Valterra Platinum Limited · JSE:VAL
Valterra Platinum — Anglo American Platinum — FY2020 Earnings Presentation
51 slides from Valterra Platinum's earnings presentation, Feb 22, 2021
Slide 1: Anglo American Platinum 2020 Annual Results Presentation
PLATINUM ANGLO AMERICAN PLATINUM 2020 ANNUAL RESULTS PRESENTATION 22 February 2021 Re-imagining mining to improve people’s lives.
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT Disclaimer: This presentation has been prepared by Anglo or achievements to differ materially from those in the forward- Certain statistical and other information about American Platinum Limited (“Anglo American Platinum”) and looking statements include, among others, levels of
Slide 3: Agenda
AGENDA Overview ESG - responsible business Operational review Financial review Market review Guidance and conclusion 3 CONFIDENTIAL 3
Slide 4: Record Financial Performance in Challenging Times
RECORD FINANCIAL PERFORMANCE IN CHALLENGING TIMES Unacceptable work-related fatality Covid-19 programme support of PGM production recovered in H2, up 1 R2.1bn 1% at Amandelbult mine, despite overall safety to protect the health of employees and communities compared to H2 2019, with operating protoco
Slide 5: Agenda
AGENDA Overview ESG - responsible business Operational review Financial review Market review Guidance and conclusion 5 CONFIDENTIAL 5
Slide 6: Safety Improvements Continue – But Unacceptable Fatality
SAFETY IMPROVEMENTS CONTINUE – BUT UNACCEPTABLE FATALITY Fatalities and total recordable injury frequency rate (TRCFR)1 Unacceptable fatality at own-managed mine 1 15 5.5 5.28 TRCFR 13 5 at Amandelbult mine 4.52 11 4.5 Improvement in TRCFR1 to 2.40 9 4 7 7 3.5 6 4% decrease year-on-year 3.00 5 3 2.5
Slide 7: WeCare – Protecting Health of Employees & Communities
WECARE – PROTECTING HEALTH OF EMPLOYEES & COMMUNITIES Clinics & hospitals supported Total spend on Covid-19 measures R500m 77 for employees and communities, excluding salaries with ventilators, medical supplies and PPE Food parcels and vouchers distributed Empowerment centers for victims of gender-b
Slide 8: Health Is a Priority - Continue to Manage Chronic Disease
1200 HEALTH IS A PRIORITY - CONTINUE TO MANAGE 45 CHRONIC DISEASE Tuberculosis (TB) related deaths and TB incidence rates2 40 Progress against UNAIDS 20203 targets 1000 94:92:84 987 35 834 800 30 focus on revised UNAIDS targets when announced 27 660 25 615 TB incidence rate2 reduction 600 582 43% 20
Slide 9: No Environmental Incidents & Reduction in Waste to Landfill
NO ENVIRONMENTAL INCIDENTS & REDUCTION IN WASTE TO LANDFILL Reduction in total waste to landfill (‘000 tonnes) Environmental incidents zero − 92% 22.2 level 4 and 5 incidents at all operations since 2013 Waste to landfill reduced 12.8 92% off 2013 base, and 51% year-on-year with hazardous and 7.9 no
Slide 10: GHG Emissions Lower – Ambition to Be Carbon Neutral by 2040
GHG EMISSIONS LOWER – AMBITION TO BE CARBON NEUTRAL BY 2040 Greenhouse gas emission Energy intensity (million tons of CO2e) (Gigajoule per ton milled) Greenhouse gas emissions down 4.29 −8% 3.94 −30% −100% 0.88 −7% 8% 0.82 from the 2016 baseline to 3.94 million tons of CO2e 3.00 Energy intensity dow
Slide 11: Increasing Our Contributions to Society
INCREASING OUR CONTRIBUTIONS TO SOCIETY Taxes to government Alchemy community share Investing in communities scheme R10.4bn 1.4m R0.8bn Income tax and royalties unencumbered AAP shares Social investment (2019: R5bn) transferred to Alchemy trust (2019: R0.6bn) Local procurement Salaries and benefits
Slide 12: Agenda
AGENDA Overview ESG - responsible business Operational review Financial review Market review Guidance and conclusion 12 CONFIDENTIAL 12
Slide 13: Strong H2 Production Recovery
STRONG H2 PRODUCTION RECOVERY PGM production (ounces) …but strong recovery in H2 up By Q4 all own-mines operating at 3.8m 1% 100% down 14% due to Covid-19 with operating protocols embedded of normal operating capacity Mining EBITDA margin Refined production (ounces) of Build in WIP inventory ounces
Slide 14: PGM Production Recovered in H2 2020
PGM PRODUCTION RECOVERED IN H2 2020 PGM production (‘000 ounces) 1,182 1,215 57 893 622 H2: 53% 608 136 200 390 H2: 64% 224 560 H1: 47% 242 196 63 202 21 142 H2: 63% H2: 59% H1: 36% 116 218 82 H1: 37% 80 H1: 41% Mogalakwena Amandelbult Mototolo Unki 2019 Production at end of life in 2019 H1 2020 H2
Slide 15: Strong Mining EBITDA Margins – 62% in H2
STRONG MINING EBITDA MARGINS – 62% IN H2 Adjusted EBITDA mining margin (%) Own-mine EBITDA margin % 62% 62% 56% 51% 46% 43% 43% 42% 35% 29% Mogalakwena Amandelbult Mototolo Unki H1 H2 2020 2020 2019 2020 15
Slide 16: Refined Production & Sales Impacted by ACP Repairs & Covid-19
REFINED PRODUCTION & SALES IMPACTED BY ACP REPAIRS & COVID-19 Impact to refined PGM production and sales in 2020 Refined PGM production (ounces) 4,650 (712) 2.7m down 42% due to the impacts of Covid-19 and temporary (210) closure of the ACP for repairs (1,015) Build up in work-in-progress inventory
Slide 17: Confidence in Operational Performance of ACP Phase A
CONFIDENCE IN OPERATIONAL PERFORMANCE OF ACP PHASE A Quarterly total refined PGM production performance including tolling Improving 1,528 1,427 1,492 Assume mid-point of refined production stability 1,361 guidance plus tolling divided equally into quarterly production 1,150 871 Higher 744 820 availa
Slide 18: Agenda
AGENDA Overview ESG - responsible business Operational review Financial review Market review Guidance and conclusion 18 CONFIDENTIAL 18
Slide 19: Record Financial Performance
RECORD FINANCIAL PERFORMANCE Headline earnings per share Revenue EBITDA Cost savings (Rand/share) +63% R138bn R42bn R1.8bn 115.54 up 38% up 39% to offset Covid-19 impacts 70.87 89.27 ROCE (%) Net cash Dividends per share 42.72 72% R19bn R46/share 28.15 26.27 2019 2020 up from 58% up by R1.4 billion
Slide 20: Revenue Increase Driven by Higher Basket Price
REVENUE INCREASE DRIVEN BY HIGHER BASKET PRICE Revenue (R billion) Rand basket price increase 71% +38% 138.3 137.8 (0.1) 10.8 to R33,320 / PGM oz 27.9 Decrease in own sales volumes (34.4) 34.0 38% 18.8 to 2.9 million ounces 9.2 99.6 (0.1) Trading PGM volumes 1,171oz 2019 Price Fx Volume Trading Toll
Slide 21: Unit Cost Impacted by Covid-19, Partially Offset by Cost Savings
UNIT COST IMPACTED BY COVID-19, PARTIALLY OFFSET BY COST SAVINGS Unit cost per R/PGM ounce Lower mined production led to an increase of 15% +15% 11,739 607 Total cost savings of R1.8bn 366 1,654 10,189 (1,077) partially mitigating this impact Salaries paid to employees unable to work 2019 CPI Cost s
Slide 22: EBITDA Increase to R42bn
EBITDA INCREASE TO R42BN EBITDA (R billion) Mining margin (12.8)(12.8) 55% up from 43% EBITDA margin 28.8 (2.5) 43% 41.6 (3.4) 1.5 (5.9) up from 32% 30.0 Return on capital employed 2019 Price & FX4 ACP incident Covid losses5 Cost & volume FY 2020 72% and stock improvement up from 58% count adjustmen
Slide 23: Working Capital Up Due to WIP – Impact of ACP
WORKING CAPITAL UP DUE TO WIP – IMPACT OF ACP Working capital movements (R billion) Build up of work-in-progress PGM inventory of ~1moz 23.1 (6.8) increased by R22 billion, with Total WIP value of R36 billion 0.4 Release inventory by the end of 2022 21.6 WIP (9.2) 10.6 Customer prepayment increased
Slide 24: Investing Capital to Sustain the Business
INVESTING CAPITAL TO SUSTAIN THE BUSINESS SIB (R billion) SIB focused on : 7.8 – 8.3 • Safety and Environment 7.0 - 7.5 • Asset integrity including smelter rebuild programme • Replacement HME (Mogalakwena) 5.0 0.7 1.2 Capitalised waste stripping in 2020 3.1 R2.5bn Guidance 2021: R2.8bn - R3.1bn 2020
Slide 25: Strong Balance Sheet - Delivering Returns to Shareholders
STRONG BALANCE SHEET - DELIVERING RETURNS TO SHAREHOLDERS Strong cash position 2020 Dividend Pay-out per share R18.7bn R12.1bn R46/share Liquidity headroom of R22bn 40% of headline earnings of R30bn H2 pay-out of R35.35/share 25
Slide 26: Disciplined and Value Focused Capital Allocation
DISCIPLINED AND VALUE FOCUSED CAPITAL ALLOCATION Capital allocation framework Cash generated R24.5bn Sustaining capital Balance sheet R7.8bn Including ESG, asset integrity and reliability and HME flexibility Base dividend R7.2bn Committed to 40% payout ratio of headline earnings Discretionary capita
Slide 27: Agenda
AGENDA Overview ESG - responsible business Operational review Financial review Market review Guidance and conclusion 27 CONFIDENTIAL 27
Slide 28: Basket Price at Record Levels
BASKET PRICE AT RECORD LEVELS Indexed market prices log scale (2 Jan 2020 = 100)7 USD basket price increase 200 51% average realised prices 2020 vs 2019 Rand weakened against USD 100 11% 2020 compared to 2019 Rand basket price increase 50 Jan 20 Pt Apr 20 Pd Rh Jul 20 ZAR basket Oct 20 USD Basket 71
Slide 29: Demand: Autos Strong Second Half Recovery
DEMAND: AUTOS STRONG SECOND HALF RECOVERY Global light vehicle sales (% change year-on-year)8 Global auto sales down year-on-year 14% Lockdowns 10% Near-normal conditions Rapid recovery led by China with the largest impact due to lockdowns in H1 0% Strong recovery in H2, auto sales down only (10%) (
Slide 30: Industrial Demand Resilient & Jewellery Weak but Recovering
INDUSTRIAL DEMAND RESILIENT & JEWELLERY WEAK BUT RECOVERING Platinum industrial demand in 20209 Chinese jewellery store sales (% change year-on-year)10 Other 20% industrial Petroleum 10% Medical 0% Autocatalyst (10%) Electrical (20%) Glass (30%) Chemical (40%) (50%) (60%) (70%) Investment Jewellery
Slide 31: Investment Flows Positive for Platinum on Improving Outlook
INVESTMENT FLOWS POSITIVE FOR PLATINUM ON IMPROVING OUTLOOK Platinum ETF holdings and annual changes (‘000 ounces)11 3,940 Platinum ETF holdings at record highs (ounces) 480 2,580 (5) 90 (230) 1,025 ~4m on lower prices and more positive outlook, partially End 2015 2016 2017 2018 2019 2020 End 2020 d
Slide 32: Hydrogen Economy Gathers Momentum in 2020
HYDROGEN ECONOMY GATHERS MOMENTUM IN 2020 Hydrogen economy advancing in 202012 PEM electrolyser capacity installed (MW) Italy (draft) Portugal Netherlands 140 EU 120 100 Germany France Spain (draft) 80 60 40 20 Chile Norway Canada 0 2016 2017 2018 2019 2020 2021f 9 new national plus EU hydrogen Hydr
Slide 33: 3E PGM Metals in Deficit and Will Be Again in 2021
IN TOTAL 3E PGM METALS IN DEFICIT AND WILL BE AGAIN IN 2021 Market balance 2017 – 2021 forecast (‘000 ounces)13 2021 palladium outlook sizeable deficit (200) as auto production rebounds (600) (750) Sizeable deficit (900) 2021 platinum outlook 200 250 Small surplus small surplus (300) as supply recov
Slide 34: Agenda
AGENDA Overview ESG - responsible business Operational review Financial review Market review Guidance and conclusion 34 CONFIDENTIAL 34
Slide 35: 2021 Guidance
2021 GUIDANCE M&C PGM production (million ounces) Refined PGM production (million ounces) PGM sales volumes (million ounces) 4.2 – 4.6 4.6 – 5.0 4.6 – 5.0 back to pre-Covid-19 levels excluding toll refined production excluding toll refined production which is not sold by Anglo American Platinum SIB
Slide 36: Conclusion – Record Financials Delivered Through Headwinds
CONCLUSION – RECORD FINANCIALS DELIVERED THROUGH HEADWINDS Record financial performance WeCare programme focused on lives and livelihoods Continued robust fundamentals for PGMs Business is set up for strong recovery in 2021 Continue our focus on elimination of fatalities and zero harm 36
Slide 37: Appendix
Appendix 37 CONFIDENTIAL 37
Slide 38: Auto Recycling Down Due to Covid - and Platinum Peaking
AUTO RECYCLING DOWN DUE TO COVID - AND PLATINUM PEAKING Historic and forecast autocatalyst recycling volumes (‘000 ounces)14 2020 recycling volumes 4,500 4,000 lower Palladium as new car sales fall and collection networks disrupted 3,500 3,000 Platinum volumes in 2021 will 2,500 2,000 peak as platin
Slide 39: Auto PGM Demand Supported by Higher Loadings
AUTO PGM DEMAND SUPPORTED BY HIGHER LOADINGS Typical historic and forecast 3E light duty PGM loadings15 LDV gasoline loadings increase by ~17% Light duty gasoline vehicles Impact of Euro 6 and similar Spread of RDE testing Impact of Euro 7 and similar emissions legislation emissions legislation betw
Slide 40: Truck Demand a Platinum Growth Area
TRUCK DEMAND A PLATINUM GROWTH AREA Platinum demand in Chinese/ Indian heavy-duty trucks (‘000 ounces)16 All Chinese heavy-duty trucks sold by 360 2023 will need platinum-based catalysts, with many manufacturers beginning implementation earlier 70 285 Platinum loadings per truck in China ~3x higher
Slide 41: Industrial Demand Strong & Well Diversified for All PGMs
INDUSTRIAL DEMAND STRONG & WELL DIVERSIFIED FOR ALL PGMS 2020 global net demand, by sector17 Platinum Palladium Rhodium Iridium Ruthenium 2.2 million oz 1.1 million oz 0.1 million oz 0.2 million oz 0.8 million oz Applications include Applications include Applications include Applications include App
Slide 42: ETF Flows and Bar Investment Positive for Platinum
ETF FLOWS AND BAR INVESTMENT POSITIVE FOR PLATINUM Total annual inflows (positive) or outflows (negative) (‘000 ounces)18 1,400 1,200 1,000 800 600 400 200 0 (200) (400) 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Bars/coins ETFs Total 42
Slide 43: Overall Outlook for 3E PGM Demand Firm
OVERALL OUTLOOK FOR 3E PGM DEMAND FIRM Short to medium term… …longer term Substitution into Electrification Commercial vehicle gasoline Hydrogen economy through fuel cell demand grows autocatalysts vehicles Platinum Global Jewellery demand Stricter emissions Industrial ‘middle class’ recovers legisl
Slide 44: Earning Sensitivities
EARNING SENSITIVITIES Impact of 10% change Sensitivity analysis ‒ 2020 in price/FX Commodity / Currency 31 December spot Average realised EBITDA (Rm) Platinum ($/oz) 1,072 880 1,599 Palladium ($/oz) 2, 365 2,214 4,785 Rhodium ($/oz) 16,650 10,628 2,728 Gold ($/oz) 1,887 1,754 198 Nickel ($/tonne) 16
Slide 45: Net Cash Flow by Mine
NET CASH FLOW BY MINE Net cash Project capital Net cash SIB and waste Economic free Customer Deferred Income tax Net cash Assets generated/ and interest Dividends paid 31 Dec 2019 capital cash flow prepayment consideration paid 31 Dec 2020 utilised capitalised Mogalakwena 15,637 (4,830) 10,806 (690)
Slide 46: Cost Breakdown
COST BREAKDOWN Costs reflective of AAP Own mined and Joint Venture share of production and costs at operations. Excludes all purchase of concentrate costs and volume, overhead and marketing expenses. Cost base (Rbn) Volume % PGMs (koz) Labour Contractors Materials Utilities Sundries 2020 Opencast mi
Slide 47: All In Sustaining Cost (AISC)
ALL IN SUSTAINING COST (AISC) Mogalakwena Amandelbult Mototolo Unki Modikwa Kroondal Mining Cost (US$ million) Cash operating costs 631 641 165 154 106 170 1,867 Other costs and marketing 161 151 30 53 9 28 435 Capitalised waste costs 155 155 Sustaining capital & economic interest 140 41 37 24 10 14
Slide 48: Rand Basket Price
RAND BASKET PRICE Joint Company Mogalakwena Amandelbult Mototolo Unki operations Mining POC/Other (ex-trading) Net sales revenue (US$ million) from platinum 298 198 59 51 88 694 357 1,050 from palladium 886 258 101 125 183 1,552 482 2,034 from rhodium 302 518 145 76 271 1,312 704 2,016 from other me
Slide 49: Simplified EBITDA
SIMPLIFIED EBITDA Attributable Joint Exit and Operations C&M POC & Company - Mogalakwena Amandelbult Mototolo Unki share mines Mined TOLL Trading Other Company Excl Trading a = (b x c)/1000 + d Net revenue R million 28,317 18,248 5,348 4,963 9,423 66,298 29,621 41,871 137,790 95,919 R/PGM b Basket p
Slide 50: Three Year Guidance
THREE YEAR GUIDANCE Unit 2021 2022 2023 Metal in concentrate Total PGM’s (m ounces) 4.2 - 4.6 4.2 - 4.6 4.2 – 4.6 Platinum (m ounces) 1.9 – 2.1 1.9 – 2.1 1.9 – 2.1 Palladium (m ounces) 1.4 – 1.5 1.4 – 1.5 1.4 – 1.5 Other PGM’s and gold (m ounces) 0.9 – 1.0 0.9 – 1.0 0.9 – 1.0 Refined production Tota
Slide 51: Footnotes
FOOTNOTES (1) Total recordable case injury frequency rate (TRCFR) is a measure of the rate of all injuries requiring treatment above first aid per 1,000,000 hours worked (2) TB incident rate is the incidence of tuberculosis per 100,000 people (3) UNAIDS 2020 targets is to ensure that 90% of people l
Anglo American Platinum — FY2020 Earnings Presentation on 6ix