Highlights Operating profit of R2,9 billion up 52% year on year - - PowerPoint PPT Presentation

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Highlights Operating profit of R2,9 billion up 52% year on year - - PowerPoint PPT Presentation

Mar 30, 2023 12 likes •447 views

Highlights Operating profit of R2,9 billion up 52% year on year Sishen Mine sales up 8% Interim dividend of 350 cents per share Sishen Expansion Project construction progressing well 4,9 Mt B grade material mined

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Highlights

  • Operating profit of R2,9 billion up 52% year on year
  • Sishen Mine sales up 8%
  • Interim dividend of 350 cents per share
  • Sishen Expansion Project construction progressing well
  • 4,9 Mt “B” grade material mined and stockpiled for SEP
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SLIDE 3

SAFETY

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Thabazimbi Mine

0.2 0.4 0.6 0.8 1 2001 2002 2003 2004 2005 2006 Jan Feb Mar Apr May Jun LTIFR

Sishen Mine

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 2001 2002 2003 2004 2005 2006 Jan Feb Mar Apr May Jun LTIFR

Safety – “one injury is one too many”

  • Safety the top priority
  • Sishen Mine achieved 3 million LTI free man-hours in May 2007
  • Thabazimbi Mine achieved 2 million LTI free man-hours in June 2007
  • SEP safety performance sustained
  • Regrettably one fatality at Sishen Mine

EBIT Margin 56%

* Fatality

** * * * * *

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SLIDE 5

FINANCIAL REVIEW

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Financial highlights

  • Revenue up 35% from R4,0 billion to R5,4 billion
  • Sishen Mine unit cost – R78,39 per tonne (2006 – R78,22)
  • Operating profit R2,9 billion up 52% year on year
  • Headline earnings of R1,6 billion – 502 cents per share
  • Interim dividend of 350 cents per share
  • R3,0 billion cash flow from operations
  • Capital expenditure of R1,2 billion

EBIT Margin 56%

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Financial overview

(5) 17 61 (30) 26 47 (5) 18

% change

1 229 2 570 16 980 608 2 238 2 846 43 2 000 (2 619) 4 619

6 mths to 31 Dec 2006 % change 6 mths to 30 Jun 2006 6 mths to 30 Jun 2007

(Rm) 18 (2 100) (2 482) Operating expenditure * 138 489 1 166 Capital expenditure 77 1 707 3 017 Cash generated from operations 25 27 Effective tax rate (%) ** 38 1 145 1 578 Headline earnings 286 406 – minority interest 1 143 1 579 – equity holders of Kumba Iron Ore 39 1 429 1 985 Profit attributable to: 13 48 54 Operating margin (%) (EBIT) * 52 1 935 2 949 Operating profit * 35 4 035 5 431 Revenue

* 31 December 2006 results adjusted for the once-off net surplus on the sale of non-iron ore assets of R1 571 million and share based payment expense – SIOC Community Development SPV of (R153 million) ** Excluding STC

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CIF operations

6 mths to 31 Dec 2006 % change 6 mths to 30 Jun 2006 * 6 mths to 30 Jun 2007 (Rm) 2,1 (21) 1,9 1,5 Wet tonnes shipped (Mt) (290) 41 (189) (267) Operating expenditure 18 16 11 Operating margin (%) (EBIT) 64 25 36 45 Operating profit 354 39 225 312 Revenue

EBIT Margin 56%

* 30 June 2006 results reclassified for CIF operations revenue and operating expenditure

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Revenue – variance

258 537 618 234 211 40 4 035 4 619 5 431 1 000 2 000 3 000 4 000 5 000 6 000 H1 '06 Volume Price Currency H2 '06 Volume Price Currency H1 '07 Rm

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Revenue – sector analysis

6 mths to 31 Dec 2006 % change 6 mths to 30 Jun 2006 6 mths to 30 Jun 2007 (Rm) 50,63 11 47,87 53,15 – US dollar per tonne 232 18 211 250 Revenue – domestic (Thabazimbi Mine) * 1,3 18 1,1 1,3 – Tonnes sold (Mt) 178 – 192 192 – Rand per tonne 354 39 225 312 Revenue – CIF operations 4 619 35 4 035 5 431 Total revenue 364 27 300 380 – Rand per tonne 3 753 34 3 356 4 485 Revenue – export 10,3 5 11,2 11,8 – Tonnes sold (Mt) 280 58 243 384 Revenue – domestic (Sishen Mine) 3,2 19 2,7 3,2 – Tonnes sold (Mt) 87 33 90 120 – Rand per tonne

* Revenue is presented after the accounting effect of IFRIC 4. Captive assets, the related depreciation and revenue from these assets are derecognised.

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37% 36% 27% China Europe Rest of Asia

Export tonnages – geographical analysis

51% 28% 21% China Europe Rest of Asia

Forecast 2011/2012 30 June 2007

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Aggregate operating expenditure

(3) 588 290

–

41 (30) 11 250 240 1 243 1 733 1 744 2 619 6 mths to 31 Dec 2006

– –

(8) (55) 9 7 (2) (7) (5) % change 41 189 267 Expenditure – CIF operations 50 (2) (3) Sublease rent received 5 563 590 Selling, rail and port costs

–

(227) Work in progress – “B” grade (61) 6 Work in progress – “A” grade 1 148 Finished products (60) (73) Inventory movements (27) 155 112 Other 21 215 261 Thabazimbi Mine 28 1 040 1 328 Sishen Mine 21 1 410 1 701 Production costs 21 1 350 1 628 Cost of goods sold 18 2 100 2 482 Operating expenditure % change 6 mths to 30 Jun 2006 6 mths to 30 Jun 2007 (Rm)

“A” grade material > 60% Fe content “B” grade material 55% – 60% Fe content primarily feedstock for SEP

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Sishen Mine – unit cost

87,21

–

21 21 1 243 1 264 14,5 6 mths to 31 Dec 2006 (10) 7 (12) (2) % change % change 6 mths to 30 Jun 2006 6 mths to 30 Jun 2007 (Rm) 14 69,01 78,39 Sishen Mine – unit cost (R/tonne)

–

(227) Work in progress – “B” grade (61) 14 Work in progress – “A” grade (61) (213) Inventory movements 1 040 1 328 Production costs 14 979 1 115 Cost of goods produced

–

14,2 14,2 Production (Mt) Unit cost FY ’06 R78,22 per tonne

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69.01 71.85 71.85 75.03 78.68 79.33 87.21 90.72 90.72 90.02 90.02 77.76 77.76

0,60 1,80 3,56 3,18 3,65 0,66 7,88 3,53 0,02 15,00 2,74 1,10 0,72 78,39 69,01 87,21 65 70 75 80 85 90 95 1H2006 Inflation Depreciation Labour Opex Other Volume 2H2006 Inflation Depreciation Labour Opex Other "B" grade Volume 1H2007 R/ton

Sishen Mine – unit cost variance

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400 997

  • 89

232 149 1017 500 1 000 1 500 2 000 2 500 3 000 3 500 H1 '06 H2 '06 H1 '07 Forecast H2 '07 Forecast FY08

Rm

Cash generated Capital – SIB Capital – Expansion Cash available after capex

Cash flow analysis

3 017 2 570 1 707 1 218 1 851 1 341 500 1 000 1 500 2 000 2 500 3 000 3 500 H1 '06 H2 '06 H1 '07 Forecast H2 '07 Forecast FY08

Rm

1 200 – 1 400 1 400 – 1 600*

* Excludes R2,0 billion capital expenditure for Sishen South in 2008 if approved and the expansion of our own fleet capacity to replace contract mining

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Cash flow variance

1,094 3,964 3,298 3,047 1,881 1,892 1918 1,841 1,364

26 11 3 017 147 666 251 1 166 77 477 1 094 1 364 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 2007 Opening balance Cash generated Interest Tax Dividends Capital expenditure Translation Shares issued Minority dividend Debt repaid Closing balance Rm

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Dividend – cash flows

Final dividend 31 Dec 2006 * Interim dividend 30 Jun 2007 (Rm) 401 1 700 Gross dividend declared by SIOC 263 1 119 – Kumba 11 45 – SIOC Employee Share Participation Scheme 45 189 STC 11 45 – SIOC Community Development SPV 71 302 – Exxaro 356 1 511 356 1 511 Dividend declared by Sishen Iron Ore Company (SIOC)

* For the two-month period ended 31 December 2006

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Kumba dividend

  • Interim dividend of 350 cents per share
  • Strong balance sheet and robust cash flow

251 1 103 Total dividend declared (Rm) 80 305 Dividend per share (cents per share) 84 502 Earnings per share (cents per share) Final dividend 31 Dec 2006 * Interim dividend 30 Jun 2007

* Earnings per share for the two-month period ended 31 December 2006

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Gearing

  • Strong cash generation, R3 billion, reduced net debt position
  • Based on historic forecasts, a net debt position of around R3 billion at

31 December 2007 before taking into account any new projects

  • Maximum debt in terms of covenants – R4,5 billion

84 20 Interest cover (times) 1 055 2 778 Total equity 2 925 2 169 Net debt (1 094) (1 364) Cash and cash equivalents 4 019 3 533 Interest-bearing borrowings 31 Dec 2006 30 Jun 2007 (Rm)

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OPERATIONAL REVIEW

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* Measured as total waste: total ore

Production statistics – Sishen Mine

  • Increased mining activity
  • 4,9 Mt “B” grade material stockpiled
  • Sustained DMS production
  • SEP reduces the stripping ratio

6 mths to 31 Dec 2006 % change 6 mths to 30 Jun 2006 6 mths to 30 Jun 2007 (Mt) 14,8 17 16,3 19,1 ROM production 34,1 28 25,2 32,1 Waste mined 48,9 23 41,5 51,2 Total tonnes mined 2,31 1,53 2,61 Stripping ratio pre SEP * 1,64 Stripping ratio * 14,5 – 14,2 14,2 Final product production – DMS

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* Measured as total waste: total ore

Production statistics – Thabazimbi Mine

  • Production and sales driven by

Mittal offtake and rail constraints

  • Stripping ratio in line with the life
  • f mine plan

6 mths to 31 Dec 2006 % change 6 mths to 30 Jun 2006 6 mths to 30 Jun 2007 (Mt) 5,4 6,7 6,0 Stripping ratio * 1,7 21 1,4 1,7 ROM production 9,1 6 9,5 10,1 Waste mined 1,3 27 1,1 1,4 Final product production 1,3 18 1,1 1,3 Sales

  • Current life of mine – 2011
  • Project Phoenix being evaluated
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LOGISTICS AND SALES

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Logistics and sales

  • Rail and port systems performed satisfactorily
  • Sale of inventory built up at Saldanha by 31 December 2006
  • Ship loader 2 expected to be back in operation by

August 2007

6 mths to 31 Dec 2006 % change 6 mths to 30 Jun 2006 6 mths to 30 Jun 2007 (Mt) 1,3 18 1,1 1,3 Thabazimbi Mine 3,2 19 2,7 3,2 Sishen Mine 4,5 18 3,8 4,5 – Sales domestic 10,3 5 11,2 11,8 – Sales export 14,8 9 15,0 16,3 Total sales 11,9 (7) 12,4 11,5 Railed to port

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Kumba Total capacity * Unconfirmed

Rail capacity on Sishen-Saldanha export channel

Pre-feasibility/ Potential

  • Additional

9 Mtpa to be agreed

  • Sishen South

Other uses

  • SEP 13 Mtpa
  • Port expansion

completed

  • Rail in

progress None Expansion details/ plans Decision 2007 Approved In ramp-up Completed Status

24 35 35

90 * 60 47 41 30

20 40 60 80 100 Current 2009 2010 2011 2015 Mtpa

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SLIDE 26

PROJECT PIPELINE

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Northern Cape growth prospects

10 20 30 40 50 60 70 80 90 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Mtpa Sishen Mine SEP 1 SEP 1B Sishen South Sishen South Medium Grade Ore SEP 2 Phase 1 Sishen C-grade Fines Sishen Pellets

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SEP implementation status

Project commissioning and ramp-up:

  • Delays in primary and secondary crusher

castings

  • First production expected in August 2007
  • 6 of 8 jig modules in production by end of

2007

  • 1,5 Mt production anticipated for 2007 (9

Mt – 2008)

  • Full capacity expected in the first half
  • f 2009

Budget:

  • Project to be delivered within

R5,1 billion budget despite earlier delays

13 Mtpa expansion, utilising jigging technology to beneficiate medium grade ores previously classified as waste

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Sishen South

  • Feasibility study completed
  • Delays experienced in finalising

expansion and rail tariffs with Transnet

  • Mining rights anticipated later

this year

  • Latest capital expenditure estimate

– R4,5 billion (June 2007 real terms) Greenfields project of 9 Mtpa direct shipping ore, 70 km south

  • f Sishen Mine, similar to SEP

grade ore

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Falémé

  • Arbitration proceedings against Miferso and the Government of Senegal

are currently being initiated

  • Arbitration will be governed by the Rules of Arbitration of the

International Chamber of Commerce

  • The matter is confidential in nature
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OUTLOOK

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Outlook

  • Profitability remains highly sensitive to the Rand/US Dollar exchange

rate

  • However, we remain positive on iron ore prospects given:

– Continued strong Chinese demand; and – Upward pressure on spot prices due to delayed supply side response and logistical constraints

  • Successful SEP commissioning set to unlock future value and reduce

Sishen Mine unit cost

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QUESTIONS AND ANSWERS

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ANNEXURES

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Headline earnings

EBIT Margin 56%

980 1 145 1 578 Headline earnings 314 – – Adjustments attributable to minority interests (608) (286) (406) Less: minority interests 1 274 1 431 1 984 – (1) 3 Taxation effect of adjustments (1 571) – – Net surplus on disposal of investment in non-iron

  • re assets

(1) 3 (4) Net (profit)/deficit on disposal or scrapping of property, plant and equipment 2 846 1 429 1 985 Profit 6 mths to 31 Dec 2006 6 mths to 30 Jun 2006 6 mths to 30 Jun 2007 (Rm)

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Reconciliation of attributable profit

6 mths to 31 Dec 2006 % change 6 mths to 30 Jun 2006 6 mths to 30 Jun 2007 (Rm) 2 846 39 1 429 1 985 Profit (608) 42 (286) (406) Attributable to minorities (608) 42 (286) (401) – Exxaro * – 100 – (3) – SIOC Community Development Trust ** – 100 – (2) – SIOC Employee Share Participation Scheme *** 2 238 38 1 143 1 579 Attributable to equity holders of Kumba Iron Ore

* 20% interest in the profits of Sishen Iron Ore Company (SIOC) ** Guaranteed dividend paid to SIOC Community Development Trust funded by the 31 December 2006 SIOC dividend *** 50% of the 31 December 2006 SIOC dividend distributed on SIOC shares allocated to employees

EBIT Margin 56%

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Reconciliation of minority interest

548 Minority interest – 30 June 2007 (77) – Exxaro (3) – SIOC Community Development Trust (2) – SIOC Employee Share Participation Scheme 3 Interest in movement in equity reserves 406 Profit for the period (77) Dividends paid 2 – SIOC Employee Share Participation Scheme 3 – SIOC Community Development Trust 401 – Exxaro 216 Minority interest – 31 December 2006 6 mths to 30 Jun 2007 (Rm)

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Reconciliation of total equity

2 768 Total equity 548 Minority interest 158 – SIOC Community Development SPV and SIOC Share Participation Scheme

  • wnership of SIOC *

2 062 – equity holders of Kumba Iron Ore 2 220 Shareholders’ equity, attributable to 6 mths to 30 Jun 2007 (Rm)

* SIOC Community Development SPV and SIOC Employee Share Participation Scheme each hold an interest of 3% in SIOC. For purposes of the preparation of the condensed consolidated interim financial statements SIOC Community Development SPV and SIOC Employee Share Participation Scheme are considered special purpose entities and are therefore consolidated.

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Sensitivities on operating profit

for H2 ’07 of a 1% change in

  • 80
  • 60
  • 40
  • 20

20 40 60 80 Currency (R65m) Export price (R56m) Export volume (R38m) Opex (R14m)

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Sishen Mine – impact of SEP on unit cost

1,64 Stripping ratio 2,61 Stripping ratio pre SEP

– – –

4,9 4,9 “B” grade material (Mt) 14,2 87% 16,2 (2,0) 14,2 “A” grade material (Mt) Total (Mt) Waste (Mt) 14,2 87% 16,2 2,9 51,2

– – – –

32,1 Product Yield Plant feed Stockpile Ex-pit

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Sishen Mine – cost structure

20,52 19,66 22,46 16,85 14,59 12,94 18,36 7,71 9,98 10,98 12,27 9,67 9,74 10,1 11,29 8,89 6,6 8,05 7,96 8,05 2,58 2,76 2,97 2,55 14,38 13,72 11,92 15,31 10 20 30 40 50 60 70 80 90 100 2006 H1 2006 H2 2006 2007 H1 Period R/ton Labour Outside services Maintenance Fuel Depreciation Drilling & blasting Other

69,01 87,21 78,21 78,39

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Sishen Mine - total tonnes mined

14,17 14,80 16,27 17,11 14,56 4,90 32,14 34,10 25,16 29,52 29,12 10 20 30 40 50 60 2005 H1 2005 H2 2006 H1 2006 H2 2007 H1 Mt A grade material B grade material Waste material

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Northern Cape growth prospects

fact sheet

75,3 Potential Northern Cape Production 28,4 Sishen Current DMS Production R22,6bn 46,9 Total Growth Projects Potential 2015 R1,1bn 3,0 Sishen South Medium Grade Ore Potential 2013 R5,7bn 10,0 Sishen C-Grade Potential 2012 R1,0bn 1,5 Sishen Pellets Pre-feasibility 2012 R5,1bn 10,0 SEP2 Feasibility study completed 2011 R4,5bn 9,0 Sishen South Commence feasibility study 2009 R0,1bn 0,4 SEP1B Implementation Aug-07 R5,1bn 13,0 SEP1 Status Production Start Latest Capex Estimate Real June 2007 Tonnes Mtpa Project