Investor Conference Presentation. November 2007

Transcription

1 Investor Conference Presentation November 2007

2 Disclaimer This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the safe harbour created by such sections. All statements other than those of historical facts included in this presentation are forward-looking statements including, without limitation, (i) estimates of future earnings, and the sensitivity of earnings to commodity prices; (ii) estimates of future commodity production and sales, (iii) estimates of future cash costs; (iv) estimates of future cash flows, and the sensitivity of cash flows to commodity prices; (v) statements regarding future debt repayments; (vi) estimates of future capital expenditures; (vii) estimates of reserves, and statements regarding future exploration results and the replacement of reserves. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, commodity price volatility, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, as well as political and operational risks in the countries in which we operate and governmental regulation and judicial outcomes. The Company does not undertake any obligation to release publicly any revisions to any "forward-looking statement" to reflect events or circumstances after the date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. 2

3 ARM corporate structure ARM listed on the JSE ARI / ARIJ.J Market cap (5 Nov 2007) ZAR 30.6 bn ($4.7 bn) Share price (5 Nov 2007) ZAR145 ($22) 3

4 Partner of choice ARM has positioned itself as a partner of choice in the South African and African mining industry Division Modikwa Two Rivers Nickel Ferrous m etals Thermal coal Partner Anglo Platinum Impala Platinum Norilsk Nickel Assore Xstrata 4

5 Headline earnings per share over 4 years cents per share ( 10) ( 1) Interim results (6 months to December) Annual results (12 months to June) Huge increase in headline earnings driven by increased commodity p rices, higher volumes and cost redu ctions 5

6 More balanced and diversified earnings 500 Annual grow th in divisional attributable headline earnings R million ( 100) Platinum Nkomati Iron Ore Manganese Chrome Coal In conjunction with our respective partners Anglo Platinum Impala Platinum Norilsk Nickel Assore Xstrata Coal 6

7 Incremental segmental results F2007: EBIT 2007 attributable EBIT segmental contribution (excluding exploration and corporate costs) Ferrous 42.5% Coal 0.3% Platinum 37.0% Nickel 20.3% Note: 2006 EBIT R1 112 million adjusted to reflect Assmang consolidated at 50% for the full year 7

8 ARM strategy 8

9 2 x 2010 Delivering on growth plans in ARM Platinum Operation (100% basis) Project stage Production in FY 2007 At steady state Production Financial year Life of mine (years) Modikwa Approaching steady state PGMs oz PGMs years on the UG2 orebody Two Rivers Approaching steady state PGMs oz PGMs years on the UG2 orebody t Ni t Ni 10 years without Nkomati Interim Ramp-up t Cu oz PGMs t Cu t PGMs 2008 large scale expansion released Nkomati Large Scale Expansion Bankable feasibility complete n/a t Ni t Cu oz PGMs Nkomati Chrome Ramp-up tpa Kalplats PGM Project Exploration n/a n/a n/a n/a 9

10 2 x 2010 Delivering on growth plans in ARM Ferrous Capacity at steady-state Operations Production FY2007 Thousand Life-of-mine (100% basis) Commodity Thousand Tonnes Tonnes pa Financial year (years) Nchwaning II & III Manganese Volumes dependent on market demand and logistical constraints 30 Volumes dependent on Gloria Manganese market demand and logistical 30 constraints Dwarsrivier Chrome Beeshoek Iron ore Volumes to decline as Khumani ramp-up occurs 7 Khumani Khumani (Potential) Iron ore mt by mt by 2010 Timing dependant on logistical constraints 30 10

11 New growth planned in ARM Coal & Africa ARM Coal at a glance (100% basis) Operation Thermal Coal Sales in FY 2007 Million Tonnes Capacity at steady-state Million Tonnes Financial year Life-of-mine (years) Xstrata Coal South Africa 75% export, 25% domestic 21.6 >20 Current 20 Goedgevonden 48% export, 52% domesti c Teal at a glance (100% basis) Resources Project Country JV Partners Grade Contained metal Kalumines (60%) DRC Gecamines 3.51% Cu 462 m lb Cu Mwambashi (70%) Zambia Korea Zinc 2.03% Cu 344 m lb Cu Konkola North* (100% / 80%) Zambia ZCCM (20% option) 2.36% Cu m lb Cu Otjikoto (100%) Namibia 1.25 g/t 1.76M oz Au Exploration properties DRC & Zambia Gecamines, Korea Zinc, BHP Billiton Lupoto deposit only * East and South (excl Area A) Measured and Indicated Resources only 11

12 2 x 2010 Growth Strategy 450 PGMs Thermal Coal Thousand ounces Modikwa Two Rivers Nkomati Million tonnes Xstrata Coal SA GGV a 2006a 2007a 2008e 2009e 2010e 2005a 2006a 2007a 2008e 2009e 2010e 8 Nkomati Nickel 1,600 Chrome Ore Thousand tonnes Thousand tonnes. 1,400 1,200 1, Nkomati Assmang a 2006a 2007a 2008e 2009e 2010e a 2006a 2007a 2008e 2009e 2010e 12

13 Thousand tonnes. Thousand tonnes. Manganese Ore 2,000 1,800 1,600 1,400 1,200 1, a 2006a 2007a 2008e 2009e 2010e Ferro Manganese a 2006a 2007a 2008e 2009e 2010e Thousand tonnes. 2 x 2010 Growth Strategy Thousand tonnes. 6,000 5,000 4,000 3,000 2,000 1, Iron Ore Beeshoek Khumani a 2006a 2007a 2008e 2009e 2010e Charge Chrome a 2006a 2007a 2008e 2009e 2010e 13

14 Investing in our future 14

15 Mining license approved December 2006 Construction commenced 2006 First t blast May 10 mtpa 2007 export by 2010 Transnet export contract (20 yr - 10 mtpa) completed May 2007 First export railing April 2008 Khumani Iron Ore Project R3.0 billion committed to date (Total capital of R4 billion) Ongoing expansion potential to 16 mtpa On mine costs anticipated to be c. 25% lower than Beeshoek Funding from Assmang balance sheet Khumani Resources % Fe Total (mt) Product Fe% Lumpy Scaw Fines Bruce (Mt) King (Mt) Total (Mt)

16 Khumani location 16

17 Nkomati indicative expansion phases MSB (30 ktpm) Phase 1: 100 ktpm (100 ktpm) F.S Production Construction Completed Production Phase 2A: 375 ktpm MMZ (475 ktpm) Phase 2B: PCMZ upgrade P1 to 250 ktpm (625 ktpm) Feasibility study Feasibility study Completed Construction Construction Production Production Capital expenditure for Large Scale expansion estimated to be R3.2 billion 17

18 Nkomati grade and milled tonnes profile 18

19 Goedgevonden Coal Project Goedgevonden Coal Project (GGV) is 51% owned by ARM Coal and 49% owned by Xstrata mtpa Thermal Coal 3.2 mtpa export sales 3.5 mtpa local sales ARM Coal has secured 3.2 mtpa Eskom off-take negotiations ongoing additional capacity at Richard s Bay Coal Terminal (RBCT) Located near to railway line Project released 2007 Open cast mine expected to produce at lower mining costs Ramp-up: 2009 Full production: 2011 Project funding provided by Xstrata Coal 19

20 GGV costs on lower end of cost curve US$/t GGV 2006 Export Thermal FOB Cash Cost Curve Energy Adjusted to 6350kcal/kg gar Million Tonnes Australia Indonesia China Sth africa Russia East Russia West New Zealand Norway Canada Colombia Venezuela Vietnam USA Poland Source: Xstrata Coal 20

21 Efficient cost control Looking forward: Khumani Iron Ore mining costs expected to be 25% lower GGV Thermal Coal mining costs expected to be lower due to open cast mining 21

22 F2007 Financial Results Summary 22

23 Attributable capital expenditure by division Actual Estimate R million June 2007 June 2008 June 2009 June 2010 ARM Platinum Modikwa* Nkomati Two Rivers** ARM Ferrous ARM Coal TEAL** ARM company TOTAL *Excludes Modikwa Expansion (currently in scoping study stage) ** 100% as per income statement 23

24 Sufficient capacity to fund growth platforms R million Long term interest bearing borrowings Short term interest bearing borrowings Per Balance sheet Net debt calculation Total interest bearing borrowings ARM attributable total debt Cash and cash equivalents Net debt (excluding partner loans) Assmang (50%) ARM Company* Modikwa TEAL Two Rivers (ARM share) Two Rivers (Impala share) ARM Coal (Xstrata share) (625) (501) (1063) * Includes R800m for ARM Coal, Two Rivers and Nkomati expansions EBITDA for the period strong at R2.9 billion Net gearing for ARM relatively low at 17% 24

25 Questions? 25