Gem Diamonds Limited · LSE:GEMD
Gem Diamonds — FY2015 Earnings Presentation
30 slides from Gem Diamonds's earnings presentation, Mar 15, 2016
Slide 1: Full Year 2015 Results
Full Year 2015 Results 15 March 2016
Slide 2: Disclaimer
Disclaimer 2 The following presentations are confidential and are being made only to, and are No statement in this presentation is intended as a profit forecast or profit estimate only directed at, persons to whom such presentations may lawfully be and no statement in the presentation should be inte
Slide 3: Agenda
Agenda 3 Full year 2015 results highlights Diamond market Operational performance HSSE Letšeng Ghaghoo Sales, marketing and manufacturing Group financial performance Investment proposition
Slide 4: Full Year 2015 Results Highlights
Full Year 2015 Results Highlights 4 REVENUE EBITDA US$249m US$104m 400 200 54% 60% 306 42% 50% 271 39% EBITDA MARGIN 300 249 150 167 37% 213 33% 40% 202 EBITDA 200 100 30% 106 104 80 20% 100 50 67 10% 0 0 0% 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 BASIC EPS (pre exceptional items) FREE CAS
Slide 5: Diamond Market
Diamond Market Clifford Elphick Chief Executive Officer
Slide 6: Diamond Market
Diamond Market 6 Diamond Price Indices Diamond market for Letšeng’s high end 1.80 diamonds remained stable in an overall market subdued in 2015 1.60 Slow down in Chinese retail demand 1.40 Inventory and liquidity concerns Medium to long term market outlook 1.20 remains strong 1.00 Reduced
Slide 7: Diamond Pricing
Diamond Pricing 7 Letšeng 6 and 12 Month Rolling $/carat Letšeng Price levels maintained due to resilience in 6 month 12 month +10.8 carat Type II diamonds 3 000 2 500 Ghaghoo 2 000 Weaker market impacted Ghaghoo production 1 500 Third sale at $150 per carat, down from $210 1 000 (February 201
Slide 8: Operational Performance
Operational Performance Alan Ashworth Chief Operating Officer
Slide 9: Group HSSE Performance
Group HSSE Performance 9 Zero fatalities and Lost Time Injuries Group LTIFR 0.00 (2014 LTIFR 0.20) Group AIFR 2.87 (2014 AIFR 3.01) Zero major or significant Group-wide stakeholder or environment incidents occurred Letšeng maintained 5-star IRCA rating for a second year Ghaghoo maintaine
Slide 10: Letšeng Operational Overview
10 Letšeng Operational Overview
Slide 11: Letšeng Operational Overview
Letšeng Operational Overview 11 Waste mined (tonnes millions) Strong end to 2015 - production targets achieved 24.0 17.4 19.1 19.9 Waste mined – 24.0 million tonnes Ore treated – 6.7 million tonnes 1.9 million tonnes of Satellite pipe contribution 2012 2013 2014 2015 in 2015 Carats recover
Slide 12: Letšeng Operational Overview: Optimised Life of Mine plan
Letšeng Operational Overview 12 Optimised Life of Mine plan Increased Satellite contribution (1.9 mt 2015) Optimal waste profile – peak of 36 mtpa (2024) Steeper slope angles (resulting in less waste) Improved NPV Optimised Life of Mine plan : tonnes treated and Optimised Life of Mine plan
Slide 13: Letšeng Operational Overview: Frequency of +100 carat recoveries
Letšeng Operational Overview 13 Frequency of +100 carat recoveries 4 14 +100 cts per month Annual Frequency of +100cts 12 3 10 100 carats per month 100 carats annually 8 2 6 4 1 2 0 0 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 2011 2012 2013 2014 2015
Slide 14: Ghaghoo Operational Overview
Ghaghoo Operational Overview
Slide 15: Ghaghoo Operational Overview
Ghaghoo Operational Overview 15 Phase 1 objectives achieved Grade remains steady and ahead of Reserve Recovered grade of 28.0 cpht in 2015 Reserve grade of 27.8 cpht Surge bin successfully commissioned in January 2016 – daily throughput of 2 000 tonnes achieved Water fissure Level 1 se
Slide 16: Ghaghoo Outlook
Ghaghoo Outlook 16 Depressed diamond market impacted Ghaghoo type production Prudent to downsize in current market conditions Optimising production levels to: Reduce cash burn Targeting approx. 300 000 tonnes for 2016 Ghaghoo remains an important asset for the Group Resource of 20m car
Slide 17: Sales, Marketing and Manufacturing
Sales, Marketing and Manufacturing Clifford Elphick Chief Executive Officer
Slide 18: Sales, Marketing and Manufacturing
Sales, Marketing and Manufacturing 18 357ct white diamond which was sold for US$ 19.3 million Sales and marketing Good prices achieved for Letšeng's high quality production - average of US$2 299 per carat in 2015 36 rough diamonds achieved a value of greater than US$1.0 million each Two +300 c
Slide 19: Group Financial Performance
Group Financial Performance Michael Michael Chief Financial Officer
Slide 20: Group Financial Performance
Group Financial Performance 20 Pre Exceptional 2015 Actual Exceptional items US$ millions Results items 2015 2014 % Variance Revenue 249.5 249.5 270.8 (8%) Royalty and selling costs (21.9) (21.9) (24.7) Cost of Sales (112.4) (112.4) (127.7) Corporate expenses (11.7) (11.7) (12.4) Underlying EBITDA 1
Slide 21: Financial Performance – Letšeng Mining Operations
Financial Performance – Letšeng Mining Operations 21 2015 2014 % Variance Average price per carat (US$) 2 299 2 540 -9% Carats sold 102 778 108 963 -6% US$ millions 2015 2014 % Variance Revenue 236.3 276.8 -15% EBITDA 101.9 123.5 -17% EBITDA margin 43% 45% Unit costs (US$) % Variance Direct cash cos
Slide 22: Corporate Costs
Corporate Costs 22 Corporate costs (US$ millions) 15.3 Continued focus on cost reduction whilst upholding appropriate 14.2 13.8 governance and 12.4 assurance systems 11.7 Costs down to US$11.7m in 2015 Costs have reduced by 24% since 2011 Low end of the cost curve 2011 2012 2013 2014 201
Slide 23: Group Cash and Funding
Group Cash and Funding 23 Cash Group cash of US$85.7m (US$71.7m attributable) Net cash of US$55.3m after debt of US$30.4m Funding Total Group facilities of US$85m of which US$51m is available for draw down US$ millions Group Cash Reconciliation 300 61 250 39 200 165 25 24 150 12 12 4 6 7 100 1
Slide 24: Investment Proposition
Investment Proposition Clifford Elphick Chief Executive Officer
Slide 25: Investment Proposition
Investment Proposition 25 Gem Diamonds has a unique set of diamond assets and a strong Balance Sheet Long term fundamentals for diamonds are strong Letšeng is a world class diamond mine Ghaghoo mine is an important growth asset Produces the highest value diamonds Ready to ramp up when market con
Slide 26: Thank you
GEM AVENE Wr Thank you
Slide 27: Annexure - Gem Diamonds capital structure
Annexure 1 - Gem Diamonds capital structure 27 as at Gem Diamonds share price performance since 1 January 2015 Major shareholders 11 March 2016 Volume (000s) Price 200 2 500 Graff Diamonds International Limited 15.11% Thousands 180 160 2 000 Lansdowne Partners Ltd 14.98% 140 120 1 500 Gem Diamonds H
Slide 28: Annexure – Letšeng 2016 Guidance
Annexure 2 – Letšeng 2016 Guidance 28 FY 2016 Waste tonnes mined (Mt) 29 – 32 Ore treated (Mt) 6.8 – 7.0 Carats recovered (Kct) 107 – 109 Carats sold (Kct) 107 – 110 Direct cash costs (before waste) per tonne treated (Maloti) 145 – 155 Mining waste cash costs per tonne of waste mined (Maloti) 28 – 3
Slide 29: Annexure - Diamond Market
Annexure 3 - Diamond Market 29 Polished Diamonds Sales by Geography The US market remains the most important market for diamonds (over 40% of demand) and continues to grow strongly China has been a strong growth market for diamonds (2009-2014 CAGR of 18%). Longer term, the shift in the economy f
Slide 30: Annexure - Global Diamond Producers
Annexure 4 - Global Diamond Producers 30 As of February 1, 2016 Est. production in 2016 Mine Location Revenue US Millions Carats Per Carat Jwaneng Botswana $2 048 10 500 000 $195 Jubilee Russia $966 9 200 000 $105 Diavik Canada $805 7 000 000 $115 Orapa Botswana $760 8 000 000 $95 Debmarine Namibia