Gem Diamonds Limited · LSE:GEMD

Gem Diamonds — FY2015 Earnings Presentation

30 slides from Gem Diamonds's earnings presentation, Mar 15, 2016

  1. Slide 1: Full Year 2015 Results

    Full Year 2015 Results 15 March 2016

  2. Slide 2: Disclaimer

    Disclaimer 2 The following presentations are confidential and are being made only to, and are No statement in this presentation is intended as a profit forecast or profit estimate only directed at, persons to whom such presentations may lawfully be and no statement in the presentation should be inte

  3. Slide 3: Agenda

    Agenda 3  Full year 2015 results highlights  Diamond market  Operational performance  HSSE  Letšeng  Ghaghoo  Sales, marketing and manufacturing  Group financial performance  Investment proposition

  4. Slide 4: Full Year 2015 Results Highlights

    Full Year 2015 Results Highlights 4 REVENUE EBITDA US$249m US$104m 400 200 54% 60% 306 42% 50% 271 39% EBITDA MARGIN 300 249 150 167 37% 213 33% 40% 202 EBITDA 200 100 30% 106 104 80 20% 100 50 67 10% 0 0 0% 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 BASIC EPS (pre exceptional items) FREE CAS

  5. Slide 5: Diamond Market

    Diamond Market Clifford Elphick Chief Executive Officer

  6. Slide 6: Diamond Market

    Diamond Market 6 Diamond Price Indices  Diamond market for Letšeng’s high end 1.80 diamonds remained stable in an overall market subdued in 2015 1.60  Slow down in Chinese retail demand 1.40  Inventory and liquidity concerns  Medium to long term market outlook 1.20 remains strong 1.00  Reduced

  7. Slide 7: Diamond Pricing

    Diamond Pricing 7 Letšeng 6 and 12 Month Rolling $/carat Letšeng  Price levels maintained due to resilience in 6 month 12 month +10.8 carat Type II diamonds 3 000 2 500 Ghaghoo 2 000  Weaker market impacted Ghaghoo production 1 500  Third sale at $150 per carat, down from $210 1 000 (February 201

  8. Slide 8: Operational Performance

    Operational Performance Alan Ashworth Chief Operating Officer

  9. Slide 9: Group HSSE Performance

    Group HSSE Performance 9  Zero fatalities and Lost Time Injuries  Group LTIFR 0.00 (2014 LTIFR 0.20)  Group AIFR 2.87 (2014 AIFR 3.01)  Zero major or significant Group-wide stakeholder or environment incidents occurred  Letšeng maintained 5-star IRCA rating for a second year  Ghaghoo maintaine

  10. Slide 10: Letšeng Operational Overview

    10 Letšeng Operational Overview

  11. Slide 11: Letšeng Operational Overview

    Letšeng Operational Overview 11 Waste mined (tonnes millions)  Strong end to 2015 - production targets achieved 24.0 17.4 19.1 19.9  Waste mined – 24.0 million tonnes  Ore treated – 6.7 million tonnes  1.9 million tonnes of Satellite pipe contribution 2012 2013 2014 2015 in 2015  Carats recover

  12. Slide 12: Letšeng Operational Overview: Optimised Life of Mine plan

    Letšeng Operational Overview 12  Optimised Life of Mine plan  Increased Satellite contribution (1.9 mt 2015)  Optimal waste profile – peak of 36 mtpa (2024)  Steeper slope angles (resulting in less waste)  Improved NPV Optimised Life of Mine plan : tonnes treated and Optimised Life of Mine plan

  13. Slide 13: Letšeng Operational Overview: Frequency of +100 carat recoveries

    Letšeng Operational Overview 13 Frequency of +100 carat recoveries 4 14 +100 cts per month Annual Frequency of +100cts 12 3 10 100 carats per month 100 carats annually 8 2 6 4 1 2 0 0 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 2011 2012 2013 2014 2015

  14. Slide 14: Ghaghoo Operational Overview

    Ghaghoo Operational Overview

  15. Slide 15: Ghaghoo Operational Overview

    Ghaghoo Operational Overview 15  Phase 1 objectives achieved  Grade remains steady and ahead of Reserve  Recovered grade of 28.0 cpht in 2015  Reserve grade of 27.8 cpht  Surge bin successfully commissioned in January 2016 – daily throughput of 2 000 tonnes achieved  Water fissure  Level 1 se

  16. Slide 16: Ghaghoo Outlook

    Ghaghoo Outlook 16  Depressed diamond market impacted Ghaghoo type production  Prudent to downsize in current market conditions  Optimising production levels to:  Reduce cash burn  Targeting approx. 300 000 tonnes for 2016  Ghaghoo remains an important asset for the Group  Resource of 20m car

  17. Slide 17: Sales, Marketing and Manufacturing

    Sales, Marketing and Manufacturing Clifford Elphick Chief Executive Officer

  18. Slide 18: Sales, Marketing and Manufacturing

    Sales, Marketing and Manufacturing 18 357ct white diamond which was sold for US$ 19.3 million Sales and marketing  Good prices achieved for Letšeng's high quality production - average of US$2 299 per carat in 2015  36 rough diamonds achieved a value of greater than US$1.0 million each  Two +300 c

  19. Slide 19: Group Financial Performance

    Group Financial Performance Michael Michael Chief Financial Officer

  20. Slide 20: Group Financial Performance

    Group Financial Performance 20 Pre Exceptional 2015 Actual Exceptional items US$ millions Results items 2015 2014 % Variance Revenue 249.5 249.5 270.8 (8%) Royalty and selling costs (21.9) (21.9) (24.7) Cost of Sales (112.4) (112.4) (127.7) Corporate expenses (11.7) (11.7) (12.4) Underlying EBITDA 1

  21. Slide 21: Financial Performance – Letšeng Mining Operations

    Financial Performance – Letšeng Mining Operations 21 2015 2014 % Variance Average price per carat (US$) 2 299 2 540 -9% Carats sold 102 778 108 963 -6% US$ millions 2015 2014 % Variance Revenue 236.3 276.8 -15% EBITDA 101.9 123.5 -17% EBITDA margin 43% 45% Unit costs (US$) % Variance Direct cash cos

  22. Slide 22: Corporate Costs

    Corporate Costs 22 Corporate costs (US$ millions) 15.3  Continued focus on cost reduction whilst upholding appropriate 14.2 13.8  governance and 12.4  assurance systems 11.7  Costs down to US$11.7m in 2015  Costs have reduced by 24% since 2011  Low end of the cost curve 2011 2012 2013 2014 201

  23. Slide 23: Group Cash and Funding

    Group Cash and Funding 23 Cash  Group cash of US$85.7m (US$71.7m attributable)  Net cash of US$55.3m after debt of US$30.4m Funding  Total Group facilities of US$85m of which US$51m is available for draw down US$ millions Group Cash Reconciliation 300 61 250 39 200 165 25 24 150 12 12 4 6 7 100 1

  24. Slide 24: Investment Proposition

    Investment Proposition Clifford Elphick Chief Executive Officer

  25. Slide 25: Investment Proposition

    Investment Proposition 25 Gem Diamonds has a unique set of diamond assets and a strong Balance Sheet Long term fundamentals for diamonds are strong Letšeng is a world class diamond mine Ghaghoo mine is an important growth asset  Produces the highest value diamonds  Ready to ramp up when market con

  26. Slide 26: Thank you

    GEM AVENE Wr Thank you

  27. Slide 27: Annexure - Gem Diamonds capital structure

    Annexure 1 - Gem Diamonds capital structure 27 as at Gem Diamonds share price performance since 1 January 2015 Major shareholders 11 March 2016 Volume (000s) Price 200 2 500 Graff Diamonds International Limited 15.11% Thousands 180 160 2 000 Lansdowne Partners Ltd 14.98% 140 120 1 500 Gem Diamonds H

  28. Slide 28: Annexure – Letšeng 2016 Guidance

    Annexure 2 – Letšeng 2016 Guidance 28 FY 2016 Waste tonnes mined (Mt) 29 – 32 Ore treated (Mt) 6.8 – 7.0 Carats recovered (Kct) 107 – 109 Carats sold (Kct) 107 – 110 Direct cash costs (before waste) per tonne treated (Maloti) 145 – 155 Mining waste cash costs per tonne of waste mined (Maloti) 28 – 3

  29. Slide 29: Annexure - Diamond Market

    Annexure 3 - Diamond Market 29 Polished Diamonds Sales by Geography  The US market remains the most important market for diamonds (over 40% of demand) and continues to grow strongly  China has been a strong growth market for diamonds (2009-2014 CAGR of 18%). Longer term, the shift in the economy f

  30. Slide 30: Annexure - Global Diamond Producers

    Annexure 4 - Global Diamond Producers 30 As of February 1, 2016 Est. production in 2016 Mine Location Revenue US Millions Carats Per Carat Jwaneng Botswana $2 048 10 500 000 $195 Jubilee Russia $966 9 200 000 $105 Diavik Canada $805 7 000 000 $115 Orapa Botswana $760 8 000 000 $95 Debmarine Namibia

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