2011 Half Year Results

Transcription

1 Clifford Elphick, CEO Kevin Burford, CFO 2011 Half Year Results 19 th August 2011

2 2 disclaimer The following presentations are being made only to, and are only directed at, persons to whom such presentations may lawfully be communicated ( relevant persons ). Any person who is not a relevant should not act or rely on these presentations or any of their contents. Information in the following presentations relating to the price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to the future performance of such investments. These presentations do not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscriber for or otherwise acquire securities in any company within the Group. The presentations contain forward-looking statements which are subjects to risk and uncertainties because they relate to future events. These forward-looking statements include, without limitation, statements in relation to the Group s projected financial results of the 2011 financial year. Some of the factors which may cause actual results to differ from these forward-looking statements are discussed in certain slides of the presentation and others can be found by referring to the information contained under the heading Key Group risk 2010 in The Business Review in our Annual Report for the year ended The Annual Report can be found on our website (gemdiamonds.com). The presentations also contain certain non-ifrs financial information. The Group s management believes these measure provide valuable additional information in understanding the performance of the Group or the Group s businesses because they provide measures used by the Group to assess performance. However, this additional information presented is not uniformly defined by all companies, including those in the Group s industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies. Additionally, although these measures are important in the management of the business, they should not be viewed in isolation or as replacements for or alternatives to, but rather as complementary to, the comparable IFRS measures such as revenue and other items reported in the consolidated financial statements.

3 3 Highlights Revenue of US$196.5 million (US$103.9 million in H1 2010) Record EBITDA of US$90.8 million (US$18.5 million in H1 2010) Record attributable earnings of US$28.9 million (US$3 million in H1 2010) Earnings of US cents per share (1.72 US cents per share in H1 2010) Cash of US$165.6 million at the period end (US$129.8 million December 2010) Record rough diamond prices Sales and marketing bedded down Publication of Independent Technical Report Letšeng Expansion (Project Kholo) Study is nearing completion Development of the Ghaghoo Mine in Botswana (formerly known as Gope) has commenced

4 4 Diamond prices Letšeng Letšeng achieved a record average value of US$3 052 per carat in H (US$1 728 per carat in H1 2010) Implementation of sales and marketing strategy: wider client base; introduction of reserve pricing on tenders Successfully implemented its downstream initiatives Letšeng US$ per carat H1 H2 H1 H2 H1 H2 H Axis Title

5 5 Diamond prices Kimberley Diamonds Ellendale achieved a record average price of US$4 045 per carat for its fancy yellow diamonds in H (US$2 588 per carat in H1 2010) A new (monthly) market pricing mechanism implemented for fancy yellow diamonds January to July, prices for fancy yellow diamonds have risen by 52% Commercial prices 29% above pre crash highs Ellendale Tiffany Yellows US$ per carat H2 H1 H2 H1 H2 H1 Axis Title Ellendale Commercial US$ per carat H2 H1 H2 H1 H2 H1 Axis Title

6 6 Group income statement US$ millions 6 months ended 30 June months ended 30 June 2010 Variance Revenue % Royalty and selling costs (15.4) (9.9) Cost of sales (82.6) (69.9) Corporate expenses (7.7) (5.6) EBITDA % Non cash items Depreciation and amortisation (16.5) (14.6) Share based payments (0.8) (0.8) Other income Foreign exchange gain Net finance income Profit before tax % Income tax (26.9) (2.3) Profit from continuing operations % (Loss) / profit from discontinued operations (1.2) 0.6 Profit for the period % Non-controlling interest (22.0) (3.1) Attributable profit %

7 7 Segmental performance US$ millions Letšeng Diamonds Kimberley Diamonds H H H H Revenue Royalty and selling costs (13.2) (7.8) (2.2) (2.1) Cost of sales (45.7) (40.5) (35.2) (28.2) EBITDA (4.1) 3.3 EBITDA margin 63% 32% (12%) 10% Average Maloti to US$ Average A$ to US$ Exchange rates

8 8 Group Cash (31 December 2010 to 30 June 2011)

9 9 Operations Letšeng

10 10 Operations Letšeng Continued focus on safety programmes Both plants continue to operate in line with plan Waste tonnes mined increased as planned to 8.5 million tonnes ( million tonnes in H1 2010) carats recovered in H ( carats in H1 2010) Recovered grade of 1.56 cpht was 6% above forecast (1.17 cpht in H1 2010) Letšeng produced a total of 295 rough diamonds greater than 10.8 carats in size

11 11 Operations Letšeng Letšeng expansion (Project Kholo) study nearing completion Increase throughput to at least 8.5 million tonnes Reducing diamond damage and improving diamond liberation: Test work on appropriate crushing technology completed Top and middle cut off sizes to be adjusted Improving recovery while reducing capital and operating costs Test work on High Volume X-ray sorters completed Detailed presentation on 5 th September 2011 in London

12 12 Operations Ellendale

13 13 Operations Ellendale Ellendale remains LTI free since August 2009 (668 LTIfree days to the end of June) Unusually high and prolonged rainfall caused processing difficulties and delayed the resumption of in-pit mining carats recovered in H ( carats in H1 2010) Installation has begun on front-end modifications to improve throughput of sticky ore through the processing plant Resource extension and development programme report expected at the end of 2011

14 14 Operations Ghaghoo (formerly Gope)

15 15 Operations Ghaghoo (formerly Gope) Capital expenditure and planned timing on track Mine development on track Earthworks for the decline portal have commenced First ore production planned for mid 2013 Project optimisation continues

16 16 Outlook Long term diamond supply vs. demand fundamentals remain positive Letšeng and Ghaghoo growth projects on track In-house sales and marketing strategy continues to yield positive results A detailed presentation by Gem Diamonds management on the Letšeng Expansion project and the Ghaghoo mine project will be made to investors in London on 5 September 2011

17 17 Thank You