Mmg Ltd. · HKEX:1208

Mmg — FY2015 Earnings Presentation

38 slides from Mmg's earnings presentation, Mar 10, 2016

  1. Slide 1: 2015 Annual Results Presentation

    2015 Annual Results Presentation 10 March 2016 HKEx:1208 ASX:MMG

  2. Slide 2: Disclaimer

    Disclaimer The information contained in this presentation is intended solely for your personal reference and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person (whether within or outside your organisation/firm) or published, in whole or in part, for any pu

  3. Slide 3: Continuing to grow through the down cycle

    _ _ _ _ Continuing to Financial Operational Emerging grow through results excellence copper major, the down Ross delivering positioned for cycle Carroll superior the upside Andrew Chief Financial results Andrew Officer Michelmore Marcelo Michelmore Chief Executive Bastos Chief Executive Officer Chie

  4. Slide 4: Continuing to grow through the down cycle

    Continuing to grow through the down cycle Andrew Michelmore Chief Executive Officer

  5. Slide 5: Our first value: We think safety first

    Our first value: We think safety first Safety Performance 5  Fatality of contracted security guard in 4.5 4.8 March 2015 at Kinsevere as a result of snake bite. 4 4.1 3.5  TRIF1 of 2.1 per million hours worked in 2015 an improvement compared to 2.3 3 reported for 2014. 3.0 2.5 2.4  MMG is committ

  6. Slide 6: 2015 in review

    2015 in review Las Bambas commissioned and now in ramp Growth up, updated Dugald River development plan approved1. Higher copper sales volumes offset by lower Solid revenue commodity prices. Record copper production, well managed Operating discipline costs. Negatively impacted by amortisation of Und

  7. Slide 7: Financial results

    Financial results Ross Carroll Chief Financial Officer

  8. Slide 8: Challenging commodity cycle impacting financial performance

    Challenging commodity cycle impacting financial performance Copper and Zinc commodity price performance Indexed, 2 Jan 2015 =100 1.2  Commodity prices for copper and zinc both fell 26%. 1.1  Revenue down 21% to US$1,950.9 million. 1  Operating costs benefited from favourable AUS:US foreign exchan

  9. Slide 9: Condensed consolidated income statement

    Condensed consolidated income statement Year ended 31 December 2015 2014 Variance US$ million % Revenue 1,950.9 2,479.8 (21) EBITDA 420.9 780.8 (46) Depreciation and amortisation (649.4) (537.1) (21) Underlying EBIT (228.5) 243.7 (194) Underlying (Loss)/profit for the period (264.4) 99.2 (367) EBITD

  10. Slide 10: Positive cash generation

    Positive cash generation Asset EBITDA as a proxy for operating cash flow 1200 50  All operations cash generative due to ongoing productivity focus and 43% 39% cost management. 1000 36% 36% 40  Group net operating cash flow US$282.4 million, down 58%. 800 30  Operating expenditure 31% US$1,313.2 m

  11. Slide 11: Commodity price variance analysis

    Commodity price variance analysis Price variance US$ million US$ million 400 350 Kinsevere (120.1) 300 Copper (285.0) 250 Sepon 200 (125.3) 150 FY14 Price EBIT (506.4) 100 243.7 50 Century (168.2) 0 Zinc (156.7) -50 Rosebery Gold (9.4) (32.4) -100 Lead (29.0) Golden Grove (60.4) -150 Silver (26.4) -

  12. Slide 12: Sales volume variance analysis

    Sales volume variance analysis US$ million Volume variance US$ million 400 Silver 21.3 Sepon 1.9 350 300 Lead 30.4 Gold 0.4 Kinsevere 72.4 250 200 Copper 35.2 150 Price FY14 (506.4) EBIT 100 243.7 Century (71.4) 50 Zinc (109.8) 0 -50 Rosebery(14.0) Golden Grove(11.4) -100 -150 -200 Volume (22.5) -25

  13. Slide 13: Underlying EBIT variance analysis

    Underlying EBIT variance analysis US$ million 300 FY14 EBIT 100 243.7 -100 FY15 Price Admin EBIT (506.4) Exploration Expense (228.5) Other 30.6 20.7 Expenses Operating (45.3) Expenses Volume Other 178.1 (22.5) Income D&A (15.1) (112.3) -300 13

  14. Slide 14: Access to long term capital, a competitive advantage

    Access to long term capital, a competitive advantage Amortisation schedule1 US$ million 14,000  MMG total debt borrowings have attractive quasi-equity features: 12,000 – Sourced from Chinese government 10,000 supported financial institutions. – Majority vanilla structure with 8,000 optionality. – L

  15. Slide 15: Operational excellence delivering superior results

    Operational excellence delivering superior results Marcelo Bastos Chief Operating Officer

  16. Slide 16: 'Squeezing' the assets to earn the right to grow

    ‘Squeezing’ the assets to earn the right to grow  Improved safety performance, reduced down-time and Asset Utilisation across increased asset utilisation. MMG assets1  2015 production above guidance at all operations. 97%  Copper production record of 207,528 tonnes. 90% 89% 86%  Record productio

  17. Slide 17: Continuous focus on cost management

    Continuous focus on cost management C1 Cost US$/lb Copper Zinc  Kinsevere – another record production year and improved grid power supply. 1.50 0.8  Sepon – facing higher costs to process more difficult ore but maintaining 1.30 production rates above nameplate.  Century – record quarterly ore 0.6

  18. Slide 18: Las Bambas, ramp up to 4th largest copper mine

    Las Bambas, ramp up to 4th largest copper mine  Shipping commenced through Matarani Port, 93% of new port facilities complete.  Mining achieved full capacity moving over 400,000 tpd.  Both lines of copper concentrate plant successfully commissioned and now in production ramp up.  Concentrator Pl

  19. Slide 19: Australian Operations, a consolidated model

    Australian Operations, a consolidated model  Australian sites under an integrated management team with reduced administration costs.  Reduction of around 690 FTEs with rationalisation of around 80 service and support positions in 2015 and 2016 to date. Workforce transition due to Improved Asset Ut

  20. Slide 20: Dugald River, exposure to zinc upside

    Dugald River, exposure to zinc upside  Updated development plan approved.  Subject to final financing arrangements.  Provides important exposure to zinc at a time of shrinking global supply.  Remaining capital expenditure US$750 million including interest cost.  Reviewing project fundamentals a

  21. Slide 21: Emerging copper major, positioned for the upside

    Emerging copper major, positioned for the upside Andrew Michelmore Chief Executive Officer

  22. Slide 22: Copper continues to see longer term price support

    Copper continues to see longer term price support Tonnes 000’ US$/lb 30,000 6.00 25,000 5.00 20,000 4.00 15,000 3.00 10,000 2.00 Base Case Copper Supply Short – term volatility 5,000 1.00 0 0.00 2010 2015 2020 2025 2030 2035 Base Case + Probable Projects Copper Supply Base Case Copper Supply Copper

  23. Slide 23: Zinc market now facing declining mine output

    Zinc market now facing declining mine output Tonnes 000’ US$/lb 25,000 2.00 1.80 20,000 1.60 1.40 15,000 1.20 1.00 10,000 0.80 Short – term 0.60 volatility Base Case Zinc Supply 5,000 0.40 0.20 0 0.00 2010 2015 2020 2025 2030 2035 Base Case + Probable Projects Zinc Supply Base Case Zinc Supply Zinc

  24. Slide 24: Emerging copper major positioned for growth

    Emerging copper major positioned for growth  Maintain objective to be valued as one of the world’s top, mid-tier miners by 2020.  Continue to squeeze efficiencies from operations and earn the right to grow.  Maintain tight cost focus to deliver shareholder returns.  Ramp-up Las Bambas to commerc

  25. Slide 25: We mine for progress

    WE MINE FOR PROGRESS A

  26. Slide 26: Appendices

    AA “prouness IMEIVIG Appendices

  27. Slide 27: Our business

    Our business Source: Wood Mackenzie Source: Wood Mackenzie 27

  28. Slide 28: Investor value proposition

    Investor value proposition  Current commodity prices have heavily impacted all base metal valuations.  Track record of operational performance and capital discipline.  2016 guidance demonstrates shift in leverage to copper.  Las Bambas completion and first production de-risks project investment.

  29. Slide 29: Financial dashboard

    Financial dashboard Revenue by commodity Revenue by customer location 24% 32% Zinc Australia Copper Europe 19% Gold 14% Middle East 53% Silver Japan & Korea 7% Lead Other Asia 21% 16% China 5% 6% 3% EBITDA by operating segment Operating expenses (Sites) 12% 21% 39% Sepon People 7% Kinsevere External

  30. Slide 30: Kinsevere – full year production record

    Kinsevere – full year production record  YTD production record of 80,169 tonnes of Financials copper cathode. US$ million 2015 2014 %  Operational efficiencies, stable electricity, increases to mill throughput. Revenue 418.1 465.7 (10)  Lower copper prices marginally offset by EBITDA1 131.8 189.3

  31. Slide 31: Sepon – successfully transitioning

    Sepon – successfully transitioning  Successful transition to harder Type II ore Financials with quarterly milling record delivered. US$ million 2015 2014 %  YTD production record of 89,253 tonnes of Revenue 496.9 620.2 (20) copper cathode. EBITDA1 248.8 366.5 (32)  Maintained stable mining and mi

  32. Slide 32: Century – last production

    Century – last production  Production of 392,667 tonnes of zinc and 79,153 Financials tonnes of lead despite transition to lower grades in final stages of mining. US$ million 2015 2014 %  Mining from single stage of open-pit mine, lower Revenue 613.6 853.3 (28) strip ratio, reduction in consumable

  33. Slide 33: Rosebery

    Rosebery Financials US$ million 2015 2014 % Revenue 201.1 247.5 (19) EBITDA1 79.1 85.2 (7) EBIT 12.5 38.7 (68) EBITDA margin (%) 39 34 C1 costs – zinc (US$ / lb) 0.30 0.26 Zinc in zinc concentrate production Lead in lead concentrate production ‘000 tonnes ‘000 tonnes 25 88 92 25 82 81 84 23 23 75-80

  34. Slide 34: Golden Grove

    Golden Grove Financials US$ million 2015 2014 % Revenue 221.2 293.1 (25) EBITDA1 19.5 29.0 (33) EBIT (25.1) (15.2) (65) EBITDA margin (%) 9 10 C1 costs – zinc (US$ / lb) 0.30 0.25 Copper in copper concentrate production Zinc in zinc concentrate production ‘000 tonnes ‘000 tonnes 71 34 73 34 31 28 26

  35. Slide 35: 2016 Guidance

    2016 Guidance Las Bambas Rosebery Copper – production1 250,000 – 300,000 tonnes Zinc – production 75,000 – 80,000 tonnes Copper – C1 costs2 US$0.80 – US$0.90 / lb Zinc – C1 costs US$0.30 – US$0.40 / lb Lead – production 18,000 – 22,000 tonnes Kinsevere Golden Grove Copper – production 75,000 - 80,00

  36. Slide 36: Condensed consolidated balance sheet

    Condensed consolidated balance sheet Year ended 31 December 31 December 2015 31 December 2014 US$ million Non-current assets 13,025.7 12,280.6 Current assets – cash and cash equivalents 598.3 251.2 Current assets – other 1,036.0 958.2 Total assets 14,660.0 13,490.0 Total equity 2,175.2 2,974.6 Non-c

  37. Slide 37: Consolidated financial performance: Cash flow statement

    Consolidated financial performance: Cash flow statement Year ended 31 December 2015 2014 US$ million Receipts from customers 2,289.0 2,578.4 Payments to suppliers (1,875.2) (1,744.8) Payments for exploration expenditure (42.4) (73.0) Income tax paid (89.0) (93.9) Net cash generated from operating ac

  38. Slide 38: Financial resources and liquidity

    Financial resources and liquidity  Gearing ratio1 MMG Group (excluding Las Maturity profile of borrowings Bambas) as at 31 Dec 2015 of 0.51. as at 31 December 2015  Gearing ratio1 MMG South America Management 36% within one year Group as at 31 Dec 2015 of 0.65 10% one - two years two - five years

MMG — FY2015 Earnings Presentation on 6ix