FY18 Results Presentation September 2018 Black Rock Assore - - PowerPoint PPT Presentation

FY18 Results Presentation

September 2018

Black Rock

FY18 Results Presentation

Assore Executive Team

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▪ Charles Walters Chief Executive Officer ▪ Ross Davies Chief Financial Officer ▪ Tiaan van Aswegen Executive: Operations ▪ Patrick Sacco Executive: Sales & Marketing ▪ Kieran Daly Executive: Growth & Strategic Development ▪ Bongani Phakathi Executive: HR & Corporate Affairs (effective 1 October 2018)

FY18 Results Presentation

Assore Group Structure

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Oresteel Investments Boleng Trust Fricker Road Trust Assore Employee Trust Assmang Dwarsrivier Chrome Marketing & Shipping Other IronRidge (IRR: AIM) Dwarsrivier Chrome Mine Ore & Metal African Mining & Trust Minerais (51%) Wonderstone Zeerust Chrome RMDC (56%) Exploration (Africa / Australia) Iron Ore Khumani Mine Beeshoek Mine Manganese Ore Black Rock Complex (Gloria/Nchwaning) Manganese Alloys Cato Ridge Cato Ridge Alloys (50%) Sakura (54%) Machadodorp Public (Free Float) Assore Ltd (ASR : JSE)

14.3% 11.8% 21.5% 52.4% 50% 100% 100% 100% ~29%

FY18 Results Presentation

FY18 Group Highlights

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8% 12%

Revenue

R7 805m

Profit After Tax (pre-Assmang)

R1 667m

2% 2%

Attributable Earnings

R5 119m

Headline Earnings

R5 109m

29% 56%

Free Cash Flow

R4 754m

Net Cash (excluding Assmang)

R7 865m

2%

HEPS

R49.53

DPS

R22.00

57%

FY18 Results Presentation

▪ Overall improvement in safety (one fatality at Sakura) ▪ HEPS down 2% y/y to R49.53; EPS up 2% to a record R49.63 ▪ Record production & sales volumes in Iron Ore and Chrome Ore ▪ Most US$ market prices higher y/y; Chrome Ore price down y/y, but less volatile ▪ Strengthening of the R/US$ by 6% was a headwind ▪ Assmang (100%) headline earnings of R7.1bn down 5% y/y ▪ In Assmang, Manganese earnings up 64% y/y; Iron Ore down 23% y/y ▪ Net Cash increased to R7.9bn (FY17: R5.0bn; H1 FY18: R6.6bn) ▪ Final DPS of R12.00 takes full year to a record R22.00 ▪ R6.7bn Black Rock Expansion Project now ~90% complete

FY18 Group Highlights

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FY18 Results Presentation

Key Drivers - Sales volumes & prices

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• 1%

3% 19% 7% 22% 25%

• 28%

22%

• 6%
• 30%
• 20%
• 10%

0% 10% 20% 30% Market Price Volume Market Price Volume Market Price Volume Market Price Volume R/US$ Iron Ore Manganese Ore Manganese Alloys Chrome Ore Exchange Rate FY18 vs. FY17

Note: Market Prices & Sales Volumes per Slides 15-20

Iron Ore Manganese Ore Manganese Alloys Chrome Ore Exchange Rate Market Price Sales Volume Market Price Sales Volume Market Price Sales Volume Market Price Sales Volume R/US$

FY18 Results Presentation

Headline Earnings - Dwarsrivier delivers again

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3772 1628 1433 3723 3555 843 875 505 290 377 653 713 4230 1976 1744 5209 5109 1000 2000 3000 4000 5000 6000 FY14 FY15 FY16 FY17 FY18 Rm Assmang Dwarsrivier Marketing & Shipping Other Assore

FY18 Results Presentation

Headline Earnings - Manganese outperformed Iron Ore

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3488 1423 1413 2509 2004 593 374 272 1501 2211 1241 845 4230 1976 1744 5209 5109 1000 2000 3000 4000 5000 6000 FY14 FY15 FY16 FY17 FY18 Rm Iron Ore Manganese Chrome Other Assore

* includes dividend received in Assmang upon its sale of Dwarsrivier to Assore (50% share)

*

FY18 Results Presentation

Cash Flow - Net Cash increased by 56% y-o-y

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5047 7865 1900 442 3000 457 367 683 1931

2000 4000 6000 8000 10000 12000

Net Cash at end FY17 Operating CF (pre-WC) Working Capital Assmang Dividend Net Interest Net Additions/(Disposals) Tax Dividends Paid (net) Net Cash at end FY18

Rm

Net Cash at end FY17 Operating CF (pre-WC) Working Capital Assmang Dividend Net Interest Net Additions/ (Disposals) Tax Dividends Paid (Net) Net Cash at end FY18

FY18 Results Presentation

Dividends - Payout ratio in line with the sector

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40.98 19.15 16.90 50.49 49.53 10.00 6.00 7.00 14.00 22.00 0.00 10.00 20.00 30.00 40.00 50.00 60.00 FY14 FY15 FY16 FY17 FY18 R/sh HEPS* DPS**

*103m shares **140m shares

FY18 Results Presentation

59% 47% 31% 54% 10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% FY17 FY18 Iron Ore Manganese Chrome

▪ LTIFR down from 0.17 to 0.13 ▪ Headline Earnings down 5% y/y to R7.1bn (FY17: R7.4bn) ▪ Manganese 54% of earnings (FY17: 31%) ▪ Net Cash of R4.8bn (post-R6.0bn dividend) ▪ Iron Ore

▪ Khumani production of 14.7mt (+1% y/y) ▪ Beeshoek production of 3.9mt (+22% y/y) ▪ Unit production cost up 2% y/y (Khumani)

▪ Manganese Ore & Alloys

▪ Black Rock production up 21% y/y to 3.7mt ▪ Black Rock unit production cost up 16% y/y ▪ Black Rock Expansion Project 90% complete; R2.7bn capex for Gloria ▪ Sakura produced 244kt (Nameplate: 216kt)

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Assmang* - A strong production performance

Contribution to Assmang Headline Earnings

*All figures 100% Assmang basis

FY18 Results Presentation

▪ LTIFR down from 0.20 to 0.19 ▪ Headline Earnings up 4% y/y to R875m (FY17: R843m) ▪ Record Chrome Ore production of 1.6mt (FY17: 1.4mt) ▪ Record Chrome Ore sales of 1.6mt (FY17: 1.3mt) ▪ Unit production cost down 1% y/y ▪ US$ market price (44%Cr) down 28% y/y, but less volatile ▪ Realised price only marginally down on mix and timing ▪ Capex of R300m (FY17: R141m) ▪ Free Cash Flow of over R1bn

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Dwarsrivier Chrome - Another record year

Dwarsrivier Chrome Ore Production (mt)

1.0 1.1 1.2 1.4 1.6 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 FY14 FY15 FY16 FY17 FY18

FY18 Results Presentation

Outlook

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▪ US economy strong; but pressure on emerging markets ▪ Impact of potential “trade war” hard to quantify ▪ China increasing infrastructure spend to balance property weakness ▪ Positive impact of Chinese environmental restrictions expected to continue ▪ Demand for high quality raw materials expected to remain strong ▪ Stable prices so far in FY19; Chrome Ore under pressure ▪ Weakening R/US$ is a tailwind ▪ Draft Mining Charter 2018 discussions are ongoing ▪ Actively looking for appropriate, value-accretive, growth opportunities

Questions & Answers

Beeshoek Mine

FY18 Results Presentation

Units FY18 FY17 y/y

Production Volumes Iron Ore Manganese Ore Manganese Alloys Chrome Ore mt mt mt mt 18.6 3.7 0.5 1.6 17.7 3.1 0.4 1.4 5% 21% 15% 16% Sales Volumes Iron Ore Manganese Ore* Manganese Alloys Chrome Ore mt mt mt mt 17.9 3.2 0.4 1.6 17.3 3.0 0.3 1.3 3% 7% 25% 22%

Production & Sales Volumes (100%)

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*Excluding intergroup sales to Cato Ridge Works

FY18 Results Presentation

Iron Ore Price (62%Fe CFR China)

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20 40 60 80 100 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 US$/t

FY17 = US$69.53 FY18 = US$69.08

Source: Platts

FY18 Results Presentation

Iron Ore Lump Premium

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• 5

10 15 20 25 30 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 US$/t

FY17 = US$7.39 FY18 = US$13.34

Source: Platts

FY18 Results Presentation

Manganese Ore Price (44%Mn CIF China)

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0.00 2.00 4.00 6.00 8.00 10.00 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 US$/mtu

FY17 = US$5.77 FY18 = US$6.88

Source: Metal Bulletin

FY18 Results Presentation

Manganese Alloy Price (HCFeMn)

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200 400 600 800 1000 1200 1400 1600 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 US$/t

FY17 = US$1176 FY18 = US$1430

Source: CRU

FY18 Results Presentation

Chrome Ore Price (44%Cr Concentrate CFR China)

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100 200 300 400 500 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 US$/t

FY17 = US$310 FY18 = US$224

Source: CRU

FY18 Results Presentation

Marketing & Shipping ▪ Profits in line with Assmang revenue ▪ Interest income Other Operations ▪ Zeerust & Rustenburg - sold for nominal value ▪ Wonderstone - improving product diversification IronRidge Resources ▪ Assore has a ~29% stake and 2 board seats ▪ Listed on AIM with ~GBP80 million current market cap ▪ Promising exploration drilling results at Cape Coast lithium project in Ghana

Other Segments

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