissioning TEAL’s
Slide 5: Diversified earnings and revenues
Diversified earnings Divisional attributable headline earnings 2,500 2,000 1,500 1,000 500 0 -500 F2006 F2007 F2008 F2009 PGMs Nkomati Iron ore Manganese Chrome Coal 9 Diversified revenues F2008 Revenue commodity contributions F2009 Revenue commodity contributions Platinum Platinum Manganese 18% 32%
Slide 6: ARM strategy continues to create value
ARM strategy continues to create value Operational Organic growth efficiencies 2 x 2010 Acquisitions Africa Entrepreneurial Owner operator Profit focused Partner of choice management World-class management team 11 Continuation of key growth projects important for ARM’s investment case • ARM’s contin
Slide 7: Investing in our future
Continuation of key growth projects important for ARM’s investment case Favourable • Volume growth is occurring in markets where the absolute commodity dit incremental volume is not expected to negatively impact markets the global demand/supply balances Key growth • Key projects include GGV Thermal
Slide 8: Responding to the global economic crisis
Responding to the global economic crisis New Cash Quick Operational opportunities preservation response restructuring and acquisitions • Positive cash flow • Production • Retrenchments of • Continuous from operating volumes adjusted ARM employees assessment of activities based on dramatic minimised
Slide 9: Delivering company transforming growth projects
Corporate action places ARM in a strong position Two Rivers g • ARM has entered into an agreement p with Impala p Platinum to incorporate adjacent prospecting properties into Two Rivers Platinum Mine • This extends the life of mine by 6 years • ARM’s ownership will dilute from 55% to 51%, retaining
Slide 10: Quality long-term growth assets under construction
Quality long-term growth assets under construction Khumani Iron Ore Goedgevonden Nkomati Nickel Large (10 o 16 mtpa) Thermal Coal Scale Expansion Capex committed 95% (20%) 90% 75% 375ktpm plant Stage Ramp-up (Building) Commissioning commissioning Position on cost 40th percentile 25th percentile 40th
Slide 11: Operational performance
Operational review André Wilkens, Chief Executive Officer Operational performance 13% increase in iron ore sales to 7.4 million tonnes 6% increase in attributable PGM production/sales to 323 259 ounces 42% decrease in external manganese ore sales to 2.15 million tonnes 12% decrease in nickel product
Slide 12: ARM in a strong position
ARM in a strong position Quick response to Cash Operational changing market preservation efficiencies dynamics • No operations to be cash flow • Balance between minimising shareholder • Retrenchments of ARM negative at depressed pricing value destruction due to global recession employees minimised t
Slide 13: Strong underlying cash flows and divisional EBITDA margins
Strong underlying cash flows ARM F2009 EBITDA margin is 44% ARM cash flow from operating activities (R million) 76% 2,456 Manganese 70% 1,422 Iron ore 60% 414 Coal 22% 156 Chrome 10% 177 Nkomati Platinum -13% 830 25 Divisional EBITDA margins 80% 70% 60% 50% 40% 30% 20% 10% 0% -10% -20% Chrome Iron o
Slide 14: Solid EBITDA margins; Modikwa costs improving
Solid EBITDA margins Stock-pile rebuild and planned maintenance contributed to cost increases % change F2009 F2009 vs F2008 EBITDA Commodity group Unit cost (metric) (decrease)/increase margin (%) Iron ore R/tonne (7) 70 Nickel R/tonne milled 15 10 Manganese ore R/tonne 19 81 Platinum R/PGMs 20 (13)
Slide 15: Mining costs
Mining costs ARM Ferrous ARM Platinum ARM Coal Cost control and plant Export volumes increasing Increasing volumes with optimisation with restructuring and shift to lower cost restructuring implemented implemented open cast mining Approximate on mine and Approximate on mine Approximate on mine smelt
Slide 16: Profit variance and revenue drivers
Profit variance 9,000 Profit from operations before exceptional items 8,000 1,062 7,000 6,678 (1 051) 6,000 194 5,000 R million 65 (1 869) (553) 4,000 3 707 Thermal Thermal Coal Chrome Coal Chrome 0.7% 4% 1% (820) 13.0% Platinum 3,000 Group Iron Ore 32% Metals 24.4% 2,000 F2008 Nickel F2009 4.1% Iro
Slide 17: Commodity price movements
Commodity price movements Spot prices at 21 August 2009 vs the average F2009 prices 80 60 40 Percentage (%) 20 0 -20 -40 -60 Rhodium Nickel Palladium Copper Platinum Chrome ore Charge Gold Export Rand/Dollar Manganese Domestic Iron ore Manganese ($/oz) ($/lb) ($/oz) ($/lb) ($/oz) (R/t) chrome ($/oz)
Slide 18: Manganese ore production; 2 x 2010 growth strategy
Manganese ore production 1 2 3 Total 2008 % Contribution Africa & ME 35 China 24 Asia (ex China) 16 Americas 10 CIS 8 India 6 Other 1 Total 2008: 14mt 48% 26% 26% Total 2007: 13mt 50% 23% 27% Source: International Manganese Institute (June 2009), ARM estimates 35 2 x 2010 growth strategy – attributa
Slide 19: 2 x 2010 growth strategy – 100% basis
2 x 2010 growth strategy – 100% basis Nkomati nickel Thousand tonnes Nickel monthly sales 20 (tonnes) 18 800 16 700 14 600 12 500 10 400 8 300 6 200 100 4 0 2 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 - F2005a F2006a F2007a F2008a F2009a F2010e F2011e F2012e Chrome ore Thousand tonnes Chrome ore mon
Slide 20: 2 x 2010 growth strategy; Growth projects continue
2 x 2010 growth strategy – 100% basis Ferromanganese Thousand tonnes Ferromanganese alloys monthly sales 300 (thousand tonnes) 16 250 14 12 200 10 150 8 6 100 4 2 50 0 0 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 F2005a F2006a F2007a F2008a F2009a F2010e F2011e F2012e Charge chrome Thousand tonnes Ch
Slide 21: Sufficient capacity to fund growth platforms
Sufficient capacity to fund growth platforms Net debt calculation Per balance sheet June 2009 Dec 2008 June 2008 Long-term interest bearing borrowings 1 364 Short-term interest bearing borrowings 2 380 Total interest bearing borrowings 3 744 3 744 4 220 3 978 Assmang (50%) 13 ARM company* and other
Slide 22: Questions / Appendix
Questions Provisional results for the year ended 30 June 2009 Appendix Provisional results for the year ended 30 June 2009
Slide 23: ARM operational summary
ARM operational summary F2009 F2008 % change Modikwa PGMs in concentrate (6E) Ounces 348 866 343 062 2 Cash cost R/kg 160 507 123 995 29 Cash operating margin % (20) 58 (135) Two Rivers PGMs in concentrate Ounces 246 295 206 491 19 ARM Cash cost R/kg 136 288 125 391 9 Platinum (100% basis) Cash oper
Slide 24: Operations optimised to be cash positive
Operations optimised to be cash positive Capex Costs Volumes • Continuation of growth • Optimisation of • Short-term cutbacks projects operations • Manganese ore • Total capex rescheduled • Managing working • Machadodorp charge over 3 years >25% capital chrome and Dwarsrivier chrome • Maintain geari
Slide 25: Dollar commodity price and volume variance analysis
Dollar commodity price variance analysis Total commodity Manganese Manganese Charge price Nickel Other Platinum Palladium Rhodium Chrome Ore Alloys Iron Ore Chrome/Ore variance 0 (298) (500) (68) (1,000) 503 227 (1,051) (814) R million (141) (1,500) 808 248 (2,000) (2,500) (1375) (4) (3,000) Note: V
Slide 26: Manganese market; Summarised income statement
Manganese market Manganese commodity prices Manganese ore – China imports 20 5,500 18 5,100 16 4,700 4,300 14 3,900 $/dmtu 12 3,500 $/mt 10 3,100 8 2,700 6 2,300 1,900 4 1,500 2 1,100 0 700 Jun-06 Oct-06 Apr-07 Jun-07 Oct-07 Apr-08 Jun-08 Oct-08 Apr-09 Aug-06 Dec-06 Feb-07 Aug-07 Dec-07 Feb-08 Aug-0
Slide 27: Summarised cash flow and balance sheet
Summarised cash flow Reviewed Audited R million June 2009 June 2008 Cash generated by operations 6 678 5 175 Net finance costs 78 (246) Dividends paid (847) (315) Tax paid (1 977) (466) 3 932 4 148 Capital expenditure (3 264) (2 659) Other 247 253 Cash flow from financing activities (171) (175) Net
African Rainbow Minerals — FY2009 Earnings Presentation on 6ix