Tharisa Plc · JSE:THA
Tharisa — Investor Presentation (September 2017)
31 slides from Tharisa's investor presentation, September 2017
Slide 1: Integrated Innovation
INTEGRATED INNOVATION August/September 2017
Slide 2: Disclaimer
DISCLAIMER These Presentation Materials are for information purposes only and must not be used or relied upon for the purpose of making any investment decision or engaging in any investment activity. Whilst the information contained herein has been prepared in good faith, neither Tharisa plc (the “C
Slide 3: Tharisa at a Glance
THARISA AT A GLANCE Innovative • Strategically positioned as a low cost a co-producer of PGM and chrome concentrates • Mine 5 MG chromitite reef layers • Large scale open pit operation with 18 years open pit LOM + 40 year underground extension • Benefit from controlling an integrated mine-to-market
Slide 4: Tharisa's Journey
THARISA’S JOURNEY DISCOVERING DEVELOPING DELIVERING SENIOR CAPITAL SEED CAPITAL PRE IPO LISTING TOTAL DEBT FUNDING US$65m US$245m US$48m US$482m US$123m H1 2004 2006 2008 2009 2011 2012 2013 2014 2016 2017 PROSPECTING PROSPECTING MINING FIRST GENESIS VOYAGER CHALLENGER LISTED ON JSE LISTED ON LSE RE
Slide 5: Our Operations
OUR OPERATIONS 5
Slide 6: Value Chain
VALUE CHAIN THARISA MINERALS RESOURCE MINING PROCESSING 877.7 Mt resource 18 year open pit LOM 400 ktpm nameplate capacity MID TIER OPEN PIT PGM AND 98.9 Mt reserve of which 80.2 Mt 40 year underground extension Genesis Plant (100 ktpm) CHROME CONCENTRATE CO- open pit Voyager Plant (300 ktpm) PRODUC
Slide 7: Mining Five MG Seams
MINING FIVE MG SEAMS RESOURCES AND RESERVES GENERALISED CROSS SECTION SHOWING THE MG CHROMITITE LAYERS AT PLANNED DEPTH Steady state mining rate of 5.0 Bench = 20m Mtpa with an average stripping ratio of 9.7 (m3:m3 basis) MINERAL RESOURCE 200m 877.7 Mt Reef dip east: 9-12° 1.58 g/t 6PGE+Au Reef
Slide 8: Innovative Approach
INNOVATIVE APPROACH SPIRALS a" FLOTATION <—____—_ SPIRALS <a E i | fi = CVOVO) DISPATCH TAILINGS oe ae DISPATCH <— SECONDARY Yay, 78 = MILLING thar’sa
Slide 9: YTD Operational Highlights
SPECIALTY CHROME YTD OPERATIONAL HIGHLIGHTS PRODUCTION ↑27.9% 239.6 kt (*2016: 187.3 kt) REEF MINED PGM PRODUCTION CHROME CONCENTRATE PRODUCTION ↑3.6% ↑11.9% ↑6.5% 3 724.3 kt 104.6 koz 970.7 kt (*2016: 3 594.0 kt) (*2016: 93.5 koz) (*2016: 911.5 kt) REEF MILLED PGM RECOVERY CHROME RECOVERY ↑ 6.7% ↑1
Slide 10: Operational Performance YTD
OPERATIONAL PERFORMANCE YTD Quarter on quarter Nine months Quarter ended Quarter ended movement Quarter ended ended 30 Jun 2017 31 Mar 2017 % 30 Jun 2016 30 Jun 2017 Reef mined kt 1 275.2 1 219.2 4.6 1 235.4 3 724.3 Stripping ratio m³ waste/m³ reef 6.9 7.5 7.4 7.8 Reef milled kt 1 199.1 1 211.3 (1.0
Slide 11: Our Financials
OUR FINANCIALS thar’sa u
Slide 12: Strong Financial Performance
STRONG FINANCIAL PERFORMANCE GROUP REVENUE ↑103.6% EBITDA ↑451.0% HEPS ↑1 500.0% 100 80.00% 25 US$ millions US$ millions US$ cents 78.00% 300 .0 50.00% 76.00% 74.00% 47.0% 90 72.00% 70.00% 20 81.0 45.00% 246.8 68.00% 16 240.7 66.00% 250 .0 80 64.00% 15 40.00% 62.00% 215.5 219.6 60.00% 58.00% 70 56.0
Slide 13: Increasing Margins
PGM SHARED COSTS CHROME SHARED COSTS INCREASING MARGINS 25% (2016: 50%) 75% (2016: 50%) PGM REVENUE AND GROSS PROFIT MARGIN CHROME REVENUE AND GROSS PROFIT MARGIN US$ millions US$ millions 170.4 180 .0 70.00% 90.0 0 70.00% 83.1 81.5 161.2 163.7 160 .0 80.0 0 60.00% 60.00% 70.0 0 70.4 140 .0 138.1 13
Slide 14: Costs in the Lowest Quartile
STRIPPING RATIO AVERAGE EXCHANGE RATE COSTS IN THE LOWEST QUARTILE 8.4 m3:m3 ZAR:US$ 13.6 ↓9.3% (2016: 6.8 m3:m3) (2016: 15.0) UNIT COSTS CASH COST PER TONNE MILLED (US$) 259.0 H1 FY2017 H1 FY2016 Change All in cost per Pt ounce sold (1 123) 402 - 174.0 All in cost per 42% chrome tonne sold 88 85 3.
Slide 15: Our Markets
OUR MARKETS 15
Slide 16: PGM Market
PGM MARKET PLATINUM DEMAND AND SUPPLY 2017 PGM BASKET PRICES Demand driven by the autocatalyst, jewellery, industrial and PGM market heading for three-way price parity with platinum investment sectors and palladium edging closer towards the price of iridium Both primary and secondary sources of
Slide 17: Chrome Lifecycle
CHROME LIFECYCLE Global Chrome Production Global Crude Stainless Steel Production [Mt] [Mt] GLOBAL 10.2% CHINA CHINA 35 50 15.7% ~3% 28.88 29.02 30 MINING 40 25 20 30 13.97 15 20 10 5 10 0 FERROCHROME 0 2015 2016 H1 2017e 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017(f) Global Ferrochrome Produc
Slide 18: Chrome Market
CHROME MARKET DEMAND AND SUPPLY 2017 CHROME PRICES Demand for metallurgical grade chrome concentrate is driven 450 US$/t by its use in the manufacture of stainless steel, the 400 production of which is estimated to grow at between 3% to 4% in 2017 350 300 China is wholly dependent on imports of
Slide 19: Stainless Steel by End Use Segment
STAINLESS STEEL BY END USE SEGMENT Automotive & Heavy Transport • Truck exhaust systems Industrial & Heavy Industry • Fuel lines • Recovery in pulp and paper industry • Sensors DrillingOther Plant & Equipment • Seawater desalination 3% Industrial & Heavy Industry 8% Automotive & Heavy Consumer Goods
Slide 20: Our Future
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Slide 21: Transition to Owner Mining
TRANSITION TO OWNER MINING PLAN STATUS GOAL Tharisa Minerals moves from contract to Conditions fulfilled, funding in place Smooth transition with no operational impact owner mining operating model Conditions, including regulatory approval, Transaction effective 1 October 2017 Tharisa Minerals
Slide 22: Regulatory Review
REGULATORY REVIEW THE NOISE THARISA FACTS Tharisa’s Black Economic Empowerment (BEE) partners, Tharisa Resources and the local community, own 20% and 6% respectively at the mine level. It would be relatively simple to upscale ownership levels if required. Certain of new targets set out in Mining Cha
Slide 23: Strategic Developments
STRATEGIC DEVELOPMENTS SUPPLYING TISCO JV THIRD-PARTY CHROME PGM R&D Five-year strategic co-operation Arxo Metals agreement with Western Arxo Metals commissioning a 1MW DC agreement Platinum furnace to produce PGM-rich metal Minimum of 240 ktpa at market prices Operate the K3 UG2 plant, as
Slide 24: Annexures
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Slide 25: Corporate Structure
CORPORATE STRUCTURE Tharisa(1) (Cyprus) 100% 100% 100% 74% Arxo Resources Dinami Arxo Logistics Tharisa Minerals (2) (Cyprus) (Guernsey) (South Africa) (South Africa) TRADING TRADING LOGISTICS SERVICES MINING AND PROCESSING 100% Arxo Metals (South Africa) BENEFICIATION AND R&D Tharisa Mine (1) Prima
Slide 26: Summary of Results
SUMMARY OF RESULTS INCOME STATEMENT HIGHLIGHTS SEGMENTAL ANALYSIS PGMs CHROME US$ millions H1 FY2017 H1 FY2016 Change US$ millions H1 FY2017 H1 FY2016 H1 FY2017 H1 FY2016 Revenue 175.1 86.0 103.6% Gross profit 19.0 12.1 63.4 9.0 Gross profit 82.4 21.1 290.5% Gross profit margin 44.5% 33.8% 47.8% 17.
Slide 27: Funding
ESTIMATED NEW FLEET FUNDING REPLACEMENT COST c. US$135.0m CURRENT OWNER MINING TRANSITION US$ millions H1 FY2017 FY2016 US$ millions Total interest bearing debt 38.4 67.1 Fleet purchase 22.3 Long term 10.5 24.0 Lease equipment (approximate capital portion)** 6.3 Short term* 27.9 43.1 28.6 Debt servi
Slide 28: Strong Cash Flow Generation
STRONG CASH FLOW GENERATION SUMMARISED CASH FLOW STATEMENT OPERATIONALLY CASH GENERATIVE US$ millions US$ millions H1 FY2017 H1 FY2016 Cash flow from operating activities 44.2 18.2 44.2 Investing cash flows (8.8) (6.6) 28.8 Financing cash flows (24.9) (23.6) 15.4 18.2 Net increase/(decrease) in cash
Slide 29: PGM Products and End Uses
PGM PRODUCTS AND END USES PGM MARKETS PRIMARY USES OF PGMs • Largest deposits of PGMs are found in South Africa, Zimbabwe, Russia Pt Platinum Automotive catalytic converter Jewellery • Bushveld Complex is the largest platinum resource in the world and accounts for 75% of annual global production Pd
Slide 30: Chrome Products and End Uses
CHROME PRODUCTS AND END USES CHROME MARKETS USES OF CHROME ORE/CONCENTRATE • Chromite is the mineral extracted from the ore •Cr2O3 – 30% to •Cr2O3 – >46% •Cr2O3 – 45% to •Cr2O3 - >46% 45% •SiO2 - <1% 47% •SiO2 - <1.2% •SiO2 - <1% •High thermal •SiO2 - <1.2% • Chrome ore is mined from primary chromit
Slide 31: Contact Details
CONTACT DETAILS Investor Relations Joint Broker Joint Broker Financial PR Sherilee Lakmidas Peel Hunt BMO Capital Markets Buchanan D: +2711 996 3538 T: +44 207 7418 8900 T: +44 020 7236 1010 D: +44(0) 20 7466 5000 [email protected] [email protected]