Northam Platinum Holdings Limited · JSE:NPH
Northam Platinum — Mvelaphanda Resources — H1 2009 Earnings Presentation
32 slides from Northam Platinum's earnings presentation, Feb 19, 2009
Slide 1: Interim Results for the Six Months Ended 31 December 2008
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2008
Slide 2: Forward looking statements
Forward looking statements • Certain statements contained in this document including, without limitation, those concerning the economic outlook for the gold, platinum and diamond mining industries, expectations regarding commodity prices, production, cash costs and other operating results, growth pr
Slide 3: Content
Content 1. Financial review 2. Economic review 3. Platinum overview 4. Gold overview 5. Net asset value 6. Strategic assessment and options 3
Slide 4: Six months to 31 December 2008 in review
Six months to 31 December 2008 in review • Financial year began well: • Implemented Booysendal Transaction; • Announced Impala expression of interest; • Platinum US$2 069/oz, Gold US$930/oz, R7.83/US$ • Financial crisis in USA gains momentum. Initially expectations of “decoupling” of Emerging Market
Slide 5: Financial review
Financial review • Consolidating Northam in accounts for 4 months from 1 September 2008 (2 months equity accounted) – comparisons difficult; • Booysendal included from 20 August 2008; • Northam cash generative and robust balance sheet; • Gold Fields Transaction matures on 17 March 2009 – Mvela Resou
Slide 6: Balance sheet
Balance sheet R’000 31 Dec 2008 31 Dec 2007 % change Assets GFI-SA loan 4 617 000 4 846 000 (5) Cash and cash equivalents 1 318 037 1 708 949 (23) Liabilities Pref share funding (Booysendal) 2 346 648 N/a Senior Bank loan (GFI-SA) 69 946 384 895 (82) Mezzanine debt (GFI-SA) 1 959 892 1 727 108 13 6
Slide 7: Income statement
Income statement R’000 31 Dec 2008 31 Dec 2007 % change Difference between market value and purchase consideration on Booysendal Transaction 2 691 273 N/a Finance costs (283 870) (165 643) N/a Senior bank loan (GFI-SA) (12 160) (28 060) N/a Mezzanine Finance (GFI-SA) (154 843) (137 583) N/a Coupon o
Slide 8: Income statement (continued)
Income statement (continued) R’000 31 Dec 2008 31 Dec 2007 % change Loss on revaluation of financial instruments (463 000) (427 000) N/a GFI-SA loan (463 000) (427 000) N/a Trans Hex forward purchased shares (56 952) N/a Loss before taxation (303 562) (288 593) N/a Taxation 437 454 50 762 N/a - Norm
Slide 9: Cash flow statement
Cash flow statement R’000 31 Dec 2008 31 Dec 2007 % change Cash flows from operating activities 375 421 184 924 103 Cash flows from investing activities (2 849 040) 158 334 N/a Cash flows from financing activities 1 872 070 137 635 N/a Cash and cash equivalents 1 318 037 1 708 949 (23) 9
Slide 10: Current economic realities
Current economic realities • Global growth has slowed significantly; • Demand for commodities has fallen; • The outlook remains uncertain – continued poor economic data against uncertain response to stimulus packages, interest rate cuts and infrastructure programmes; • Lack of liquidity in debt mark
Slide 11: Impact on global markets
Impact on global markets Relative performance of global markets Dow Jones FTSE Hang Seng FTSE/JSE ALSI Source: INet Bridge 11
Slide 12: Market fear still very high (VIX)
0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Market “fear” still very high Apr-07 Volatility Index (US$) (VIX) Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 12
Slide 13: Impact on commodity prices
Impact on commodity prices Relative commodity price performance Gold Nickle Platinum Copper Aluminium Source: INet Bridge 13
Slide 14: Diversified mining companies
Diversified mining companies Relative performance of diversified mining companies Low debt levels High debt levels Anglo BHP Billiton Rio Tinto Xstrata ARM Source: INet Bridge Low debt levels = higher market rating 14
Slide 15: Platinum sector overview
Platinum sector overview Relative commodity price performance Gold Platinum Palladium Rhodium Source: INet Bridge 15
Slide 16: SA PGM sector – tough times!
SA PGM sector – tough times! • PGM prices have pulled back significantly, squeezing operating margins; • Deep level mine project funding is challenging - banks loathe to lend and equity investors have shied away; • Capital and operating costs have risen sharply, adding to the financing difficulties;
Slide 17: Mvela Resources - Platinum
Mvela Resources - Platinum • Increased 62.8% shareholding in Northam following Booysendal Transaction with Anglo Platinum and Northam; • Strategic alignment with Northam provides competitive advantage; • Established, technically competent management and labour force with unique deep level mining exp
Slide 18: Northam strategically positioned
Northam strategically positioned • Northam Zondereinde mine – reliable, consistent mid-tier producer • highest recovered yield in the industry • cost profile in the lower half of industry cost curve • Moderate capex requirements going forward • Cash positive in current market conditions and basket p
Slide 19: Cash positive at current prices
Cash positive at current prices R/kg (3PGE+Au) Rand basket price (spot) 700 000 600 000 R533 566 500 000 R467 203 R406 837 400 000 R311 089 R297 792 300 000 R236 706 200 000 R183 290 R184 610 R183 798 R167 612 R166 823 R175 620 100 000 Jul-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 May-08 Jun-08 J
Slide 20: Platinum sector cost curve (R/kg 6E)
Platinum sector cost curve (R/kg 6E) Northam is cash flow positive after capex at spot prices and positioned well down cost curve 20
Slide 21: Booysendal – flexible, quality growth
Booysendal – flexible, quality growth • Large (103Moz), shallow resource; 1A 1B • Potential for modular development; • Scale and timing flexible – fit to prevailing conditions; 1D 1C • Early production = early cashflow = partial self financing; • Bankable feasibility on track - decision Q3 calendar
Slide 22: Gold
Gold • GFI-SA Transaction completed in March 2004 – matures on 17 March 2009 after a 5 year term; • Mvela Resources will receive 50 million Gold Fields shares in March 2009 (7.1% of GFI); • No restrictions on shareholding - can refinance or sell stake; • Strategic rationale of holding minority share
Slide 23: Gold in rands and dollars (rebased)
Gold in rands and dollars (rebased) Relative performance of gold in dollar/oz and rand/oz Source: INet Bridge 23
Slide 24: Gold Fields relative FTSE/JSE Gold Index
Gold Fields relative FTSE/JSE Gold Index Gold Fields relative to FTSE/JSE Gold Index Source: INet Bridge 24
Slide 25: Mvela Resources Add-up value
Mvela Resources Add-up value* Shares Shares Share Value per in issue owned % price Value share Asset (m)1 (m) owned (R) (Rm) (R) Gold Fields Ltd 703 50.00 7.1% 118.05 5,903 27.46 Northam Total 360 225.84 62.8% 22.20 5,014 23.32 Trans Hex Total 106 21.53 20.3% 1.70 37 0.17 Total listed assets 10,953
Slide 26: Mvela Resources strategic issues
Mvela Resources strategic issues New economic realities provided opportunities • Debt on balance sheets is viewed as risky and carries a large discounted in the market; • The outlook for gold in 2009 remains positive for gold and Gold Fields in particular • The long term outlook for the PGM market i
Slide 27: Mvela Resources strategic assessment
Mvela Resources strategic assessment Mvela Resources strategic issues – unlocking discount: • Holding company status with multiple entry points to underlying assets; • Mvela Resources “pyramid structure” – JSE requires a solution to be presented by August 2009; • Debt negatively viewed by market; •
Slide 28: Mvela Resources strategic process: Step 1
Mvela Resources strategic process Step 1: Redeem mezzanine finance due on 17 March 2009 but secure maximum return on Gold Fields investment. • Refinancing of R2.1 billion mezzanine debt underway; • Outlook for gold extremely good for year ahead due to ongoing global economic crisis; • Gold Fields op
Slide 29: Mvela Resources strategic process: Step 2
Mvela Resources strategic process Step 2: Repay all debt • Total debt R4.3 billion. Benefit • Mining companies with little/no debt enjoy higher relative ratings; • Reduce Mvela Resources’ dependence on Northam dividends – lower risk; • Strong message that Booysendal can be financed by Northam as no
Slide 30: Mvela Resources strategic options
Mvela Resources strategic options Step 3: Strategic options assuming excess cash • Apply to growth opportunities that may exist in the current market; • Recapitalise Northam through a rights issue to all shareholders which will ensure financing and optimal development of the Booysendal project; • Ac
Slide 31: Mvela Resources likely strategy
Mvela Resources likely strategy Step 4: Mvela Resources recapitalises Northam, unbundles all its Northam shares and collapses structure: • Addresses pyramid structure; • Unlocks trading discount; • Avoids cash dividend tax on shareholders – tax efficient. Benefit • No dividend tax avoided due to unb
Slide 32: Thank you Q & A
Thank you Q&A 32
Mvelaphanda Resources — H1 2009 Earnings Presentation on 6ix