Valterra Platinum Limited · JSE:VAL
Valterra Platinum — Anglo American Platinum — Merger or Acquisition (September 2015)
38 slides from Valterra Platinum's merger presentation, Sep 8, 2015
Slide 1: Sale of the Rustenburg Operations
SALE OF THE RUSTENBURG OPERATIONS 1
Slide 2: Disclaimer
DISCLAIMER Certain statements included in this presentation, as well as oral statements that may be made by Sibanye or Anglo American Platinum, or by officers, directors or employees acting on their behalf related to the subject matter hereof, constitute or are based on forward- looking statements.
Slide 3: Contents
CONTENTS 1. Introduction – Chris Griffith 2. Transaction overview – Chris Griffith 3. Rustenburg transaction rationale – Neal Froneman 4. Empowerment – Neal Froneman 5. Management capacity and retaining focus – Neal Froneman 6. Conclusion – Chris Griffith & Neal Froneman 7. Appendix 3
Slide 4: Introduction
INTRODUCTION “Pleased to announce Anglo American Platinum’s sale of the Rustenburg Operations to Sibanye” 4
Slide 5: AAP – Repositioning our portfolio
AAP – REPOSITIONING OUR PORTFOLIO • Announced the restructuring in 2013 • Cost benefits of R4.2bn realised - above the R3.8bn target by 2015 – Consolidated Rustenburg from 5 to 3 mines and Union from 2 to 1 mine – Optimisation of Union and Rustenburg mines well progressed • Next stage is the reposit
Slide 6: The future AAP portfolio
THE FUTURE AAP PORTFOLIO Operational improvement, debottleneck, Mogalakwena potential for future expansion Investment in replacement ounces, 1 High quality asset portfolio Amandelbult potential to expand Twickenham Mechanise and establish ideal scale 2 Low cost production Unki Expand to infrastructu
Slide 7: Background to the transaction
BACKGROUND TO THE TRANSACTION Anglo American Platinum announced its decision to exit from Rustenburg during 2014 • “…confident that the assets will receive greater management focus under different ownership… • …where the mines will not be competing for allocation of capital… • ...exit in a responsib
Slide 8: Contents
CONTENTS 1. Introduction 2. Transaction overview 3. Rustenburg transaction rationale 4. Empowerment 5. Management capacity and retaining focus 6. Conclusion 7. Appendix 8
Slide 9: Rustenburg Operations: transaction perimeter
RUSTENBURG OPERATIONS Transaction perimeter includes mining, processing & surface infrastructure RPM Transaction perimeter Rustenburg section Operating mines Excluded from transaction Smelting and refining Thembelani (including Khuseleka) Siphumelele (including Khomanani) Bathopele 1 operations Kroo
Slide 10: Next steps towards completion
NEXT STEPS TOWARDS COMPLETION 1 Management of Rustenburg • Will remain part of the AAP portfolio until completion of the transaction • Will be run under different executive management (Executive Head: Joint Ventures) as a separate entity and according to the operational plan • Management information
Slide 11: Terms of the transaction
TERMS OF THE TRANSACTION • Sibanye will acquire the Rustenburg Operations from Anglo American Platinum for a minimum consideration of R4.5 billion made up of: 1. An upfront consideration of R1.5 billion in cash or shares (at Sibanye’s election) 2. A deferred payment of 35% of distributable free cash
Slide 12: Contents
CONTENTS 1. Introduction 2. Transaction overview 3. Rustenburg transaction rationale 4. Empowerment 5. Management capacity and retaining focus 6. Conclusion 7. Appendix 12
Slide 13: Confirming Sibanye's investment thesis
CONFIRMING SIBANYE’S INVESTMENT THESIS 13
Slide 14: Confirming Sibanye's investment thesis
CONFIRMING SIBANYE’S INVESTMENT THESIS 14
Slide 15: Confirming Sibanye's investment thesis
CONFIRMING SIBANYE’S INVESTMENT THESIS 15
Slide 16: Sibanye transaction rationale
SIBANYE TRANSACTION RATIONALE • Consistent with Sibanye’s strategy to enhance its cash flows and ability to pay industry leading, sustainable dividends • Transaction structure balances short term downside protection for Sibanye and mid-term upside sharing with AAP • Secures a meaningful entry into t
Slide 17: Free cash flow generative
FREE CASH FLOW GENERATIVE R million 1,630 1,514 2 670 3 522 212 (597) 2010 2011 2012 2013 2014 2015 1H Source: AAP reporting Notes: 1. Operating free cash flow equals net sales revenue less direct cash operating costs, processing costs, allocated other costs, on-mine stay-in-business capital and all
Slide 18: Sibanye transaction rationale
SIBANYE TRANSACTION RATIONALE • Consistent with Sibanye’s strategy to enhance its cash flows and ability to pay industry leading, sustainable dividends • Transaction structure balances short term downside protection for Sibanye and mid-term upside sharing with AAP • Secures a meaningful entry into t
Slide 19: Structured to comply with investment thesis
STRUCTURED TO COMPLY WITH INVESTMENT THESIS • The phased transaction structure facilitates shared risk exposure • Deal structure provides down side protection to Sibanye in a “lower for longer” platinum price scenario, while earn out provides AAP upside exposure in the event of higher PGM prices in
Slide 20: Sibanye transaction rationale
SIBANYE TRANSACTION RATIONALE • Consistent with Sibanye’s strategy to enhance its cash flows and ability to pay industry leading, sustainable dividends • Transaction structure balances short term downside protection for Sibanye and mid-term upside sharing with AAP • Secures a meaningful entry into t
Slide 21: Rustenburg Operations - a top global PGM producer
RUSTENBURG OPERATIONS - A TOP 5 GLOBAL PGM PRODUCER 4E Reserves1,2 (moz) 4E Resources1,2 (moz) 2015E 4E Production1,4 (moz) AAP- ex AAP - ex AAP - ex Rustenburg 194.7 Rustenburg 814.4 Rustenburg 3.4 Operations³ Operations³ Operations Norilsk Nickel 128.2 Impala 395.2 Norilsk Nickel 3.4 Major global
Slide 22: Sibanye transaction rationale
SIBANYE TRANSACTION RATIONALE • Consistent with Sibanye’s strategy to enhance its cash flows and ability to pay industry leading, sustainable dividends • Transaction structure balances short term downside protection for Sibanye and mid-term upside sharing with AAP • Secures a meaningful entry into t
Slide 23: Sibanye operating model
SIBANYE OPERATING MODEL Reduce Premium rating costs and paylimits Robust Increase dividends flexibility SIBANYE Strong cash Increase flows margins Optimise all capital including balance sheet Increasing the operational focus, managing capital and rewarding shareholders 23
Slide 24: Sibanye operational track record
SIBANYE OPERATIONAL TRACK RECORD 2,500 Production and All-in cost 1750 1500 2,000 1250 US$/oz 000oz 1,500 1000 1,000 750 500 500 2007 2008 2009 2010 2011 2012 2013 2014 F2015 Production (koz) Gold Price ($/oz) All-in cost Gold Fields Sibanye Historical Forecast 50.0 Reserve growth 45.1 40.0 37.5 35.
Slide 25: Rustenburg restructuring by AAP complete
RUSTENBURG RESTRUCTURING BY AAP COMPLETE 4E Production (koz)1 Employees1 ~1,300 24,000 ~1,000 16,500 ~800 ~800 Base 2013 2015E 2017+ 2012 2015 1H Source: AAP H1 2015 reporting 1. Restructuring concluded by APP Restructured for sustainability and optimisation ongoing 25
Slide 26: Production, cost & capex profiles
PRODUCTION, COST & CAPEX PROFILES Rustenburg Operations (incl. WLTR) 4E Production and cash cost 1,250 14,000 1,000 13,000 4E production, koz Costs, R/4E oz 12,000 750 11,000 500 10,000 250 9,000 0 8,000 2012a 2013a 2014a 2015f¹ 2016e 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e Historical
Slide 27: Sibanye transaction rationale
SIBANYE TRANSACTION RATIONALE • Consistent with Sibanye’s strategy to enhance its cash flows and ability to pay industry leading, sustainable dividends • Transaction structure balances short term downside protection for Sibanye and mid-term upside sharing with AAP • Secures a meaningful entry into t
Slide 28: Sibanye's PGM market view
SIBANYE’S PGM MARKET VIEW Despite our bullish fundamental view, US$ PGM pricing headwinds are likely to persist over the near term for a variety of reasons • Excess above ground PGM stocks remain difficult to quantify. Deficit drawdowns and working capital cycle underpin should see an accelerated dr
Slide 29: Contents
CONTENTS 1. Introduction 2. Transaction overview 3. Rustenburg Transaction rationale 4. Empowerment 5. Management capacity and retaining focus 6. Conclusion 7. Appendix 29
Slide 30: Empowerment
Shine’s Management experience in PGM EMPOWERMENT • Consistent with Sibanye’s strategic intent of creating value for all stakeholders, its approach to Black Economic Empowerment is of a broad based nature • Sibanye will facilitate the creation of a fully empowered, low risk, vendor financed, SPV (“BE
Slide 31: Contents
CONTENTS 1. Introduction 2. Transaction overview 3. Rustenburg transaction rationale 4. Empowerment 5. Management capacity and retaining focus 6. Conclusion 7. Appendix 31
Slide 32: New divisional units – retaining the focus
NEW DIVISIONAL UNITS – RETAINING THE FOCUS Gold Uranium Platinum Sibanye Gold and Uranium Division Sibanye Platinum Division Wayne Robinson Shadwick Bessit Ensuring minimum disruption and clear role clarity 32
Slide 33: Sibanye Platinum – management expertise
SIBANYE PLATINUM – MANAGEMENT EXPERTISE Platinum Division Barry Davison – Non Executive Previously Executive Chairman of AAP, > 40 years’ industry Director experience Shadwick Bessit – SVP Operations Previously Executive Director of Operations at Impala Platinum from 2005 to 2010 Robert Van Niekerk
Slide 34: Contents
CONTENTS 1. Introduction 2. Transaction overview 3. Rustenburg transaction rationale 4. Empowerment and transformation 5. Management capacity and retaining focus 6. Conclusion 7. Appendix 34
Slide 35: Conclusion
CONCLUSION Close engagement between Sibanye and AAP has resulted in a sensible commercial transaction, which is beneficial for both parties Anglo American Platinum Sibanye Successful step in portfolio repositioning Successful entry into the PGM sector In line with strategy to focus on core ass
Slide 36: Contents
CONTENTS 1. Introduction 2. Transaction overview 3. Rustenburg transaction rationale 4. Empowerment 5. Management capacity and retaining focus 6. Conclusion 7. Appendix 36
Slide 37: Additional Rustenburg Operations information
ADDITIONAL RUSTENBURG OPERATIONS INFORMATION Bathopele key facts Siphumelele key facts Mine commenced 1999 Mine commenced Sinking 1979 and production in 1983 Mining right coverage 17km2 Mining right coverage 43km2 Infrastructure Two decline shafts (Central and East) Infrastructure One vertical shaft
Slide 38: Rustenburg – reserves and resources
RUSTENBURG – RESERVES AND RESOURCES As of 31 December 2014 Tonnes Grade 4E Tonnes Grade 4E 100% basis 100% basis (Mt) (g/t) (Moz) (Mt) (g/t) (Moz) Reserves Resources (incl. reserves) UG2 61.0 3.30 6.5 UG2 407.8 4.69 61.5 Merensky 13.9 5.57 2.5 Merensky 123.1 6.06 24.0 Subtotal 75.0 3.73 9.0 Subtotal
Anglo American Platinum — Merger or Acquisition (September 2015) on 6ix