Impala Platinum Holdings Limited · JSE:IMP
Impala Platinum — H1 FY2005 Earnings Presentation
33 slides from Impala Platinum's earnings presentation, Feb 17, 2005
Slide 1: Results for 6 months ended 31 Dec 2004
Results for 6 months ended 31 Dec 2004 1 Agenda • Overview • Market review • Financial review • Operational review • Corporate issues • Prospects 2 1
Slide 2: Key features – financial
Key features – financial • Sales revenue rises by 10% to R6.2 billion • Revenue per platinum ounce – up 23% in dollars, 7% in rands • Operating profit increases 7% to R2 billion • Margins constant at 33% • Net profit of R3.0 billion inclusive of • Sale of Lonplats • Impairment of asset at Marula 3 K
Slide 3: Key features – operational
Key features – operational • Best ever safety performance • Headline production (excl Lonplats concentrate) up 1.3% to 880 000 ounces • Impala production steady despite strike 000oz 2500 2000 H2 H2 1500 H2 H1 H1 H1H1 Lonplats 1000 500 H1 H1 0 FY03 FY04 FY05 5 Key features – operational • Impala unit
Slide 4: Contribution to headline earnings; Operating margins
Contribution to headline earnings Rm % Impala 885 83.2 IRS 77 7.2 Marula (34) (3.2) Zimplats 52 4.9 Mimosa 51 4.8 Aquarius (3) (0.3) Lonplats net 36 3.4 Total 1 064 100.0 7 Operating margins (%) FY2005 FY2004 interim interim Impala Mine-to-market 40 38 Zimplats Mine-to-matte 22 36 Mimosa Mine-to-con
Slide 5: Sales volumes and prices achieved by metal
Sales volumes – by metal (000oz) FY2005 FY2004 % change interim interim Platinum 803 765 5 Palladium 394 377 5 Rhodium 91 102 (11) Nickel (000t) 7 8 (7) 9 Prices achieved – by metal FY2005 FY2004 % change interim interim Platinum ($/oz) 829 707 17 Palladium ($/oz) 221 195 13 Rhodium ($/oz) 1 001 482
Slide 6: Market review
Market review 11 Overview – platinum • Fundamentals remain firm • Solid and growing demand in automotive sector • Jewellery market down but resilient • First surplus registered in six years 12 6
Slide 7: Platinum supply/demand balance; palladium and rhodium
Platinum supply/demand balance 300 900 200 $775 - 875 800 100 700 0 600 P rice ($/o z ) (100) ('000 O z ) (200) 500 (300) 400 (400) 300 (500) 200 (600) (700) 100 (800) 0 CY97 CY98 CY99 CY00 CY01 CY02 CY03 CY04 CY05 CY06 (Deficit)/Surplus Pt Price 13 Overview – palladium and rhodium Palladium • Incre
Slide 8: Palladium and rhodium supply/demand balance
Palladium supply/demand balance 1200 $150 - 225 800 1000 700 800 600 600 Price ($/Oz) 400 ('000 Oz) 500 200 400 0 (200) 300 (400) 200 (600) (800) 100 (1000) 0 CY97 CY98 CY99 CY00 CY01 CY02 CY03 CY04 CY05 CY06 (Deficit)/Surplus Pd Price 15 Rhodium supply/demand balance 200 2000 1800 150 1600 $1000 -
Slide 9: Platinum demand - diesel
Platinum demand - diesel 50 45 Market Share % 40 35 30 25 20 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Schmidt 17 Demand drivers • Diesel emission control catalysts • Emission legislation • Continuous tightening of existing standards worldwide • Adoption of standards in other countri
Slide 10: Heavy duty diesel emission standards
US heavy duty diesel standards 2.5 0.2 HC, NOx & PM Emission Limits [g/bhp*hr] 0.18 HC 2 0.16 NOx PM Emission Limits 0.14 PM 1.5 0.12 0.1 1 0.08 0.06 0.5 0.04 0.02 0 0 04 05 06 07 08 09 10 19 European heavy duty diesel emission standards 9 Euro I 8 CO Euro II 7 HC Emission Limits [g/kWh] NOx 6 Euro
Slide 11: Diesel emission control catalysts
Current diesel emission control catalysts • Require use of oxidation catalyst to convert hydrocarbons and carbon monoxide • Optional use of diesel particulate filters (DPF) to eliminate soot • Removes hydrocarbons, carbon monoxide and components of particulate matter Oxidation catalyst 21 Diesel emi
Slide 12: Diesel particulate filter technology; NOx traps
Diesel particulate filter technology Diesel Particulate Filter Oxidation Catalyst 23 NOx traps • Absorbs NO2 during storage mode and subsequently reduces it to nitrogen • Oxidation catalyst required downstream to convert unburned fuel HC injection Catalyst Filter NOx trap Oxidation catalyst Exhaust
Slide 13: Selective catalytic reduction; Financial review
Selective catalytic reduction (SCR) • Proven method used since 1980 in stationary applications • System uses urea to reduce NOX to nitrogen Urea injection Catalyst Filter SCR Oxidation catalyst Exhaust flow Removal of HC, Removal of Removal of NH3 CO, PM NOx 25 Financial review 26 13
Slide 14: Group income statement; Sales variance analysis
Group income statement Rm FY2005 FY2004 % change interim interim Sales 6 188 5 632 10 Cost of sales (4 167) (3 743) (11) Gross profit 2 022 1 889 7 27 Sales variance analysis FY2004 FY2005 Change % interim interim Sales 5 632 6 188 556 9.9 Volumes 20 0.4 Price 1 434 25.4 Exchange rate (898) (15.9) 2
Slide 15: Cost of sales; Group income statement (continued)
Cost of sales Rm FY2005 FY2004 % change interim interim Mining, processing and refining - Impala 2 217 2 061 (7) - Off-lease 581 350 (66) Amortisation 276 259 (7) Metals purchased 1 158 1 303 11 (Increase) in metal inventories (65) (230) (72) Total 4 167 3 743 (11) 29 Group income statement (continu
Slide 16: Net cash position; Group capex
Net cash position Rm 4000 3500 3000 2500 2000 1500 1000 500 0 Dec 03 June 04 Dec 04 31 Group capex Rm 3500 3000 2500 2000 1500 H2 H2 1000 500 H1 0 H1 FY20002 FY2003 FY2004 FY2005 FY2006 interim Forecast 32 16
Slide 17: Sale of Lonplats; Impairment of Marula assets
Sale of Lonplats $m Rm Sale price 800.0 Fair value adjustments (5.5) 794.5 Dividend received (31.7) 762.8 4,919 Carrying value of investment (1,634) Transaction costs (35) Fair value adj of vendor financing (94) Profit on sale of Lonplats 3,156 33 Impairment of Marula assets Value before Book value
Slide 18: Headline earnings sensitivity; Operational review
Headline earnings sensitivity Per annum Effect on profit Effect on EPS (Rm) (c) R0.10 change in exchange rate 100 150 $10 change in basket price 50 75 35 Operational review 36 18
Slide 19: Group safety performance; Impala Platinum
Group safety performance • Best-ever safety performance FIFR 0.250 0.200 0.150 0.134 0.139 0.104 0.100 0.079 0.050 0.000 FY 2002 FY 2003 FY 2004 FY 2005 12 LTIFR 10 7.90 Per million man hours 8 5.65 6 4.80 4 3.47 2 0 FY 2002 FY 2003 FY 2004 FY 2005 37 Impala Platinum 38 19
Slide 20: Impala - performance; Drill jig roll-out
Impala - performance • Strong performance from ‘the engine’ • Strike in October related to wage negotiations • 10 days lost production – 44 300 ounces • 8% wage settlement, with agreement on implementation of drill jigs • Efficiencies maintained at 41 centares per man 39 Drill jig (DDT) roll-out • 1
Slide 21: Operating performance - Impala; Capex – 16 and 20 shafts
Operating performance - Impala FY2005 FY2004 % change interim interim Tonnes milled (000t) 7 829 7 982 (2) Refined Pt production (000oz) 547 546 0.2 Cost per Pt oz refined (R/oz) 4 251 3 980 (7) Cost per Pt oz refined ($/oz) 685 559 (23) No of employees (000) 27.1 27.6 (2) Capex (R million) 642 541
Slide 22: Impala production profile; Refineries performance
Impala production profile 18 1 16 16 7 De 21 De c 14 Sh c 18 19 af t Tonnage (millions) 12 Sh Sh 1 af t af t 16 7 Sh 10 Sh a ft 1 14 af t 8 2 0 1C B Sh 6 af Current working shafts t 4 2 0 FY2005 FY2010 FY2015 FY2020 FY2025 FY2030 FY2034 43 Refineries performance • Gross platinum refined down 18%, he
Slide 23: Marula Platinum
Marula Platinum 45 Marula – the way forward • Back to basics • Change to owner-mining in Dec 2004/Jan 2005 • Further development expenditure of R830 million approved for conversion to conventional mining 46 23
Slide 24: Marula – Mining layout; Platinum ounce profile
Marula – Mining layout - conventional Clapham Shaft Back to basics • Utilising Clapham shaft only • Conventional breast stoping • Decline development in the footwall • 220 000 tonnes per month at 5.3 g/t • 140 000 Pt ounces per annum 47 Platinum ounce profile 160 '000 ounces 140 120 Original profile
Slide 25: Operating performance – Marula; Zimplats
Operating performance – Marula For six months to December 2004 Tonnes milled (000t) 457 Pt production in concentrate (000oz) 17.3 Cost per Pt oz in concentrate (R/oz) 10 104 Cost per Pt oz in concentrate ($/oz) 1 630 49 Zimplats 50 25
Slide 26: Zimplats; Operating performance – Zimplats
Zimplats • Current holding of 84.5% • Production on track • Escalating costs • Increased opencast contractor costs • Managed auction exchange rate • Inflation • Opencast tonnes to be substituted with lower cost underground ore over time • Margins of 22% in spite of cost pressures 51 Operating perfor
Slide 27: Zimplats expansion; Mimosa
Zimplats • Board has approved expansion to 145 000 platinum ounces in principle, but clarity needed on • Security of tenure and special mining licences • Indigenisation • Foreign currency accounts • Execution of bilateral accord between SA and Zimbabwe • Infrastructural developments at a cost of US$
Slide 28: Performance - Mimosa
Performance - Mimosa • Cost pressures • Managed auction exchange rate • Local inflation • Expansion to 80 000 platinum ounces delayed pending greater clarity on foreign currency accounts 55 Operating performance – Mimosa (100%) FY2005 FY2004 % interim interim change Tonnes milled (000t) 673 675 - Pt
Slide 29: Aquarius Platinum and Two Rivers
Aquarius Platinum and Two Rivers 57 Aquarius Platinum • 20% stake in AQP(SA) and 8% stake in AQP Limited • Equity-accounted earnings affected by strength of the rand and difficulties at Marikana • Good contribution to IRS • Everest project began in October 2004 58 29
Slide 30: Two Rivers; Corporate issues
Two Rivers • 45% stake, with ARM • Extensive trial mining validates mining parameters • Project approved by both boards • Full project release pending finalisation of financing • Capex of R1.2 billion (45% attributable) • 120 000 ounces of platinum at full production 59 Corporate issues 60 30
Slide 31: Corporate issues; Current shareholding
Corporate issues • Conversion application for ‘new order’ mining rights • Marula submitted • Impala submission imminent • Group acquired 893 022 of its own shares (1.3%) at an average price of R497 per share 61 Current shareholding Unclassified Europe (other) 4% 6% USA/Canada 18% South Africa 60% UK
Slide 32: Prospects
Prospects 63 Platinum production outlook 000oz 2000 1500 1000 500 0 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08/9 Mine to market 3rd party processing Lonplats Zimbabwean expansions 64 32
Slide 33: Conclusions
Conclusions • Group margins have held up well despite a very difficult time for the SA mining industry • Fundamentals for platinum remain firm • Healthy balance sheet • Investing for the future • Sustaining capital in Impala • Greenfields investments – Marula, Two Rivers • ‘Blue sky’ in Zimbabwe • M
Impala Platinum Holdings — H1 FY2005 Earnings Presentation on 6ix