Royal Bafokeng Platinum — FY2013 Earnings Presentation
40 slides from Royal Bafokeng Platinum's earnings presentation, 2014
Slide 1: Audited Results for the year ended 31 December 2013
Royal Bafokeng Platinum Audited Results for the year ended 31 December 2013
Slide 2: Disclaimer
Disclaimer The information presented in this presentation is of a general nature and the forward looking information, opinions and beliefs of the Company and its affiliates are based on various market related assumptions. Changes in market circumstances after the production of the information may im
Slide 3: Content
Content 2013 1. Overview A year during which our efforts 2. Safety, health and environment towards achieving our 3. Market review strategic objectives were rewarded 4. Operational review and project update 5. Financial review 6. Future outlook 3
Slide 4: Overview
ROYAL BAFOKENG Drains SECTION 1 OVERVIEW
Slide 5: Operational flexibility provides solid performance
Operational flexibility provides solid performance > Continuity and sustainability > Safety performance continues to improve > 6% improvement in productivity to 31.6t/employee > 8% improvement in built-up head grade to 4.38g/t 4E > 4% increase in 4E PGM ounces to 280koz > 2% decrease in cash operati
Slide 6: Safety, Health and Environment
SECTION 2 SAFETY, HEALTH AND ENVIRONMENT
Slide 7: Good safety performance – regrettably two fatalities at BRPM
Good safety performance – regrettably two fatalities at BRPM LTIFR SIFR Safety 1.00 0.60 0.91 > 36% reduction in LTIFR since 2010 0.90 • 9% improvement in 2013 0.50 0.80 0.47 0.68 > 50% reduction in SIFR since 2010 0.42 0.70 0.61 • 37% improvement in 2013 0.40 0.60 /200 000 hrs /200 000 hrs > Number
Slide 8: Reduction in safety stoppages
Reduction in safety stoppages 4E Ounces lost 2013 Classification 16.0 14.0 14.0 Winches & 12.0 11.5 Rigging, 12% 10.2 10.0 Sub-standard conditions, 23% koz 8.0 Fatalities, 59% 6.0 4.0 Sub-standard 2.0 support, 6% 0.0 Description Unit 2011 2012 2013 Var Var % Events No. 12 12 11 1 8% Production shift
Slide 9: Market Review
MARKET REVIEW Drains SECTION 3
Slide 10: Platinum market – above ground stocks keep prices low
Platinum market – above ground stocks keep prices low 2013 > Platinum price declined 4% YoY to an average of $1 486/oz, after having peaked at $1 742/oz in Feb 2013 > Primary supply decreased by 4.5% to 5.6Moz • South African output reduced to 4Moz • Recycling increased by about 6% to 2.15Moz > Dema
Slide 11: Palladium market – market remains in deficit
Palladium market – market remains in deficit 2013 > Palladium demand grew by 0.6% to 9.5Moz > Strong growth in Chinese car market lifted global palladium usage in gasoline autocatalysts by 5% to 7Moz > Primary supply of palladium declined to 6.3Moz while recycling grew by about 8% to 2.1Moz 2014 > D
Slide 12: Rhodium market – market currently well stocked
Rhodium market – market currently well stocked 2013 > Demand for rhodium rose by 4.5% to 960koz > Rhodium supply decreased by 9.1% to 680koz as UG2 was trimmed further • Weak rhodium price resulted in erosion of margins in UG2 production > Expected to be part of light duty diesel formulations with i
Slide 13: Operational Review and Project Update
SECTION 4 OPERATIONAL REVIEW AND PROJECT UPDATE
Slide 14: Overall performance consistent with strategy and objectives
Overall performance consistent with strategy and objectives • LTIFR improved by 9% Continuity and • SIFR improved by 37% sustainability • Safety stoppages reduced • Stable labour relations • Reef tonnes broken up 6% • Grade improved by 8% • Sweepings lower 39kt • IMS panel ratio 1.52 • Tonnes milled
Slide 15: Robust mining platform
Robust mining platform Description Unit 2011 2012 2013 Var > Development 8% Total development km 30.2 39.4 36.5 8% • Achieved IMS panel ratio of 1.52 Working cost development km 26.6 34.3 30.9 10% Capital development km 3.6 5.1 5.5 -8% Development replacement ratio 2 m /m 32.2 27.1 32.4 19% > Stopin
Slide 16: 4% Increase in ounce production
4% Increase in ounce production BRPM plant (4E) concentrate Description Unit 2011 2012 2013 Var recovery Tonnes milled - total kt 2 305 2 375 2 301 -3% 100.0 Tonnes milled - MER kt 2 047 1 958 1 887 -4% Tonnes milled - UG2 kt 258 417 414 -1% 90.0 87.83 87.21 87.05 UG2% milled % 11 18 18 3% Tonnes mi
Slide 17: Labour aligned with operational requirements
Labour aligned with operational requirements Description Unit 2011 2012 2013 Var % > Working cost labour reduction Total labour No. 8 313 7 743 7 907 -2% • Labour review Working cost labour (31 Dec) No. 6 924 6 057 6 180 -2% Working cost labour (FY average) No. 6 553 6 633 6 060 9% • Sharing of serv
Slide 18: Operating cost increase below inflation
Operating cost increase below inflation Description Unit 2011 2012 2013 Var % Cash operating cost R'm 1 802 2 051 2 093 -2% Operating cash unit cost R/t 782 864 920 -6% Operating cash cost/4E oz R/oz 6 399 7 616 7 519 1% Operating cash cost/Pt oz R/oz 9 863 11 775 11 592 2% BRPM JV – R/tonne milled
Slide 19: Cost reduction mainly associated with mining process
Cost reduction mainly associated with mining process Cash cost breakdown Process costs 1 000.0 900.0 129 2012 2013 800.0 120 124 153 700.0 134 Sundries Sundries 600.0 120 12% 13% R/t milled Utilities 8% Utilities 500.0 Labour costs Labour costs 9% 37% 37% 400.0 Stores Stores 20% 638 18% 300.0 609 53
Slide 20: Efficient capital expenditure
Efficient capital expenditure Description Unit 2011 2012 2013 Var % SIB % of opex 14% Stay-in-business capital R'm 116 238 138 42% 12% 12% SIB % of operating cost % 6% 12% 7% 43% Replacement capital R'm 378 308 184 40% 10% Phase II R'm 209 116 9 92% 8% Phase III R'm 167 192 175 9% 6% 7% % BRPM UG2 R
Slide 21: Phase III Merensky replacement project - ahead of schedule and below budget
Phase III Merensky replacement project - ahead of schedule and below budget Description Unit Plan Actual/ Var Progress Forecast > Current completion is 5% or two months % Complete % 52 57 5 ahead of planned completion Development m 5 218 6 107 889 > The project is forecast to close four months Compl
Slide 22: 2014 – Looking ahead
2014 – Looking ahead Production and cost ˃ Throughput : Around 2.3 Mt ˃ Grade : 4.2g/t(4E), increases to 4.3 g/t (4E) in 2016 ˃ UG2 contribution : 18% for 2014, reduce to around 10% in 2018 inline with Styldrift ramp-up ˃ Opex : Below mining inflation Capital expenditure ˃ SIB : 6% to 8% of operatin
Slide 23: Styldrift I Project
PROJECT UPDATE STYLDRIFT I PROJECT
Slide 24: Revised Styldrift concentrator strategy
Revised Styldrift concentrator strategy Base case Revised strategy > Single stand alone concentrator 230ktpm BRPM concentrator upgrade : > Phase 1: Upgrade existing concentrator from 200ktpm to 250ktpm > Phase 2: Construct additional 100ktpm module Revised Process Description Unit IP COS Optimised S
Slide 25: Styldrift on schedule
Styldrift on schedule Description Unit Plan Actual Var Progress Overall progress % 37.5 39.2 1.7 > Main and Service shafts sunk to 708 level Main shaft sinking m 708 708 - > 2 304m of lateral development completed Service shaft sinking m 708 708 - during 2013 Total development m 4 540 4 521 -19 > Su
Slide 26: Key project focus for 2014
Key project focus for 2014 Vent shaft No.1 600 Level temporary conveyor belt Service shaft Main shaft 600 Level – Reef level 642 Level – Top of silo Settlers Silos The temporary belt system has been installed to facilitate 708 Level – Loading level lateral development rock handling through the Servi
Slide 27: Styldrift below budget
Styldrift below budget Description Unit Plan Actual Var Capital expenditure Expenditure > Capital budget of R11.014 billion aligned with revised ore processing strategy FY 2013 R'm 728 682 46 > Under expenditure compared to planned Project to date (PTD) R'm 2 659 2 511 148 cashflow and earned value
Slide 28: Styldrift II Study Project
PROJECT UPDATE STYLDRIFT II STUDY PROJECT
Slide 29: Styldrift II study work progressing well
Styldrift II study work progressing well Pre-feasibility study > Commenced in 2013, planned completion Q4 2014 > Four options with a positive business case taken forward for further technical evaluation > Primary focus areas • Primary access strategies and shaft location Approximate • Production rat
Slide 30: Financial Review
SECTION 5 FINANCIAL REVIEW ROYAL BAFOKENG PLATINUM
Slide 31: 88% increase in operating profit
88% increase in operating profit Year ended 31 Year ended 31 Description Unit % Change December 2013 December 2012 Average basket price* R/Pt oz 17 927 16 404 9.3 Average Rand:US$ received R/US$ 9.65 8.21 17.5 Revenue R'm 3 251.1 2 865.3 13.5 Cost of sales R'm 2 650.1 2 525.5 4.9 Gross profit R'm 60
Slide 32: 66.7% increase in headline earnings
66.7% increase in headline earnings Year ended 31 Year ended 31 Description Unit % Change December 2013 December 2012 Headline earnings R'm 283.9 170.3 66.7 Weighted average shares outstanding #'m 164.3 164.0 0.2 HEPS R/share 1.73 1.04 66.3 Fair Value depreciation and amortisation R/share 0.55 0.50
Slide 33: Robust cash generation
Robust cash generation Year ended 31 Year ended 31 Description Unit % Change December 2013 December 2012 Cash generated by operating activities R'm 907.8 732.6 23.9 Cash, net of debt (incl. pref share investment) R'm 772.9 910.5 15.1 Capital expenditure (100% BRPM) R'm 1 058.8 1 192.3 11.2 Gross pro
Slide 34: Strong platinum and base metals bias
Strong platinum and base metals bias 2013 0.3% Pt 2.2% Year ended 31 Average price 6.9% Description December 2013 achieved* 0.4% Pd (US$) 0.8% Sales volume Au 4.0% 3.0% Rh Ir Platinum (oz) 181 351 1 418/oz 14.2% Ru Ni Palladium (oz) 68.2% 74 009 719/oz Cu Co Gold (oz) 8 771 1 309/oz Rhodium (oz) 15
Slide 35: Containment of cost
Containment of cost 2013 2013 2012 2012 Description R million % of Total R million % of Total Labour 773.3 34.9% 753.1 34.3% Utilities 179.4 8.1% 171.1 7.8% Contractor costs 489.0 22.1% 478.4 21.7% Materials and other mining costs 651.0 29.3% 648.0 29.5% Total cash costs excl. once–off costs 2,092.7
Slide 36: Exchange rate and cost management benefits
Exchange rate and cost management benefits 385.9 (124.7) 700 463.1 214.1 64.9 105.9 600 10.3* 91.7 165.5 500 45.2 100.3 3.3 17.3 79.1 400 2.7 21.2 58.2 283.9 300 200 170.3 100 0 * Excludes profit on disposal of property, plant and equipment 36
Slide 37: Strong cash position at year end
Strong cash position at year end 2 000 907.8 138.0 1 800 184.0 1 600 714.6 1 400 1 200 R million 1 000 BRPM JV 2.1 6.7 800 311.1 BRPM JV 600 195.0 400 RBPlat RBPlat 599.4 577.9 200 0 Cash and cash Cash generated by SIB capex Replacement capex Expansion capex Other Net reduction in Cash and cash equi
Slide 38: Year in review
Year in review ˃ Basket price increased by 9.3% due mainly to ZAR weakening against USD ˃ Effective cost management resulting in marginal increase in cash operating costs ˃ Newly optimised life of mine and processing strategy ˃ Renegotiated Impala 6# & 8# royalty agreement ˃ Cash on hand at year end
Slide 39: Future Outlook
SECTION 6 FUTURE OUTLOOK ROYAL BAFOKENG Drains
Slide 40: Strongly positioned to achieve our goals in 2014
Strongly positioned to achieve our goals in 2014 > Safety, health and wellness of every employee remains our key focus > Anticipate a slight recovery in PGM demand in 2014 • However prices to remain flat > 2014 production to remain at current levels • Set to increase from 2015 with the ramp up of St
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