CHIEF EXECUTIVE OFFICER SIPHO NKOSI OVERVIEW Safety focus impact - - PowerPoint PPT Presentation

SIPHO NKOSI

CHIEF EXECUTIVE OFFICER

2

OVERVIEW

Safety focus

– impact on mining industry

Exxaro’s performance

– successful integration – improved production in 2H07 – revenue exceeds R10 billion – headline earnings 425cps – total dividend 160cps

Mining rights

– conversion status – new applications – Namakwa Sands, Mafube and Igoda acquisitions

Skills shortage

MIKE KILBRIDE

CHIEF OPERATING OFFICER

4

0.51 0.50 0.48 0.42 0.33 0.36 1.11 1.10

2004 1 1 2 2 1 4 4

Fatalities LTIFR

SAFETY

Overall improvement in safety

performance

Regrettably four mine-related and

• ne public road fatality

Some notable achievements in

2007

– improvement in LTIFR to 0.36 – five business units were LTI free – focused drive for improvement

Visible Felt Leadership is key to our SHE performance

2005 2006 2007 2004 2005 2006 2007

5

HEALTH AND ENVIRONMENT

Health

Noise and dust programmes review Reduction in number of confirmed

• ccupational diseases

HIV/Aids programme:

– encourage participation in VCT – facilitation to enrol in ART – strong peer educator programme drive

Environment

Ongoing rehabilitation focus Clean energy strategy approved to

mitigate climate change

International certification target -100%

by end 2008 (ISO & OHSAS) HIV/Aids programme

14% HIV +

49% on ART

Our safety vision “Leading the Way to Zero Harm”

VCT participation (30%)

6

RBCT steam coal FOB Chinese market coke exports

Sources: SA Coal Report, CRU

COAL MARKETS

Very strong domestic and

international demand with tight supply

Steam (thermal) coal prices

> $100 and remain at record high levels

Coking coal prices recovered

from 2Q06 Growing demand Steam coal and coke prices (US$/t)

2004 2005 2006 2007 10 30 50 70 90 110 50 150 250 350 450 550 650

7

Production volumes (Mt)

COAL OPERATIONS

Improved 2H07 resulting in 41.3Mt Power station coal (Eskom):

– sales 34.2Mt – Matla and Arnot experienced difficult mining conditions – increased sales from Grootegeluk – NBC turnaround

Coking coal production:

– record due to GG6 ramp-up and Tshikondeni performance

Export steam coal:

– NCC underground closure – fast tracked Inyanda mine – failure of Leeuwpan reclaimer

5 10 15 20 25 1H05 2H05 1H06 2H06 1H07 2H07

Steam coal (export and domestic) Coking coal Power station coal

8

300 400 500 600 700 800 900

2004 2005 2006 2007

500 1 000 1 500 2 000 2 500

MINERAL SANDS MARKETS

Strong demand for pigment from

Asia-Pacific and China

Demand for zircon remains

strong, additional supply resulted in downward price pressure

Modest recovery in chloride

process slag (CP slag) prices

Buoyant low manganese pig iron

prices

Strength of AUD impacts on

results Zircon, pigment and CP slag prices (US$/t – FOB)

Source: TZMI

Zircon Pigment CP Slag

Tight market conditions impacting the business

9

MINERAL SANDS OPERATIONS

Australia Sands

Improved production:

– good synthetic rutile (SR) plant performance – processed ilmenite stockpile

Maintained record pigment production Zircon and rutile impacted by

lower in-situ grades KZN Sands

Improved furnace performance:

– record CP slag – improved pig iron production

Zircon and rutile impacted by

lower in-situ grades Attributable production (kt) Mining rights and grades impact on production

54 54 134 150 86 70 98 100 2006 2007

Pigment CP slag Zircon SR

10

KZN SANDS FURNACE RAMP-UP

Current furnace output at 85% of

cold-design capacity of 220ktpa

Focus to achieve 250ktpa:

– stable operating conditions – commission pre-heater – extend centre piece life

Furnace reline schedule:

– 4 yearly, 4 month outage – Furnace 2 in 2008 – Furnace 1 in 2010

Reviewing furnace technology

Furnace production (kt)

Actual Cold design

Improved furnace stability

20 40 60 80 100 120 2005 2006 2007

11

ZINC MARKETS

Sharp decline in USD price in

the last quarter

Local demand weaker due to

downtime at continuous galvanising plants

Strong international growth in

refined zinc supply

Treatment charges improved

due to global oversupply of concentrate Zinc metal price

Average 06 $3 274 Average 07 $3 250

2004 2005 2006 2007

‘000 R/t US$/t

700 1 700 2 700 3 700 4 700 5 10 15 20 25 30

Source: I-Net

12

BASE METALS OPERATIONS

Zinc concentrate (kt)

Decline in production at Rosh

Pinah due to floods, industrial action and plant performance Zinc metal (kt)

Good improvement at Zincor due

to better concentrate quality and stable plant performance

Zincor Roaster No.4 rebuilt during

2H07

Ramp-up of Chifeng Phase 3

capacity expansion Concentrate production (kt) Zinc metal production (kt)

124 126 104 95 22 21 25 27 2004 2005 2006 2007

90 101 102 104 23 16 15 12 2004 2005 2006 2007

Zincor Chifeng Zinc Lead

13

INDUSTRIAL MINERALS OPERATIONS

Ferrosilicon

Sustained production

performance

High off-take from iron ore mines

Dolomite production

Output negatively influenced by

lower demand for metallurgical dolomite and plant breakdowns Ferrosilicon production (t) Dolomite production (Mt)

6 137 5 648 6 065 5 653 2004 2005 2006 2007 1.35 1.39 1.38

• 1. 43

2004 2005 2006 2007

DIRK VAN STADEN

CHIEF FINANCIAL OFFICER

15

144 141 246 179 1H06 2H06 1H07 2H07

KEY FINANCIALS

160 60 100 Total dividend (cps) – Interim – Final 425 Headline earnings (cps) R1 448 Headline earnings R1 444 Net operating profit (EBIT) R10 157 Revenue Headline earnings (cps) Dividend cover 2.5 times

16

COMPARABLE REVENUE

(1) Pro forma including Eyesizwe for 12 months, for comparative purposes

0.75 0.83 Realised USD/AUD rate 6.76 7.26 Realised ZAR/USD rate 15 8 814 10 157 Total 21 7 Other 30 122 159 Industrial Minerals (743) (767)

• Inter group elimination

15 2 234 2 558

• Zincor

6 888 941

• Rosh Pinah

15 2 379 2 732 Base Metals 14 1 042 1 188

• Australia Sands

20 817 984

• KZN Sands

17 1 859 2 172 Mineral Sands 18 2 808 3 319

• Commercial operations

9 1 625 1 768

• Tied operations

15 4 433 5 087 Coal % Change FY06(1) FY07 (R million)

Comparable revenue up 15%

17

COMPARABLE EBIT AND MARGINS (%)

(3) Excludes all non-recurring entries associated with the empowerment transformation transaction in FY06 (2) Excludes the R784 million pre-tax impairment of the carrying value of assets in FY06 (1) Pro forma including Eyesizwe for 12 months, for comparative purposes

19 21 1 881 22 2 242

EBITDA

29 620 798

Non-cash costs

15 14 1 261 14 1 444

EBIT

45 (53) (29)

Other(3)

(1) (1) (2) (3)

Industrial Minerals

(33) (67)

• Consolidation entries

25 11 238 12 298

• Zincor

13 45 404 49 457

• Rosh Pinah

13 26 609 25 688

Base Metals

(70) 19 200 5 60

• Australia Sands

(38) (14) (114) (16) (157)

• KZN Sands(2)

5 86 (4) (97)

Mineral Sands

55 18 515 24 797

• Commercial operations

(16) 6 105 5 88

• Tied operations

43 14 620 17 885

Coal % change in EBIT (%) FY06(1) (%) FY07 (R million)

EBITDA margin of 22%

18

COMPARABLE EBIT FY06 vs FY07

Rm

1 261 928 (8) (25) (504) (133) (75) 1 444

December 2006 Price Volume Exchange rate Cost Stock revaluation Other December 2007

19

COMPARABLE EARNINGS

38 26 Effective tax rate(%)(3) 313 341 Weighted average number of share in issue (million) 49 285 425 HEPS (cents) 62 893 1 448 Headline earnings 36 307 418 Attributable earnings per share (cents) 48 962 1 427 Attributable earnings (26) (27) (20) Minority Interest 46 989 1 447 Profit after taxation (14) (595) (512) Taxation 14 638 728 Post-tax equity income(2) 2 Income from investments (32) (315) (215) Net financing costs 15 1 261 1 444 EBIT % Change FY06(1) FY07 (R million)

HEPS up 49%

(1) Pro forma including Eyesizwe for 12 months, for comparative purposes (2) Sishen Iron Ore (SIOC) equity accounted for 12 months in FY06, for comparative purposes (3) Including post-tax equity accounted income

20

COMPARABLE CASH FLOW

379 Dividend income from equity investments (1 733) 388 Net cash inflow/(outflow) 165 5 Other 239 50 Proceeds from sale of non-core assets & investments (211) (257) Investments acquired (923) (1 296) Fixed assets (1 003) 1 507 Cash available (2 219) (223) Dividends (501) (462) Taxation (263) (116) Net financing costs 1 980 2 308 Cash retained from operations FY06 FY07 (R million)

21

CAPITAL STRUCTURE

483 Net debt 1 333 (850) Cash and cash equivalents After 2011 1 072 1 333 Total debt 2011 43

• Short term

2010 44 408 410

• Australia Sands

2009 100 2 450 923

• Corporate

2008 74 2 858 1 333 Long term Repayment profile Undrawn Drawn Debt structure: R million 21 24 Return on capital employed (%) 11 15 Return on equity - attributable income (%) 6 9 Net financing cost cover (times) - EBITDA FY06 FY07 Ratios:

Debt equity ratio 5% before committed acquisitions

22

PROJECT DEVELOPMENTS

Inyanda plant to be commissioned in 1H08 Mafube ramp-up over seven months Sintel char to be commissioned in 1H08 Additional coal tonnages from Blesbok, Eerstelingsfontein and NCC

projects: await regulatory approvals

Fairbreeze construction targeted for 4Q08 Feasibility studies:

– Medupi Phase 2 – Market coke

Investment decision on Kwinana pigment expansion planned for 1H08 Completion of Rosh Pinah partial divestment in 1H08

23

OUTLOOK

Impact of power supply constraints Skills shortage a challenge Strong local and export demand at higher coal prices Increased coal volumes from new projects Mineral Sands results influenced by lower grades, furnace reline and

strong AUD

Softer zinc prices A weaker rand will benefit earnings

Improved results expected for 2008

ADDITIONAL SLIDES

25

COMPARABLE NET FINANCING COST

(1) Pro forma including Eyesizwe for 12 months, for comparative purposes

111 47 99 Interest adjustment on non-current provisions (12) (96) Interest income (57) 268 116 Net interest expense (32) 315 215 Net financing cost as per income statement 51 39 59 Finance leases (36) 241 153 Interest expense and loan costs % Change FY06 (1) FY07 (R million)

26

COMPARABLE HEADLINE EARNINGS

313 341 Weighted average number of shares in issue (million) 285 425 Headline earnings per share (cents) 893 1 448 Headline earnings

10 (3) Taxation effect of adjustments

• (6)

Reversal of impairment of investment

• (39)

Gains or losses on the disposal of associates or joint ventures

• (7)

Share of associate's recycling of re-measurements from equity to the income statement

• (1)

(3) Share of associate's gains or losses on disposal of PPE

• (3)

17 Gains or losses on disposal of PPE

• 23

Impairment of property peant and Equipment (PPE)

• (36)

Excess of acquirer's interest in net fair value of acquiree's identifiable assets, liabilities and contingent liabilities over cost

• Adjustments:

962 1 427 Attributable earnings FY06(1) FY07 (R million)

(1) Pro forma including Eyesizwe for 12 months, for comparative purposes

27

COMPARABLE DEPRECIATION AND AMORTISATION PER SEGMENT

(1) Pro forma including Eyesizwe for 12 months, for comparative purposes

11 11 Corporate 60 66 Base Metals 6 6 Industrial Minerals 662 763 Total 267 296 Mineral Sands 318 384 Coal FY06 (1) FY07 (R million)

28

COMPARABLE CAPITAL EXPENDITURE

(1) Pro forma including Eyesizwe for 12 months, for comparative purposes (2) Estimates (3) FY08 excludes Namakwa Sands

1 296 679 16 25 7 569 FY07 235 29 8 11 1 179 63 40 20

• Coal
• Mineral Sands
• Base Metals
• Industrial Minerals and other

923 2 470 Total capex Expansion 640 1 168 Sustaining and environmental FY06 (1) FY08 (2)(3) (R million)

29

DIVIDEND – CASH FLOWS

60 100 160 Dividend declared (cps) STC 211 353 564 Dividend declared (Rm) 112 185 297 BEE Holdco 211 535 564 Gross dividend declared 6 11 17 Exxaro empowerment scheme (MPower) 72 120 192 Public 21 37 58 Anglo Interim Dividend 30 Jun 2007 Final Dividend 31 Dec 2007 Total Dividend 2007 (R million)

30

COMPARABLE EBIT 1H07 vs 2H07

Rm

891 204 182 (67) (524) (133) 553

1H07 Price Volume Exchange rate Cost Stock revaluation 2H07

31

COMPARABLE PHYSICAL INFORMATION

48 59 77 98

• Other

602 628 660 592

• Export

1 775 1 590 1 817 2 307

• ArcelorMittal

2 425 2 277 2 554 2 997 Sales 437 414 364 463

• Tshikondeni

1 972 1 859 2 132 2 499

• Grootegeluk

2 409 2 273 2 496 2 962 Production COKING COAL FY04 FY05 FY06 FY07 '000 tonnes

32

COMPARABLE PHYSICAL INFORMATION

1 585 1 784 1 481 1 892

• NBC

822 361 311 156

• NCC

6,020 4 976 3 985 3 702

• Arnot

15 584 12 470 13 613 13 030

• Matla

366 513 921 956

• Leeuwpan

14 017 14 060 14 268 14 510

• Grootegeluk

38 394 34 164 34 599 34 246 Production POWER STATION COAL FY04 FY05 FY06 FY07 ‘000 tonnes

33

COMPARABLE PHYSICAL INFORMATION

1 585 1 784 1 481 1 855

• NBC

207 618 255 120

• NCC

6 020 4 976 3 985 3 702

• Arnot

15 530 12 427 13 613 12 997

• Matla

430 540 915 965

• Leeuwpan

13 926 14 163 14 416 14 587

• Grootegeluk

37 698 34 508 34 665 34 226 Sales POWER STATION COAL FY04 FY05 FY06 FY07 '000 tonnes

34

COMPARABLE PHYSICAL INFORMATION

1 415 1 543 1 774 1 229

• Export

3 597 4 251 2 998 2 832

• Domestic

5 012 5 794 4 772 4 061 Sales 1 065 1 534 469 391

• NBC

1 186 996 1 107 814

• NCC

1 249 1 442 1 504 1 421

• Leeuwpan

1 403 1 551 1 585 1 485

• Grootegeluk

4 903 5 523 4 665 4 111 Production STEAM COAL FY04 FY05 FY06 FY07 '000 tonnes

35

COMPARABLE PHYSICAL INFORMATION

99 90 32 21 108 104 FY06 104 102 35 25 119 126 FY05 LEAD CONCENTRATE (ROSH PINAH) ZINC CONCENTRATE (ROSH PINAH) 104 101

• Production

119 99

• Sales

ZINC METAL (ZINCOR) 12 19

• Sales: export

27 22

• Production

119 97

• Sales: inter company

124 95

• Production

FY04 FY07 ‘000 tonnes

36

COMPARABLE PHYSICAL INFORMATION

(1) Exxaro's effective interest in Chifeng

ZINC METAL (CHIFENG) (1) 12 15 16 23

• Sales

12 15 16 23

• Production

FY04 FY05 FY06 FY07 ‘000 tonnes

37

COMPARABLE PHYSICAL INFORMATION

40 30 36 26

• Sulphate slag

96 134 134 150

• Chloride slag

5 8 10 20

• Scrap iron

63 89 75 90

• Pig iron (LMPI)

20 23 25 17

• Rutile

49 47 50 34

• Zircon

262 356 319 367

• Ilmenite

Production KZN SANDS MINERAL SANDS FY04 FY05 FY06 FY07 '000 tonnes

38

COMPARABLE PHYSICAL INFORMATION

24 41 30 29

• Sulphate slag

84 150 104 163

• Chloride slag

8 11 9 8

• Scrap iron

58 79 60 91

• Pig iron (LMPI)

17 18 31 18

• Rutile

48 47 48 27

• Zircon

27 60 50 50

• Ilmenite (external sales)

Sales KZN SANDS MINERAL SANDS FY04 FY05 FY06 FY07 '000 tonnes

39

COMPARABLE PHYSICAL INFORMATION

53 53 54 54

• Pigment

11 12 14 16

• Leucoxene

112 111 98 100

• Synthetic rutile

18 16 18 17

• Rutile

38 35 36 36

• Zircon

236 220 227 216

• Ilmenite

Production AUSTRALIA SANDS(1) MINERAL SANDS FY04 FY05 FY06 FY07 '000 tonnes

(1) Exxaro's effective 50% interest in Tiwest joint venture with Tronox Inc.

40

COMPARABLE PHYSICAL INFORMATION

17 14 10 17

• Leucoxene

50 59 27 57

• Synthetic rutile

21 18 18 16

• Rutile

38 36 32 29

• Zircon

30 13 30 20

• Ilmenite

Sales AUSTRALIA SANDS(1) MINERAL SANDS FY04 FY05 FY06 FY07 '000 tonnes

(1) Exxaro's effective 50% interest in Tiwest joint venture with Tronox Inc.

41

PROJECT DETAILS

2013 Feasibility study TBD 6.1Mtpa Medupi Phase 2 1Q12 Pre-feasibility TBD TBD Port Durnford (51%) 2011 Pre-feasibility TBD 200ktpa Dongara (Australia 100%) 3Q09 Pre-feasibility R350m 1.8Mtpa Belfast 2011 Awarded TBD 8.5Mtpa May 2006 Medupi Phase 1 2011 Feasibility study R1.9bn 380ktpa Market coke 3Q08 Feasibility study R136m 1.3Mtpa Nov 2007 Diepspruit 2012 Pre-feasibility TBD 3.5Mtpa Moranbah South (Australia) 1Q08 Construction R1.96bn 5Mtpa Nov 2006 Mafube Coal JV (50%) 2Q08 Construction R269m 1.5Mtpa Nov 2006 Inyanda 2014 Pre-feasibility TBD 560ktpa Toliara Sands (Madagascar) 2Q08 Construction R340m 160ktpa Aug 2005 Char project - Grootegeluk 2010 Feasibility study TBD 20ktpa AlloyStream - Furnace 1 2008 Feasibility study R10m 1.1Mtpa Eerstelingsfontein 2008 In progress

• 2.4Mtpa

Blesbok expansion 3Q10 Planned 4Q08 R734m 300ktpa May 2006 Fairbreeze - Sands 3Q09 Feasibility study US$90m 40ktpa Kwinana (100% - 50% attributable) Board approval Status Estimated start-up Estimated Capex Scope Ownership (100% unless indicated otherwise)

Project details subject to study completion

Coal Mineral Sands Base Metals and Industrial Minerals