African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — H1 F2019 Earnings Presentation
34 slides from African Rainbow Minerals's earnings presentation, March 2019
Slide 1: Headline earnings increased by 13% to R2.2 billion
“Headline earnings increased by 13% to R2.2 billion. Interim dividend of R4.00 per share declared. The net cash position improved to R1.2 billion.” Patrice Motsepe Executive Chairman 1
Slide 2: 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 3: Overview and group performance
Black Rock Manganese Ore Mine Overview and group performance Patrice Motsepe, Executive Chairman 3
Slide 4: Group assets
Group assets 100% 100% 10% 51% 14.0% Gold: Platinum Ferrous Coal Harmony PGMs Iron Ore Coal 41.5% Modikwa1 50% Khumani 20% Participative Coal 54% Two Rivers 50% Beeshoek Business (PCB)2 Nickel, PGMs & Chrome Manganese Ore Coal 50% Nkomati 50% Nchwaning 51% Goedgevonden 50% Gloria (GGV) 2 PGM Explora
Slide 5: Salient features: Earnings
Salient features: Earnings Headline earnings Headline earnings per share per 13%by to to R11.49 share R2.2 billion (1H F2018: R1.9 billion) (1H F2018: R10.23 per share) EBITDA* Basic earnings to R4.2 billion to R1.3 billion** (1H F2018: R3.7 billion) (1H F2018: R1.8 billion) *On a segmental basis **
Slide 6: Salient features: Dividends and financial position
Salient features: Dividends and financial position Interim dividend declared Dividends received from Assmang by60% to to R1.8 billion per R4.00 share (1H F2018: R2.50 per share) (1H F2018: R1.0 billion) ARM attributable coal debt Net cash to R2.0 billion to R1.2 billion from R3.2 billion as at (as a
Slide 7: Maintaining a safe working environment
Maintaining a safe working environment There were no fatalities at the ARM operations in 1H F2019 12 0.70 0.60 10 0.50 8 Number of incidents 0.40 LTIFR 6 0.30 4 0.20 2 0.10 0 0.00 2018-07 2018-08 2018-09 2018-10 2018-11 2018-12 Lost Time Injuries Reportable incidents Lost Time Injury Frequency Rate
Slide 8: Six-monthly headline earnings (R million)
Six-monthly headline earnings (R million) 3 500 First half (1H) Second half (2H) 3 000 2 869 977 2 500 2 341 2 201 ** 2 000 1 945 1 767 1 693 1 892* 1 503 1 500 1 026 1 000 718 507 544 500 0 F2014 F2015 F2016 F2017 F2018 F2019 *In the second half of F2018 headline earnings were R2 869 million includ
Slide 9: Headline earnings and dividends (cents per share)
Headline earnings and dividends (cents per share) 3 000 Headline earnings per share Final dividend per share Interim dividend per share 2 526 2 500 513 2 000 2 013* 1 684 1 500 1 149** 1 000 1 000 803 650 750 494 500 350 225 400 250 0 F2015 F2016 F2017 F2018 1H F2019 *The F2018 headline earnings inc
Slide 10: Operational and financial review
Beeshoek Iron Beeshoek Ore Mine Iron Ore Mine Operational and financial review Mike Schmidt, Chief Executive Officer 10
Slide 11: Headline earnings analysis
Headline earnings analysis Headline earnings changes by division (R million) 2 600 101 111 6 362 2 201 2 100 1 945 ( 265) ( 59) 1 600 1 100 Increase Decrease 600 100 (400) 1H F2018 ARM ARM ARM ARM ARM Net 1H F2019 Platinum Ferrous Coal* Copper Corporate * re- measurement loss * *1H F2019 includes a
Slide 12: Headline earnings / (loss) by division / operation
Headline earnings / (loss) by division / operation Six months ended 31 December R million 2018 2017 % change ARM Platinum 167 226 (26) Two Rivers Mine 180 173 4 Modikwa Mine 173 36 >200 Nkomati Mine (186) 17 ARM Ferrous 2 127 1 765 21 Iron ore division 1 230 873 41 Manganese division 919 872 5 Chrom
Slide 13: Segmental EBITDA split by commodity (%)
Segmental EBITDA split by commodity (%) 100% 6% 4% 3% 5% 8% 5% 5% 11% 14% 80% 12% 14% 27% 38% 33% 60% 56% 46% 59% 58% 50% 40% 37% 44% 8% 9% 20% 8% 4% 2% 25% 30% 23% 16% 18% 17% 19% 0% (3%) (4%) (20%) F2013 F2014 F2015 F2016 F2017 F2018 1H F2019 PGM Nickel Iron Ore Manganese Chrome Coal (GGV) Copper
Slide 14: Strong EBITDA margins
Strong EBITDA margins Divisional EBITDA margins (%) 38% Iron Ore 43% 41% Manganese 40% 43% Coal (GGV) 34% 26% PGMs 33% 12% Nickel (29%) (40%) (30%) (20%) (10%) 0 10% 20% 30% 40% 50% 1H F2018 1H F2019 14
Slide 15: Cost curve position
Cost curve position ARM is focused on maximising margins at each operation. Two Rivers Modikwa Platinum Platinum PCB Coal Beeshoek Operations Iron Ore GGV Khumani Coal Iron Ore Manganese Sakura Ore Operations Ferroalloys Cato Ridge Ferromanganese Nkomati Nickel Commodity Unit cash cost 25% 50% 75% 1
Slide 16: Operational and financial review: ARM Ferrous
Khumani Iron Ore Mine Operational and financial review ARM Ferrous 16
Slide 17: ARM Ferrous
ARM Ferrous Unaudited attributable profit before tax variance analysis (R million) Changes in on-mine unit production costs (%) Sakura 23% Cato Ridge Works 14% Manganese ore 14% Mining PPI at Iron ore 6% 6% 0% 5% 10% 15% 20% 25% Mining PPI refers to South African Mining Producer Price Inflation. Cha
Slide 18: Iron ore (100% basis)
Iron ore (100% basis) % 1H F2019 1H F2018 change Lump sales as a percentage of total export Export sales 000 sales increased from 52% to 58%. 7 246 7 387 (2) volumes tonnes Local sales 000 1 507 1 743 (14) volumes tonnes Change in on- mine unit % 6 (1) production costs Capital R 1 028 609 69 expendi
Slide 19: Iron ore lump premiums
Iron ore lump premiums Spot lump premium for 65% Fe iron ore (US$/t) 30 Average $7.80 Average $7.38 Average $13.34 YTD $21.19 26.45 25 23.23 21.45 20 19.88 18.36 16.95 15 13.57 14.00 12.42 12.18 9.32 10.55 11.94 10 8.72 11.62 9.66 7.42 5.69 5 6.28 3.75 3.14 1.98 0 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17
Slide 20: Manganese ore (100% basis)
Manganese ore (100% basis) % 1H F2019 1H F2018 change Manganese ore sales volumes increased by 3% to 1.61 million tonnes. Export sales 000 1 531 1 516 1 volumes tonnes Local sales 000 74 40 85 volumes * tonnes Change in on- mine unit % 14 23 production costs Capital R 950 557 71 expenditure million
Slide 21: Manganese alloys (100% basis)
Manganese alloys (100% basis) % 1H F2019 1H F2018 change Sakura continued to produce at higher than Sales volumes: design capacity. South African 000 64 57 14 tonnes operations Sales volumes: 000 100 105 (5) Sakura tonnes Change in unit % 16 23 production costs Unit costs at Sakura were impacted by
Slide 22: Operational and financial review: ARM Platinum
Modikwa Platinum Mine Operational and financial review ARM Platinum 22
Slide 23: ARM Platinum
ARM Platinum Unaudited attributable profit before tax variance Changes in unit production costs (R/t milled) analysis (R million) Nickel 11% Two Rivers 2% Modikwa (5%) ZAR:USD (10%) (5%) 0% 5% 10% 15% Changes in average realised US Dollar prices (%) Revenue contribution per commodity (%) 110% 99% Co
Slide 24: PGMs (100% basis)
PGMs (100% basis) % The average basket price for Modikwa and 1H F2019 1 H F2018 change Two Rivers each increased by 20% to 6E PGM R452 307 and R437 441 per 6E kilogram, Production ounces 384 849 422 104 (9) respectively. Modikwa cash cost R/oz 6E 8 560 8 832 (3) Two Rivers cash R/oz 6E 7 338 6 655 1
Slide 25: Nickel (100% basis)
Nickel (100% basis) Nickel C1 cash costs net of by-products Nkomati recorded a headline loss of R186 million mainly as a result of lower sales % 1H F2019 1H F2018 volumes, higher unit costs and a negative change mark-to-market adjustment. On-mine cash cost* US$/lb 11.69 10.38 13 Off-mine cash cost U
Slide 26: Operational and financial review: ARM Coal
Goedgevonden (GGV) Coal Mine Operational and financial review ARM Coal 26
Slide 27: ARM Coal
ARM Coal Unaudited attributable profit variance analysis (R million) Changes in on-mine unit production costs (%) 18% PCB 9% GGV *Other includes a re-measurement loss on loans of R53 million. 0% 5% 10% 15% 20% Changes in sales volumes* (%) ARM attributable debt (R million) 20% 18% Before debt restru
Slide 28: GGV and PCB (100% basis)
GGV and PCB (100% basis) 1H 1H % Average realised US Dollar export coal F2019 F2018 change prices increased by 9% for both GGV and PCB. More than 80% of GGV’s export sales Export sales volumes Mt 7.28 8.35 (13) volumes were high quality coal. Domestic sales volumes Mt 3.20 2.72 18 GGV on-mine produc
Slide 29: Financial position and allocation of capital
Black Rock Manganese Ore Mine Financial position and allocation of capital Abigail Mukhuba, Finance Director 29
Slide 30: Disciplined capital allocation
Disciplined capital allocation SOURCES OF FUNDS: CASH GENERATED FROM OPERATIONS (INCLUDING CASH DISTRIBUTIONS RECEIVED) DEBT EQUITY APPLICATION OF FUNDS: INVEST IN EXISTING MERGERS AND ACQUISITIONS DEBT REPAYMENT BUSINESS External growth capital Maintenance and efficiency DIVIDEND PAYMENTS improveme
Slide 31: Net cash position
Net cash position R million 31 December 2018 30 June 2018 Cash and cash equivalents (before short term borrowings)* 3 297 3 291 Total borrowings (2 132) (2 296) Long-term borrowings (1 679) (1 744) Short-term borrowings (453) (552) Net cash 1 165 995 Total equity 27 881 27 378 Net cash to equity rat
Slide 32: Cash flow analysis
Cash flow analysis Cash flow from 1 July 2018 to 31 December 2018 (R million) Increase Decrease 1 750 5 500 97 ( 264) 4 500 ( 505) ( 167) ( 211) 781 3 500 2 910 2 914 (1 477) 2 500 1 500 500 Cash and Cash Dividends Tax paid Other Sustaining Borrowings Investment in Dividend Cash and cash generated r
Slide 33: Capital expenditure: Segmental analysis
Capital expenditure: Segmental analysis Re-investment growth funded by internal cash flows (R million)* Actual 1H F2019: R1 565 million 1H F2018: R1 147 million 3 500 3 326 3 075 2 918 2 900 3 000 2 800 2 383 2 464 2 500 2 352 2 000 1 500 1 000 500 0 F2014a F2015a F2016a F2017a F2018a F2019e F2020e
Slide 34: Thank you
FaxtM African Rainbow Minerals en Thank you We do it better
African Rainbow Minerals — H1 F2019 Earnings Presentation on 6ix