Impala Platinum Holdings Limited · JSE:IMP
Impala Platinum — FY2003 Earnings Presentation
54 slides from Impala Platinum's earnings presentation, August 2003
Slide 1: Results for the year ended 30 June 2003
Results for the year ended 30 June 2003 1
Slide 2: Today’s presentation
Today’s presentation • Overview of results • Market review • Financial review • Operational review • Prospects 2 2
Slide 3: Key features
Key features • Gross platinum production up by 21% • Sales revenue down by 1% • Gross margin healthy at 43% • Net profit down by 25% due to rand appreciation • Zimbabwean acquisitions extend resource base • Return on equity of 37% • Return on assets of 30% 3 3
Slide 4: Key features - continued
Key features - continued • Safety improved by more than 30% • On-mine cash costs per tonne mined up by 8% • Total cost per refined platinum ounce up 11% • Effects of strike largely mitigated 4 4
Slide 5: Share price performance
Share price performance Indexed to 100 130 120 110 100 90 80 70 60 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 HSBC global mining index Implats Anglo Platinum Lonmin Source: UBS 5 5
Slide 6: Headline earnings per share
Headline earnings per share SA cps 8000 7035 6 877 7000 6000 5 140 5000 3394 4000 3000 2000 1000 0 FY00 FY01 FY02 FY03 FY H1 H2 6 6
Slide 7: Dividends per share
Dividends per share SA cps 8000 6 800 7000 6000 Special dividend 5000 3 700 4000 3 800 2 650 3000 1 760 2000 1000 0 FY00 FY01 FY02 FY03 7 7
Slide 8: Implats gross refined production
Implats gross refined production 000oz FY03 FY02 Variance (%) Platinum 1 673 1 387 21 Palladium 893 732 22 Rhodium 215 177 21 PGM 3 162 2 639 20 Nickel (t) 14.7 13.0 13 8 8
Slide 9: Refined platinum production
Refined platinum production 000 oz FY03 FY02 Variance % Mine-to-market 1 161 1 061 9 Non-mine-to-market 260 174 49 Returned to customers 252 152 66 Total 1 673 1 387 21 9
Slide 10: Corporate structure
Corporate structure Implats 100% Mining Impala Refining Strategic holdings operations Services (IRS) Impala 100% Concentrate offtake Platinum agreements 27% Lonplats Marula 80%* Platinum Aquarius 25%+ 83% Platinum SA Barplats 45%# 51% Two Rivers Zimplats *20% allocated to BEE partnership 50% Mimosa
Slide 11: Contribution to net profit
Contribution to net profit Mining operations Strategic holdings R2 585m (76%) R679m (20%) Implats R3 415m IRS R151m (4%) 11 11
Slide 12: Market review
Market review 12 12
Slide 13: A year of varying fortunes
A year of varying fortunes • Platinum • Demand underpinned by strong fundamentals • Fourth consecutive year of deficits • Palladium • Weaker demand counteracted to large extent by reduced Russian selling • Rhodium • Excess supplies depress prices 13 13
Slide 14: Average $-price achieved
Average $-price achieved FY03 FY02 Variance % Platinum ($/oz) 597 485 23 Palladium ($/oz) 264 389 (32) Rhodium ($/oz) 646 1 098 (41) Nickel ($/t) 7 664 5 594 37 Revenue/Pt oz ($) 935 934 - Revenue/Pt oz (R) 8 471 9 489 (11) 14 14
Slide 15: Sales volumes up
Sales volumes up 000oz FY03 FY02 Variance % Platinum 1 373 1 251 10 Palladium 688 663 4 Rhodium 193 165 17 Nickel (000t) 13.9 12.0 16 15 15
Slide 16: Platinum supply and demand
Platinum supply and demand Calendar year (000oz) 2003* 2002 2001 Demand Automobile 2 460 2 600 2 205 Jewellery 2 670 2 850 2 590 Industrial/investment 1 620 1 620 1 635 Total demand 6 750 7 070 6 430 Total supply 6 635 6 565 6 250 Net deficit (115) (505) (180) * Estimate 16 16
Slide 17: Palladium supply and demand
Palladium supply and demand Calendar year (000oz) 2003* 2002 2001 Demand Automobile 4 340 4 485 5 435 Electronics 805 950 1 425 Dental 815 760 720 Other 650 620 550 Total demand 6 610 6 815 8 130 Total supply 6 670 7 060 8 920 Net surplus 60 245 790 * Estimate 17 17
Slide 18: Market outlook - platinum
Market outlook - platinum • Stricter emission legislation worldwide, coupled with growth in diesel vehicle sales, to underpin demand • Chinese jewellery demand negatively impacted by high prices • Abolition of VAT and reduction in consumption tax should stimulate fabrication growth • Japanese demand
Slide 19: Market outlook - palladium
Market outlook - palladium • Lower price and more stable supply will stimulate demand • Noticeable reverse substitution in automotive sector • Increased South African output and above-ground stocks will pressure pricing 19 19
Slide 20: Financial review
Financial review 20 20
Slide 21: Financial review
Financial review R million FY03 FY02 Variance % Sales 11 807.0 11 901.5 (1) Total operating expenses 6 775.9 5 764.9 (18) Profit from operations 5 031.1 6 136.6 (18) Net forex transaction (losses)/gains (328.8) 130.8 (351) Share of results of associates before tax 1 039.3 1 102.9 (6) Royalty expense
Slide 22: Sales variance analysis
Sales variance analysis R million Year-ended June 2002 11 902 Volumes 1 206 Price 1 Exchange rate (1 302) Year-ended June 2003 11 807 22 22
Slide 23: Net profit by entity
Net profit by entity FY2003 FY2002 Variance % Impala Platinum 2 563 3 382 (24) IRS 151 416 (64) Barplats (35) 87 (140) Lonplats 646 717 (10) Mimosa Platinum JV 11 22 (50) Zimplats 46 (13) 454 Aquarius Platinum 33 (29) 214 Total Implats 3 415 4 582 (25) 23 23
Slide 24: Exchange rate comparisons
Exchange rate comparisons 12 12 7.68 10.16 9.06 10.32 10 10 7.52 8 8 6 6 4 4 2 2 0 0 FY01 FY02 FY03 June 200202 June 200303 Average annual rate received Rate at year-end 24 24
Slide 25: Total operating expenses
Total operating expenses Rm FY03 FY02 Variance % On-mine operations 3 251.1 2 567.5 (27) Concentrating and smelting 801.1 642.6 (25) Refining operations 411.5 354.7 (16) Amortisation of mining assets 452.4 248.8 (82) Metals purchased 1 474.1 1 883.4 22 Other costs 252.6 203.9 (24) Decrease/(increase
Slide 26: Strong cash generation continues
Strong cash generation continues • Cash-on-hand in excess of R2 billion • Strong balance sheet for future funding requirements • Gearing to improve through project financing 26 26
Slide 27: Group capex
Group capex (Rm) 2003 2002 Variance % Impala lease area 1 079 1 009 (7) Marula Platinum 545 172 (217) Barplats 51 69 26 Zimplats 25 - - Mimosa Platinum JV 87 - - Total 1 787 1 250 (43) 27 27
Slide 28: Operational review
Operational review 28 28
Slide 29: Impala safety improves
Impala safety improves ! • Significant improvements in health and safety • World-class performance from Refineries • FIFR at lowest level in three years and LTIFR at all time low 0.2 14 0.15 -37% 12 10 -31% 8 0.1 6 0.05 4 2 0 0 FY00 FY01 FY02 FY03 FY00 FY01 FY02 FY03 FIFR LTIFR 29 29
Slide 30: Safety programmes bear fruit
Safety programmes bear fruit • Highly successful fall-of-ground prevention campaign 250 200 150 Before After 100 GCDs GCDs 50 0 ct ct ov ly ly ug ug n ec ay pt pt ar e Ja n O O Ju Ju M Se Se N D M A A Ju GCD: Ground control districts 30 30
Slide 31: Impala safety programmes bear fruit
Impala safety programmes bear fruit • Highly successful fall-of-ground prevention campaign • Roll-out of Du Pont’s SMAT system continues • Launch of Tsiboga 31 31
Slide 32: Impala – key features
Impala – key features ! Solid operational performance • Tonnes mined up 6% to 15 029mt • Tonnes milled rose by 1.3% to 15 042mt • Platinum production increased by 1.5% to 1.04Moz Costs FY2003 FY2002 Variance Per tonne mined (R/t) 188 174 (8) (on mine only) ($/t) 21 17 (24) Per tonne milled (R/t) 265
Slide 33: Productivity
Productivity ! FY03 FY02 Variance % Centares/panel man m2/man 40.7 40.2 1.2 Face advance m/month 16.0 15.9 0.6 Panel length m 25.2 24.5 2.9 Tonnes mined/employee 51.2 50.3 1.8 33 33
Slide 34: New technology
New technology ! • Ultra-low profile machinery • Narrow reef continuous mining machine 34 34
Slide 35: New technology
New technology Nylon rock straps – on trial at shafts 10 and 4 35 35
Slide 36: Mineral Processes
Mineral Processes ! • All time high Merensky recovery rate of 89% • UG2 recovery stable at 75%, plant capacity increased by 20% • Capital efficient project delivery: • Sulfacid plant R65m • No 6 Dryer R99m • Other technical initiatives • Tails scavenging • Smelting capability for high chrome content
Slide 37: Sulfacid plant commissioned
0 10 20 30 40 50 60 70 80 90 Tonnes Mar-02 Apr-02 Sulfacid plant commissioned May-02 Jun-02 Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Average daily rate of SO2 stack emissions Jul-03 37 37
Slide 38: Impala Refineries
Impala Refineries !! • 21% increase in metal production • 10% real decrease in refining costs per platinum ounce • First phase of expansion successfully concluded • Capex of R60m • Capacity increased to 1.65Moz Pt • Phase 2 underway to increase capacity to 2Moz Pt • Planned capex of R252m in FY2004
Slide 39: Marula Platinum
Marula Platinum ! • 20% BEE participation • 10% Mmakau Mining • 5% stake to Community Trust • 5% to local business • On-reef decline development slightly behind schedule • 163 000-tonne stockpile on hand • Concentrator commissioning planned for Feb 2004 • Production of 100 000 Pt oz pa at full produ
Slide 40: Barplats/Crocodile River
Barplats/Crocodile River " Disappointing performance • Disappointing operational results, as mining changed from opencast to underground operation • Tonnes mined decreased by 38% • Unit costs up 62% per tonne milled • Concentrator recoveries above 70% • Platinum production in concentrate decreased b
Slide 41: Barplats/Crocodile River
Barplats/Crocodile River • Revised mining targets not being met • Continues to operate at a loss, relying on funding from Implats loan • Options investigated: • Mining at Krokodildrift and Zandfontein not viable • Kennedy’s Vale project not viable • Going forward: • Sale or partial sale of sharehold
Slide 42: Zimplats
Zimplats ! Provides flexibility and blue sky potential • Current holding of 68% • Offer to minorities expires on 29 August • Opencast produced 82 000 Pt oz in concentrate • Significant expansion potential of mine-to-market oz • Underground trial mine established • Bankable feasibility study expected
Slide 43: Hartley Complex
Hartley Complex Tonnage Grade Pt oz (m) 3PGE & (m) Au Ore Reserves Total 343.7 3.33 18.0 Mineral Resources Total 2 494.1 4.12 161.2 43 43
Slide 44: Moving up the resource chain
Moving up the resource chain Attributable resources Moz PGM 800 700 600 Inferred 500 400 300 200 100 0 Aquarius Northam Lonm in Im plats Angloplat 44 44
Slide 45: Mimosa Platinum JV
Mimosa Platinum JV ! Quality, low-cost asset • 36 000 oz Pt in concentrate in FY2003 • Ramping up to full production of 65 000 Pt oz by Sept 2003 • FY2004 – feasibility study on further increasing production 45 45
Slide 46: Good growth for IRS
Good growth for IRS ! Exceptional volume growth • Platinum production up 75% to 633 100oz • Nickel production increased by 27% to 6 700 tonnes 000oz 1600 1400 1200 1000 CAGR of 38% 800 600 400 200 0 FY00 FY01 FY02 FY03 FY04 Pt PGMs 46 46
Slide 47: Strategic holdings
Strategic holdings • Lonplats • Aquarius • Two Rivers 47 47
Slide 48: Lonplats
Lonplats • On track to increase production to 1Moz Pt by FY2008 • Net contribution of R646m • Dividends of R176 million • Discussions on potential BEE participation in progress 48 48
Slide 49: Aquarius Platinum
Aquarius Platinum • Total production up to 134 000 Pt oz in FY2003 • Contribution of R33 million • Marikana commissioning commenced • Everest South feasibility study in progress 49 49
Slide 50: Two Rivers
Two Rivers • Feasibility study in final stages of completion • Resource of 8Moz Pt • Mining licence and EMPR approved during the year • BEE provision through Tiso Capital 50 50
Slide 51: Strategic issues and prospects
Strategic issues and prospects 51 51
Slide 52: Strategic issues
Strategic issues • Gencor unbundling • Black Economic Empowerment • HIV/AIDS Pt 000oz • Growth Potential 2500 upside from 2000 Zimbabwe 1500 1000 500 0 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 52
Slide 53: Prospects
Prospects • Prospects remain good in short and medium term • Platinum demand remains sound, although palladium and rhodium markets remain under pressure in the short-term • Further strengthening of the rand not predicted • Whilst earnings for current year are likely to be lower than results reported
Slide 54: Results for the year ended 30 June 2003
Results for the year ended 30 June 2003 54
Impala Platinum Holdings — FY2003 Earnings Presentation on 6ix