powerpoint presentation · palladium 2.27 1.74 2.06 . 23/08/2012 16 one team one vision with pride...

23/08/2012

1

One Team One Vision With Pride

Annual Results

for the year ended 30 June 2012


Forward-looking statement

Certain statements contained in this presentation other than the statements of historical fact contain

forward-looking statements regarding Implats’ operations, economic performance or financial condition,

including, without limitation, those concerning the economic outlook for the platinum industry, expectations

regarding metal prices, production, cash costs and other operating results, growth prospects and the

outlook of Implats’ operations, including the completion and commencement of commercial operations of

certain of Implats’ exploration and production projects, its liquidity and capital resources and expenditure,

and the outcome and consequences of any pending litigation or enforcement proceedings. Although

Implats believes that the expectations reflected in such forward-looking statements are reasonable, no

assurance can be given that such expectations will prove to be correct. Accordingly, results may differ

materially from those set out in the forward-looking statements as a result of, among other factors, changes

in economic and market conditions, success of business and operating initiatives, changes in the regulatory

environment and other government actions, fluctuations in metal prices and exchange rates and business

and operational risk management. For a discussion on such factors, refer to the risk management section

of the company’s Annual Report. Implats is not obliged to update publicly or release any revisions to these

forward-looking statements to reflect events or circumstances after the dates of the Annual Report or to

reflect the occurrence of unanticipated events. All subsequent written or oral forward-looking statements

attributable to Implats or any person acting on its behalf are qualified by the cautionary statements herein.

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23/08/2012

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Agenda

- Overview -

Terence Goodlace

- Safety and Operational review -

Terence Goodlace

- Financial review -

Brenda Berlin

- Market Review -

Derek Engelbrecht

- Conclusion -

Terence Goodlace

3


Remembrance

All Please Stand for a Minute’s Silence

We remember all those who have passed on in the

South African Mining Industry.

Our thoughts, prayers and sympathies are with the families,

friends and loved ones of those who have died.

We must never forget and we are poorer for their passing.

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3


Key features - operational

5

A significant intervention is required to

improve our safety culture

The six week illegal strike severely

impacted performance

Gross refined platinum production

declined by 21% to 1.45 million ounces

Mine-to-market down 13%

IRS down 50%

Group unit costs increased by 24% to

R13 450 per refined platinum ounce 0

00

oz

00

0 o

z

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

FY11 FY12

Mine-to-

market

Non-

Managed

Non-

Managed

Mine-to-

market

Platinum production


Key features - financial

Revenue down 17% to R27.6 billion

Gross profit fell by 40% to R7.0 billion

Headline earnings declined by 37% to

R4.2 billion equivalent to R6.85 per

share

Group capital expenditure increased by

38% to R7.3 billion

Cash decreased from R4.5 billion to

R0.6 billion

Final dividend of 60 cents per share and

195 cents for the year

Rm

4 542

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

June 2011 June 2012

Cash position

23/08/2012

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Safety Review

Terence Goodlace


Group safety

Fatal injury frequency rate Industry comparison*

8

*Calendar year statistics reported to the DMR

0.10

0.08

0.12

0.05

0.09

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

Implats Platinum industry

2008 2009 2010 2011 2012

(per

mill

ion m

an h

ou

rs w

ork

ed)

(per

mill

ion m

an h

ou

rs w

ork

ed)

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Group safety

Lost time injury frequency rate Total injury frequency rate

9

2.92 2.92

4.61

4.94 4.96

0.00

1.00

2.00

3.00

4.00

5.00

6.00

16.97

13.95

15.21

13.47

11.19

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

(per

mill

ion m

an h

ou

rs w

ork

ed)

(per

mill

ion m

an h

ou

rs w

ork

ed)


Safety – the way forward

Companies get the safety performance they demonstrate they are

prepared to accept

Now fully committed to industry initiatives which include:

The cultural transformation framework

The adoption of best practices

Safety nets and in stope bolting

Proximity Devices on trackless mobile machinery

Shaft Safety Devices

The training of 3 200 safety representatives by 2014

Internal safety stoppages to increase until we get it right

23/08/2012

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Operational Review

Terence Goodlace


750

185 63

100

145

205 1448

0

200

400

600

800

1000

1200

1400

1600

Impala Zimplats Marula Mimosa Two Rivers Non-managed Total

Group refined platinum production

12

Mine-to-market 1 243 000 ozs

00

0 o

z

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Group unit cost per platinum ounce

13

R/P

t o

z

10 801

8 232

16 884

9 685 9 615

10 867

13 913

9 594

16 483

11 255 10 814

13 450

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

Impala Zimplats Marula Mimosa Two Rivers* Group

FY11 FY12

(Rm

)

*Not included in group unit costs


Group unit cost plus capex FY2012

0

5 000

10 000

15 000

20 000

25 000

Impala Zimplats Marula Mimosa Two Rivers Group

Cash costs Stay in business capital Replacement capital Expansion capital

FY2012 R/Pt oz sold

Current R/Pt oz sold

R/P

t o

z

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Six week strike at Impala

RDO wage demand and a refusal to deal through official structures

Ended up in a six week illegal strike with high levels of violence and

intimidation

Mass resignations from NUM and the emergence of AMCU

Current position

Increased communication with employees and industry

Ongoing meetings with interim workers committees

Working with all parties and honouring NUM’s threshold agreement

Striving for a new dispensation for employee participation

Uncertain labour environment across the industry

Performance at Impala remains below planned levels


Zimbabwe indigenisation update

Indigenisation Plans submitted for both Zimplats and Mimosa

Plans comply with the Indigenisation Law (51%) and are constructed as

follows:-

10% - Community Trust

10% - Employees Trust

31% - Broad based indigenous Zimbabwean groupings

Plans have been accepted in principle by the Government

Zimplats commencing with implementation of the Community and

Employee Trusts

Discussions are on-going to finalise the details of the sale of the 31% for

both companies

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Major capital projects

20 shaft 16 shaft 17 shaft Zimplats Ph II

Capital Spend for

FY2012

R997m R960m R581m US$176m

Remaining

Capital Spend

R3.2bn R4.1bn R8.3bn US$240m

Full production

date

FY2018 FY2018 FY2020 FY2015

Steady-state

throughput

1.7mtpa 2.7mtpa 2.7mtpa 2.0mtpa

Steady-state

platinum

production

125kozpa 185kozpa 180kozpa 90kozpa

Current primary

activities

Development of

the ancillary

inclines and

declines.

Production build

up has

commenced with

26koz planned for

FY2013

Main shaft

equipping

underway.

Development

towards reef has

commenced from

the ventilation

shaft

Sinking of the

main and

ventilation shafts

and excavating

Merensky Reef

shaft pillars

Construction of the

concentrator plant,

development of

Portal 3 and

associated

infrastructure


Leeuwkop Project

Leeuwkop

Capital Spend for

FY2013

R261m

Remaining Capital

Spend

R9800m

First production date FY2021

Full production date ≈FY2026

Steady-state

throughput

2.16mtpa

Steady-state platinum

production

145kozpa

Current primary

activities

Single shift sinking of

the main shaft to 330m

below surface

Board has approved R1.4 billion

for phase 1 but has restricted

spend to R261 million for

FY2013

Approvals to be sought on an

ongoing basis and dependent

upon market conditions and the

Implats balance sheet

23/08/2012

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Leeuwkop location


Shaft Section

Intermediate Pumping Station

1142m BC

Ventila

tion s

haft

Pro

ductio

n s

haft

1580m BC

1476m BC Future decline

20 Level

27 Level

UG2 reef horizon dips at 9⁰ and

has a channel width of 1.32m

330m

23/08/2012

11


Financial Review

Brenda Berlin


Group Income Statement

R million FY2012 FY2011 % change

Sales 27 593 33 132 (17)

Cost of sales (20 641) (21 490) 4

Gross profit 6 952 11 642 (40)

Gross margin % 25 35 (28)

Royalty expenses (664) (804) 17

Profit before tax 6 250 9 561 (35)

Profit 4 299 6 810 (37)

HEPS (cps) 685 1 105 (38)

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Gross profit movement

Rm

FY2011 gross profit 11 642

Revenue (5 539)

Volumes (6 071)

Rand metal prices 532

Cost of sales 849

Inflation (1 940)

Inventories 1 447

Share based payments 253

Lower volumes 1 089

FY2012 gross profit 6 952

(40%)


Operating costs per platinum ounce

10 867

13 850

13 450

1 509

1 474 400

9 000

10 000

11 000

12 000

13 000

14 000

Jun 2011 Inflation Volumes Jun 2012 Off-reef Jun 2012

R/p

t o

z

% SA

(R)

Zim

(US$)

Wages 13.9 7.2

Power 22.8 47.8

Consumables 7.4 5.4

Total 12.3 11.2

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Group capital expenditure

25

Rb

n

4 502

2 123146

248265 7 284

858 8 142

3 000

4 000

5 000

6 000

7 000

8 000

9 000R

m


Movement in net cash position

4 542

818

587

- 995

4 978

1 715

2 546

7 284

-2 000

-1 000

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

FY2011 FY2011

Dividend

Operating

cash flow

Capital FY2012

interim

dividend

Other FY2012 Cash net

of debt

Rm

23/08/2012

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Market Review

Derek Engelbrecht


Sales Volumes by Metal

FY2012 FY2011 %

change

Platinum (000oz) 1 368 1 665 (18)

Palladium (000oz) 765 1 011 (24)

Rhodium (000oz) 183 221 (17)

Nickel (000t) 13.9 15.5 (10)

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Average Prices Achieved – Major Metals

FY2012 FY2011 % change

Platinum ($/oz) 1 614 1 691 (5)

Palladium ($/oz) 687 670 3

Rhodium ($/oz) 1 601 2 275 (30)

Nickel ($/t) 19 513 23 965 (19)

Basket ($/Pt oz sold) 2 601 2 799 (7)

(R/Pt oz sold) 20 054 19 677 2

Exchange rate (R/$) 7.71 7.03 10


Investments

Moz as at 1 Jan 2011 31 Dec 2011 30 Jun 2012

Futures Platinum 2.14 1.21 1.26

(CME/Nymex) Palladium 1.68 0.60 0.43

ETF Platinum 1.26 1.40 1.45

Palladium 2.27 1.74 2.06

23/08/2012

16


Light Duty Vehicle Sales

Forecast for 2012 - 81.7 million units (+7%)

July 2012 year to date vs 2011

%

US 14

China 7

Europe (7)

India 9

Japan 53


Chinese Jewellery

0

200 000

400 000

600 000

800 000

1000 000

1200 000

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Pt

oz

Shanghai Gold Exchange annual cumulative ounces

2009 2008 2007 2010 2011 2012

23/08/2012

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Platinum Supply / Demand Balance

000oz 2010 2011 2012

(Forecast)

DEMAND

Automobile

Jewellery

Industrial

Investment

3 270

2 260

1 695

650

3 400

2 415

1 730

150

3 470

2 420

1 730

100

Total Demand 7 875 7 695 7 720

SUPPLY

South Africa

Russian Sales

North America

Recycle - auto

Other – incl. jewellery

recycle

4 745

800

230

1 020

1 015

4 735

800

375

1 110

1 020

4 360

795

380

1 180

975

Total Supply 7 810 8 040 7 690

Balance -65 345 - 30


Palladium Supply / Demand Balance

000oz 2010 2011 2012

(Forecast)

DEMAND

Automobile

Industrial

Investment

5 200

3 155

1 055

5 600

3 160

-520

5 900

3 100

400

Total Demand 9 410 8 240 9 400

SUPPLY

South Africa

Russian Sales

North America

Recycle - auto

Other

2 580

2 850

665

1 370

1 360

2 595

2 750

860

1 500

1 465

2 425

2 750

930

1 700

975

Total Supply 8 825 9 170 8 780

Balance -585 930 -620

23/08/2012

18


Rhodium Supply / Demand Balance

000oz 2010 2011 2012

(Forecast)

DEMAND

Automobile

Industrial

750

150

760

180

790

190

Total Demand 900 940 980

SUPPLY

South Africa

Russian Sales

North America

Recycle - auto

Other

650

70

14

230

26

635

70

20

265

30

600

65

19

275

31

Total Supply 990 1 020 990

Balance 90 80 10


Prospects

Fundamental demand holding steady

Emission legislation continues to drive demand

Euro 6 – 2014

California - LEV III phased in from 2014

China – full Euro 4 plus diesel in 2013

Eurozone issues still a concern

US recovery uncertain

Emerging market growth robust

Southern African supply challenges will feature prominently

23/08/2012

19


Conclusion

Terence Goodlace


Conclusion

Production

Impala to increase by between 80 and 100koz’s of platinum

Marula will improve marginally on current production levels

Zimplats, Two Rivers and Mimosa to maintain current

production levels

Third party suppliers stressed

Costs pressures

Mining inflation to remain at current levels

Increasing development to create ore reserve flexibility

Safety initiatives

Continued squeeze on operating margins

23/08/2012

20


Conclusion

Considerable "headwinds" facing the mining industry and

platinum in particular

Rapidly escalating costs in a price taker environment

Unproductive operating environment

Community and industrial relations challenges

Response

Strongly drive “Zero Harm” Health and Safety imperatives

Actively and collaboratively engage in dialogue at the highest

levels to improve the operating environment

Continue to invest in current long term capital projects

Implement cash preservation initiatives to protect the balance

sheet

Long term business with market fundamentals intact


Annual results

for the year ended 30 June 2012

40

powerpoint presentation · palladium 2.27 1.74 2.06 . 23/08/2012 16 one team one vision with pride...

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