Mineral Resources Limited · ASX:MIN
Mineral Resources — 1H21 Earnings Presentation
41 slides from Mineral Resources's earnings presentation, Feb 10, 2021
Slide 1: 1H21 Results
1H21 RESULTS 10 FEBRUARY 2021
Slide 2: Contents
01 Highlights 3 02 Safety and Sustainability Performance 4 03 Financial Performance 6 CONTENTS 04 Operating Performance 16 05 Future Direction 21 06 Appendix 28 2
Slide 3: 1H21 Highlights
1H21 HIGHLIGHTS Mining Services • Remained COVID and LTI free • Production volume up 23% pcp • EBITDA up 37% pcp • TRIFR 2.75, 16% improvement • Commissioning three crushing plants this month – 31Mtpa • Revenue $1.5bn, up 55% pcp capacity Iron Ore • Underlying EBITDA $763m, up 131% pcp • Production
Slide 4: 1H21 Sustainability Performance: Injury Frequency Rates
1H21 SUSTAINABILITY PERFORMANCE Injury Frequency Rates Per million hours worked 2.75 0.00 14.52 1.40 14.00 TRIFR LTIFR 1.20 Lost Total Injury Frequency Rate (LTRIFR) TRIFR1 LTI1 Total Recordable Injury Frequency Rate 12.00 16% improvement2 1.00 10.00 0.80 (TRIF) 8.00 7.15 3,900+ 5.99 0.60 6.00 4.86
Slide 5: 1H21 Sustainability Performance: Greenhouse Gas Emissions
1H21 SUSTAINABILITY PERFORMANCE Greenhouse Gas (GHG) Emissions1 250 3.2 3.50 54 72 CO2 Equivalent (kt) Emissions Intensity 3.00 (tCO2e per kTMM) 200 2.4 2.50 150 2.2 2.00 Apprentices2 Trainees/Graduates2 100 1.50 1.00 50 0.50 0 FY19 FY20 1H21 0.00 $473m Diesel Gas Electricity Emissions Intensity Tax
Slide 6: Financial Performance
FINANCIAL PERFORMANCE MINERAL RESOURCES
Slide 7: 1H21 Financial Performance Summary
1H21 FINANCIAL $1.5bn 23.4% Revenue ROIC PERFORMANCE ↑55% on 1H20 After Tax SUMMARY $516m $763m Operating Cash EBITDA Flow1 (underlying) 100 cps ↑$303m on 1H20 ↑131% on 1H20 Dividends ↑335% on 1H20 $1.1bn $351m Cash Capex ↓$193m on 1H20 Note: 7 1. Operating cash flow excludes tax paid of $332m and $
Slide 8: 1H21 Underlying Profit & Loss
1H21 UNDERLYING PROFIT & LOSS • Revenue of $1.5bn up 55% on prior corresponding period (pcp) Underlying Profit & Loss 1H20 1H21 Variance ($ million) and EBITDA of $763m up 131% on pcp Revenue 987 1,531 544 • 1H21 Revenue and EBITDA driven by: Operating costs (656) (768) (112) • Mining services growt
Slide 9: 1H21 Underlying EBITDA 1H20 to 1H21
1H21 UNDERLYING EBITDA 1H20 TO 1H21 $ million Notes: 1. Iron ore price and spodumene price variances include the impact of changes in royalty costs. 9
Slide 10: 1H21 Cash Flow
1H21 CASH FLOW Cash Flow ($ million) 1H20 1H21 Variance Working capital outflow of $108m in 1H21 as a result of: Underlying EBITDA 330 763 433 • Increase in trade receivables due to higher iron ore sales, combined Movement in working capital (13) (108) (95) with higher pricing Net cash flow from ope
Slide 11: 1H21 Capital Expenditure
1H21 CAPITAL EXPENDITURE Capital expenditure $351m in 1H21 as a result of: CAPEX ($ million) 1H21 Sustaining Capex • Deferred stripping with further development of the Yilgarn Hub and Utah Point Hub to ensure future iron ore production Deferred stripping 53 • Sustaining capex to continue to deliver
Slide 12: 1H21 Summary Balance Sheet
1H21 SUMMARY BALANCE SHEET Summary Balance Sheet ($ million) FY20 1H21 Variance • Current tax payable decreased $348m from final Wodgina tax Inventories 156 142 (14) payment Trade and other receivables 178 356 178 • Financial assets increased $101m from fair value adjustment of Trade and other payab
Slide 13: 1H21 Net Debt Waterfall
1H21 NET DEBT WATERFALL $ million Notes: 1. Final tax payment of $332m on sale of 60% interest in Wodgina Lithium Project. 2. Derecognition of Perth metro office lease. 13 3. Other comprises: amounts advanced to joint venture partners ($30m); payments for financial assets ($12m); less proceeds from
Slide 14: Revenue and Earnings
REVENUE AND EARNINGS Revenue ($m) Underlying EBITDA ($m) Underlying NPAT ($m) 2,500 900 500 2,125 800 765 763 450 430 2,000 700 400 1,624 350 334 1,458 1,512 1,531 600 1,500 506 300 270 500 464 433 250 206 205 400 1,000 200 300 150 500 200 100 100 50 0 0 0 14
Slide 15: Free Cashflow Generation
FREE CASHFLOW GENERATION Capex ($m) Operating Cash Flow1, 2 Cumulative Free Cash ($m) Flow ($m) 3, 4 900 700 1,000 800 595 600 800 700 516 600 751 600 500 411 587 400 500 400 296 200 400 300 0 135 300 56 186 200 -200 200 100 100 -400 -520 0 0 -600 FY17 FY18 FY19 FY20 1H21 Maintenance Deferred Strip
Slide 16: Operational Performance
OPERATIONAL PERFORMANCE MINERAL RESOURCES
Slide 17: Our Business
OUR BUSINESS World’s largest crushing contractor Leading pit-to-port mining services provider World’s top 5 lithium miner with joint ownership of the largest hard rock lithium deposit Australia’s 5th largest iron ore producer Major holder of exploration permits in Perth Basin’s highly prospective ga
Slide 18: 1H21 Mining Services Performance
1H21 MINING SERVICES PERFORMANCE Mining Services Crushing and Contract Mining Construction Energy Contracts Processing • 2 new contracts • 23 operating plants • 19 open pits • Wonmunna • Perth Basin infrastructure and exploration • 2 renewals • 3 crushers mine development activities commissioning pr
Slide 19: 1H15 to 1H21 Mining Services Performance
1H15 TO 1H21 MINING SERVICES PERFORMANCE Mining services production-related contract tonnes1 Mining services less construction EBITDA3 CAGR 20%2 1. Contract tonnes include production-related Ore Mined, Crushed, Processed and other mining services where MRL owns the underlying assets delivering the s
Slide 20: 1H21 Commodities Performance
1H21 COMMODITIES PERFORMANCE Yilgarn Hub Utah Point Hub Mt Marion Wodgina Kemerton Iron Ore Iron Ore Spodumene Spodumene Lithium Hydroxide TMM 29.6Mt TMM 17.1Mt TMM 14.7Mt Care and maintenance Construction ongoing 5.6Mt produced 3.7Mt produced 262kdmt produced 1,250 people on site 5.0Mt shipped 2.9M
Slide 21: Future Direction
FUTURE DIRECTION MINERAL SQ RESOURCES
Slide 22: Growth Strategy – CY21 to CY23
GROWTH STRATEGY – CY21 to CY23 • Grow our mining services business • Own and operate critical supply chain infrastructure • Develop longer-life, higher quality commodity projects • Grow our lithium hydroxide capacity • Own natural gas • Generate high ROIC and predictable cash flow 22
Slide 23: Mining Services
MINING SERVICES • Continue growth with external clients for crushing and haulage • Develop and own supply chain infrastructure • Ports • Private haul roads • Innovative transport systems • Transhipping • Support execution of internal development projects • Pursue energy opportunities to reduce carbo
Slide 24: Commodities Iron Ore
COMMODITIES IRON ORE • Yilgarn Hub • 10 year mine plan being finalised • Parker Range – online mid 2021 • Developing Mt Richardson • Utah Point Hub • Wonmumma – first ore February 2021 • Lamb Creek – construction ready by 2H22 • Wedge – construction ready by 2H23 • Ashburton • Kumina/Bungaroo South
Slide 25: Commodities Lithium
COMMODITIES LITHIUM • Mt Marion at full production • Wodgina on care and maintenance • Improving lithium market • Evaluating opportunities to access additional conversion capacity Notes : Photo as at 7 December 2020. 25
Slide 26: 1H21 FY21 Guidance
1H21 FY21 GUIDANCE YILGARN HUB1 UTAH POINT HUB1 MT MARION2 WODGINA KEMERTON Lithium Commodity Iron ore Iron ore Spodumene Spodumene Hydroxide Ownership 100% 100% 50% 40% 40% Care & Under Exports 11.0 to 11.5 Mt 8.5 to 9.0 Mt 450 to 475 Kt maintenance construction 10 to 15% Lower Costs Similar to FY2
Slide 27: Thank You – Any Questions?
ANY QUESTIONS? SS“ MINERAL RESOURCES
Slide 28: Appendix
APPENDIX ADDITIONAL INFORMATION 28
Slide 29: Reconciliation of Non-IFRS Financial Information
RECONCILIATION OF NON-IFRS FINANCIAL INFORMATION Reconciliation of Non-IFRS Financial Information ($ million) 1H20 2H20 FY20 1H21 Statutory Revenue 987 1,138 2,125 1,531 Statutory EBITDA 1,575 431 2,006 927 Less: gain on disposal of 60% interest in Wodgina1 (1,290) (8) (1,298) - Less: realised FX ga
Slide 30: Operating Segments
OPERATING SEGMENTS • Mining services provides pit-to-port infrastructure services across Operating Segments 1H20 1H20 1H20 1H21 1H21 1H21 the mining supply chain to Australia’s blue chip mining ($ million) Revenue Underlying Margin Revenue Underlying Margin companies and MRL’s own and joint venture
Slide 31: Mining Services Key Business Metrics
MINING SERVICES KEY BUSINESS METRICS Major external contract1 win/renewal metrics Metrics FY15 FY16 FY17 FY18 FY19 FY20 1H21 New contracts commenced - - 3 1 3 2 2 Ore bodies exhausted early, contracts ended due to end of life-of-mine - (1) - (1) - (1) (1) or completion of scope Existing contracts re
Slide 32: Commodities Segment
COMMODITIES SEGMENT Iron Ore Commodities Segment 1H20 1H20 1H20 1H21 1H21 1H21 ($ million) Revenue Underlying Margin Revenue Underlying Margin • Record exports of 7.9Mt up 17% pcp due to growth of EBITDA EBITDA the Yilgarn Hub Iron Ore 696 185 27% 1,219 582 48% • Material increase in Platts index ha
Slide 33: Commodities Yilgarn Hub Iron Ore
COMMODITIES YILGARN HUB IRON ORE Yilgarn Hub Iron Ore 1H19 2H19 FY19 1H20 2H20 FY20 1H21 • 5.0Mt exported in 1H21, 38% Lump Lump • Overall revenue per tonne is higher due to the strong 1,216 1,271 1,135 1,824 2,959 1,874 Exports (Kwmt) 55 Platts index Fe grade (%) 59.7% 59.3% 59.3% 59.7% 59.2% 59.4%
Slide 34: Commodities Utah Point Hub Iron Ore
COMMODITIES UTAH POINT HUB IRON ORE • 2.9Mt exported in 1H21, 49% Lump Utah Point Hub 1H19 2H19 FY19 1H20 2H20 FY20 1H21 Lump • Overall revenue per tonne is higher due to the strong Platts index Exports (Kwmt) 1,926 1,187 3,113 1,305 1,417 2,723 1,415 Fe grade (%) 60.1% 60.0% 60.1% 59.6% 59.2% 59.4%
Slide 35: Commodities Mt Marion Lithium
COMMODITIES MT MARION LITHIUM • 1H21 spodumene concentrate exports of 203Kdmt, Mt Marion Lithium 1H19 2H19 FY19 1H20 2H20 FY20 1H21 76% High Grade Weighted Average Exports (at 100%) (Kdmt) 179 187 366 188 206 394 203 • Weak lithium conditions resulted in a reduction in Revenue per tonne in the year
Slide 36: Conservatively Geared Through Cycles
CONSERVATIVELY GEARED THROUGH CYCLES $ million $1,000 $800 $600 $400 $200 $0 ($200) ($400) ($600) ($800) ($1,000) FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 1H21 Net (Debt)/Cash EBITDA (Underlying) 36
Slide 37: Credit Metrics and Debt Maturity Profile
CREDIT METRICS AND DEBT MATURITY PROFILE CREDIT METRICS FY20 1H21 DEBT MATURITY PROFILE2 Cash and equivalents $1,522m $1,113m $1,000 909 $900 Net debt/(cash) ($231m) $75m $800 Net gearing (11%) 3% $700 $600 Gross gearing 36% 31% $500 Net debt/(cash) to Underlying EBITDA 1 (0.3x) 0.1x $400 $300 250 G
Slide 38: FY21 Capital Expenditure Guidance
FY21 CAPITAL EXPENDITURE GUIDANCE CAPEX ($ million) FY21 Sustaining Capex Deferred Strip 80 Commodities 72 Other 23 Total Sustaining Capex 175 Growth Capex Commodities 150 Mining Services 138 Central 43 Corporate Office 60 Other 34 Total Growth Capex 425 TOTAL CAPEX 600 38
Slide 39: Glossary
GLOSSARY 1H, 2H, FY First half, second half, full year K Thousand $ Australian dollar M Million US$ United States dollar Net debt / (cash) Gross debt less cash and cash equivalents NPAT Net profit after tax CAGR Compound annual growth rate PBT Profit before tax CFR Cost and freight rate pcp Prior co
Slide 40: Disclaimer
DISCLAIMER This presentation has been prepared by Mineral Resources Limited (“MRL” or “the Company”). It should not be considered as an offer or invitation to subscribe for or purchase any securities in the Company or as an inducement to make an offer or invitation with respect to those securities.
Slide 41: Investor Relations
INVESTOR RELATIONS James Bruce Head of Investor Relations T: +61 8 9329 3706 E: james.bruce@mrl.com.au OFFICE: 1 Sleat Road, Applecross, WA6153 POSTAL: PO Locked Bag 3, Canning Bridge LPO, Applecross, WA6153 P +61 8 9329 3600 F +61 8 9329 3601 www.mrl.com.au 41