Royal Bafokeng Platinum — FY2015 Earnings Presentation
36 slides from Royal Bafokeng Platinum's earnings presentation, 2016
Slide 1: Audited Annual Results for the year ended 31 December 2015
Audited Annual Results for the year ended 31 December 2015
Slide 2: Disclaimer
Disclaimer The information presented in this presentation is of a general nature and the forward-looking information, opinions and beliefs of the Company and its affiliates are based on various market related assumptions. Changes in market circumstances after the production of the information may im
Slide 3: Contents
CONTENTS OVERVIEW MARKET REVIEW OPERATIONAL REVIEW FINANCIAL REVIEW OUTLOOK
Slide 4: Overview
1 Overview 4
Slide 5: 2015 at a glance: an extremely challenging year
2015 at a glance…..an extremely challenging year SAFETY MARKETS ˃ Depressed PGM market throughout 2015 ˃ Regrettably, 5 fatal accidents in 2015 ˃ Proactively responded by preserving cash and protecting our ˃ Principle of zero harm remains unchanged balance sheet: • Styldrift I construction reduced d
Slide 6: Continued focus on key strategies underpins consistency in a challenging environment
Continued focus on key strategies underpins consistency in a challenging environment SIFR: Our journey to zero harm Impala royalty income PGM operating environment 0.60 80 0.50 > Depressed commodity market 70 60 /200,000 hrs 0.40 > Labour and community unrest 50 R’million 0.30 40 0.53 75 0.47 30 62
Slide 7: Market Review
2 Market Review 7
Slide 8: PGM supply recovery
PGM supply recovery Global platinum supply South African platinum production 9 5 8 7 2.0 2.0 2.0 4 6 2.0 5 3 (Moz) (Moz) 4 2 4.1 4.3 4.1 3 5.9 6.1 5.8 4.9 3.0 2 1 1 0 0 2012 2013 2014 2015 2012 2013 2014 2015 Recycling Mine production Source: SFA (Oxford) Mine production ˃ South African platinum sup
Slide 9: Platinum supply recovery but weak demand growth
Platinum supply recovery but weak demand growth Global platinum demand (2015 − 8Moz) 2015 Platinum demand analysis 9 000 2012 2013 2014 2015 8 000 Jewellery 7 865 7 000 7 876 36% 7 411 7 593 Other 6 000 5% Chemical 5 000 7% (koz) 4 000 Medical & Biomedical 3 000 3% 3 418 3 289 Auto 3 154 3 136 2 994
Slide 10: Palladium deficit down slightly to 800koz
Palladium deficit down slightly to 800koz Global palladium demand (2015 − 10Moz) 2015 palladium demand analysis 2012 2013 2014 2015 12 000 10 000 10 001 9 540 9 803 8 000 Auto Electrical 9 448 7 680 77% 9% 7 554 Chemical (koz) 7 167 6 000 5% 6 713 4 000 Dental 4% 2 000 Jewellery 425 353 305 292 2 31
Slide 11: Rhodium closer to balance as autocatalyst demand rises
Rhodium closer to balance as autocatalyst demand rises Global rhodium demand (2015 − 1Moz) 2015 Rhodium demand analysis 1 200 2012 2013 2014 2015 1 000 1 025 999 800 918 948 Chemical 858 833 Auto 790 9% 770 84% Other (koz) 600 4% 400 Glass 2% 164 166 158 148 200 Electrical 0 1% Autocats Other a To
Slide 12: Operational Review
Operational 3 Review 12
Slide 13: Safety remains our key challenge
Safety remains our key challenge Safety Lost time injury frequency rate • Five fatalities in 2015 1.20 • 23% improvement in LTIFR year-on-year 1.00 • 54% improvement in SIFR year-on-year 0.80 /200,000 hrs 0.60 1.00 Health and environment 0.40 0.91 0.68 0.61 0.53 • 50% decrease in NIHL cases exceedin
Slide 14: The RBPlat safety strategy: zero harm through resilience
The RBPlat safety strategy − zero harm through resilience Key initiatives to progress to resilience Behaviour and leadership • Leadership training programmes • Culture based behavioural safety − 4th Wave • Emotional fitness training • Align volume contractors with safety strategy Behavioural safety
Slide 15: Flexibility ensures consistent performance
Flexibility ensures consistent performance Description Unit 2013 2014 2015 Var Working cost development Tonnes delivered Total development km 36.5 39.9 35.5 (11%) 40.0 Working cost development km 30.9 35.4 31.6 (11%) 35.4 35.0 2 500 Capital development km 5.5 4.4 3.9 (11%) 30.9 31.6 UG2 UG2 UG2 IMS
Slide 16: Stable concentrator performance
Stable concentrator performance Description Unit 2013 2014 2015 Var Tonnes milled Total tonnes milled kt 2 301 2 479 2 461 (1%) 3 000 MER kt 1 887 1 914 1 874 (2%) 2 479 2 461 UG2 kt 414 565 587 4% 2 500 2 301 UG2% milled % 18 23 24 5% 2 000 BRPM concentrator tonnes milled kt 2 010 2 112 2 044 (3%)
Slide 17: Labour reduction in line with capital deferment
Labour reduction in line with capital deferment Description Unit 2013 2014 2015 Var % Working cost labour 7 000 Total labour No. 7 907 8 873 7 255 18% 6 180 6 272 6 256 Working cost labour No. 6 180 6 272 6 256 0% 6 000 Capital labour No. 1 727 2 601 999 62% 5 000 Stoping efficiency − total m2/crew
Slide 18: Cash costs increase by 8% with unit costs impacted by volume and grade
Cash costs increase by 8% with unit costs impacted by volume and grade Description Unit 2013 2014 2015 Var Unit cost − R/tonne milled Unit cost − 4E ounce Cash operating cost R'm 2 093 2 361 2 548 (8%) 10 000 9 359 1 200 Operating cash cost/t R/t 920 957 1 066 (11%) 1 066 8 040 957 8 000 7 519 Opera
Slide 19: Prudent capital expenditure in a tough metals market
Prudent capital expenditure in a tough metals market Description Unit 2013 2014 2015 Var Stay-in- SIB expenditure 4.4% of operating cost Stay-in-business capital R'm 138 154 112 27% business ˃ Reduction in line with cash SIB % of operating cost % 6.6 6.5 4.4 32% capital preservation strategy Replace
Slide 20: Styldrift I year in review
Styldrift I year in review Q1 2015 Q2 2015 Q3 2015 Q4 2015 R435 million capex R545 million capex R370 million capex R309 million capex Sept 2015 • 12kt of Styldrift ore Dec 2015 Mar 2015 • 65kt of Styldrift Jun 2015 delivered AVENG Mining ore delivered for Jan 2015 early engagement • Main shaft • De
Slide 21: Styldrift I project progress: de-risking future ramp-up
Styldrift I project progress….de-risking future ramp-up Capital expenditure : 2015 -> R1.66 billion Styldrift I capital expenditure (R’billion) : PTD -> R5.48 billion : Deferred -> R0.77 billion in 2015 6.0 0.31 0.37 0.55 5.0 0.43 0.77 Development completed : 2015 -> 1.6 km 4.0 R’billion 3.0 6.25 :
Slide 22: Styldrift outlook
Styldrift outlook 2016 Mining and construction Revised Styldrift ramp-up 3 000 • 600 level development − 5.8km 2 500 • 642 level decline development and initial ore pass installation − 900m 2 000 • 642 level footwall preparation for Silo No.3 and No.4 ktpm 1 500 • Silo No.4 1 000 • Commence Settler
Slide 23: 2016 operational guidance
2016 operational guidance Production and costs • Safety : Behavioural based initiatives a key driver • Throughput : 2.75 to 2.90Mt • Grade : 3.95 to 4.05g/t (4E) • UG2 contribution : 20% for 2016 • Ounces recovered : 305 − 315koz (4E)/200 − 205koz (Pt) • Operating cost : Unit cost in line with minin
Slide 24: Financial Review
Financial 4 Review 24
Slide 25: Profitability impacted by 13% reduction in Rand basket price
Profitability impacted by 13% reduction in Rand basket price…. Year ended Year ended Description Unit 31 December 2015 31 December 2014 % Change \ Average basket price* R/Pt oz 17 256 19 842 (13.0) Platinum basket price − 2010 real terms Average Rand:US$ received R/US$ 12.78 10.85 17.8 (relative to
Slide 26: Resulting in an impairment of non-financial assets
….resulting in an impairment of non-financial assets BRPM Housing Year ended Description Unit operations Styldrift I assets 31 December 2015 Impairment of property, plant and equipment (fair value) R'm 2 340.8 − − 2 340.8 Impairment of property, plant and equipment (book value) R'm 21.5 − − 21.5 Imp
Slide 27: And a headline loss of R159.6 million
….and a headline loss of R159.6 million 2015 2014 Description Unit R (million) R (million) Headline (loss)/earnings R’m (159.6) 440.9 Weighted average shares outstanding #m 191.6 184.7 (HLPS)/HEPS cents/share (83.2) 238.6 Fair value depreciation and amortisation cents/share 47.8 49.6 Tax impact of a
Slide 28: Headline earnings per share bridge
cents per share 0 -100 -50 50 100 150 200 250 Headline earnings per share: 2014 238.6 Revenue − ZAR basket 144.2 ROYAL BAFOKENG PLATINUM ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015 186.1 Revenue − Revaluation of pipeline 41.9 Once-off tax adjustment 57.5 Mining inflation increase in cash cost
Slide 29: 57% decrease in cash generated by operations
57% decrease in cash generated by operations impacted by…. Year ended Year ended Description Unit 31 December 2015 31 December 2014 % Change Cash generated by operating activities R'm 619.2 1 426.5 (56.6) Cash and cash equivalents R'm 917.6 1 864.2 (50.8) Capital expenditure* R'm 2 018.4 1 675.6 (20
Slide 30: Significant deterioration in all metal prices
…significant deterioration in all metal prices 2015 2014 US$ Price Metal Unit R (million) R (million) variance Volume US$ Volume US$ % Platinum oz 176 944 971/oz 189 710 1 346/oz (28%) Palladium oz 72 878 633/oz 78 555 832/oz (24%) Gold oz 8 039 1 122/oz 8 841 1 259/oz (11%) Rhodium oz 16 317 809/oz
Slide 31: 7.6% increase in cost of sales also impacting profitability
7.6% increase in cost of sales also impacting profitability 2015 2015 2014 2014 Description R million % of Total % Change R million % of Total Labour 946.3 35.6% (7.1) 883.8 35.8% Utilities 233.5 8.8% (12.0) 208.5 8.5% Contractor costs 633.4 23.9% (16.9) 541.9 22.0% Materials and other mining costs
Slide 32: 136% decrease in headline earnings
R’million -500 -300 -100 100 300 500 700 900 1100 1300 Headline earnings − 2014 Revenue − Sales volumes 440.9 227.6 Movement in inventory, other costs and impact of reduced volumes 12.2 Real cost saving 43.0 -207 controllable ROYAL BAFOKENG PLATINUM ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015
Slide 33: Cash and cash equivalents movement
R’million 500 0 1 000 1 500 2 000 2 500 3 000 Cash and cash equivalents 1 452.8 411.4 − 1 January 2015 1 864.2 Cash generated by operations 601.9 2008/2009/2010 RBR tax 50.0 settlement Interest, dividends and 67.3 tax ROYAL BAFOKENG PLATINUM ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015 SIB cap
Slide 34: Balance sheet remains strong at year-end
…balance sheet remains strong at year-end ˃ Rand basket decreased by 13% mainly due to US$ commodity price weakening ˃ Impairment of non-financial assets of R4.5 billion (net R2.9 billion) due to weak pricing environment ˃ Strong cash and funding position • R917.6 million cash on hand for the Group
Slide 35: Conclusion and outlook
Conclusion and 5 outlook 35
Slide 36: Looking forward to 2016
Looking forward to 2016 ˃ Objective of zero harm a major focus as well as maintaining improvement in our LTIFR and SIFR ˃ Maintain optimal flexibility and continue to actively pursue value-enhancing opportunities ˃ Key 2016 operational challenges include ensuring: • Operational stability • Volume de
Royal Bafokeng Platinum — FY2015 Earnings Presentation on 6ix