Full Y ear 2015 Results 15 March 2016 Disclaimer 2 The following - - PowerPoint PPT Presentation
Full Y ear 2015 Results 15 March 2016 Disclaimer 2 The following - - PowerPoint PPT Presentation
Full Y ear 2015 Results 15 March 2016 Disclaimer 2 The following present ations are confident ial and are being made only to, and are No st atement in this present ation is intended as a profit forecast or profit estimate only directed at ,
Disclaimer
The following present ations are confident ial and are being made only to, and are
- nly
directed at , persons to whom such presentat ions may lawfully be communicated (“ relevant persons” ). Any person who is not a relevant person should not act or rely on these presentations or any of their contents. Informat ion in the following present at ion relating to the price at which relevant investments have been bought or sold in the past or the yield on such invest ment s cannot be relied upon as a guide to the fut ure performance of such invest ments. This present at ion does not constitut e an offering of securities or
- therwise
const itute an invitation or inducement to any person to underwrit e, subscribe for
- r otherwise acquire securit ies in any company within the Group. Neither this
document at ion nor the fact of its distribution nor the making of t he presentat ion const itutes a recommendation regarding any securities. This present ation if for information purposes only. The present at ion contains forward-looking st atement s which are subj ect to risk and uncert ainties because they relat e to future event s. These forward-looking stat ements include, without limit ation, st atement s in relation to the Group’ s proj ect ed growth opportunities. Some of t he factors which may cause act ual results to differ from these forward-looking statement s are discussed in cert ain slides of t he presentat ion and others can be found by referring to the information contained under the heading “ Principal risks and uncertainties” in “ The Strategic Report ” in our Annual Report for the year ended 2015. The Annual Report can be found on our website (www.gemdiamonds.com). No st atement in this present ation is intended as a profit forecast or profit estimate and no statement in the present at ion should be int erpreted to mean that earning per share for the current or future financial years would necessarily match or exceed the historical published earnings. The present ation also contains certain non-IFRS financial informat ion. The Group’ s management believes these measures provide valuable additional information in underst anding the performance of the Group or the Group’ s businesses because they provide measures used by the Group to assess performance. However, this addit ional 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 import ant in the management of t he business, they should not be viewed in isolation or as replacement s for
- r
alternatives to, but rather as complement ary to, the comparable IFRS measures such as revenue and other items reported in the consolidated financial statements. The distribut ion of t his presentation or any informat ion contained in it may be restricted by law in certain j urisdictions, and any person into whose possession any document cont aining this present at ion or any part of it comes should inform themselves about, and observe such restrictions. Information in this presentation is correct as at 14 March 2016
2
Agenda
Full year 2015 result s highlight s Diamond market Operat ional performance
HS S E
Let šeng
Ghaghoo
S
ales, market ing and manufact uring
Group financial performance Invest ment proposit ion
3
Full Y ear 2015 Results Highlights
4
REVENUE
US$249m
EBITDA
US$104m
BASIC EPS (pre exceptional items)
US cents 30
FREE CASH FLOW FROM OPERATIONS
US$14m
306 202 213 271 249 100 200 300 400 2011 2012 2013 2014 2015 167 67 80 106 104 54% 33% 37% 39% 42% 0% 10% 20% 30% 40% 50% 60% 50 100 150 200 2011 2012 2013 2014 2015 EBITDA MARGIN EBITDA 77
- 51
21 61 14
- 100
- 50
50 100 2011 2012 2013 2014 2015 49 13 17 24 30 10 20 30 40 50 60 2011 2012 2013 2014 2015
Diamond Market
Clifford Elphick Chief Execut ive Officer
Diamond Market
Diamond market for Letšeng’s high end
diamonds remained stable in an overall market subdued in 2015
Slow down in Chinese retail demand Inventory and liquidity concerns Medium to long term market outlook
remains strong
Reduced sales from De Beers and Alrosa leads
to firmer prices
Improved outlook as 2016 starts to show
green shoots
6
0.60 0.80 1.00 1.20 1.40 1.60 1.80 2010 2011 2012 2013 2014 2015 2016 WWW Large Index WWW Overall Index
Diamond Price Indices
Diamond Pricing
Letšeng
Price levels maintained due to resilience in
+10.8 carat Type II diamonds Ghaghoo
Weaker market impacted Ghaghoo production Third sale at $150 per carat, down from $210
(February 2015) and $165 (July 2015), dropping in line with WWW Overall index
First sale in 2016 achieved $160 per carat - up
6.7% from previous sale
7
Letšeng 6 and 12 Month Rolling $/ carat
- 500
1 000 1 500 2 000 2 500 3 000 FY 2014 Q1 Q2 Q3 FY 2015 6 month 12 month
Operational Performance
Alan Ashwort h Chief Operat ing Officer
Group HSSE Performance
Zero fatalities and Lost Time Inj uries Group LTIFR 0.00 (2014 LTIFR 0.20) Group AIFR 2.87 (2014 AIFR 3.01) Zero maj or or significant Group-wide stakeholder or environment incidents occurred Letšeng maintained 5-star IRCA rating for a second year Ghaghoo maintained 4-star IRCA rating for a second year Group invested US
$0.6m (2014 US $0.6m) in CS R initiatives
The Group continued implementing international best practice in respect of environmental and social
responsibility
9
0.25 0.30 0.13 0.20 0.00 2011 2012 2013 2014 2015 4.54 4.45 2.49 3.01 2.87 2011 2012 2013 2014 2015 1.1 0.6 0.5 0.6 0.6 2011 2012 2013 2014 2015
LTIFR AIFR CSI
Letšeng Operational Overview
10
Letšeng Operational Overview
S
t rong end t o 2015 - product ion t arget s achieved
Waste mined –24.0 million tonnes
Ore treated – 6.7 million tonnes
1.9 million tonnes of S atellite pipe contribution in 2015
Carats recovered – 108 579
Prices remain st able – FY 2015 US
$2 299 per carat
Plant 2 Phase 1 upgrade – additional 250 000 tonnes p.a. being realised
Coarse Recovery Plant – addressing diamond damage and enhanced security
Cont inual improvement s:
Cost efficiencies
Power back up capacity
Improved blasting techniques
11
17.4 19.1 19.9 24.0 2012 2013 2014 2015
Waste mined (tonnes millions)
6.6 6.3 6.4 6.7 2012 2013 2014 2015
Ore treated (tonnes millions)
114 95 109 109 2012 2013 2014 2015
Carats recovered (000’s)
Letšeng Operational Overview
Optimised Life of Mine plan Increased Satellite contribution (1.9 mt 2015) Optimal waste profile – peak of 36 mtpa (2024) Steeper slope angles (resulting in less waste) Improved NPV
12
20 40 60 80 100 120 1 2 3 4 5 6 7 8
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037
Carats recovered ‘ 000s Tonnes treated - millions
S atellite pipe Main pipe Carats recovered 5 10 15 20 25 30 35 40
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037
Waste Tonnes mined - millions
Main pit waste S atellite pit wast e
Optimised Life of Mine plan : tonnes treated and carats recovered profile Optimised Life of Mine plan : waste profile
2 4 6 8 10 12 14 1 2 3 4
1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 2011 2012 2013 2014 2015 100 carats annually 100 carats per month +100 cts per month Annual Frequency of +100cts
Letšeng Operational Overview
13
Frequency of +100 carat recoveries
Ghaghoo Operational Overview
Ghaghoo Operational Overview
Phase 1 obj ectives achieved Grade remains steady and ahead of Reserve Recovered grade of 28.0 cpht in 2015 Reserve grade of 27.8 cpht Surge bin successfully commissioned in January 2016 –
daily throughput of 2 000 tonnes achieved
Water fissure Level 1 sealed and mined t hrough Level 2 sealed Long t erm sust ainable solut ion in place
Premature caving and sand ingress
No inj uries or propert y damage Long t erm plans in place t o minimise dilut ion Three sales concluded Average $ per carat for 2015 - US $162
15
Underground operations at Ghaghoo Processing plant at Ghaghoo
Ghaghoo Outlook
Depressed diamond market impacted Ghaghoo
type production
Prudent to downsize in current market conditions Optimising production levels to:
Reduce cash burn Targeting approx. 300 000 tonnes for 2016
Ghaghoo remains an important asset for the Group Resource of 20m carats worth >US$4 billion in situ Options being assessed to expand when diamond
prices improve
First sale in 2016 achieved $160 per carat - up 6.7%
from previous sale
16
Parcel of Ghaghoo diamonds
S ales, Marketing and Manufacturing
Clifford Elphick Chief Execut ive Officer
Sales, Marketing and Manufacturing
Sales and marketing
Good prices achieved for Letšeng's high quality
production - average of US$2 299 per carat in 2015
36 rough diamonds achieved a value of greater
than US$1.0 million each
Two +300 carat exceptional quality Type IIa
rough diamonds sold Manufacturing
336 carats extracted at a rough value of
US$4.6 million for manufacturing during 2015
Uplift achieved >20%
18 357ct white diamond which was sold for US $ 19.3 million
108.51 carat diamond achieved US $65,226 per carat
Group Financial Performance
Michael Michael Chief Financial Officer
Group Financial Performance
20
US $ millions 2015 Actual Results Exceptional items Pre Exceptional items 2015 2014 % Variance Revenue
249.5 249.5 270.8 (8%)
Royalt y and selling cost s
(21.9) (21.9) (24.7)
Cost of S ales
(112.4) (112.4) (127.7)
Corporat e expenses
(11.7) (11.7) (12.4)
Underlying EBITDA
103.5 103.5 106.0 (3%)
Depreciat ion and amort isat ion
(10.4) (10.4) (14.8)
Non cash and ot her it ems
15.4 9.6 5.8 4.0
Net finance income
0.1 0.1 0.2
Profit before tax from continuing operations
108.6 9.6 99.0 95.4 14%
Income t ax
(31.6) (31.6) (35.0)
Discont inued operat ions
0.6 0.6
- (2.5)
Profit after tax
77.6 10.2 67.4 57.9 34%
Attributable profit
52.0 10.2 41.8 33.2 36%
Basic EPS (US cents)
37.6 7.4 30.2 24.0 57%
Financial Performance – Letšeng Mining Operations
21
US$ millions 2015 2014 % Variance Revenue 236.3 276.8
- 15%
EBITDA 101.9 123.5
- 17%
EBITDA margin 43% 45% 2015 2014 % Variance Average price per carat (US $) 2 299 2 540
- 9%
Carat s sold 102 778 108 963
- 6%
Unit costs (US$) % Variance Direct cash cost s (before wast e) per t onne t reat ed 11.40 12.70
10%
Operat ing cost s per t onne t reat ed 16.50 19.64
16%
Wast e cash cost per wast e t onne mined 2.20 2.22
1%
Exchange rate –Average to US$ Malot i 12.78 Malot i 10.85 18% Unit costs (local currency - Maloti) % Variance Direct cash cost s (before wast e) per t onne t reat ed 145.64 137.75 6% Operat ing cost s per t onne t reat ed 210.84 213.08
- 1%
Wast e cash cost per wast e t onne mined 28.08 24.07 17%
Corporate Costs
Continued focus on cost reduction whilst
upholding appropriate governance and assurance systems
Costs down to US
$11.7m in 2015
Costs have reduced by 24%
since 2011
Low end of the cost curve
22
Corporate costs (US$ millions)
15.3 14.2 13.8 12.4 11.7 2011 2012 2013 2014 2015
Group Cash and Funding
Cash
Group cash of US$85.7m (US$71.7m attributable) Net cash of US$55.3m after debt of US$30.4m
Funding
Total Group facilities of US$85m of which US$51m is available for draw down
23
99 93 86 111 165 61 39 25 24 12 12 4 6 7 16
- 50
100 150 200 250 300
Cash December 2014 Letšeng - cash generat ed Wast e cost s capit alised Tax paid Invest ment - Ghaghoo Invest ment - PPE Dividends to minority int erest holders Corporat e costs Financial liabilities repaid Subt ot al Invest ment in polished invent ory Subt ot al Dividends paid Cash December 2015 (including available facilities)
US$ millions
Group Cash Reconciliation
Clifford Elphick Chief Execut ive Officer
Investment Proposition
Investment Proposition
25
Gem Diamonds has a unique set of diamond assets and a strong Balance Sheet Long term fundamentals for diamonds are strong Letšeng is a world class diamond mine
Produces the highest value diamonds
(US$2 299 per carat in 2015)
Is a long life asset Is strongly profitable and cash flow
generative
Further upside through diamond breakage
reduction, improved large recoveries and increased ore from the Satellite pipe Ghaghoo mine is an important growth asset
Ready to ramp up when market conditions
allow
Temporary reduction in production protects
the Balance Sheet
100%
- wnership
20m carats worth >US$4 billion in situ 20 years of mining lease remaining
Cash flow generative and strong profitability even in current market conditions Strong Balance Sheet with net cash of US$55 million & further US$51 million undrawn facilities Ordinary and special dividends proposed for 2015 Attractive EV:EBITDA multiple
Thank you
500 1 000 1 500 2 000 2 500 20 40 60 80 100 120 140 160 180 200
01 January 2015 01 March 2015 01 May 2015 01 July 2015 01 S eptember 2015 01 November 2015 01 January 2016
Thousands
Volume (000s) Price
Annexure 1 - Gem Diamonds capital structure
27
Major shareholders as at 11 March 2016 Graff Diamonds Int ernat ional Limit ed 15.11% Lansdowne Part ners Lt d 14.98% Gem Diamonds Holdings Limit ed 6.74% Maj edie Asset Management 5.28% BlackRock 4.47% FMR LLC 4.18% Ot her Direct ors’ holdings 1.79%
Gem Diamonds share price performance since 1 January 2015
Gem Diamonds Limited is listed on the Main Board of the London Stock Exchange LSE: GEMD Company officers Daily average t rading volume (last 12 mont hs) 213.6k Clifford Elphick Chief Execut ive Officer S hares in issue 138 269 811 Alan Ashwort h Chief Operat ing Officer Free float 56.3% Michael Michael Chief Financial Officer S hare price (11 March 2016) £1.01 Glenn Turner Chief Legal and Commercial Officer Market capit alisat ion (millions) £140 / US $200
S
- urce: Fact S
et as of 06 March 2015
Annexure 2 – Letšeng 2016 Guidance
28
FY 2016 Waste tonnes mined (Mt) 29 – 32 Ore treated (Mt) 6.8 – 7.0 Carats recovered (Kct) 107 – 109 Carats sold (Kct) 107 – 110 Direct cash costs (before waste) per tonne treated (Maloti) 145 – 155 Mining waste cash costs per tonne of waste mined (Maloti) 28 – 30 Operating costs per tonne treated1 (Maloti) 200 – 220 Stay in business capital (US$m) 8 – 10
Annexure 3 - Diamond Market
The US market remains the most important
market for diamonds (over 40%
- f demand) and
continues to grow strongly
China has been a strong growth market for
diamonds (2009-2014 CAGR of 18% ). Longer term, the shift in the economy from construction to consumption combined with favourable demographic trends should support strong continued growth
India is an important global j ewellery market
which has embraced diamonds in recent years
29
Rest of World India China Gulf Japan US
Polished Diamonds Sales by Geography
Annexure 4 - Global Diamond Producers
30 S
- urce: www.paulzimnisky.com (2016)
As of February 1, 2016
- Est. production in 2016
Mine Location Revenue US Millions Carats Per Carat Jwaneng Bot swana $2 048 10 500 000 $195 Jubilee Russia $966 9 200 000 $105 Diavik Canada $805 7 000 000 $115 Orapa Bot swana $760 8 000 000 $95 Debmarine Namibia Namibia $700 1 400 000 $500 Cat oca Angola $553 6 500 000 $85 Ekat i Canada $520 5 100 000 $102 Grib Russia $450 4 500 000 $100 Argyle Aust ralia $420 16 800 000 $25 Nyurbinskaya Russia $405 4 500 000 $90 Almazy-Anabara Placers Russia $396 4 400 000 $90 Udachnaya (Pit % UG) Russia $360 4 000 000 $90 Int ernat ional Russia $360 4 000 000 $90 Aikhal Russia $297 3 300 000 $90
Letsěng
Lesotho $249 110 000 $2 264 Vict or Canada $248 550 000 $451 Venet ia S
- ut h Africa
$240 2 000 000 $120 Nizhne-Lenskoye Placers Russia $234 2 600 000 $90 Karowe Bot swana $221 350 000 $631 Mir Russia $198 2 200 000 $90 Nyurba Placers Russia $198 2 200 000 $90 Finsch S
- ut h Africa
$185 2 400 000 $77 Marange (A) Zimbabwe $158 3 500 000 $45 Gahcho Kue Canada $149 1 000 000 $149 Bot uobinskaya Russia $135 1 500 000 $90 Karpinskogo-1 Russia $108 1 200 000 $90 Mining Area 1 LOR Namibia $96 180 000 $533 Elizabet h Bay Namibia $96 180 000 $533 Koidu S ierra Leone $90 300 000 $300 Voorspoed S
- ut h Africa
$78 650 000 $120