Royal Bafokeng Platinum — H1 2017 Earnings Presentation
34 slides from Royal Bafokeng Platinum's earnings presentation, 2017
Slide 1: Condensed Consolidated Interim Results for the six months ended 30 June 2017
Condensed Consolidated Interim Results for the six months ended 30 June 2017
Slide 2: Contents
CONTENTS OVERVIEW MARKET REVIEW OPERATIONAL REVIEW FINANCIAL REVIEW OUTLOOK 2
Slide 3: 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 4: Overview
1 OVERVIEW 4
Slide 5: Ongoing progress despite a challenging environment
Ongoing progress despite a challenging environment > No fatalities, in line with our commitment to zero harm SAFETY > TIFR, SIFR and LTIFR increased by 88.2%, 52.9% and 48.6% respectively > Ongoing focus on the implementation of our revised safety strategy > Record first half delivered tonnes since
Slide 6: Market Review
2 MARKET REVIEW 6
Slide 7: Platinum demand to soften in 2017
Platinum demand to soften in 2017 Global platinum supply forecast Global platinum demand forecast 10.0 8 200 1.8 Peak = 6.9 2.0 8 000 8.0 140 (40) (105) 2014 = 4.9 7 800 (90) (130) 6.0 5.9 (50) (160) (165) koz Moz 5.3 4.2 7 600 4.0 7 400 7 755 7 755 2.0 3.1 7 200 7 455 7 455 0.0 2000 2001 2002 2003
Slide 8: Structural palladium deficit, with a slight contraction in demand expected in 2017
Structural palladium deficit, with a slight contraction in demand expected in 2017 Global palladium supply forecast Global palladium demand forecast 10.0 2.3 9.0 2.3 10 600 8.0 Peak = 7.0 60 (20) (125) 70 10 5 (50) 2014 = 6.4 10 400 (120) 7.0 6.9 6.0 10 200 koz Moz 5.0 10 000 4.0 10 300 10 300 3.0 9
Slide 9: Operational Review
3 OPERATIONAL REVIEW 9
Slide 10: Responsive and adaptive strategy appropriate for current market environment
Responsive and adaptive strategy appropriate for current market environment > Fatality-free six month period TOWARDS > Highest BRPM H1 delivered tonnes OPERATIONAL > Flat year-on-year unit costs EXCELLENCE > Improved labour productivity > Optimise quality of ore mix − suspend UG2 mining at South sha
Slide 11: Safety and health remain key to a stable production environment
Safety and health remain key to a stable production environment Safety Lost time injury frequency rate Serious injury frequency rate > Fatality-free in H1 2017 0.60 0.30 0.51 0.52 0.26 > 49% deterioration in LTIFR 0.50 0.25 > 53% deterioration in SIFR 0.40 0.20 0.35 0.17 /200 000 hrs /200 000 hrs >
Slide 12: Strong operating performance at BRPM and Styldrift
Strong operating performance at BRPM and Styldrift Description Unit H1 2016 H1 2017 Var Working cost development Tonnes delivered 20.0 1 600 1 473 Total development km 17.6 19.1 8.5% 1 296 BRPM km 15.6 15.8 1.3% 15.66 15.84 1 400 15.20 1 178 Working cost development km 15.2 15.8 3.9% 15.0 1 200 Capi
Slide 13: Improved mining volumes yield greater metal output
Improved mining volumes yield greater metal output Tonnes milled Metals in concentrate (4E) Description Unit H1 2016 H1 2017 Var 1 700 180 Total tonnes milled kt 1 292 1 477 14.3% 1 477 155 1 500 160 BRPM kt 1 150 1 237 7.6% 142 1 292 140 122 Styldrift kt 142 240 69.0% 1 300 120 Merensky kt 1 015 1
Slide 14: Capital labour increase aligned with Styldrift construction programme
Capital labour increase aligned with Styldrift construction programme Description Unit H1 2016 H1 2017 Var Total working cost labour Capital labour 7 000 3 000 6 279 6 330 6 247 Total labour No. 7 228 7 819 (8.2%) 2 545 6 000 Working cost labour No. 6 330 6 247 1.3% 2 500 Capital labour No. 898 1 57
Slide 15: Organisational redesign and value enhancement
Organisational redesign and value enhancement Restructuring a two-pronged approach > Organisational redesign > Suspension of unprofitable UG2 at BRPM South shaft • Includes BRPM and shared services • Reallocate 9 crews to higher margin production areas • 636 reduction in BRPM employees • Enhanced mi
Slide 16: Unit costs remain flat year-on-year
Unit costs remain flat year-on-year Cash operating cost/tonne milled Cash operating cost/4E oz Description Unit H1 2016 H1 2017 Var Cash operating cost R'm 1 329 1 429 (7.5%) 1 400 12 000 1 156 1 155 10 080 10 236 10 227 Cash operating cost/tonne milled R/t 1 156 1 155 0.1% 1 200 1 119 10 000 Cash o
Slide 17: Capital expenditure aligned to Styldrift ramp-up
Capital expenditure aligned to Styldrift ramp-up Description Unit H1 2016 H1 2017 Var SIB expenditure 4.1% of operating cost Stay-in-business capital (SIB) R’m 56 59 (5.4%) ˃ Reduction in line with cash preservation SIB % of operating cost % 4.2% 4.1% 2.4% Stay-in- strategy Replacement capital R’m 4
Slide 18: Styldrift I - 150ktpm ramp-up progress
Styldrift I − 150ktpm ramp-up progress Description Unit H1 2016 H1 2017 Var Project progress Stoping square metres 000’m2 3.7 16.5 346% Project-to-date stoping square metres 000’m2 3.7 29.8 − Development m 2 068 3 328 61% Project-to-date development m 8 016 14 294 − ROM tonnes delivered kt 140 238 7
Slide 19: Underground - mining and infrastructure construction
Underground − mining and infrastructure construction Legend: 600 level: Key underground construction activities during H1 2017 Development completed end 2016 Infrastructure and mining footprint Development H1 2017 included: H2 2017 development Underground TM3 stores > Services shaft equipping consum
Slide 20: Styldrift - securing the 150ktpm ramp-up
Styldrift − securing the 150ktpm ramp-up 23 operational mining and construction crews: Operational flexibility: > 11 trackless mining crews > Decoupling of ore handling • 600 level − 4 development and 4 stoping crews • Dump trucks − 600 and 642 levels • 642 level − 2 trackless development crews • 60
Slide 21: Financial Review
4 FINANCIAL REVIEW 21
Slide 22: 9.8% reduction in average rand revenue basket price
9.8% reduction in average rand revenue basket price 6 months ended 6 months ended Year ended Description Unit 30 June 2017 30 June 2016 % Change 31 December 2016 Average basket price R/Pt oz 17 745 19 680 (9.8) 18 906 Average R:US$ in revenue R/US$ 13.07 15.41 (15.2) 14.70 Revenue R’m 1 593.9 1 646.
Slide 23: Headline earnings per share bridge
Cents/share 100 0 50 -50 Headline earnings per share: H1 2016 77.8 Revenue - lower realised average rand 41.7 basket Revenue - increased volumes 28.5 Increase in other income 15.1 Royal Bafokeng Platinum Condensed Consolidated Interim Results for the six months ended 30 June 2017 Restructuring costs
Slide 24: Cash position remains healthy
Cash position remains healthy 6 months ended 6 months ended Year ended Description Unit 30 June 2017 30 June 2016 % Change 31 December 2016 Cash generated by operations R’m 122.0 382.2 (68.1) 528.8 Cash and cash equivalents R’m 1 664.5 1 033.2 61.1 835.5 Cash and cash equivalents − 100% BRPM R’m 347
Slide 25: Platinum US$ metal price remains under pressure while other commodity prices improve
Platinum US$ metal price remains under pressure while US$ prices for other commodities improve % Change 2017 6 months ended 6 months ended in US$ 0.6% 2.0% 0.8% Description Unit 30 June 2017 30 June 2016 Price 1.8% 5.0% 5.6% 3.6% Volume US$ Volume* US$ Platinum oz 89 825 940/oz 83 686 969/oz (3.0) 2
Slide 26: 8.2% increase in cash cost of sales
8.2% increase in cash cost of sales 6 months ended 6 months ended 6 months ended 6 months ended 30 June 2017 30 June 2017 30 June 2016 30 June 2016 Description R million % of Total % Change R million % of Total Labour 543.6 38.4% (6.1) 512.5 39.2% Utilities 122.5 8.6% (7.2) 114.3 8.7% Contractor cos
Slide 27: Headline earnings bridge
R’million 150 250 350 50 -250 -150 -50 Headline earnings - H1 2016 149.3 Revenue - volume increase 113.7 Increase in costs due to increased 109.7 volumes Restructuring costs 57.1 22.4 controllable Increase in admin and other costs, 46.7 decrease in net finance income Royal Bafokeng Platinum Condense
Slide 28: Cash flow movement: strong cash balance available to fund growth
R’million 1 000 1 200 1 400 1 600 1 800 2 000 200 400 600 800 0 Cash and cash equivalents - 370.5 465.0 835.5 1 January 2017 Cash generated by operations 122.0 Interest, dividends and 352.2 tax 48.6 Cash generated from Stydrift Incidental 181.6 revenue SIB capex 59.7 Royal Bafokeng Platinum Condense
Slide 29: Restructuring and cost management initiatives underway
Restructuring and cost management initiatives underway > During the period under review, the Group embarked upon a process to restructure and right-size the overhead and operational structure of the business to be appropriate for the current and future market environment > A two-pronged approach • F
Slide 30: RBPlat well positioned for long term value creation
RBPlat well positioned for long term value creation > Rand basket price decreased by 9.8% due mainly to a strengthen R:US$ exchange rate > 36% of R842.5 million capital expenditure funded from cash generated by operations and revenue from Styldrift on-reef development > Strong cash and funding posit
Slide 31: Outlook
5 OUTLOOK 31
Slide 32: Uncertainty continues in the regulatory environment
Uncertainty continues in the regulatory environment > Delay in the finalisation of the MPRDA Amendment Bill > Controversial Mining Charter III • No negotiations with the industry or Chamber of Mines • Poorly drafted • Lots of ambiguity in the document • Value destructive in its current form RBPlat r
Slide 33: Laying the foundation to successfully take the business to the next phase
Laying the foundation to successfully take the business to the next phase > The restructured business is expected to enhance margins going forward > Focus will be aimed at consolidating the strong operational performance achieved during the first half of the year > JV production for the full year fo
Slide 34: Thank you
THANK YOU 34
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