African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — FY2010 Earnings Presentation
29 slides from African Rainbow Minerals's earnings presentation, Aug 30, 2010
Slide 1: ARM continues with aggressive growth strategy
ARM continues with aggressive growth strategy Provisional results for the year ended 30 June 2010 We do it better 1 “ARM has achieved good operational results g with significant volume growth g and continues to control its costs. We have delivered on our 2 X 2010 growth strategy and are continuing w
Slide 2: Disclaimer
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 predictions of or indicate future earnings, savings, synergies, events, trends, pla
Slide 3: Salient features
Overview and strategy Patrice Motsepe, Executive Chairman 5 Salient features Headline earnings down 26% to R1.7 billion from R2.3 billion mainly due to a stronger Rand and lower commodity prices (headline earnings per share of 807 cents per share compared to 1 094 cents per share in the previous fin
Slide 4: Salient features; good recovery in second half earnings
Salient features Decrease in unit costs of iron ore, nickel and platinum group metals (PGM) reflects a strong focus on continuing cost control Cash and cash equivalents of R3.0 billion; net debt to equity of 1.7% Approval of the development of Konkola North Copper Project in Zambia. The mine will be
Slide 5: ARM declares an increased 4th annual dividend
ARM declares an increased 4th annual dividend Headline earnings per share and dividends per share (cents per share) 2000 1 906 1800 1600 1400 1200 1 094 1000 807 800 580 600 400 400 150 175 200 200 0 F2007 F2008 F2009 F2010 Headline earnings per share Dividends per share 9 Strong cash and low gearin
Slide 6: Diversified revenues and divisional earnings
Diversified revenues F2009 Revenue - Sales Contribution F2010 Revenue - Sales Contribution Nickel 5% Nickel 11% Iron Ore Iron Ore 25% 23% Platinum 18% Coal 1% Platinum 29% Chrome 9% Manganese 27% Coal Manganese 2% Chrome 42% 8% 11 Divisional earnings Contribution to headline earnings 12 months ended
Slide 7: Significant improvement in second half earnings
Significant improvement in second half earnings Contribution to headline earnings six months ended Commodity group R million June 2010 December 2009 % change Platinum Group Metals 184 131 40 Nkomati Nickel and Chrome 170 36 372 Ferrous Metals 1 062 302 252 Coal (53) 36 (247) Exploration (58) (85) 32
Slide 8: Successful execution of 2 X 2010 growth strategy
Successful execution of 2 X 2010 growth strategy Iron ore* (million tonnes) Manganese ore* (million tonnes) 12.0 3.5 3.1 9.8 10.0 3.0 8.0 2.5 5.8 2.0 1.8 6.0 1.5 4.0 1.0 2.0 0.5 0.0 0.0 F2005 F2010 F2005 F2010 PGM* (thousand ounces) Nickel* (thousand tonnes) 800 12.0 689 700 9.7 10.0 600 500 8.0 400
Slide 9: Continuing aggressive growth in iron ore and nickel
Continuing aggressive growth in iron ore Iron ore production growth (on 100% basis - million tonnes per annum) 15.0 14.0 14 0 14.0 13.0 12.0 11.0 10.7 10.2 9.8 10.0 9.0 8.0 7.0 6.0 5.0 F2010a F2011e F2012e F2013e 17 Continuing aggressive growth in nickel Nickel production growth (on 100% basis - tho
Slide 10: Continuing aggressive growth in coal and investment
Continuing aggressive growth in coal GGV coal production growth (on 100% basis - million tonnes per annum) 8.0 70 7.0 6.5 67 6.7 67 6.7 6.0 5.0 4.0 3.0 2.4 2.0 1.0 0.0 F2010a F2011e F2012e F2013e Domestic thermal coal Export thermal coal 19 Continuing aggressive investment in growth ARM’s Portion F2
Slide 11: Konkola North Copper Project released
Konkola North Copper Project released Ore resource of 300 million tonnes at 2.57% copper 2.5 million tonne milled yielding 45 000 tonnes copper per annum Commission concentrator – December 2012, full production 2015 Life of mine – 28 years Total capital expenditure – US$380 million in July 2010 term
Slide 12: Safety and sustainable development
Safety and sustainable development Modikwa achieved 6 000 000 fatality free shifts on 2 December 2009 and to date have completed 52 months of fatal free work and are still continuing Nkomati achieved 1 000 000 fatality free shifts on 16 April 2010 Two Rivers surpassed 1 500 000 fatality free shifts
Slide 13: Outlook
Outlook ARM will continue to aggressively grow its portfolio of commodities ARM is strategically positioned to grow in South Africa and Africa ARM continues to evaluate opportunities for acquisitions or take-over 25 Operational review André Wilkens, Chief Executive Officer 26 13
Slide 14: Significant increase in volumes achieved
Significant increase in volumes achieved 27 Significant increase in sales volumes* 516% increase in chrome concentrate sales to 313 735 tonnes (Nkomati only) 112% increase in nickel sales to 8 697 tonnes 103% increase in ferromanganese sales to 238 thousand tonnes 44% increase in manganese ore sales
Slide 15: Significant increase in sales volumes
Significant increase in sales volumes* 32% increase in iron ore sales volumes to 9.8 million tonnes 31% increase ferrochrome sales to 272 thousand tonnes 11% increase in PGM sales to 688 957 ounces 6% increase in export thermal coal sales to 11.9 million tonnes * On 100% basis 29 Significant sales v
Slide 16: Commodity prices
Commodity prices F2010 versus F2009 average commodity price change 80.00% 60.00% 40.00% 20.00% 0.00% 20 00% ‐20.00% ‐40.00% ‐60.00% Mn ore FeMn Cr Ore Iron ore FeCr Rhodium Rand/Dollar Gold Platinum Nickel Palladium ($/t) ($/t) (R/t) ($/t) ($/t) ($/oz) exchange ($/oz) ($/oz) ($/lb) ($/oz) rate (R/$)
Slide 17: EBITDA margins and profit variance analysis
EBITDA margins • Significant improvement in Platinum and Nickel EBITDA margins • Iron ore and Manganese margins impacted by the relatively lower Rand prices realised ARM’s EBITDA margin g is 35.4% for the y year ((F2009: 44.4%)) Iron Ore 69% 51% Manganese 76% 40% Chrome 23% ‐6% 60% Coal * 54% Platin
Slide 18: Strong cash generated from operations
Strong cash generated from operations Net cash inflow/ (outflow) from operating activities (R million attributable) Iron Ore 902 Manganese 529 * Chrome (110) Coal 23 Platinum 760 Nickel 365 Exploration (137) Corporate and other 188 ‐300 ‐100 100 300 500 700 900 1,100 * Manganese cash generated from
Slide 19: Unit costs and mining costs
Unit costs Unit cost changes and EBITDA margins F2010 % change F2010 Commodity Group Unit cost (metric) F2010 vs. F2009 EBITDA ((decrease)/increase ) g ((%)) margin Nickel R/tonne milled (37.8) 35.4 Platinum R/PGM ounce (9.7) 35.2 Iron ore R/tonne (6.0) 50.9 Coal R/tonne (on mine saleable) (0.8) 53.
Slide 20: Aggressive growth continues: Khumani
Aggressive growth continues 39 Khumani Iron Ore growth profile Iron ore sales volumes (thousand tonnes) 16,000 14 000 14,000 Khumani Beeshoek 12,000 10,000 8,000 6,000 4,000 2,000 0 2005a 2006a 2007a 2008a 2009a 2010a 2011e 2012e 2013e 40 20
Slide 21: Khumani expansion and Nkomati nickel growth profile
Khumani expansion: additional 6 mtpa Total project cost R6.7 billion approved; well within budget Capital expenditure to date R2.2 billion Production ramp p up p Expect to begin production ramp up in January 2012 Full production 2013 (financial year) Position on cost curve 40th percentile Comment Fe
Slide 22: Nkomati Nickel expansion and thermal coal growth profile
Delivering quality long-term growth projects: The Nkomati Nickel Expansion Project Nkomati Nickel Large Scale Expansion Capex to date R3.3 billion of approved R3.7 billion Stage 250ktpm commission December 2010 Full production (Financial year) 2013 Steady state 20 500t nickel Position on cost curve
Slide 23: Goedgevonden and Konkola North projects
Delivering quality long-term growth projects: The Goedgevonden Project Goedgevonden Thermal Coal Commissioning 2009 (calendar year) Full production 2011 (financial year) Steady state 3.5mt local; 3.2mt export Position on cost curve 25th percentile Comment Dragline opencast operation 45 The Konkola N
Slide 24: Growth projects continue
Growth projects continue Attributable capital expenditure by division (R million) 4,500 4,000 3 700 3 800 3,500 3 333 3,000 2 779 2 738 2,500 2,000 2 000 1,500 1,000 500 0 F2008a F2009a F2010a F2011e F2012e F2013e ARM Copper ARM Coal ARM Ferrous Two Rivers Nkomati Modikwa F2005 – F2010: R>13.5bn F20
Slide 25: Robust financial position
Robust financial position 49 Financial position strength continues 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 1 552 288 439
Slide 26: Sufficient capacity to fund growth; income statement
Sufficient capacity to fund growth Net cash/ (Net debt) calculation Per statement of financial position June 2010 June 2009 Cash and cash equivalents 3 039 3 513 Long-term interest bearing borrowings (2 582) Short-term interest bearing borrowings (764) Total interest bearing borrowings (3 346) (3 34
Slide 27: Summarised cash flow and financial position
Summarised cash flow Reviewed Audited R million June 2010 June 2009 Cash generated from operations 3 430 6 678 Net finance costs 41 78 Dividends received 33 118 Dividends paid (371) (847) Tax paid (612) (1 977) 2 521 4 050 Capital expenditure (2 500) (3 264) Net borrowings raised / (repaid) (773) (1
Slide 28: 2005 2010
2005 2010
Slide 29: Questions
Questions We do it better 57 29
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