Mmg Ltd. · HKEX:1208
Mmg — FY2017 Earnings Presentation
40 slides from Mmg's earnings presentation, Mar 8, 2018
Slide 1: 2017 Results
2017 Results 8 March 2018 Focused, Efficient and Delivering Growth
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
Slide 3: Overview
Overview Jerry Jiao, CEO 2017 in review Ross Carroll, CFO Financial results Jerry Jiao, CEO Strategy and outlook Questions and Answers 3
Slide 4: 2017 in review
2017 in review Jerry Jiao Chief Executive Officer
Slide 5: 2017 Highlights
2017 Highlights Record safety performance in 2017 Safety NPAT attributable to equity holders of US$147.1m. Improvement Return to profit of US$300m on 2016 Strong cash generation. Net debt reduced by US$1.5 billion Debt reduction Las Bambas established as one of the worlds largest copper Grow
Slide 6: Safety, Environment and Social Performance
Safety, Environment and Social Performance Safety performance Safety – our first value Record low yearly TRIF for MMG of 1.17 per million 4.1 hours worked in 2017 MMG’s TRIF benchmarks in the lowest quartile of 3.0 all International Council on Mining and Metals (ICMM) members globally. 2016 me
Slide 7: Operational Excellence
Operational Excellence 2017 production Las Bambas 598kt Cu, 87kt Zn 454kt Cu, C1 2018 guidance US$0.99/lb. 560-590kt Cu, 190- Large scale, low cost, 220kt Zn long life Kinsevere Sepon Stable production 24% increase in mill 140% increase in throughput in 2017 material movement 2018/19
Slide 8: MMG's objectives
MMG’s objectives MMG’s objective is to be valued as one of the world’s top mid-tier miners by 2020 and, in the longer term, as one of the world’s top miners. To achieve this objective, we deliver value through four strategic drivers: We acquire, discover and develop mining assets that transform ou
Slide 9: Financial results
Financial results Ross Carroll Chief Financial Officer
Slide 10: Profit, Cash Flow and Balance Sheet Improve in 2017
Profit, Cash Flow and Balance Sheet Improve in 2017 2017 Key Financial Metrics (US$ million) 2017 2016 v 2016 Income Statement Revenue 4,143.2 2,488.8 66% EBITDA 2,210.0 949.2 133% Profit / (loss) After Tax 348.4 (98.7) 453% Attributable to: Equity holders 147.1 (152.7) 196% Non-controlling interest
Slide 11: EBITDA growth from Las Bambas and commodity prices, costs controlled
EBITDA growth from Las Bambas and commodity prices, costs controlled External = +$221 million Controllable= ($148) million US$ million 2250 12 178 263 (42) 2000 (114) (46) 1750 1500 1,086 1250 1000 (75) 750 2016 EBITDA Divestments Las Bambas Price Royalties, FX Volume Operating Hedging Gain on 2017
Slide 12: Underlying profit MMG to equity holders
Underlying profit MMG to equity holders NPAT attributable to equity holders 2017 2016 2017 v MMG remains focused on driving (US$m) 2016 increased returns to shareholders Profit After Tax - Las Bambas 62.5% interest 336.8 96.9 248% via: Profit/(loss) After Tax - Other operations 53.4 (23.5) 327%
Slide 13: Cash Flow and Earnings sensitivity
Cash Flow and Earnings sensitivity US$2.4b of Net Operating Cash Flow Net operating cash flow (US$m) US$3.5b (NOCF) in 2017. Spot commodity prices US$3.0b and FX implies a ~US$600m US$2.5b improvement on FY17 NOCF4 US$2.4b US$3.0b US$2.0b LME Cu Avg. LME Cu spot4 US$1.5b US$2.80/lb US$3.23/lb Hi
Slide 14: Net debt reduced by US$1.5 billion
Net debt reduced by US$1.5 billion Movements in Net Debt (US$m) Summary of annual interest expense US$11.0b savings US$10.0b 9,787 1535 US$9.0b (17) 8,335 Annual 209 (275) interest US$8.0b saving Initiative (US$m) US$7.0b Las Bambas $500m debt prepayment - Jul 172 26 US$6.0b Las Bambas $500m debt pr
Slide 15: Well managed debt maturity profile
Well managed debt maturity profile Gross debt reduced by >US$1b in 2017 Average outstanding maturity profile now ~7 years Debt repayment schedule1 (US$m) 3,500.0 3,000.0 2,500.0 2,000.0 1,500.0 1,000.0 500.0 0.0 2018 2019 2020 2021 2022-25 2026-32 Las Bambas Acquisition Facility, 7 yrs Las Bamba
Slide 16: Business Improvement Focus
Business Improvement Focus Track record of C1 improvement at operations MMG weighted average Copper C1 costs (US$/lb) Mining industry costs likely to have seen bottom of cycle 2.00 Mature operations facing challenges 1.80 such as declining grades and higher waste movement. Working hard for 1.6
Slide 17: Las Bambas 2017 performance
Las Bambas 2017 performance Key highlights: Financials 166% increase in EBITDA US$ million 2017 2016 % Labour enterprise agreement reached with Las Bambas Revenue 2,936.9 1,224.2 140% workforce during 2017 which extends until 2019. EBITDA1 1,740.8 655.0 166% 11% increase in total waste and ore
Slide 18: Kinsevere 2017 performance
Kinsevere 2017 performance Financials Key highlights US$ million 2017 2016 % Third consecutive year production above 80kt. Revenue 500.9 400.4 25% 140% increase in material movement to 14.8 million in 2017. EBITDA1 178.7 116.3 54% EBITDA increased 54% due to higher copper prices EBIT 34.5 (68.
Slide 19: Sepon 2017 performance
Sepon 2017 performance Key highlights Financials Reduced production in 2017 due to lower grade and more US$ million 2017 2016 % complex ores and reliance on reclaiming long term stockpiles. Revenue 391.9 390.8 0% Fourth quarter was strongest production quarter, driven by improved ore grade contr
Slide 20: Australian Operations 2017 performance
Australian Operations 2017 performance Financials Key highlights US$ million 2017 2016 % Portfolio optimisation (sale of Golden Grove, Century, Avebury) Revenue 305.2 448.6 (32%) EBITDA1 156.1 179.4 (13%) Rosebery EBITDA increased 34% to US$152 million. EBIT 82.2 75.9 8% Debottlenecking at Ros
Slide 21: MMG: Focused, Efficient and Delivering Growth
MMG: Focused, Efficient and Delivering Growth Jerry Jiao Chief Executive Officer
Slide 22: Positive outlook for copper and zinc
Positive outlook for copper and zinc Attractive fundamentals and insights from Mined copper supply gap and requirement for new capacity major shareholder support commodity outlook 26 Base case production capability Primary demand Supply risks growing – social, political, grade 24 22 and under-inve
Slide 23: World-class asset base – sustained production growth
World-class asset base – sustained production growth World class asset base with geographic diversity and track record of delivering operational commitments Top 10 miner of copper and zinc Low cost position Delivered 15% pa growth in Cu equivalent production over 5 past years 2016-2018 Las
Slide 24: Democratic Republic of Congo – Mining Code Update 2018
Democratic Republic of Congo – Mining Code Update 2018 • Following over four years of discussions, The DRC Parliament has passed significant changes to the Mining Code through the House of Representatives and the Senate. • The legislation has been harmonised and sent for signature to the President’s
Slide 25: Las Bambas – outlook
Las Bambas – outlook Outstanding ramp up has established Las Bambas as one of the lowest cost copper operations of this scale in the world 1Q18 production is impacted by a localised geotechnical instability in one of the pit walls. This has caused ore intended to be mined in this period to be de
Slide 26: Dugald River – ramp up ahead of schedule
Dugald River – ramp up ahead of schedule The Dugald River project ahead of Ramping up with decade high Zinc prices schedule Top 10 zinc mine. Highest-grade zinc project in First production delivered in 4Q17 development Total development capital until commercial Large scale and long life – an
Slide 27: Dugald River
Dugald River DUGALD RIVER 2016 DUGALD RIVER 2017 27
Slide 28: Focused, Efficient and Delivering Growth
Focused, Efficient and Delivering Growth Growth Las Bambas then Dugald River - Top 10 producer of copper and zinc. Operational Excellence Track record of continuous improvement. Shareholder 12 month total shareholder return of 78%. Strong cash value generation and near term focus on debt reduc
Slide 29: Appendix
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Slide 30: MMG asset base
MMG asset base We have a globally diversified portfolio of base metals operations and development projects HIGH LAKE IZOK LAKE SEPON (90%) 2018 production guidance: 70,000 – 80,000 tonnes of copper cathode 2018 C1 guidance: LAOS HONG KONG US$1.60 – US$1.75/lb VIENTIANE SEPON DUGALD RIVER (100%) LAS
Slide 31: Guidance for 2018
Guidance for 2018 Las Bambas Rosebery Copper – production 410,000 – 430,000 tonnes Zinc – production 70,000 – 80,000 tonnes Copper – C1 costs US$1.00 – 1.10 / lb Zinc – C1 costs US$0.00 – 0.15 / lb Kinsevere Sepon Copper – production 80,000 tonnes Copper – production 70,000 – 80,000 tonnes Copper –
Slide 32: MMG overview
MMG overview Overview Key metrics Founded in 2009, MMG is a diversified base metals company with five HKEx/ASX tickers 1208.HK, MMG.ASX operating mines located across four continents Headquartered in Melbourne (Australia), with a primary listing on the Shares Outstanding 7,949m HKEx (1208 HK) an
Slide 33: Financial dashboard
Financial dashboard Revenue by commodity Revenue by customer location 1% Australia 5% 4% 5% 6% 5% China Zinc 9% Copper Japan and 14% Korea Gold Asia Silver 49% Middle East Lead 17% Other 85% EBITDA by operating segment Operating expenses (sites) 8% 6% 7% 2% 7% 14% People 8% External Services Sepon E
Slide 34: Consolidated financial performance: Statement of financial performance
Consolidated financial performance: Statement of financial performance 2017 2016 Year ended 31 December US$ million US$ million Revenue 4,143.2 2,488.8 Operating expenses (1,904.0) (1,457.1) Other (Loss) /Income (35.0) 40.3 Exploration expenses (45.6) (38.8) Administration expenses (81.7) (57.9) Oth
Slide 35: Condensed consolidated balance sheet
Condensed consolidated balance sheet US$ million 31 Dec 2017 31 Dec 2016 Non-current assets 13,093.5 13,198.5 Current assets – cash and cash equivalents 936.1 552.7 Current assets – other 760.0 1,478.8 Total assets 14,789.6 15,230.0 Total equity 2,971.8 2,589.6 Non-current liabilities – other 1,817.
Slide 36: Consolidated financial performance: Cash flow statement
Consolidated financial performance: Cash flow statement Twelve months ended 31 December FY2017 FY2016 US$ million Receipts from customers 4,820.5 2,875.1 Payments to suppliers and employees (2,318.3) (2,049.3) Payments for exploration expenditure (45.6) (38.8) Income tax paid (86.8) (64.7) Net cash
Slide 37: Mineral Resources
Mineral Resources Copper and zinc Mineral Resources of 14.4Mt and 11.8Mt respectively Mineral Resources – Contained Metal (100% asset basis) As at 30 June 2017 Project Copper Zinc Lead Silver Gold Molybdenum kt kt kt moz moz kt Las Bambas 11,625 182 2.7 341 Kinsevere 1,431 Sepon 531 1.3 Dugald River
Slide 38: Ore Reserves
Ore Reserves Copper and zinc Ore Reserves of 8.2Mt and 4.3Mt respectively Ore Reserves – Contained Metal (100% asset basis) As at 30 June 2017 Project Copper Zinc Lead Silver Gold Molybdenum kt kt kt moz moz kt Las Bambas 7,493 118 1.8 207 Kinsevere 486 Sepon 247 Dugald River 3,903 722 46 Rosebery 1
Slide 39: Executive team – global experience
Executive team – global experience Chief Executive Officer Chief Financial Officer EGM Business Support EGM Marketing & Risk Jerry Jiao Ross Carroll Greg Travers Xu Jiqing 25+ years’ experience in metals 25+ years’ experience in the Executive General Manager 25+ years’ experience in and mini
Slide 40: “prouress EWEIVIG
MA “prouress EWEIVIG