Lonmin Plc INTERIM RESULTS 2005

Transcription

1 Lonmin Plc INTERIM RESULTS 2005

2 Overview Recovered from smelter accident and minimised full year impact Costs managed in line with previous guidance - R2,431 per PGM ounce sold Total PGM production of 666,303 ounces and platinum production of 366,781 ounces 19% growth in EBIT to $152 million (including insurance and metallurgical recoveries) Underlying earning per share up 23% to 48.7 cents per share Dividend maintained at 30 cents per share Offer for Southern Platinum launched on 22 March 2005

3 Smelter Interim Results CONCENTRATE TREATED AT LONMIN PLATINUM SMELTER 18,000 16,000 14,000 TONNES 12,000 10,000 8,000 6,000 4, OCT 2004 NOV 2004 DEC 2004 JAN 2005 FEB 2005 MAR 2005 Monthly Average TONNES CONC TREATED

4 Cost Per PGM Ounce Sold Rand FY 2003 HI 2004 H FY 2004 HI 2005

5 Safety Interim Results Number of Incidents LTIF Total Fatalities H FY03 FY04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 H1 05 Monthly average Monthly average LTI Medical Treatment Cases (MTC) LTIF (12 month Rolling Average)

6 Operating Results - Continuing Operations March 2005 $m March 2004 $m Turnover EBITDA Depreciation (29) (26) Associates operating profit/(loss) 4 (1) EBIT Net interest and similar items (10) (11) Profit before tax Tax (57) (65) Minority interest (16) (15) Profit for the period EBITDA margin 42% 35% Basic EPS (cents) Underlying EPS (cents)

7 EBIT waterfall (9) (22) (21) (21) 152 Actual March 2005 Exchange Operational cost increases Improved recoveries Incwala Insurance receipts Smelting incident Sales prices Volumes - net Actual March 2004 $m Key Decrease Increase

8 Cashflow Continuing Operations March 2005 $m March 2004 $m EBIT Group Working Capital (132) (3) Other items (mainly depreciation) Net cash inflow from operating activities Interest and finance costs (8) (9) Tax (57) (49) Trading cash flow (22) 103 Capital expenditure (87) (85) Associate dividend received 2 - Minority dividends paid (21) (34) Free cashflow (128) (16) Acq/disps/fin inv (10) (6) Shares issued - 4 Equity dividends paid (59) (59) Cash outflow (197) (77)

9 Balance Sheet Ratios March 2005 September 2004 March 2004 Equity $771m $755m $644m Net Borrowings $473m $275m $277m Debt/EBITDA 1.2x 0.8x 0.8x Interest Cover 32.3x 30.4x 21.4x

10 Lonmin Platinum Growth Strategy Maximise the value of our core assets Production growth to 1.1 million ounces by 2008 (including Messina) Performance benchmarked against the best in the world Costs and Productivity Six Sigma being implemented Mechanisation & Automation Shared Business Services consolidate resources and eliminate duplication Identify and capture quality resources and extract maximum benefit Exploration new JV with Inco in Sudbury, Canada M&A Southern Platinum Underpinned by a focussed programme of transformation initiatives

11 Platinum Production Growth Production and Capex Profiles US $ million Pt Ounces (000) MINE EXTRACTION PLAN MESSINA PHASE 1 MESSINA PHASE 2 AND 3 (Subject to feasibility) CAPEX PLUS MESSINA (Indcative for phase 2 and 3) EXISTING CAPEX

12 Key Projects Progress Saffy Hossy Messina K4 Vert. Decl. Phase I Projected Spend Spend to Date $134m $ 72m $230m $75m R975m R535m R1,662m - $ 81m $ 46m $108m - R600m R346m R832m - % completed (Sink & Stn Dev) 100% 100% 20% 76% - Full Production Projected depth of shafts 804m 420m 660m 1,356m 800m Current Depth 804m 420m 390m 1,222m 400m

13 Cost Management - 6 Sigma Before Kaizen event After Kaizen event Result = Inventory halved and productivity doubled

14 Mechanisation & Automation A mechanised stope at Western Platinum Mine Mechanised haulage development

15 Shared Services Substantial duplication of central services between mining operations Cost to Lonmin per annum of around R1.4 billion Implementation of new streamlined structure during remainder of financial year and introduction of standard business practices Targeting cost saving of 10-20% per annum

16 Exploration & Project Development Pipeline Increase in confidence of project viability Setting identified Inco JV (2 properties) Wallbridge JV (8 properties) PGMs located & drilled Inco JV (4 properties) Union Bay Messina 3 Inferred Resource stage Indicated Resource stage Resource Reserve Monts de Cristal (Gabon) Luwumbu Joint Venture Boynton Wallbridge JV (2 properties) Mibango Millennium Mibango (Laterite) Messina Messina 2 2 Pandora Pandora Prospects Targets Initial Resource Drilling to Scoping Study Pre-feasibility Full Feasibility Build = 3 million ounce PGM resource (shading indicates Southern Platinum property)

17 Southern Platinum Business Rationale PGM resource base of 20 million ounces to a depth of 1,000 metres. Platinum production potential Phase I - Increase from 45,000 to 75,000 ounces by improving profitability and safety Post close assess feasibility on additional 150,000 to 200,000 ounces per year Offers substantial synergies Improvement in overall Lonplats smelting recoveries by around 2% Head office and central costs Smelter Contract buyout from Implats for $15million effective from mid 2006 Financial effects Earnings and cash flow accretive from FY 2007 onwards

18 Transaction Details Offer document posted on 14 April 2005 Offer valued at $190m (Offer price C$2.66) Offer to be financed from existing bank facilities EBIT interest cover of greater than 10 times Subject to competition clearance in South African Expected completion by 1 July 2005

19 Transformation Initiatives Focussing culture on safety, productivity, costs, teamwork, profitability and community engagement Cost efficiency Six Sigma and Shared Services Workforce engagement progressing with New Era Labour Agreement Living Agreement Joint problem solving with the workforce Gain sharing on projects to address productivity and costs Community Engagement Communication of transformation process led by Landmark Education Business Development

20 Organisational Changes Board Karen de Segundo appointed as Non-Executive Director London Alex Shorland-Ball appointed VP, Investor Relations & Communications South Africa Alistair Ross appointed President of Lonmin s South African operations with effect from 1 July 2005 Khumo Seopela appointed VP, Human Resources, South African operations

21 Platinum - The Historic View Real commodity prices: = in 2004 Dollars (using US GNP deflator) oil platinum gold copper (Source: Mitsui)

22 The PGM Market Today. Platinum: Fundamentals sound Supply tight on Rand strength Growth of diesel catalyst market Renewed emphasis on the global Pt jewellery brand Palladium: Fundamental oversupply Significant speculative positions New role in diesel catalysis New Chinese jewellery segment Rhodium Niche market strong Illiquidity drives volatility '000 ozs Platinum Supply and Demand Supply Demand

23 and in the Future Platinum: Tight markets going forward Continued growth of scope of emissions legislation Growth in demand from Medium/Heavy Duty diesels Hybrid cars likely to have positive impact Viability of production increases in doubt Palladium: Increased recycling Evolution of role in diesel catalysis Supply surpluses Rhodium Current demand drivers to continue Emissions PM CO NOX/HC '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 European Diesel Passenger Vehicles

24 The Next Six Months Accelerating production mix change to greater proportion of higher grade, lower cost underground ounces Expect platinum production for the FY to be between 905,000 and 925,000 ounces Full year cost guidance maintained at R2,475 per PGM ounce sold Key ongoing events New Era Labour Agreement outcomes New order mining rights licence Completion and integration of Southern Platinum

25 Appendices

26 Tax Reconciliation March 2005 $m March 2004 $m Current tax - excluding exchange on local exchange (1) - Deferred tax - excluding exchange STC 14 5 Change in South African corporate tax rate to 29% (11) - Exceptionals - (4) Exchange - current tax (1) 2 - deferred tax (unrealised) Tax charge Tax rate* 40% 33% * Excludes exchange/exceptionals/tax rate change

27 EPS - Continuing Operations March 2005 $m March 2004 $m Attributable profit for the period Change in South African corporate tax rate to 29% (11) - Tax on exceptional items - (4) Exchange on tax balances - realised (2) 2 - unrealised Minority interest on adjustments - (7) Underlying earnings Average number of shares (m) Reported EPS - cents Underlying EPS - cents

28 Questions