annual results fy2013 (final)implats.co.za/pdf/presentations/2013/annual-results-29...2013/08/29...

29 August 2013

1

We respect, care and deliver

Annual Results

for the year ended 30 June 2013


Forward-looking statement

Certain statements contained in this presentation other than the statements of historical fact contain

forward-looking statements regarding Implats’ operations, economic performance or financial condition,

including, without limitation, those concerning the economic outlook for the platinum industry, expectations

regarding metal prices, production, cash costs and other operating results, growth prospects and the

outlook of Implats’ operations, including the completion and commencement of commercial operations of

certain of Implats’ exploration and production projects, its liquidity and capital resources and expenditure,

and the outcome and consequences of any pending litigation or enforcement proceedings. Although

Implats believes that the expectations reflected in such forward-looking statements are reasonable, no

assurance can be given that such expectations will prove to be correct. Accordingly, results may differ

materially from those set out in the forward-looking statements as a result of, among other factors, changes

in economic and market conditions, success of business and operating initiatives, changes in the regulatory

environment and other government actions, fluctuations in metal prices and exchange rates and business

and operational risk management. For a discussion on such factors, refer to the risk management section

of the company’s Annual Report. Implats is not obliged to update publicly or release any revisions to these

forward-looking statements to reflect events or circumstances after the dates of the Annual Report or to

reflect the occurrence of unanticipated events. All subsequent written or oral forward-looking statements

attributable to Implats or any person acting on its behalf are qualified by the cautionary statements herein.

2

29 August 2013

2


Agenda

- Overview -Terence Goodlace

- Safety and Operational review -Terence Goodlace

- Impala Rustenburg review –Paul Dunne

- Financial review -Brenda Berlin

- Market Review -Derek Engelbrecht

- Conclusion -Terence Goodlace

3


Key operational features

4

Safety has improved across all indicators

Performance was impacted by low

throughput at Impala

Gross refined platinum production

increased by 9% to 1.58 million ounces

Mine-to-market down 2%

IRS up 80%

Group unit costs increased by 23% to

R16 570 per refined platinum ounce

000

oz

0

200

400

600

800

1 000

1 200

1 400

1 600

2012 2013

Mine-to-market

Non-Managed

Non-Managed

Mine-to-market

Platinum production

(000

oz)

29 August 2013

3


Key financial features

Revenue up 9% to R30 billion

Gross profit declined by 19% to R5.1 billion

Headline earnings declined by 52% to R2 billion (330 cps)

Group capital expenditure reduced by 22% to R6.4 billion

Successful convertible bond raising of R4.5 billion (US$500 million)

Net debt increased from R1.0 billion to R1.6 billion

Final dividend of 60 cps declared and 95 cps for the year


Safety Review

Terence Goodlace

29 August 2013

4


Group safety

Fatal injury frequency rate Industry comparison*

7

*Calendar year statistics reported to the DMR

(per

mill

ion

man

hou

rs w

orke

d)

(per

mill

ion

man

hou

rs w

orke

d)

0.082

0.122

0.053

0.087

0.065

0.000

0.020

0.040

0.060

0.080

0.100

0.120

0.140

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

Implats Platinum industry

2009 2010 2011 2012 2013 to June


Group safety

Lost time injury frequency rate Total injury frequency rate

8

(per

mill

ion

man

hou

rs w

orke

d)

(per

mill

ion

man

hou

rs w

orke

d)

2.92

4.614.94 4.96

4.21

0.00

1.00

2.00

3.00

4.00

5.00

6.00

13.95

15.21

13.47

11.19 10.90

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

29 August 2013

5


Notable safety achievements

9

Operation Achievement

Zimplats 10 million fatality free shifts on 26 March 2013

Impala refineries 9 million fatality free shifts 9 November 2012

Impala 1 shaft 6 million fatality free shifts on 13 December 2012

Impala 12 shaft 4 million fatality free shifts on 9 May 2013

Mimosa 3 million fatality free shifts on 22 April 2013

Impala 16 shaft 2 million fatality free shifts on 1 March 2013

Impala 10, 14, 20, 6 shafts and Marula Each achieved 1 million fatality free shifts during the year

Mimosa Improved its lost time injury rate by 78% for the year

Marula Improved its lost time injury rate by 53% for the year


Safety Strategy

Cultural Transformation

Framework

SafetyStrategy

Technical Initiatives

Effective Supervision

Nets and Bolts

Proximity Detection Systems

Self Contained Self Rescuers

Modern Shaft Safety Devices

Fire Retardent Conveyor Belts

Electronic Winch Signaling Devices

Modern Centralised Blasting Systems

Methane Detection Systems

Leadership

Risk Management

Accident Investigations

Zero Harm Incentives

Adopting Leading Practices

Eliminating discrimination

Skills and Training

Effective Leadership

Triggered Action Response Plan

29 August 2013

6


Operational Review

Terence Goodlace


709

180

71

97

157

368 1 582

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

Impala Zimplats Marula Mimosa Two Rivers Non-managed Total

Group refined platinum production

12

Mine-to-market1 214 kozs

(00

0 o

z)

29 August 2013

7


Zimbabwean operations

Zimplats

Tonnes milled up 7% to 4.7 million

Platinum in matte increased by 6% to 198 000 ounces

Unit costs rose by 5% to US$1 307 per platinum ounce in matte

Phase 2 expansion on target for full production in 2015

Mimosa

Tonnes milled up by 2% to 2.3 million

Platinum in concentrate declined by 5% to 100 300 ounces

Unit costs increased by 23% to US$1 782 per platinum ounce in concentrate

13


Other SA operations

Marula

Tonnes milled up 3% to 1.6 million

Platinum in concentrate increased by 4% to 71 700 ounces

Unit costs rose by 19% to R19 665 per platinum ounce in concentrate

Two Rivers

Tonnes milled increased by 2% to 3.2 million

Platinum in concentrate up by 8% to 162 200 ounces

Unit costs rose by 8% to R11 683 per platinum ounce in concentrate

14

29 August 2013

8


Group capital expenditure

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

2012 2013

(Rm

)

Zimplats Expansion

Other replacement projects

17 Shaft

16 Shaft

20 Shaft

SIB

Capital expenditure was reduced by 22% to R6.4 billion

Cash preservation initiatives

Focus on critical path activities

R4.4 billion incurred at Impala

R2.65 billion spent on 20, 16 and 17 shafts

R1.1 billion incurred on the Phase 2 expansion at Zimplats


Group unit cost plus capital - 2013

(R/P

t o

z)

0

5 000

10 000

15 000

20 000

25 000

Impala Zimplats Marula Mimosa Two Rivers Implats

Cash costs Stay in business capital Replacement capital Expansion capital

2013 R/Pt oz sold

Current R/Pt oz sold

29 August 2013

9


Employee relations

A dynamic labour environment

Government intervention to restore peace and stability to the industry

High barriers to exit

Diminished labour tension

Commencement of wage negotiations

Advancing our ER strategy

Increased employee engagement and team mobilisation

New recognition agreement concluded with AMCU

Health and safety agreement being progressed


Zimbabwe update

Indigenisation

Indigenisation Plans submitted for both Zimplats and Mimosa

Plans are constructed as follows:-

10% - Community Trust

10% - Employees Trust

31% - NIEEF

Term sheets being revisited

Discussions are on-going

Land acquisition

Gazetted on 1 March 2013

Objection and claim for compensation lodged

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29 August 2013

10


Impala Rustenburg review

Paul Dunne


Constrained mining flexibility

Limited mining face availability

lower than planned primary development

backlog in construction, equipping and ledging

depletion of the old shafts

Further impacted by:

challenging UG2 geology at 10, 12 and 14 Shafts

safety initiatives and stoppages

changing workforce dynamic

deterioration in mining quality

29 August 2013

11


Merensky Reefs - 2014

21


Merensky Reef - 2018

22

29 August 2013

12


UG2 Reef - 2014

23


Mineral reserves distribution - FY13

3.4

7.1

0.7

5.1

3.4

0.0 2.0 4.0 6.0 8.0 10.0 12.0

(Pt Moz)

Merensky UG2

New Shafts

Mature Shafts

Old Shafts

29 August 2013

13


Initiatives

Ore reserve flexibility Proudfoot initiative Dedicated development and construction management Breast ledging Increased development

Quality mining Grade reviews Grade control observers Team mobilisation Incentive scheme

Improved systems Mine planning Enhanced Production Scheduler Geological information and diamond drilling Predictive planning models

25


Deliverables – 2014

Face availability and quality measurements

Total development up 10% to 108 kilometres

Primary reef development up 35% to 47 kilometres

Increase mineable face from 19 kilometres to 22 kilometres

Productivity up 4% to 300m2 per team

Off-reef mining improvement from 12% to 9%

Sweepings improvement from 75% to 84%

This will result in:

Tonnes mined will increase to 11.4 million tonnes

Grade and recoveries will remain unchanged at 3.50 g/t and 85%

26

29 August 2013

14


Mineable Face Length

10 000

12 000

14 000

16 000

18 000

20 000

22 000

24 000

26 000

28 000

Mar-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18

Actual Target

(Me

tre

s)


Impala – tonnage production profile

28

Old shafts

Mature shafts

New shafts

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

(00

0 t)

Old Shaft Mature Shafts New Shafts

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

29 August 2013

15


Financial Review

Brenda Berlin


Group income statement

R million 2013 2012 % change

Sales 30 032 27 593 9

Cost of sales (24 980) (21 337) (17)

Gross profit 5 052 6 256 (19)

Gross margin 16.8 22.7 (26)

Royalty expenses (764) (664) (15)

Profit before tax 2 551 6 250 (59)

Profit 1 075 4 299 (75)

HEPS (cps) 330 685 (52)

DPS (cps) 95 195 (51)

29 August 2013

16


Sales variance

27 593

30 032

351

3 823

1 735

24 000

25 000

26 000

27 000

28 000

29 000

30 000

31 000

2012 Sales volumes Dollar prices Exchange rate 2013

(Rm

)


Operating costs per platinum ounce

13 450

16 570

1 582

2 833

1 295

5 000

7 000

9 000

11 000

13 000

15 000

17 000

19 000

2012 Strike Inflation Volumes & other 2013

(R/P

t oz)

29 August 2013

17


Gross profit movement

6 256

5 052

2 439

3172 832275 137

716

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

10 000

2012 Sales Cash costs Share basedpayments

Chromeoperations

Depreciation Metalspurchased andchange in stock

2013

(Rm

)


Profit movement – FY2013

4 299

1 075

196

466

1 204 100

928

1 018

323

313 0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

2012 Gross profit Royalties Impairments Goodwill Zim Tax FX gains Fair valueadj on bond

Other 2013

(Rm

)

29 August 2013

18


Net Earnings

2013 2012 %

(Rm) cps (Rm) Cps Var

Basic Earnings 1 022 168 4 180 690 (76)

Headline earnings adjustment *

979 162 (29) (5)

Headline Earnings 2 001 330 4 151 685 (52)

Impairments 1 306 215 378 62

Normalised Earnings 3 307 545 4 529 747 (27)

* Inclusive of goodwill impairment (R1.0 billion)


Movement in gross cash

587

4 497

5 938

4 466

446

366

1 159

6 360 214

(1 000)

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

Jun 2012 2012Dividend

Operatingcash flow

Capital InterimDividend

ConvertibleBond

Other Jun 2013

(Rm

)

29 August 2013

19


Net debt

R million 2013 2012

Cash 4 497 587

Debt excluding leases (6 114) (1 582)

Net debt (1 617) (995)


Market Review

Derek Engelbrecht

29 August 2013

20


Sales Volumes by Metal

2013 2012 % change

Platinum (000oz) 1 333 1 368 (3)

Palladium (000oz) 859 765 12

Rhodium (000oz) 176 183 (4)

Nickel (000t) 14.7 13.9 5


Average Prices Achieved – Major Metals

2013 2012 % change

Platinum ($/oz) 1 551 1 614 (4)

Palladium ($/oz) 676 687 (2)

Rhodium ($/oz) 1 143 1 601 (29)

Nickel ($/t) 16 437 19 513 (16)

Basket ($/Pt oz sold) 2 528 2 601 (3)

(R/Pt oz sold) 22 246 20 054 11

Exchange rate (R/$) 8.80 7.71 14

29 August 2013

21


Investment

0

500

1 000

1 500

2 000

2 500

3 000

(00

0 o

z)

Palladium ETF Investment

US ETF UK ETF Swiss ZKB OTHER

0

500

1 000

1 500

2 000

2 500

(00

0 o

z)

Platinum ETF Investment

US ETFs UK ETFs SWISS ZKB OTHER ABSA

So

urc

e :

Mits

ui


Investment

0

500

1 000

1 500

2 000

2 500

3 000

(00

0 o

z)

Palladium Exchange Investment

0

500

1 000

1 500

2 000

2 500

3 000

3 500

(00

0 o

z)

Platinum Exchange Investment

So

urc

e :

Mits

ui

29 August 2013

22


Vehicle Sales

RegionYear-to-Date % Chg.

YTDCurrent

(000)Year-Ago

(000)

North America 9 181 8 573 7.1

Asia / Pacific 16 572 15 718 5.4

Europe 9 292 9 857 -5.7

South America 2 742 2 564 6.9

Other 1 948 1 877 3.8

World Total 39 735 38 589 3.0

World Light Vehicle Sales by Region

40 000

50 000

60 000

70 000

80 000

90 000

100 000

110 000

(000

uni

ts)

Light duty vehicles

6 000

7 000

8 000

9 000

10 000

11 000

12 000

13 000

(000

uni

ts)

Heavy duty vehicles

Sou

rce

: LM

C A

uto

mo

tive


Chinese Jewellery

0

200

400

600

800

1 000

1 200

(00

0 P

toz)

Shanghai Gold Exchange(Annual cumulative ounces)

2010 2011 2012 2013

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

29 August 2013

23


Platinum Supply / Demand Balance

000 oz 2011 20122013

(Forecast)

DEMAND

Automobile

Jewellery

Industrial

Investment

3 400

2 415

1 730

150

3 470

2 525

1 700

200

3 475

2 565

1 750

600

Total Demand 7 695 7 895 8 390

SUPPLY

South Africa

North America

Other- Incl. Jewellery recycle

Recycle - Auto

Russian Sales

4 735

375

1 020

1 110

800

4 025

380

1 040

1 120

795

4 175

335

1 125

1 230

800

Total Supply

Balance

8 040

345

7 360

- 535

7 665

- 725


Palladium Supply / Demand Balance

000 oz 2011 20122013

(Forecast)

DEMAND

Automobile

Industrial

Investment

5 600

3 160

-520

6 000

3 110

300

6 300

3 125

250

Total Demand 8 240 9 410 9 675

SUPPLY

South Africa

North America

Other

Recycle

Russian Sales

2 595

860

1 465

1 500

2 750

2 245

930

1 080

1 600

2 700

2 300

950

650

1 850

2 700

Total Supply

Balance

9 170

930

8 555

- 855

8 450

-1 225

29 August 2013

24


Rhodium Supply / Demand Balance

000 oz 2011 20122013

(Forecast)

DEMAND

Automobile

Industrial

760

180

790

190

800

190

Total Demand 940 980 990

SUPPLY

South Africa

North America

Other

Recycle

Russian Sales

635

20

30

265

70

580

19

31

260

65

590

20

35

300

65

Total Supply

Balance

1 020

80

955

-25

1 010

20


Prospects

Inventory overhang depressing prices.

Fundamental demand holding steady

Emission legislation continues to drive demand

Euro 6 – 2014

California - LEV III phased in from 2014

China – full Euro 4 plus diesel in 2015

Eurozone issues still a concern, but may be bottoming.

US recovery gaining momentum

Emerging market growth slowing

Southern African supply challenges will feature prominently

29 August 2013

25


Conclusion

Terence Goodlace


Conclusion

Safety

Remains our first priority

Will drive the safety strategy

PGM Markets

Above ground stocks pressurising short-term prices

Primary supply to remain constrained

Automotive (sales and legislation) drive demand

Positive medium to long term price outlook

50

29 August 2013

26


Conclusion

Operating environment

Changed workplace dynamic

Impending wage negotiations

Margin squeeze

Grow mine-to-market production

Execute operational plan at Impala Rustenburg to deliver 850 000 platinum

ounces by 2018

Complete the 90 000 ounce Phase 2 expansion at Zimplats by 2015

Grow Marula from 70 000 to 86 000 ounces of platinum by 2016

Maintain production at other operations

Pursue third party and other processing opportunities

We have a plan and we plan to deliver with respect and care

51


Annual results

for the year ended 30 June 2013

52

annual results fy2013 (final)implats.co.za/pdf/presentations/2013/annual-results-29...2013/08/29...

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