African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — Corporate Update (October 2010)
31 slides from African Rainbow Minerals's corporate update, Oct 6, 2010
Slide 1: ARM Investor and Analyst Khumani Mine Visit
ARM Investor and Analyst Khumani Mine Visit 5 – 6 October 2010 We do it better 1 Disclaimer Certain statements in this report constitute forward looking statements that are neither reported financial results nor other historical information. They include but are not limited to statements that are pr
Slide 2: ARM overview
ARM overview 3 ARM group structure 4
Slide 3: ARM strategy; History of growing earnings
ARM strategy Entrepreneurial Owner operator Profit focused Partner of choice management World-class management team 5 History of growing earnings Headline earnings (R million) 3 500 3 272 3 000 2 500 2 232 2 000 1 500 1 260 1 000 659 741 548 500 454 320 331 19 131 85 0 F2005 F2006 F2007 F2008 F2009
Slide 4: Diversified revenues; Continued strong focus on cost control
Diversified revenues F2009 Revenue - Sales Contribution F2010 Revenue - Sales Contribution Nickel Nickel 5% 11% Iron Ore Iron Ore 23% Platinum 25% 18% Coal 1% Platinum 29% Chrome 9% Manganese 27% Coal Manganese 2% Chrome 42% 8% 7 Continued strong focus on cost control ARM target for operations on th
Slide 5: Significant investment in growth; Aggressive growth continues
Significant investment in growth ARM’s Portion F2005 – F2010 F2011 – F2013 R13.5 bn R9.5 bn F2005 – F2013 Growth projects + Investment in R23.0 bn completed growth Partners’ Portion F2005 – F2010 F2011 – F2013 F2005 – F2013 R10.8 bn + R8.4 bn R19.2 bn Projected total investment over 9 years in growt
Slide 6: Growth supported by robust financial position
Growth supported by robust financial position EBITDA excluding exceptional items Cash on statement of financial position R million R million 8000 4000 7 229 3 513 7000 3500 3 039 6000 3000 2 660 5000 4 484 2500 4000 3 907 2000 2 887 1500 3000 1 063 2 014 1000 2000 1 552 439 1000 500 288 0 0 F2005 F2
Slide 7: The iron ore market
The iron ore market Market fundamentals for iron ore producers remain strong as developing world continuous to industrialise First quarter (Apr-Jun 2010) price increase of above 95%, Jul-Aug (+22%), Q3 (-12%) Quarterly pricing system gaining traction Globally steelmakers are investigating up
Slide 8: Assmang iron ore sales; World crude steel production
Assmang iron ore sales (Forecast 2010 calendar) Sales recovery in Europe; new markets in South East Asia Europe (30%) China (46%) Japan (9%) S.Korea (3%) Thailand (4%) Indonesia (4%) South Africa (4%) * Indonesia: Non-metallurgical Pipe Coating applications 15 World crude steel production 1 800 fore
Slide 9: Seaborne iron ore demand and supply
Seaborne iron ore demand China’s iron ore demand is surging Rest of World forecast 1 527 1 456 China 1 362 1 277 544 Million metric tons 1 173 520 492 1 068 460 944 430 845 400 785 316 407 408 983 936 870 817 743 668 628 438 377 2007 2008 2009 2010f 2011f 2012f 2013f 2014f 2015f China (%) 48% 52% 67
Slide 10: Iron ore seaborne supply and demand; pricing
Iron ore seaborne supply and demand Supply could start exceeding demand from around 2013/14 1 600 90 Surplus/ (deficit) in million tons 1 500 80 forecast 70 1 400 60 1 300 million tons 50 1 200 40 1 100 30 20 1 000 10 900 0 800 -10 700 -20 2007 2008 2009 2010f 2011f 2012f 2013f 2014f 2015f Surplus/
Slide 11: Iron ore quarterly price: Spot price (CFR China)
Iron ore quarterly price: Spot price (CFR China) CFR iron ore spot price (US$/ ton) 200 Spot 180 160 Q1 140 120 US$/ton Apr-Jun 100 80 60 40 20 0 Dec-08 Dec-08 Dec-08 Dec-09 Dec-09 Oct-09 Oct-09 Mar-09 Mar-09 Mar-10 Mar-10 Jan-09 Jan-09 Feb-09 Feb-09 Sep-09 Sep-09 Jul-09 Jul-09 Nov-09 Nov-09 Nov-09
Slide 12: ARM iron ore division
ARM iron ore division 23 Ferrous division group structure 24 24
Slide 13: Strong earnings from iron ore
Strong earnings from iron ore Earnings down in 2010 mainly due to the stronger Rand & lower commodity prices. Good recovery in commodity prices in second half of F2010. Headline earnings (on 100% basis) (R million) 1 800 1 600 1 542 1 400 1 200 1 061 1 000 800 628 600 505 420 383 400 260 264 230
Slide 14: Increasing iron ore sales volumes since 2006
Increasing iron ore sales volumes since 2006 Iron ore sales volumes (on 100% basis – million tonnes) 16 estimated 14.0 14 12 10.7 9.8 9.7 10 8 7.4 6.9 6.6 5.8 5.9 6 4 2 0 F2005a F2006a F2007a F2008a F2009a F2010a F2011e F2012e F2013e 27 Khumani mine 28
Slide 15: Khumani management team; History of Khumani iron ore mine
Khumani management team Willem Grobbelaar Divisional Manager Iron Ore Pierre Becker Senior General Manager Alex Mostert Tinus Barnard Irene Dhlomo Marius Burger David Selemo Hampie v Zyl Manager Manager Manager Social Manager Mineral Manager Manager Human Technical Administration Investment Resource
Slide 16: Khumani locality map; Stratigraphical comparison
Khumani locality map 31 Stratigraphical comparison between Khumani and Beeshoek KHUMANI 32
Slide 17: Continuous focus on safety improvement; License to operate
Continuous focus on safety improvement Safety records – Since inception Committed to Zero harm to 1.2 employees 1.0 LTIFR of 0.29 currently 0.8 LTIFR reduced by 28.7% since 0.6 inception 0.4 Man hours worked without LTI =1 296 635 0.2 0.0 Safe days without LTI = 152 2007/2008 2008/2009 2009/2010 LTI
Slide 18: License to operate; Khumani sales volumes
License to operate Employment equity: 80% and HDSA’s; woman in mining: 16% Contribution to NC local economy; more than R 600 million per annum BEE spend of 51% for 09/10 financial year, as per mining charter Integrated management system; ISO 9002; ISO 14001; ISO 18001; OHSAS 18001 35 Khumani sales v
Slide 19: Strong focus on cost control; Unit cost breakdown
Strong focus on cost control Khumani mine on-mine unit cash costs (R/tonne) 160 140 134 124 120 104 100 80 60 40 20 0 2008 2009 2010 37 Unit cost breakdown Labour, maintenance and depreciation account for major percentage of unit cost 100% 4% 6% 3% 1% 90% 11% 80% 45% 25% 70% 33% 60% 26% 50% 22% 7% 4
Slide 20: Overview of the Khumani mine
Overview of the Khumani mine Hematite ore body situated on 2 properties (namely Bruce and King) 544 Mt resource at 64.43% Fe, substantial reserves at lower Fe are available Current mining rate 48 Mt per annum Run-of-Mine (ROM) beneficiation through JIG gravity separation; 45% Average life of mine st
Slide 21: Khumani beneficiation plant process
Figure 1: Overview – Processing Plants Khumani beneficiation plant process Bruce King ROM ROM Primary & Primary & Secondary Crushing Secondary Crushing Ore Categorisation On Grade ROM Off Grade ROM Blending Stockpiles Blending Stockpiles On grade Washing & Off grade Washing & Screening Screening Ter
Slide 22: Off-grade circuit; Typical JIG unit
Off-grade circuit Off Grade ROM Max 1000mm Primary & Secondary Crushing -80mm Crush Wet Screening Down Tertiary Crushing Discard to -32mm Dump Lumpy Jig Fines Jig Lumpy Screening Lumpy DR Lump Fines Fines Lumpy DR Lump Crushing Fines Stockpile Stockpile Stockpile -32mm to +6mm -18mm to +6mm -6mm to
Slide 23: Typical JIG unit; Khumani processing plant
Primary and secondary crusher on Bruce Farm Secondary Crushing Primary Crushing Scalping Screen 45 Khumani processing plant - Parsons Typical JIG unit Contact Ore Fed into Jig Wet Jig FEED Screening Plants Product Bucket Elevator Stratification Bed Gate System Rejects To Discard Dump AIR o o o o ..
Slide 24: Khumani processing plant; Logistics
Khumani processing plant - Parsons Product Primary stockpiles and secondary& load-out station crusher on Bruce Farm Wet Jig Screening Plants Secondary Crushing Primary Crushing Scalping Screen 47 Logistics 10 Mt per annum rail capacity agreement signed with Transnet Freight Rail (TFR) for 20 years A
Slide 25: Iron ore berth; Saldanha port
Loading facility and rail loop with wagons Product Primary andstockpiles secondary& crusher load-outon station Bruce Farm Length of each train = 3 850 m 12 locomotives Trains = 342 wagons Secondary Crushing Primary Crushing Capacity of train = 34 200 tonnes Scalping Screen Loading Facility Capacity
Slide 26: Khumani Expansion Project (KEP)
Khumani Expansion Project (KEP) 51 KEP motivation Secure the long term rail allocation on the Sishen Saldanha line Project is robust with excellent financial returns Confidence in the steel industry’s future growth High grade resource in South Africa with an excellent average stripping ratio of life
Slide 27: KEP motivation; Khumani / KEP scope
KEP motivation 10 Mt was commissioned successfully within budget and on schedule 16 Mt project is a low risk Blending of Bruce and King mines will extend the life of operations Experienced team assembled for the expansion project Improve Quality Control 53 Khumani / KEP scope Khumani = 10mtpa Bruce
Slide 28: KEP features; Iron ore growth profile
KEP features Total project cost R 6.7 billion approved; well within budget Capital expenditure to date R 2.5 billion Production ramp up Expect to begin production ramp up in January 2012 Full production 2013 (financial year) Position on cost curve 40th percentile Comment Feasibility on iron ore expo
Slide 29: KEP deliverables; KEP milestones
KEP deliverables July 2012 Feb 2012 18 Ramp-up Curve 16 July 2011 14 12 Forecast 2012/2013 10 King mine Parson plant Local siding 8 extension Primary thickener ROM On/Off grade 6 circuit Doubling of railway stockpile Secondary thickener balloon 4 Circuit 2nd Load-out station Fines dewatering 2 circu
Slide 30: KEP milestones; KEP statistics
KEP milestones Procurement spend to date BEE 63%; BBBEE 57% Full 16 Mt per annum commissioning planned ahead of schedule by at least 4 months Capital expenditure expected well within budget 59 KEP statistics Steel – 6 000 tons Earthworks moved - 4 795 292 m3 Concrete – 52 116 m3 Piping – 40 km Elect
Slide 31: Opportunities for further growth; Questions
Opportunities for further growth Options for further expansion of Khumani and Beeshoek are being investigated Local and export markets 61 Khumani Mine - A success story Questions We do it better 62
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