Mmg Ltd. · HKEX:1208
Mmg — H1 2013 Earnings Presentation
32 slides from Mmg's earnings presentation, Aug 28, 2013
Slide 1: 2013 Interim Results
2013 INTERIM RESULTS 28 AUGUST 2013 HKEx: 1208
Slide 2: Important Information
Important Information 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,
Slide 3: Highlights
Highlights Safety remains a core value – TRIFR1 2.7. Delivered Earnings Before Interest and Tax (EBIT) of US$93.0m. Increased volumes of ore mined and processed. Production related expenses well managed. Net cash generated from operating activities of US$201.3m. Focus on permanent operat
Slide 4: EBIT variance analysis
EBIT variance analysis EBIT variance Price variance 1 US$ million US$ million 300 Sepon 250 Copper (30.1) (45.3) 200 Kinsevere (16.4) Price 150 (85.7) Century Zinc (13.3) (29.0) Rosebery 100 (11.1) 1H12 EBIT Gold Golden Grove (11.8) (15.0) 259.1 50 0 1. Price variance by commodity excludes price var
Slide 5: EBIT variance analysis
EBIT variance analysis EBIT variance US$ million Volume variance US$ million 300 Lead 250 14.1 Volume Century 56.0 19.4 200 Copper 170.5 Kinsevere 136.6 Price 150 TC/RC (85.7) (11.3) Zinc Golden Grove (38.2) (42.9) 100 Rosebery Gold (70.7) (35.8) 1H12 EBIT Sepon 259.1 (21.3) 50 Silver (19.7) 0 5
Slide 6: Higher volumes – well managed costs
Higher volumes – well managed costs Sepon Kinsevere Century Rosebery Golden Grove Ore mined 28% ▲ 321% ▲ 27% ▲ 6% ▲ 34% ▲ 85% 1H12 25% 2% 25% 25% 1H13 Mining costs 64% 14% 4% 4% 14% Processing costs Ore milled 3% ▲ 120% ▲ 23% ▲ 9% ▲ 3% ▲ Grade Copper 8% ▲ Copper 3% ▲ Zinc 27% ▼ Zinc 4% ▲ Copper 0% N
Slide 7: EBIT variance analysis
EBIT variance analysis EBIT variance US$ million 300 Operating expense variance includes: US$63.6m increase at Kinsevere with 250 US$23.1m relating to diesel and electricity Volume costs. 56.0 US$7.5m saving in people costs at Golden 200 Grove. Increased mining activity resulted in higher Pric
Slide 8: Kinsevere – power supply update
Kinsevere – power supply update Kinsevere power requirements continue to be drawn from Alternative sources of power the electricity grid with additional power sourced from diesel generation as required. Contracted to provide 31MW 54% of power requirements were met from diesel SNEL (DRC) Force ma
Slide 9: EBIT variance analysis
EBIT variance analysis EBIT variance US$ million 300 250 Volume 56.0 200 Price 150 TC/RC (85.7) (11.3) Operating expenses 100 (68.9) Stock movement 1H12 EBIT (36.7) 259.1 50 0 9
Slide 10: EBIT variance analysis
EBIT variance analysis EBIT variance US$ million 300 250 Volume 56.0 200 Other Administration Price 10.0 TC/RC 24.8 150 (85.7) Exploration (11.3) Operating 10.3 expenses 100 (68.9) Stock movement 1H12 EBIT (36.7) 259.1 50 0 10
Slide 11: EBIT variance analysis
EBIT variance analysis Depreciation and amortisation EBIT variance US$ million 1H12 100 85.8 US$ million 1H13 75 57.9 46.1 300 50 43.5 31.0 26.5 12.1 20.7 25 11.3 14.3 0 250 Sepon Kinsevere Century Rosebery Golden Grove Volume 56.0 200 Other Administration Price 10.0 TC/RC 24.8 150 (85.7) Exploratio
Slide 12: EBIT variance analysis
EBIT variance analysis EBIT variance US$ million 300 250 Volume 56.0 200 Other Administration Price 10.0 TC/RC 24.8 150 (85.7) Exploration (11.3) Operating 10.3 expenses 100 (68.9) Stock movement D&A 1H12 (36.7) (64.6) 1H13 259.1 93.0 50 0 12
Slide 13: Analysis of cash flow
Analysis of cash flow Inflows 1H 2013 Cash flow summary US$ million Cash generated from operating activities of US$201.3m. Operations Financing $201.3m $333.6m Net cash generated from financing activities of US$333.6m. Inflows Outflows Purchase of property, plant PP&E $286.8m Others $74.2m and
Slide 14: Financial resources and liquidity
Financial resources and liquidity US$150.0m facility with ANZ was repaid in August 2013. Repayment of borrowings as at 30 June 2013 US$150.0m facility with ICBC extended for a further 12 months to August 2014. 40% within one year 6% Issued Convertible Redeemable Preference Shares for the one -
Slide 15: Mining performance
Mining performance Highlights EBITDA1 Ore mined increased 41% compared to 15% increase in US$ million 1H13 1H12 % operating expenses. Sepon 211.6 264.7 (20) Total copper production in 1H13 of 89,235 tonnes - 33% above 1H12. Kinsevere 2 92.8 44.9 107 Total zinc production in 1H13 was 16% lower
Slide 16: Copper – solid long-term market fundamentals
Copper – solid long-term market fundamentals Global copper refined consumption growth 1 Average LME copper price million tonnes decreased 7% in the first half 25.0 Rest of World North America Europe 2013. Other Asia China Total Minimal price reaction to Total 15% unexpected supply disruptions. 2
Slide 17: Zinc – future supply uncertain
Zinc – future supply uncertain Long-term outlook dependent on structural challenges of resource depletion and new mine supply meeting the needs of consumption growth. Forecast annual demand CAGR 1 (2012 – 2015) of 5.1% 2. Forecast annual supply CAGR 1 (2012 – 2015) of 4.1% 2. 2012 actual price
Slide 18: Financial highlights
Financial highlights Foreign exchange and commodity price Revenue of US$1,177.6m, a performance decrease of 3%. Indexed, 1H12=100 1H13 1H12 EBITDA of US$302.2m, a decrease 98 of 25%. A$ / US$ 100 EBIT of US$93.0m, a decrease of 64%. 98 Profit of US$35.9m, a decrease of Zinc (US$/tonne) 100 7
Slide 19: Building the next generation's global diversified mining company
Building the next generation’s global diversified mining company Delivered profit to shareholders in the first half 2013. Production related expenses well managed – focus on permanent operating cost reductions. On track to deliver annual guidance. Dugald River financing completed – project c
Slide 20: Appendix: Business overview
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Slide 21: Overview of assets
Overview of assets Izok Corridor copper / lead / silver / zinc Sepon gold / copper Century Kinsevere lead / silver / zinc copper Dugald River Golden Grove lead / silver / zinc copper / gold / lead / silver / zinc Legend: Rosebery Operating assets copper / gold / lead / silver / zinc Development asse
Slide 22: Financial dashboard
Financial dashboard Revenue by commodity Revenue by customer location 23% 30% Zinc Australia 17% Europe Copper 11% Middle East 56% Gold Japan & Korea 5% Silver 5% Other Asia 4% Lead 29% China 5% 4% EBITDA by operating segment Operating expenses 10% People 55% Sepon 5% 20% External Services Kinsevere
Slide 23: Sepon
Sepon Highlights Financials Solid operating performance and good management of US$ million 1H13 1H12 % production-related costs in 1H13. Revenue 378.4 429.9 (12) Copper production and sales increased 5% and 8% due to the improved plant utilisation and efficiency. EBITDA 1 211.6 264.7 (20) Gold
Slide 24: Kinsevere
Kinsevere Highlights Financials 2 The first full six months production at nameplate capacity on US$ million 1H13 1H12 % an annualised basis. Revenue 216.8 96.6 124 Copper cathode production was higher than all comparable periods due to higher throughput and a stable electricity EBITDA 1 92.8 44.
Slide 25: Century
Century Highlights Financials Revenue decreased by US$9.9m due to lower zinc sales at a US$ million 1H13 1H12 % lower average realised price. Revenue 367.1 377.0 (3) The average zinc grade of ore mined decreased from 11.9% in 1H12 to 8.2% in 1H13 as mining starts to progress through the EBITDA 1
Slide 26: Rosebery
Rosebery Highlights Financials Year-to-date mining and milling records achieved at US$ million 1H13 1H12 % Rosebery in 1H13. Revenue 106.2 150.0 (29) Revenue decreased by US$43.8m due to a lower average realised zinc price and the timing of shipment. EBITDA 1 29.2 58.1 (50) Timing of shipment
Slide 27: Golden Grove
Golden Grove Highlights Financials Mining activity continued to focus on copper in 1H13. US$ million 1H13 1H12 % Strategic review completed in 2012 resulting in employee Revenue 109.1 165.2 (34) related cost savings of US$7.5m in 1H13. Costs relating to the use of consumables decreased by EBIT
Slide 28: 2013 Guidance
2013 Guidance Sepon Rosebery Copper – production 83,000 – 88,000 tonnes Zinc – production 75,000 – 80,000 tonnes Copper – C1 costs US$0.95 – US$1.05 / lb Zinc – C1 costs US$0.25 – US$0.30 / lb Gold – production 40,000 – 50,000 ounces Lead – production 20,000 – 22,000 tonnes Gold – C1 costs US$1,475
Slide 29: Century – July 2013
Century – July 2013 Pandora’s Fault Stage 10 Stage 8 29
Slide 30: Condensed consolidated interim income statement
Condensed consolidated interim income statement 2012 Six months ended 30 June 2013 Variance Unaudited and US$ million Unaudited % restated Revenue 1,177.6 1,218.7 (3) Other income 0.5 1.9 (74) Expenses (Excluding depreciation and amortisation) (875.9) (816.9) (7) EBITDA 302.2 403.7 (25) Depreciation
Slide 31: Condensed consolidated interim balance sheet
Condensed consolidated interim balance sheet 30 June 2013 31 December 2012 US$ million Unaudited Audited and restated Non-current assets 3,737.8 3,652.2 Current assets – cash and cash equivalents 278.3 102.1 Current assets – other 618.3 807.4 Total assets 4,634.4 4,561.7 Total equity 1,581.6 1,588.3
Slide 32: Consolidated financial performance: Cash flow statement
Consolidated financial performance: Cash flow statement Six months ended 30 June 2013 2012 Unaudited Unaudited and restated US$ million Receipts from customers 1,228.3 1,209.0 Payments to suppliers (900.0) (793.2) Payments for exploration expenditure (33.3) (43.6) Income tax paid (93.7) (113.7) Net