park elektrik Üretim madencilik sanayi ve ticaret a.Ş. march 2013

Park Elektrik Üretim Madencilik Sanayi ve Ticaret A.Ş.

March 2013

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Contents

I. Park Elektrik Overview 3II. Ciner Group in Brief 7III. Operations 10IV. Reserves 13V. Shift To Open Pit Mining 17VI. Planned Investments 23VI. Financial Structure 27VII. Evaluation of The Latest Financial Tables 36VIII. Corporate Governance Rating 42

Park Elektrik March 2013Park Elektrik Madencilik

Park Elektrik 3

I. Park Elektrik Overview

3March 2013Park Elektrik Madencilik

Park Elektrik 4

The Company

Initially offered to public in 1997, Park Elektrik is the sole copper mining company on the ISE. The company currently operates two mines namely; a copper mine in Siirt and an asphaltite (a kind of hydrocarbon) mine in Sırnak.

Making up 90% of total sales revenues, concentrated copper is the main product of the company. Park Elektrik’s end product is concentrated copper which involves around 20% copper content. Park Elektrik sells all of its concentrated copper production to international commodity brokers. Park Elektrik took over operational rights of copper mine in 2004 and commenced copper mining operations in late 2006.

In mid 2009, following its merger with ISE-listed Group company Ceytas, Park Elektrik added asphaltite mining into its operation line. Asphaltite is sold to a sister company with a long term cost plus contract.

Employees working in copper and asphaltite mines are 486 and 93, respectively. With remaining administrative staff, company’s total work force is 627.


Park Elektrik 5

Ownership Structure

Others32%

Turgay Ciner7%

Park Holding61%


Park Elektrik 6

Participation, Park Termik

Park Elektrik has 10% stake in Park Termik Elektrik San. ve Tic. A.S., a Ciner Group company which is involved in thermal power generation in Çayırhan, Ankara.

Park Termik operates Çayırhan Thermal Power Plant which has a total production capacity of 620 MW, in four units.

The plant is an integrated power generator which procures coal through its own lignite mines.

In June 2012, Park Termik paid TL5.2 mn dividends to Park Elektrik & Madencilik.


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II. Ciner Group in Brief

Park Elektrik March 2013Park Elektrik Madencilik

Park Elektrik 8

Ciner Group, Main Line of Businesses

Energy & Mining Group

Ciner Group

MediaGroup

Commerce, Industry &

Services Group

Major Companies & Brands

Haberturk NewspaperHaberturk TV, Radio,Haberturk Web Site

Bloomberg HT

Major CompaniesCiner Marine,Ciner Aviation,

Lares Park Hotels,Park Insurance,

Denmar Logistics,UCZ Retail Chain

Park Holding Ciner Yayın Holding

Major CompaniesPark Elektrik, Park

Termik, Silopi Elektrik, Park Teknik, Park

Toptan, Eti Soda, Kazan Soda, Park Cam, TMC


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Ciner Group, Introduction

Park Holding, the main shareholder of Park Elektrik with 61% share, is solely owned by Mr. Turgay Ciner.

Ranking among the largest Groups of Turkey, Ciner Group’s history goes back to 1978 when it was founded. The Group has a diversified business portfolio. However, the Group’s main line of businesses are mining and energy in which it has a wide expertise.

Ciner Group is a pioneering actor in energy and mining sector given its new and initial steps since early 1990s. In line with accelerated privatization efforts in 1990s, the Group successfully involved in mining and energy sectors which are the underlying sectors of the Group’s fast growth in recent years.

As of year-end 2011, Park Holding has TL1.3 bn of consolidated sales and TL3.2 bn of total assets. Total number of employees within the Group is 5,700.

March 2013Park Elektrik Madencilik

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III. Operations


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Park Elektrik’s Existing & Planned Facilities

Asphaltite Mine

Sırnak

Natural Gas Power Plant

Adana

Copper Mine

Siirt

HPP

Diyarbakır

Natural Gas Power Plant

Edirne


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I) Madenköy Copper Zone

Park Elektrik acquired operation license of Madenkoy copper mine in 2004 from Eti Holding, a state-owned entity engaged in mining businesses, for TL9.4 mn.

Mine operations started in late 2006 in the copper zone. So far, around 5.1 mn tons of ore was extracted in the copper zone mainly through underground mining.

According to initial reports, proven reserves in the zone was determined as 13 mn tons of ore. However, according to latest reserve report issued by Micromine Consulting Services, total reserves in the zone was determined as 39.8 mn tons of ore, 31.2 mn tons of which was measured.

The company has a concentration facility and it produces and sells concentrated copper that includes copper content of around 20% level.

Park Elektrik exports all of its concentrated copper production to international commodity brokers, while the end customer is China.


Park Elektrik 13

Micromine Reserve Report Based On JORC

According to a JORC (Joint Ore Resources Code) compliant reserve report issued by Micromine Consulting Services in November 2011, based on the drilling and sampling works by Eti Holding (1981), Preussag AG Metall (1988) and Park Elektrik, the total reserves of Madenköy project was determined as 39,821,000 tons of ore, 31,182,000 tons of which was measured.

According to the same report, average grade in Madenkoy copper mine is 2.4% for the whole zone. Current grade in the zone is lower, at 1.8-1.9% levels in average.

Source: JORC Resource Estimate Report by Micromine

Resource Category Tonnes Cu (%)

Measured 31,182,000 2.26Indicated 6,433,000 2.79Total Measured & Indicated 37,615,000 2.34Inferred 2,206,000 3.38Project's Total Resources 39,821,000 2.40


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Capacity Expansion & Condemnation

In parallel with growing reserves in the Madenkoy copper zone, the company increased its concentration facility’s capacity from 750k to 1.2 mn tons of ore processing as of October 2011. Total capex for this investment was Euro 3.5mn.

Furthermore, Park Elektrik has completed it’s second phase of capacity expansion project to 1.8 mn tons of ore processing by December 2012 with an investment amount of Euro 3.5-4mn.

Condemnation process around open pit mine will continue in 2013 in line with the mine’s technological needs.


Concentration Facility 2011 2012 2013

Ore Processing Capacity (ton) 750,000 1,200,000 1,800,000* Capacity increase to 1,2 mn tons was realized in October 2011.

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2012 Monthly Production Figures

Park Elektrik Madencilik almost reached its 2012 production target of 90,000 wmt of concentrated copper with 89,253 wmt of realized production. This implies 15% growth in yearly basis. Difference between wet metric ton (wmt) and dry metric ton (dmt) is 8% humidity.


JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEP. OCT. NOV. DEC. TOTAL

Utilized Ore (wmt) 100.191 84.912 96.148 102.127 104.014 102.232 91.266 75.655 95.524 102.177 97.767 86.128 1.138.141

Produced Ore (dmt) 95.181 80.666 91.340 97.020 98.813 97.206 86.703 71.872 90.748 97.068 92.879 81.822 1.081.317

Conentrated Copper (wmt) 7.888 6.879 7.877 7.874 7.778 8.556 7.474 6.054 7.680 7.904 7.405 5.884 89.253

Concentrated Copper (dmt) 7.257 6.328 7.247 7.244 7.156 7.869 6.876 5.570 7.066 7.272 6.813 5.413 82.110

wmt: wet metric ton dmt: dry metric ton

Park Elektrik 16

Production Volumes & Targets


2011 2012 2013E

Ore (tons, wet) 973,628 1,213,013 1,500,000

Growth - 25% 24%

Concentrated Copper (wmt) 77,510 89,253 105,000

Growth - 15% 18%

Park Elektrik 17

Shift To Open Pit Mining & Stripping Expenses

Adopting underground mining since the beginning of operations in the Madenköy copper zone, Park Elektrik plans to shift its copper mining operations from underground to open-pit mining by the mid of 2013, while until mid of the year underground mining will continue.

Based on projections, the company plans to continue open pit mining between 2013-2025 for thirteen years in two phases.

Regarding this shift, the company started stripping in Madenköy copper zone by subcontractors. The planned stripping cost for 2013 is TL 82mn.


Park Elektrik 18

2013 Estimated Expenses In Copper Zone


Expenses TL mn

ORE PRODUCTION 88

- Stripping 82

- Others 6

FACILITY 30

OTHER 26

TOTAL 144


Main Ore Body

Topography

Open Pit Topographic View – I


Open Pit Topographic View - II

Main Ore Body

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II) Silopi Asphaltite Zone

Asphaltite is a petroleum-origin hydrocarbon with a thermal value of 5,500-5,800 kcal/kg.

Park Elektrik has the operational rights of Silopi asphaltite mine until 2033. Estimated asphaltite reserve in Silopi is around 35 mn tons based on Turkish Coal Enterprise (TKI) reports.

Operations in the asphaltite zone started in June 2009. The company provides asphaltite to Silopi Elektrik Üretim A.Ş., a group company which is involved in electricity production in Silopi with fluidized bed technology and has a starting capacity of 135MW.

Annual production amount in Silopi is around 450,000 tons and is subject to increase from 2014 onwards in line with capacity expansion of Silopi EUAS from 135MW to 405MW. With the expansion, annual asphaltite production of Park Elektrik is also estimated to be tripled.

Based on recently renewed contract by two companies, sale price of asphaltite is determined as “Costs + 15%”.

Asphaltite mine will be open-pit for the first years of operation. Later on, underground mining will be done by the method of “Cut and Fill Block Caving”.


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Open-Pit Mining in Silopi


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IV. Planned Investments


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Diyarbakır HPP


Installed capacity will be 50.5 MW.

Production license is valid for 49 years.

According to recent feasibility studies, estimated

investment amount is

US$ 100 mn.

The compay plans to start HPP investment in the second

half of 2013

with an estimated investment amount of TL27mn for 2013.

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Ceyhan Natural Gas Power Plant

Park Elektrik applied to Energy Market Regulatory Authority for a license to establish a NGPP in Ceyhan, Adana.

Installed capacity will be 423 MW*.

Production license will be valid for 49 years.

Estimated investment amount is Euro 250 mn.


*The technological advances took place since the application to EMRA allow us to reach max. 570 MW in one unit.

Park Elektrik 26

Edirne Natural Gas Power Plant

Park Elektrik applied to Energy Market Regulatory Authority for a license to establish a NGPP in Edirne.

Installed capacity will be 423 MW.

Estimated investment amount is Euro 250 mn.


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V. Financial Structure


Park Elektrik 28

Annual Concentrated Copper Production (wmt)

* Annual production declined due to production halt of four-month in 2010.


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Annual Con. Copper (dmt) & Cathode (ton) Sales

* In 2010, there was a production halt of four months.

** 6,613 dmt of concentrated copper were used to produce 1,210 mt copper cathode. This pushes 2011 total sales up to 61,667 dmt.

*** 14,296 dmt of concentrated copper were used to produce 2,521 mt copper cathode, that is increasing 2012 total sales volume up to 87,663 dmt.


Park Elektrik 30

Annual Asphaltite Sales (ton)

* Asphaltite operations started in mid 2009.


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Total Sales Revenues (TL)


Park Elektrik 32

Net Earnings (TL mn)


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Breakdown of COGS, as of YE12


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Annual Margin Comparison

(TL mn) 2007 2008 2009 2010 2011 2012

Sales 80 111 79 84 173 265

Gross Profit 47 73 32 44 107 134

Gross Margin 59% 66% 41% 52% 62% 51%

EBITDA 43 62 24 42 112 165

EBITDA Margin 52% 56% 30% 50% 65% 62%

Net Earnings 20 75 19 37 101 107

Net Margin 25% 68% 25% 44% 58% 40%


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Sources of Financing (TL mn)

* Park Elektrik has no financial debt.


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VI. Evaluation of 2012 Financial Results


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Evaluation of 2012 Financial Results

In 2012, total copper concentrate production was realized as 89.253 wmt, indicating 15.2 % increase compared to 2011. Asphaltite sales was realized as 363.848, 16.2% less then the previous year, due to the diminished demand by Silopi Elektrik. Total sales for copper products was realized as 73.367dmt for concentrate copper and 2,521 mt for cathode copper.

Total revenues increased by 53.5% due to the capacity expansion in the concentration center. Profit margins of the company did not realize as high as the previous year due to the depreciation costs of an open pit copper site in which the operations ended and falling copper prices. Net revenues from fx positions also diminished.

The production and sales of asphaltite decreased as 16.2% due to the operational halt caused by a technical failure in the Silopi Elektrik A.Ş.

Park Elektrik distributed TL100 mn dividends out of 2011 earnings in May 2012.


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Production & Sales Amount

Production 2011 2012 %

Concentrated Copper (wmt) 77.510 89.253 15.2

Cathode Copper (MT) 2.829 902 -68.1

Asphaltite (ton) 444.333 363.848 -16.2

Sales 2011 2012 %

Concentrated Copper (dmt) 55.054 73.367 33.3

Cathode Copper (MT) 1.210 2.521 108.3

Asphaltite (ton) 363.848 363.848 -16.2


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Sales Breakdown (TL) & Gross Margin by Products

2011 2012 %

Copper Sales 151.135.664 229.264.821 52

Gross Margin of Copper 68 57

Asphaltite Sales 19.709.514 30.816.836 56

Gross Margin of Asphaltite 20 14

Other Sales 1.676.016 4.805.991 186

Total Sales Revenues 172.521.194 264.887.648 53

Overall Gross Margin 62 51 -


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Income Statement (TL)


2012 2011 %Sales 264.887.648 172.521.194 54%COGS -130.509.149 -65.615.478 99%Gross Profit 134.378.499 106.905.716 26%Gross Margin 50,7% 62,0%Marketing, Distribution Exp -13.481.001 -8.990.046 50%General Adm. Expenses -18.427.471 -17.344.737 6%R&D Expenses -657.270 0 Other Operating Income 11.392.563 16.042.780 -29%Other Operating Expenses -3.414.296 -3.325.557 3%Operating Income 109.791.024 93.288.156 18%Operating Margin 41% 54%Financial Income 30.083.471 37.468.712 -20%Financial Expenses -6.783.954 -4.521.867 50%Profit Before Tax 133.090.541 126.235.001 5%Tax -25.775.458 -25.339.290 2%Net Profit 107.315.083 100.895.711 6%

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Summary Balance Sheets (TL)

YE11 YE12

Current Assets 297,678,924 296,579,212

Fixed Assets 186,424,631 206,692,571

TOTAL ASSETS 484,103,555 503,271,783

Short Term Liabilities 34,255,807 32,226,892

Long Term Liabilities 6,391,196 20,574,734

Shareholders Equity 443,456,552 450,470,157

TOTAL LIABILITIES 484,103,555 503,271,783


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Corporate Governance Rating

Park Elektrik was rated with 8.82 as a result of the Corporate Governance study done by SAHA Kurumsal Rating Agency. According to report done by SAHA, the rating means that the company performs “very good” in terms of Capital Markets Board’s corporate governance principles. It has, to varying degrees, identified and actively managed all significant corporate governance risks through comprehensive internal controls and management systems. The company’s performance is considered to represent best practice, and it had no deficiencies in any of the areas rated.

MAIN SECTIONS: Avg. 88,24

87.62

94.75

89.86

78.77

0 20 40 60 80 100

Shareholders

Public Disclosure &Transparency

Stakeholders

Board Of Directors


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T H A N K Y O U.

CONTACTS

Yesim Bilginturan Selim Erdogan

IR Manager IR Manager

Phone: +90 216 531 25 33 +90 216 531 25 35

[email protected]@cinergroup.com.tr

www.parkelektrik.com.tr www.cinergroup.com.tr


park elektrik Üretim madencilik sanayi ve ticaret a.Ş. march 2013

Documents

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