park elektrik Üretim madencilik sanayi ve ticaret a.Ş. november 19, 2014

Park Elektrik Üretim Madencilik Sanayi ve Ticaret A.Ş.

November 19, 2014

2

Contents

I. Company & Operations 3II. Ownership Structure & Participation

18III. Ciner Group 21IV. Financial Structure 24V. Evaluation of The Latest Financial Tables

32VI. Corporate Governance Rating

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Park Elektrik November 2014Park Elektrik Madencilik

Park Elektrik 3

I. Company & Operations

3November 2014Park Elektrik Madencilik

Park Elektrik 4

Introduction

Park Elektrik is the sole copper mining company on the ISE. The company operates Madenköy copper mine in Siirt, in the southeast of Turkey, since late 2006.

Total resources of Madenköy copper mine was determined as 41.5 mn tons of ore according to a JORC based report conducted by Micromine Consulting Services in February 2014. So far, Park Elektirk extracted approximately 7.6 mn tons of ore in the zone.

The company has a concentration facility and it produces and sells concentrated copper that includes copper content of around 20% level. Park Elektrik sells all of its concentrated copper production to an international commodity broker, namely Traxys.

As of YE2013, number of employees working in copper mine is 430.


Park Elektrik 5

Merger Process with Silopi Elektrik

On September 1st, 2014, Park Elektrik announced a plan by the BOD to merge with Silopi Elektrik, the sister company which is engaged in electricity production in Silopi, in its 135 MW thermal power plant.

The merger has rationale of product diversification, managerial and financial scales of economies and the Group’s perspective to have a bigger entity in the capital markets.

It is planned to have general meetings of both companies through the end of 2014.

Exit price and merger ratio were determined so far and announced to the public on Sep. 1st and Sep. 12nd respectively. Exit price is TL4.20 per share, while merger ratio was determined as 0.186914 by an independent third party.


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Location of Copper Mine

Copper Mine

Siirt

November 2014Park Elektrik Madencilik

http://upload.wikimedia.org/wikipedia/en/7/78/Pick_shovel.jpg

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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.

Copper mine operations started in late 2006 in Madenköy copper zone. So far, 7.6 mn tons of ore have been extracted in the copper zone, while the remaining resources is 33.9 mn tons of ore as of 3Q14.

According to initial reports, proven reserves in the zone was determined as 13 mn tons of ore when Park Elektrik commenced its operations in 2006. However, according to latest reserve report issued by Micromine Consulting Services in February 2014, total resources in the zone was determined as 41.5 mn tons of ore, 36.3 mn tons of which was measured.

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


Park Elektrik Madencilik November 2014 8

Micromine October 2011 Resource Report

Micromine February 2014 Resource Report

Tonnes Grade (%) Tonnes Grade (%)

Measured 31.182.000 2,26 36.264.000 1,95

Indicated 6.439.000 2,79 5.002.000 2,45

Inferred 2.206.000 3,38 225.000 3,52

Total Resources 39.821.000 2,40 41.500.000 2,02

According to a JORC (Joint Ore Resources Code) compliant reserve report issued by Micromine Consulting Services in February 2014, total resources of the project has increased to 41.5 million tonnes from previously declared 39.8 million tonnes.

According to the same report, average grade in Madenkoy copper mine is 2.02% for the whole zone and average grade of the measured resources is 1.95%.

Micromine Reserve Report Based On JORC

Park Elektrik 9

Capacity Expansion & Condemnation

In parallel with growing reserves in Madenkoy copper zone, the company increased its concentration facility’s capacity from 750k to 1.8 mn tons of ore processing in two phases with a total investment amount of €7 mn.

Condemnation process due to expanding area of open pit mine continued in 2013 in line with the mine’s developmental needs. Company paid TL12mn in 2012 and TL11mn in 2013 for condemnation expenses. For 2014, TL10mn of condemnation expense is included in the Company’s budgets.


Concentration Facility 2011 2012 2013

Ore Processing Capacity (ton) 750,000 1,200,000 1,800,000

Park Elektrik 10

Production Volumes & Targets


2011 2012* 2013 2014 E 2015E

Stripping (m3) - 4,024,000 15,000,000 9,000,000 9,000,000

Ore Production (tons, wet) 1,024,871 1,276,856 1,540,031 1,700,000 1,600,000

Ore Used In Con. Center (tons, dry) 949,731 1,138,232 1,463,029 1,600,000 1,500,000

Grade of Ore (%) 1,73 1,77 1,47 1,25 1,75

Con. Copper Production (wmt) 77,510 89,253 96,038 96,000 115,000

Con. Copper (dmt) (~92% of wmt) 71,309 82,113 88,354 88,300 105,800

Copper (mt) (~20% of dmt con. copper) 14,262 16,423 17,670 17,600 21,160

* Pre-stripping started in 2012. ** Production through open-pit started in mid of 2013.

Park Elektrik 11

Long Term Planning in Open Pit

Having being operated by underground mining since the beginning of operations in the Madenköy copper zone, Park Elektrik shifted its copper mining operations from underground to open-pit mining by the mid of 2013.

Based on projections, the company plans to continue open pit mining between 2013-2031. Throughout open pit mining for 18 years, the company plans to produce 26.4 mn tons of ore with 246 mn m3 stripping with an average strip ratio of 9.3 by the end of 2031.


Period Estimated Total Stripping(m3)

Estimated Total Ore Production(ton)

Estimated Strip Ratio

Estimated Total Con. CopperProduction (wmt)

2013-2031 246,000,000 26,400,000 9,31 2,107,702


Open Pit Site View

Current View From Mine


Views From The Pit



Main Ore Body

Topography

Open Pit Topographic View – I


Open Pit Topographic View - II

Main Ore Body


Open Pit Site Intersection

Power Plant Projects

Withdrew natural gas power plant applications for Edirne and Ceyhan regions due to the complexities of the investment stages and uncertainities.

Obtained environmental impact assessment report for Hydroelectricity power plant of 50MW in Diyarbakır/Tarihler.

Transmission aggreement with TEIAS was achieved.

Tender offer for construction of the facility will be made soon.


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II. Ownership Structure & Participation


Park Elektrik 20

Ownership Structure

Others32%

Turgay Ciner7%

Park Holding61%


Park Elektrik 21

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 has operating rights of 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 2014, Park Termik paid TL6 mn dividends to Park Elektrik & Madencilik.


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III. Ciner Group


Park Elektrik 23

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, Aks TV (Show TV)

Major CompaniesCiner Marine,Ciner Aviation,

Lares Park Hotels,Park Insurance,

Denmar Logistics,

Park Holding Ciner Yayın Holding

Major CompaniesPark Elektrik, Park

Termik, Silopi Elektrik, Park Teknik, Park

Toptan, Eti Soda, Rio Tur Soda, Park Cam


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Ciner Group

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.


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IV. Financial Structure


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Annual Concentrated Copper Production (wmt)

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


2006 2007 2008 2009 2010 * 2011 2012 2013 2014E

13,771

52,55464,371 63,138

37,426

77,510

89,253

96,038 96,000

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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.


2006 2007 2008 2009 2010 2011 2012 2013

9,271

47,417

60,931 59,163

32,239

55,054

73,367

93,049

1,210 2,521

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Total Sales Revenues (TL)


2007 2008 2009 2010 2011 2012 2013

80

,04

0,6

45

11

0,7

13

,83

3

69

,85

7,0

81

64

,19

1,6

60

15

1,1

35

,66

4

22

9,2

64

,82

1

22

6,5

24

,68

6

8,211,605

19,314,397

19,709,514

30,816,836 33,704,018

copper asphaltite

Park Elektrik 29

Net Earnings (TL mn)


2007 2008 2009 2010 2011 2012 2013

19.8

74.8

19.4

37.2

100.9107.3

69

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Breakdown of Cost of Production, as of YE13, (copper only)


Depreciation 48%

Direct Labor Costs 19%

Fuel & Energy 12%

Materials7%

Chemicals3%

Others 11%

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Annual Margin Comparison

(TL mn) 2008 2009 2010 2011 2012 2013

Sales 111 79 84 173 265 261

Gross Profit 73 32 44 107 134 72

Gross Margin 66% 41% 52% 62% 51% 28%

EBITDA 62 24 42 112 165 147

EBITDA Margin 56% 30% 50% 65% 62% 57%

Net Earnings 75 19 37 101 107 70

Net Margin 68% 25% 44% 58% 40% 27%


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Sources of Financing (TL mn)

* Park Elektrik has no financial debt.


2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

88 100 130 143223

302 343443 450

520

814

66 53

60

3033

41 53

64

Shareholders' Equity Total Debt

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V. Evaluation of 3Q14 Financial Results


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Evaluation of 3Q14 Financial Results

In 9M14, copper concentrate production has been realized as 67,223 wmt indicating a 10% decline as compared to 9M13 results. Copper concentrate sales also decreased to 62,558 dmt with a 16% drop, y-o-y.

Due to the development costs of open pit in the first stages of the project, having not had faced full copper ore and low prices in the LME, our profit ratios continued to deteriorate in third quarters as well.


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Production & Sales Amount

Production 9M13 9M14 %

Concentrated Copper (wmt) 75,084 67,223 -10%

Asphaltite (ton)* 249,142 101,600 -59%*

Sales 9M13 9M14 %

Concentrated Copper (dmt) 74,261 62,558 -16%

Asphaltite (ton)* 249,142 101,600 -59%*


* Park Elektrik sold the entire asphaltite operations to Silopi Elektrik for TL61 mn resulting TL14 mn profit in the end of 1Q14 due to regulatory obligations.

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Income Statement (TL)


9M13 9M14 %Sales 201.795.861 169.426.777 -16%COGS -139.318.972 -149.231.805 7%Gross Profit 62.476.889 20.194.972 -68%Gross Margin 31,0% 11,9% Marketing, Distribution Exp -10.399.602 -11.324.172 9%General Adm. Expenses -14.638.268 -22.542.326 54%R&D Expenses -58.550 0 nmOther Operating Income 39.194.224 18.048.580 -54%Other Operating Expenses -11.393.362 -22.406.446 97%Operating Income 65.181.331 -18.029.392 -128%Operating Margin 32% -11% Income From Investments 6.104.747 23.526.319 285%Expense From Investments 0 -304.079 nmIncome Before Financial Exp. 71.286.078 5.192.848 -93%Financial Income 0 207.265nmFinancial Expenses -437.276 -576.538 32%Profit Before Tax 70.848.802 4.823.575 -93%Tax Income / Expense -12.960.720 12.675.309 -198%Net Profit 57.888.082 17.498.884 -70%Net Margin 29% 10%

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Summary Balance Sheets (TL)

YE13 9M14

Current Assets 315,080,736 291,534,113

Fixed Assets 269,102,374 245,297,123

TOTAL ASSETS 584,183,110 536,831,236

Short Term Liabilities 42,409,599 44,869,254

Long Term Liabilities 21,567,541 18,001,464

Shareholders Equity 520,205,970 473,960,518

TOTAL LIABILITIES 584,183,110 536,831,236


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VI. Corporate Governance Rating


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Corporate Governance Rating

Park Elektrik’s corporate governance rating increased to 8.98 according to a recent report conducted by SAHA Corporate Rating Agency in June 2013. Based on the report, 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.


Board of Directors

Stakeholders

Public Disclosure & Transparency

Shareholders

82 84 86 88 90 92 94 96 98

87.06

87.93

96.65

87.86

MAIN SECTORS AVERAGE: 89.80

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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


mailto:[email protected]

mailto:[email protected]

http://www.parkelektrik.com.tr/

http://www.cinergroup.com.tr/

park elektrik Üretim madencilik sanayi ve ticaret a.Ş. november 19, 2014

Documents

park elektrik madencilik

park elektrik exports

park elektrik3

park elektirk

silopi elektrik

location of copper

copper content

concentrated copper