The right moves: strategy for value-add. Petrus Cilliers, Managing Director African Mining Investor Dinner Cape Town Wednesday, 6 February 2013

Transcription

1 The right moves: strategy for value-add Petrus Cilliers, Managing Director African Mining Investor Dinner Cape Town Wednesday, 6 February 2013

2 Disclaimer Opinions expressed herein are, by nature, subjective to known and unknown risks and uncertainties. Changing information or circumstances may cause the actual results, plans and objectives of Chrometco Limited (the Company ) to differ materially from those expressed or implied in the forward-looking statements. Financial forecasts and data given herein are estimates based on the reports prepared by experts who, in turn, relied on management estimates. Undue reliance should not be placed on such opinions, forecasts or data. No representation is made as to the completeness or correctness of the opinions, forecasts or data contained herein. Neither the Company, nor any of its affiliates, advisors or representatives accepts any responsibility for any loss arising from the use of any opinion expressed or forecast or data herein. Forward-looking statements apply only as of the date on which they are made and the Company does not undertake any obligation to publicly update or revise any of its opinions or forward-looking statements whether to reflect new data or future events or circumstances. 2

3 Company profile Minerals exploration and mining company have chrome, acquiring PGMs Focus on delivering value to shareholders Unique in SA as an exploration company JSE AltX listed strategy to combine chrome and PGMs Experienced management Primary asset Rooderand Mine resource statement of 60Mt chrome ore existing chrome stockpile of ±70 000t 3

4 Structure 100% 14% ROODERAND CHROME (PTY) LTD Chrometco Mining Services (Pty) Ltd Korpo Trust (Pty) Ltd 76% Moepi Mining SPV (Pty) Ltd 19% Chromex Canada 5% Section 11 transfer PILANESBERG MINING COMPANY (PTY) LTD New Order Mining Rights 4 4

5 Board and management Jonathan Scott (58) Independent non-executive chairman BSc (Hons), MBA Many years of experience in mining, mining finance, banking and corporate finance, and has served on the Boards of a number of JSE-listed companies over the years. Petrus Cilliers (47) Managing director PrEng, BEng (ChemEng), MBA Chemical engineer with more than 20 years experience in the mining and metallurgical industry as a consultant and in managerial capacity. Christopher Seabrooke (59) Independent non-executive director BCom, BAcc, MBA, FCMA Joined the Board in February. Christopher has been a director of over 20 JSE-listed companies over the years. He is currently CEO of Sabvest and a non-executive director of Brait, Datatec, Massmart, Metrofile and Net1. Edward Bramley (44) Non-executive director Experienced mining and exploration professional with international experience in business exploration and management. Edward is a co-founder of the Chrometco group of companies and has had a long-standing association with the Chrometco group. Richard Rossiter (56) Independent non-executive director Richard is an experienced mining professional and geologist, currently based in Australia as the executive chairman of Realm Resources (ASX Listed). Richard was the former chairman of Sylvania Platinum (LSE Listed). Ivan Collair (58) Independent non-executive director BCom (Hons), BSc Joined the Board in February. Ivan has over 30 years of business experience and is currently the Government Relations Manager for Shell South Africa. Trevor Scott (34) Financial director BCom (Hons), BAcc, CA(SA) Specialist in providing IFRS, tax, corporate governance, and other services to local and offshore listed companies. He has many years of experience in the disciplines of corporate finance and management. 5

6 Snapshot (as at 29 February ) Total assets: R223 million Revenue: R Gross profit: R Cash: R31 million HLPS: (9.01 cents) Market capitalisation: R48 million Shares in issue: 185 million 6

7 20-month timeline June 2011 Presented DCM deal to shareholders Shareholders reject deal December 2011 DCM mining and management ends December 2011 NOMR awarded August Nkwe deal agreed and signed Jun 2011 Jul 2011 Aug 2011 Sep 2011 Oct 2011 Nov 2011 Dec 2011 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2013 Feb 2013 February Resource revalued December 2011 CMO sells chrome ore for own account June Nkwe discussions start November Shareholders meeting for Nkwe deal December 2011 CMO takes operational control of Rooderand 7

8 Rooderand Mine Location: Western Limb of Bushveld Igneous Complex, North West Province Mining neighbours include: Platmin s Pilanesberg Mine Xstrata s Horizon Mine Anglo Platinum s Tumela Mine Average market value of ± R186 million at current resource statement upper value of R257 million S N Merensky: very close to UG2 Upper group: UG1, 2 New order mining rights in place Pilanesberg Middle group: MG1, 2, 3, 4 Lower group: LG7, 6, 6A 12 dip 8

9 Rooderand Mine Acquired by Chrometco in early 2004 Provisional sale of shares agreement with DCM Chrome for R62 million in 2007 DCM Chrome manages and mines Rooderand Mine from 2007 to 2011 Implementation of conditional disposal agreement not approved by shareholders in July 2011 at a special general meeting Mining and management agreement expired in December 2011 DCM Chrome paid R13 million deposit R13 million per year as part of a mining management contract DCM Chrome defaults on the final 2011 payment of R10 million Chrometco re-acquires Rooderand Mine for accounting purposes 9

10 Rooderand Mine: location map Portion 1 Portion 2 Remainder (Nkwe) Rooderand Portion 3 10

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12 Markets: South African domestic chrome ore prices Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q1 Q2 Q3 CIF PRICE $ 12

13 Global chrome ore production (Mt material) SA chrome ore production (Mt material) Chrome market South Africa is the largest chrome ore producer and exporter globally South Africa accounts for ~50% of global chrome ore production in 2010, growing in line with global average South Africa exported ~5Mt chrome ore in 2010, ~34% of its production compared to ~12% in South Africa Rest of world Exported Domestic consumption Source: Heinz Pariser 13

14 Markets: UG2 exports Source: Heinz Pariser 14

15 Markets: Chinese chrome ore imports Source: Heinz Pariser 15

16 Nkwe acquisition update Shareholders approved the transaction on 2 Nov Phase one of the acquisition complete Consideration 20 million Chrometco shares issued Acquired historical drill core and geological data Incorporated new data into the resource model Benefits : increased geological definition of the existing chrome resource Increased valuation Ability to mine better 16

17 Reserves and resources (Feb ) Existing Rooderand indicated mineral resources (Cr2O3) Source Unit 2013 Tonnes Grade Cr2O3 (%) 2013 Indicated Inferred Exploration target LG5, LG6, LG7, MG2, MG3, MG4 LG5, LG6, LG7, MG2, MG3, MG4 LG6, LG7, MG2, MG3, MG4, MG4A Cr2O3 content (tonnes) nil nil Estimated Total PGE mineral resources (as declared by Nkwe Platinum Limited in 2011) Source Unit Tonnes (mil) * 4E grade (g/t) 4E content (Moz) Indicated UG2 and MR *Geological losses of 30% applied Inferred UG2 and MR Total

18 Value-add: the Nkwe acquisition Chrome resource statement pre- and post- new data from Nkwe, DCM data and limited geological work Current Cr resource (Mt) Forecast data Cr resource (Mt) Current data Cr resource (Mt) Indicated (Cr) Exploration target (Cr) Inferred (Cr) 18

19 Value-add: the Nkwe acquisition Resource valuation pre- and post- new data from Nkwe, DCM and limited geological work Existing valuation: R186m Oldest value with Nkwe data: R370m Newest value with all data: R1 109m Indicated (Cr) Inferred (Cr) Exploration target (Cr) PGM 19

20 Rooderand Map - future open cast pits N chrome pit Ptn 1 ROODERAND 46 JQ Ptn 3 chrome pits Ptn 2 Ptn 5 PGM pits Ptn 6 Ptn 4 Ptn 7 Also see Google map Board presentation 20

21 Strategy Enhance resource portfolio acquisitions of complimentary assets (like Nkwe) may look at other commodities Exploration cost-effective to acquire drill data from others (like Nkwe) infill drilling as required Mining/trading opportunities looking for cash generators stockpiles at Rooderand as prime target JV, tolling options possible align with the market Disposal for the right price 21

22 Value-add: the Nkwe acquisition Rest of transaction in progress mineral rights Benefits include: increased resource through the addition of PGM and other minerals increased resource valuation Consideration operational and mining benefits: minerals to be mined simultaneously increased cost efficiency 70 million Chrometco shares to be issued 22

23 Looking ahead New acquisition Phase 2 Section 102 to be completed PGM resource to be incorporated infill drilling as required Watching brief: market conditions-dependent look out for cash-generating projects evaluate niche products from Rooderand stockpiles secure offtake agreement for Rooderand production adjust Rooderand production accordingly look for potential buyers, JV partners look for distressed assets 23

24 Investment case Excellent core asset (Rooderand Mine) in prime chrome/pgm neighbourhood various value-add options buy, sell, merge, JV various cash-generation options 70kt stockpile Value-add acquisition (Nkwe) Well placed to weather/take advantage of current market conditions comfortable cash position low costs no debt first-mover advantage for distressed assets Experienced, multi-disciplinary team Low cost of entry for investors 24

25 Contact details Contact details Tel: +27 (11) Fax: +27 (86) Registered office Building 2 Country Club Estate Woodlands Drive Woodmead Shareholder data (Incorporated in the Republic of South Africa) Registration number: 2002/026265/06 JSE share code: CMO ISIN: AE