Lonmin Plc FINAL RESULTS 2007

Transcription

1 Lonmin Plc FINAL RESULTS 2007

2 2007 Overview A number of operational challenges Actions being taken to address these issues Successes Substantial growth in high quality resources 27% increase in PGM ounces Long term growth profile further enhanced with Akanani acquisition PGM markets remain robust Full year dividend increased by 15% to cents per share 2

3 Agenda for today 2007 Issues & Actions Financial Results Operational Overview Quality Resource Base Outlook Questions 3

4 Mining Issues & Actions ISSUES ACTIONS Production planning Disconnect in short term planning and long term life of mine plan Sourced more UG2 underground ore from east of Marikana Strengthened senior team New EVP, Chris Sheppard, two new VP s in Marikana mining and new management team at Limpopo Capital Projects group established People Productivity Industrial action Limpopo Currently adverse ground conditions Business improvement Renewed focus on grade control and face advance Completed new wage agreement including measures to address absenteeism Continued focus on mechanisation Strengthening planning Integrate short and long term planning Advanced development planning for Limpopo Increased drilling and geo-physical surveys at Limpopo Reviewing options for entire Limpopo property 4

5 Process Division Issues & Actions ISSUES ACTIONS Concentrators Recoveries Lack of skilled personnel Marginal decline in milled head grade More opencast ore Timing/planning of deliveries Number One Furnace Burn through in December 2006 Full action plan for Concentrators Now managed by Process Division Recruitment of new skills Focus on forecasting and planning Move Six Sigma Black Belts to Concentrators Technical forecasting model introduced to focus on recoveries Mitigated risk Re-build of Number One furnace Completed re-commissioning of Merensky furnace Conservative operating philosophy and planned maintenance 5

6 Financial Results Alan Ferguson Chief Financial Officer

7 Summary of Operating Results 12 months to 12 months to 30 Sept Sept 2006 Variance US$m US$m % Revenue 1,941 1,855 5% EBIT Underlying EBIT (4)% Underlying EBIT margin (%) 41% 45% Profit before tax Underlying profit before tax Attributable profit Basic EPS (cents) Underlying attributable profit Underlying EPS (cents) (5)% 7

8 EBIT Variances 1,300 1,200 1,100 1, (12) (303) (28) (100) 796 (2) FY06 Reported Special FY06 Underlying $ millions PGM Price Base Metals PGM Volume PGM Mix Costs FY07 Underlying Special FY07 Reported

9 Year on Year Cost Variance Analysis (79) SHEC Marketing Exploration and Development Shared Services Productive Costs Toll Fees Royalties Share-based Payments Foreign Exchange $ millions Depreciation and Amortisation Total

10 Cost per PGM Ounce Sold months to 30 Sept months to 30 Sept 2006 Variance R/oz R/oz % Mining - Marikana 2,306 1,700 36% Mining - Limpopo 4,463 3,740 19% Mining (weighted average) 2,430 1,827 33% Concentrating - Marikana % Concentrating - Limpopo 1, % Concentrating (weighted average) % Process division % SBS % Stock movement 28 (9) C1 cost per PGM ounce (gross) 4,196 3,048 38% Base metal credits (762) (400) 91% C1 cost per PGM ounce (net) 3,434 2,648 30% Amortisation % C2 cost per PGM ounce (net) 3,794 2,920 30% 10

11 Reconciliation of Unit Costs to EBIT 12 months to 30 Sept 2007 Total revenue $m 1,941 Absorbed operating costs: Normal operations ("C1") PGMs sold K oz 1,218 Cost per ounce (gross) R/oz (4,196) Cost Rm (5,109) Other operations PGMs sold K oz 273 (Toll-refined and joint venture) Cost per ounce (gross) R/oz (5,416) Cost Rm (1,476) Total Total PGMs sold K oz 1,490 Avg Cost per ounce (gross) R/oz (4,419) Total absorbed cost Rm (6,585) FX R:$ 7.06 Total absorbed cost $m (933) Unabsorbed costs: Operating overheads $m (43) Corporate $m (59) Exploration $m (23) Total unabsorbed costs $m (125) Operating amortisation $m (87) EBIT (underlying) $m

12 Free Cash Generated 12 months to 30 Sept months to 30 Sept 2006 Variance US$m US$m % Operating profit Working Capital 81 (202) Depreciation and other items Net cash inflow from operating activities % Net interest and finance costs (25) (31) Tax paid (266) (185) Trading cash flow % Capital expenditure (276) (182) Proceeds from disposal of assets held for sale 5 28 Minority dividends paid (41) (62) Free cash flow % Trading cash flow per share (cents) % Free cash flow per share (cents) % 12

13 Operational Overview Brad Mills Chief Executive

14 2007 Safety Record LTIF (per million man-hours worked) Severity Rate (days per incident) Lonmin Industrial Fatalities LTIF (per million man-hours worked) Severity Rate (days per incident) 14

15 Marikana UG2 Underground Ore Body Fault Lines K4 SHAFT ROWLAND SHAFT K3 SHAFT Prospecting Permit HOSSY SHAFT SAFFY SHAFT Pandora JV Depth increases with latitude E3 BELT INCLINE Mineral Resource Grade (3PGE +Au g/t) 4B INCLINE 1 SHAFT 1 EAST LIFT SHAFT NEWMAN INCLINE E1 BELT INCLINE E2 BELT INCLINE 15

16 Marikana Underground Production Tonnes hoisted (000's) Milled Head Grade (5PGE + Au) g/t 0 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 3 N.B. Excludes production from Pandora Joint Venture ground Shallow Deep Saf f y & Hossy Milled Head Grade 16

17 Hossy and Saffy - Performance Tonnes Mined (000's) % of underground production 0 Q306 Q406 Q107 Q207 Q307 Q407 0 Tonnes Mined - Saffy & Hossy % of underground production 17

18 Hossy and Saffy Safety LTIFR (per million man-hours worked) Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Conv. LTIFR Mech. LTIFR Progressive Conv LTIFR Progressive Mech LTIFR 18

19 Marikana Opencast Tonnes and Grade Tonnes Mined (000's) Milled Head Grade (g/t 5 PGE + Au) Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 0 Tonnes Mined Milled Head Grade 19

20 Limpopo Tonnes and Grade Tonnes Hoisted (000's) Milled Head Grade (g/t 5PGE + Au) 0 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 0 Ore Hoisted Milled Head Grade (g/t) 20

21 Limpopo Ground Conditions IRUP IRUP Pot-Holes Baobab Shaft MERENSKY REEF 21

22 Pandora Joint Venture Mined Tonnes (000's) Milled Head Grade (g/t 5PGE + Au) 0 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Underground Tonnes Opencast Tonnes Underground Grade Opencast Grade 4.00 N.B. Underground mining from E3 shaft includes both Lonmin-owned ground and Pandora JV ground 22

23 Marikana Concentrators Saleable Metal in Concentrate (Pt oz - 000's) Recovery Rate (%) Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Saleable Metal in Concentrate (Pt oz) Recovery Rate (%) 75 23

24 Smelter Contained Pt oz produced (000 s) Installed Megawatts MW 40MW Merensky Pyromet Pyromet No. 1 Furnace No. 1 Furnace Installed Meg awatts Pyromet Pyromet No. 1 Furnace Pyromet Pyromet No. 1 Furnace 5 0 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q

25 Refineries BMR: PMR: New senior manager in place Performed well in H207, with throughput of 5,276 tonnes of matte Continuing capacity upgrade increasing by 12% from 33 to 37 tonnes per day Produced 695,842 oz of refined Platinum and 1,289,857 oz of refined PGM s Toll refined 93,609 Platinum oz and 174,378 PGM oz Total capacity of around 2 million PGM oz per annum Production (Pt oz) Production (oz) Q107 Q207 Q307 Q407 Contained Pt oz 0 Q107 Q207 Q307 Q407 Pt Pd Au Rh Ruth Iri 25

26 Long Term Sustainability New Order Mining Licence granted in October 2006 IFC agreement - US$5.9 million technical assistance partnership, focusing on: Women in mining Local supplier development HIV/AIDS in workplaces and communities Community capacity building HIV/AIDS programme encouraging results: Now tested over 50% of the workforce through VCT campaign 836 patients receiving ART through the Wellness programme Housing programme: Plan to build 500 houses for category 3 to 8 employees in 2008 Plan to convert 38 hostel units into married accommodation 26

27 Quality Resource Base Brad Mills Chief Executive

28 Current Production Growth Profile Pt oz (000's) Estimated capital expenditure of US$ million for Expect similar levels for 2009 and 2010 (includes a total of around US$50m estimated initial spend on Akanani for 2008 & Depending on options selected, Akanani could have a material impact on capex from 2009) Marikana Opencast ** Marikana Shallow * Marikana Deep Marikana Mechanised (Hossy, Saffy & K4) Limpopo * includes Pandora Joint Venture underground ounces from existing operations ** includes Pandora Joint Venture opencast ounces from existing operations *** This profile will be fully reviewed by the new Mining team over the next few months 28

29 Limpopo - Future Plans Baobab Shaft 29

30 Akanani Drill Hole Map 30

31 Quality Resource Base 30-Sep Sep-2006 Attributable Mineral Resources (Total Measured, Indicated & Inferred) Ore source Marikana Limpopo Akanani Mt PGE+Au g/t Moz Pt Moz Mt PGE+Au g/t Moz Pt Moz Pandora JV Loskop JV Total 1, * * Sep Sep-2006 Attributable Mineral Reserves (Total Proved & Probable) Ore source Marikana Mt PGE+Au g/t Moz Pt Moz 26.6 Mt PGE+Au g/t Moz Pt Moz 26.6 Limpopo Pandora JV Total ** ** 27.7 * 27% increase in resources, in PGM ounces, from 2006 to 2007 ** 9% increase in reserves, in PGM ounces, from 2006 to

32 Outlook Brad Mills Chief Executive

33 2008 Guidance 2008 guidance: Expected to be a year of consolidation Sales guidance of around 900,000 Pt ounces 2008 costs & capital expenditure: Challenging cost environment in South Africa expected to continue C1 cost guidance expected to increase by around 15% on reported 2007 C1 cost number Assumed base metal credit for 2008 in line with 2007 Anticipating capital expenditure of US$ million 33

34 Outlook PGM markets remain robust with buoyant metal prices Rand/US$ : Platinum price inverse relationship remains intact Actions being taken to address issues encountered in 2007 Continue to execute our strategy of mechanising and modernising our mines Building on safety and sustainability performances Increase in Reserves and Resources supports our long term value and growth 34

35 Questions

36 Appendices

37 Metal Split FY07 PGM Split (saleable ounces) FY07 Revenue Split (%) Platinum Palladium Rhodium Ruthenium Iridium Gold Platinum Palladium Rhodium OPM's Base Metals 37

38 Akanani latest drill results (Southern Section) Borehole Drilled width (metres) 3PGE+Au (g/t) Cu (%) Ni (%) Southern Section - P2 Unit ZF ZF043* ZF044* ZF ZF ZF ZF Weighted Mean Borehole From To Drilled width (metres) 3PGE+Au (g/t) Cu (%) Ni (%) Southern Section - P1 Unit ZF ZF ZF044_ED ZF ZF

39 Akanani latest drill results (Northern Section) Borehole Drilled width (metres) 3PGE+Au (g/t) Cu (%) Ni (%) Northern Section MO MO MO MO MO MO

40 Free Cash Utilised 12 months to 30 Sept 2007 US$m 12 months to 30 Sept 2006 US$m Free cash flow Acquisition of subsidiary (net of cash offsets) (393) (14) Purchase of other financial assets (21) (36) Dividends paid to Lonmin shareholders (171) (124) Issue of ordinary share capital (Increase) / decrease in net debt (137) 131 Opening net debt (458) (585) Effect of exchange rate changes 7 (4) Conversion of the convertible bond Closing net debt (375) (458) Gearing 15% 27% 40

41 Disclaimer This presentation, which is personal to the recipient and has been issued by Lonmin. This presentation includes forward-looking statements. All statements other than statements of historical fact included in this announcement, including without limitation those regarding Lonmin's plans, objectives and expected performance, are forward-looking statements. Lonmin has based these forward-looking statements on its current expectations and projections about future events, including numerous assumptions regarding its present and future business strategies, operations, and the environment in which it will operate in the future. Forward-looking statements generally can be identified by the use of forward-looking terminology such as 'ambition', 'may', 'will', 'could', 'would', 'expect', 'intend', 'estimate', 'anticipate', 'believe', 'plan', 'seek' or 'continue', or negative forms or variations of similar terminology. Such forwardlooking statements involve known and unknown risks, uncertainties, assumptions and other factors related to Lonmin, including, among other factors: (1) material adverse changes in economic conditions generally or in relevant markets or industries in particular; (2) fluctuations in demand and pricing in the mineral resource industry and fluctuations in exchange rates; (3) future regulatory and legislative actions and conditions affecting Lonmin's operating areas; (4) obtaining and retaining skilled workers and key executives; and (5) acts of war and terrorism. By their nature, forward-looking statements involve risks, uncertainties and assumptions and many relate to factors which are beyond Lonmin's control, such as future market conditions and the behaviour of other market participants. Actual results may differ materially from those expressed in forward-looking statements. Given these risks, uncertainties, and assumptions, you are cautioned not to put undue reliance on any forward-looking statements. In addition, the inclusion of such forward-looking statements should under no circumstances be regarded as a representation by Lonmin that Lonmin will achieve any results set out in such statements or that the underlying assumptions used will in fact be the case. Other than as required by applicable law or the applicable rules of any exchange on which Lonmin's securities may be listed, Lonmin has no intention or obligation to update or revise any forward-looking statements included in this presentation after the publication of this presentation. This presentation is for information only and does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase, any shares in Lonmin or any other securities, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied upon in connection with, any contract or investment decision related thereto. 41