Creating an Integrated, Mine to Metals PGM and Ferrochrome Company

Transcription

1 Creating an Integrated, Mine to Metals PGM and Ferrochrome Company Proposed Merger with Sylvania Resources Unlocking Value from PGMs and Ferrochrome September 2009 BAC presentation 1

2 Disclaimer This presentation has been prepared by Ruukki Group Plc (the Company ) solely for its use at the presentation to analysts and investors to be made in connection with the proposed acquisition of Sylvania Resources Limited ( Sylvania ) as announced by the Company on 30 June By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations. This document is not a prospectus, disclosure document, product disclosure statement or other offering document under Australian, English or Finnish law and this document is not an equivalent document under the laws of any other jurisdiction. This document does not constitute or form part of any offer or invitation to sell or issue, or arrange to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company or Sylvania, nor shall any part of it nor the fact of its distribution ib ti form part of or be relied on in connection with any contract t or investment t decision i relating thereto, t nor does it constitute t a recommendation regarding the securities of the Company or Sylvania. This presentation is being supplied to you solely for your information. This presentation is not directed to, or intended for distribution or use by, any person or entity that is a citizen or resident or located in any jurisdiction where such distribution or use would be contrary to any law or regulation or would require any registration, licensing or other permission. Neither this presentation nor any copy of it nor the information contained in it may be taken or transmitted in or into the United States, Canada or Japan or distributed or redistributed in Japan or to any resident thereof. Any failure to comply with these restrictions may constitute a violation of United States, Canadian, Japanese or securities laws. The distribution of this presentation in other jurisdictions may be restricted by law, and persons into whose possessions this presentation comes should inform themselves about, and observe, any such restrictions. This presentation is directed solely at persons who are both qualified investors within the meaning of Directive 2003/71/EC the Prospectus Directive (or in the case of Australia, persons who are sophisticated or professional investors for the purposes of section 708 of the Corporations Act 2001 (Cth) (the Act )), and (i) in Australia, persons who arewholesale l clients (as defined d in the Act), (ii) persons outside the United Kingdom and Australia, (iii) persons with professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 as amended (the Order ), (iv) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order and (v) persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000, as amended) in connection with the issue or sale of any securities of the Company or any member of its group may otherwise lawfully be communicated or caused to be communicated (all such persons in (i)-(v) above being relevant persons ). Any investment activity to which this communication relates will only be available to and will only be engaged with relevant persons. Any person who is not a relevant person should not act or rely on this communication. This presentation has been prepared by, and is (to the extent that the information relates to the Company) the sole responsibility of, the Company. Sylvania is responsible for any information in this presentation which has been provided by it. To the maximum extent permitted by law, no representation or warranty, express or implied, is or will be made by the Company, Sylvania or any of their affiliates, directors, officers, employees or agents, or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation and any reliance you place on them will be at your sole risk. To the maximum extent permitted by law, neither the Company, Sylvania nor any of their affiliates, or any of their respective directors, officers, employees, advisors or agents or any other person accepts any liability whatsoever, including, without limitation, any liability arising out of fault or negligence, for any loss howsoever arising, directly or indirectly from the use of this presentation or its contents or otherwise arising in connection therewith. This presentation and the information contained herein are not an offer of securities for sale in the United States. The Company's securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. The Company does not intend to register an offering of its securities in the United States or to conductct a public offering of any of its securities in the United States. The Company s securities have not been nor will they be registered under the applicable securities laws of any state or jurisdiction of Australia, Canada or Japan and, subject to certain exceptions, may not be offered or sold within Canada or Japan or to or for the benefit of any national, resident or citizen of Canada or Japan. The information contained in this presentation does not constitute financial product advice (nor investment, tax, accounting or legal advice) and is not intended to be used as the basis for making an investment decision. The Company does not hold an Australian financial services licence. This presentation has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you should consider, with or without the assistance of a financial adviser, whether an investment is appropriate in light of your particular investment needs, objectives and financial circumstances. Past performance is no guarantee of future performance. Certain statements in this presentation constitute forward-looking statements. These statements, which contain the words anticipate, believe, intend, estimate, expect and words of similar meaning, reflect the Directors beliefs and expectations and are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, changing business or other market conditions and the prospects for growth anticipated by the management of the Company. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. As a result, you are cautioned not to place undue reliance on such forward-looking statements. The Company, Sylvania and their advisors and each of their respective members, directors, officers, employees and agents disclaim any obligation to update the Company s view of such risks and uncertainties or to publicly announce the result of any revision to the forward-looking statements made herein, except where it would be required to do so under applicable law. 2

3 Current Situation RUUKKI SYLVANIA LISTED Nasdaq OMX Helsinki ASX and AIM SHARES IN ISSUE 261,0m 215,1mm MARKET CAP Euro 480m AS$ 258,1m LARGEST SHARE HOLDERS * Kermas 17,57% Atkey 13,63% Audley 19.5% Odey 85% 8.5% Nordea Pankki Suomi 12,45% Hanwa Corporation 11,49% Ruukki Group 5,59% JP Morgan 8.3% Corner Banca 6.0% First State 5.9% *3 rd July

4 1. Strategic Rationale 2. The Transaction 3. Conclusion 4

5 Strategic Rationale Create an integrated producer and processor of PGMs and ferrochrome Expand existing profitable production by accessing: previously uneconomic high chrome low grade material in tailings dumps and current risings conventional ore deposits Apply the direct current ( DC ) furnace technology which was co-developed with Mintek, South Africa's national mineral research organisation, and is currently available at Mogale Alloys Allow the development of an alternative smelting and refining route to that currently available via the platinum majors Combine operational, technical and marketing expertise from across the PGM and ferrochrome industries Unlock Value from PGMs and Ferrochrome 5

6 Introduction to Ruukki Shares listed on NASDAQ OMX Helsinki (RUG1V) Net cash position EUR 48.2 million on 30 Jun 2009 (EUR million on 31 Dec 2008) Divisions: expanding minerals division and existing wood processing business Minerals Division Specialty ferrochrome toll manufacturing agreement, Germany Turkish chrome mining operations (acq. 10/2008) Run at full capacity during H1/2009 increasing i the chrome ore and chromite concentrate t inventories Concentrate plant to be built during 2010 to utilise on-ground tailings resources Surface contained (Kavak) 3.4 million tonnes Tailings, surface contained (Tavas) 0.4 million tonnes Underground reserves, not proven, but mined for tens of years Turk Maadin Sirketi, Kavak mine, Turkey Mogale Alloys - ferro smelting operation, Krugersdorp South Africa (acq. 05/2009) R869million (4/2008 3/2009), EBIT:R242million (4/2008 3/2009) Silico manganese, ferrochrome, stainless steel alloy Capacity: around 120, tonnes pa. Furnaces: in total 96 MVA: 44 MVA DC, 12 MVA DC, two 20 MVA submerged arc Wood Processing Division Housebuilding and wood processing, Finland Mogale Alloys, smelting operations, RSA 6

7 Unlocking Value from PGMs and Ferrochrome High chrome, low grade PGM material Mine to Meta als compa any + Application of DC furnace technology currently available at Mogale Alloys jukka.havia@ruukkigroup.fi + Established processing infrastructure Well funded and established European base = Efficient, technology enabled, integrated PGM and ferrochrome company Aggressively pursuing high margins and growth 7

8 Mine To Metals Supply Processing Products Marketing PGM Tailings Dumps Cr DC Furnace Technology PGMs PGM Platreef PGM Vegenhoek UG2 Cr Concentra ate DC Furnaces Mogale Finis shed Pro oduct FeCr / Other Ferroalloys Base Metals Sales, Procurement and Marketing CHROMITE ORE 3 RD PARTY UG2 CHROMITE ORE Cr And New 60 MVA Furnace for FeCr 8

9 Complementary Businesses Ruukki is listed on NASDAQ OMX Helsinki Ltd; market capitalisation: EUR 503m (1) PGM Resources Ruukki Sylvania Processing South Africa Bushveld Region Hard Rock Everest North Grass Valley Aurora South Africa Bushveld Region Mogale Alloys Germany Elektrowerk Weisweiler Mooiplaats Hacra Tailings Dumps & Risings Sylvania Dump Operations Chrome Tailings Retreatment Project Sales and Marketing Malta RCS Limited FeCr Resources Head Office Turkey Finland Turk Maadin Sirketi Ruukki Group Plc Source: Company disclosures (1): As at close 1 September

10 Resource Base Bushveld Igneous Complex Johannesburg Northern Limb Harriet s Wish (GAU) Aurora (SXM) The Bushveld Complex South Africa South Africa Western Limb Mokopane Grass Valley (SXM) Mooiplaats (GAU) 16 Eastern Limb Key Doornbosch (SLV) Steelpoort (SLV) Lannex (SLV) Tweefontein (SLV) Everest North (SLV) SLV Sylvania RUG Ruukki Near-surface exploration New plants Chrome tailings Rustenburg 1 2 Mooinooi (SLV) Milsell (SLV) CTRP (SLV) Pretoria FLOAT PLANT 0km 100km N Source: Sylvania Resources Johannesburg Mogale DC furnace 10

11 Resource Statement: Sylvania MEASURED INDICATED INFERRED EXPLORATION TARGET TYPE TONS g/t TONS g/t TONS g/t TONS MILLIONS MILLION MILLION MILLION g/t SYLVANIA DUMP OPERATIONS Dumps (4e) EVEREST NORTH U/G AND OPENCAST (4e) MOOIPLAATS UNDERGROUND (7e) PLATREEF PROJECTS - Grassvalley OPENCAST (2e) Ni0.11% Cu0.03% - Aurora OPENCAST (2e) Ni0.05% Cu0.08% - Harriets Wish OPENCAST (2e) NI 0.11% Cu 0.08% Source: G??????? Source. Sylvania/GAU&SMX web pages 11

12 Mogale Alloys Total smelting capacity of 96 MVA in 2 DC furnaces and 2 submerged arc furnaces Currently produces silico manganese, stainless steel alloy and ferrochrome: annual production capacity around 100,000 tonnes per annum DC furnace technology co-developed with Mintek and independently developed further in recent years UG2 reef material used in ferrochrome production enhancing its cost competitiveness 12

13 1. Strategic Rationale 2. The Transaction 3. Conclusion 13

14 The Transaction Announcement for Ruukki to acquire 100% of Sylvania: 1.81 Sylvania shares for 1.0 Ruukki share Unanimous recommendation by the independent directors of Sylvania In the absence of a superior proposal and subject to confirmation from an independent expert that the scheme is in the best interests of shareholders Transaction to be implemented by way of an Australian law governed scheme of arrangement 14

15 Proposed Transaction Summary Merger Ratio 1.81 Sylvania : 1.0 Ruukki Premium 28% to share price of GBP0.82 on 29 June % to share price of GBP0.77 on 23 June 2009, the day prior to Sylvania's statement regarding press speculation 44% to 30 day volume weighted average price prior to 29 June 2009 of GBP0.73 per share Consideration Value Approximately EUR268m / AUD468m (1) Ruukki Shares To Be Issued 119.6m (2) Interest in Enlarged Group 31.4% (2) Key Conditions Shareholder vote Independent Expert recommendation (Australia) Regulatory approvals Court approval (Australia) Ruukki EGM approval Indicative Timetable (3) Scheme Document dispatched Q st Court hearing Q Shareholder vote Q Closing Q (1): Based on the closing price of Ruukki on the NASDAQ OMX Helsinki Ltd on 29 June 2009 of EUR2.24 per share and exchange rates from Bloomberg as at 1800 BST 29 th June 2009 (2): Based on the successful 100% acquisition of Sylvania and the successful 100% acquisition by Sylvania of both SA Metals ( SXM ) and Great Australian Resources ( GAU ) (3): Indicative dates only will depend on, inter alia, dates on which any conditions are satisfied and dates the court sanctions the Scheme 15

16 Group structure post merger (Finland) 100% 98.73% 74% 100% RUUKKI HOLDINGS TURK MAADIN SIRKETI (TURKEY) SYLVANIA METALS PTY (LTD) SYLVANIA SOUTH AFRICA GREAT AUSTRALIAN RESOURCES SA METALS LTD RCS RUUKKI SA MILLSELL Up to 74% 71% MOOI PLATS PLATINUM HACRA MINING & EXPLORATION PAN PALLADIUM SA PTY LTD 100% 100% 74% 100% Toll Manufacturing Agreement ELEKTROWERK WEISWEILER GERMANY 84.9% MOGALE ALLOYS LANNEX DOORN- BOSCH 26% MOOINOOI STEEL- POORT TWEE- FONTEIN CTRP 25% 74% EVEREST NORTH EHLOBO METALS 75% AQPSA AND IVON PLATS 26% AFRICAN DUNE 49% 75% 75% MATALA- A-THABA JV AURORA PROJECT JV IMPALA GRASS VALLEY PROJECT JV BETWEEN PPDSA AND IMPALA 16

17 1. Strategic Rationale 2. The Transaction 3. Conclusion 17

18 Conclusion Creating an integrated producer and processor of PGMs and ferrochrome To be implemented by way of an Australian scheme of arrangement Unanimous recommendation by the independent directors of Sylvania (1) Expanding existing profitable production Applying DC furnace technology currently available at Mogale Alloys Allowing the development of an alternative smelting and refining route to that currently available via the platinum majors Combining operational, technical and marketing expertise Well funded with established revenues Transaction expected to close Q Proposed future application for admission to the main board of the London Stock Exchange allowing greater liquidity Unlocking Value from PGMs and Ferrochrome (1): In the absence of a superior proposal and subject to confirmation from an independent expert that the scheme is in the best interests of shareholders 18

19 Appendices 19

20 Current Producing Mines Cash Costs per PGM oz (USD/oz) Source: RBCCM March

21 Platinum Market Global Vehicle Production and Growth Platinum Demand By End User (1) % 8,000 Vehicle Pro oduction (millions) % 0% -5% -10% Annual Platinu um Demand (koz) 7,000 6,000 5,000 4,000 3,000 2,000 1, A 2008F 2009E 2010E 2011E 2012E 2013E -15% A 2008F 2009E 2010E 2011E 2012E 2013E Production Growth Autocatalysts - gross Jewellery Other Source: Standard Bank and Credit Suisse Standard Securities Source: Standard Bank and Credit Suisse Standard Securities (1) Demand gross of recycled platinum 21

22 Platinum Market continued Platinum Demand by End User 2008 Platinum Supply and Demand 7,400 Autocatalysts - gross Jewellery Glass Chemical Other 20% 4% 6% 7% 63% ly / Demand (kozp pa) Platinum Supp 7,000 6,600 6,200 5,800 5, A 2008F 2009E 2010E 2011E 2012E 2013E Platinum Supply Platinum Demand Source: Standard Bank and Credit Suisse Standard Securities Source: Standard Bank and Credit Suisse Standard Securities 22

23 Platinum Price Forecast ,800 1,600 Platinum Price USD/oz 1,400 1,200 1, A 2008A 2009E 2010E 2011E 2012E 2013E Source: Standard Bank and Credit Suisse Standard Securities 23

24 Ferrochrome Market LC and MC FeCr Supply and Consumption LC and MC FeCr Consumption By Region LC and MC FeCr Supply and Demand (ktpa) 1, A 2008A 2009E 2010E 2011E 2012E 2013E Supply Consumption Source: Standard Bank and CRU International LC and MC FeCr Consu umption (ktpa gr ross weigh ht) A 2008A 2009E 2010E 2011E 2012E 2013E Source: Standard Bank and CRU International USA Europe Japan China Other 24

25 Ferrochrome Price Forecast LC FeCr Price USD/lb A 2008A 2009E 2010E 2011E 2012E 2013E Source: Standard Bank and CRU International 25