2019 Interim Results 22 August 2019
Disclaimer The information contained in this presentation is intended solely for your personal reference and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person (whether within or outside your organisation/firm) or published, in whole or in part, for any purpose. No representation or warranty express or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation. It is not the intention to provide, and you may not rely on this presentation as providing, a complete or comprehensive analysis of the Company’s financial or trading position or prospects. The informati on contained in this presentation should be considered in the context of the circumstances prevailing at the time and has not been, and will not be, updated to reflect material developments which may occur after the date of the presentation. None of the Company nor any of its respective affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss or damage howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. This presentation includes forward-looking statements. Forward- looking statements include, but are not limited to, the company’s growth potential, costs projections, expected infrastructure development, capital cost expenditures, market outlook and other statements that are not historical facts. When used in this presentation, the words such as "could," "plan," "estimate," "expect," "intend," "may," "potential," "should," and similar expressions are forward-looking statements. Although MMG believes that the expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. This presentation may contain certain information derived from official government publications, industry sources and third parties. While we believe inclusion of such information is reasonable, such information has not been independently verified by us or our advisers, and no representation is given as to its accuracy or completeness. This presentation should be read in conjunction with MMG Limited’s interim results announcement for the six months ended 30 J une 2019 issued to the Hong Kong Stock Exchange and the Australian Securities Exchange on 21 August 2019. 2
Overview Geoffrey Gao, CEO 2019 first half performance Financial results Ross Carroll, CFO Geoffrey Gao, CEO Strategy and outlook Questions and Answers 3
2019 first half in review Geoffrey Gao Chief Executive Officer
Safety, Environment and Social Performance Safety performance 5.1 ▪ Safety – our first value 4.7 4.5 4.5 4.3 ▪ Continued strong Total Recordable Injury Frequency 4.1 3.9 (TRIF 1 ) rate compared with other ICMM 2 member 3.4 companies 3 ▪ Committed to ICMM’s 10 principles of Sustainable 2.4 Development and Performance Expectations 2.3 2.1 ▪ We mine for progress. Contributing to the 1.9 1.7 development of our host countries and communities 1.2 ▪ Tailings Storage Facilities risk management 1 approach significantly enhanced since 2015 – detailed Tailings Storage Facilities disclosure available at www.mmg.com 2011 2012 2013 2014 2015 2016 2017 2018 2019 TRIF ICMM 1. Total recordable injury frequency per million hours worked International Council on Mining and Metals – data is the ICMM average TRIF of 23 2. companies 5
Copper market update Cu price vs. Citi China copper end-use tracker Near term outlook has deteriorated 7500 11 7000 9 - Copper traded as a proxy for global growth. Investors 6500 7 use it to express a view (liquid and easy to trade). In the 6000 5 long term, fundamentals will prevail over ‘risk - off’ sentiment. 5500 3 5000 1 - Global manufacturing and Chinese copper end use demand 4500 -1 indicators at multi-year lows 4000 -3 Aug-14 May-15 Feb-16 Nov-16 Aug-17 May-18 Feb-19 - However, the physical market remains tight , with spot LME copper (US$/t - LHS) Citi China copper end-use tracker (% chg - RHS) TC/RCs lowest since 2012. Mined copper supply gap and requirement for new capacity Long term unchanged – structural demand 28 Base Case Production Capability 26 Primary Demand tailwinds and limited supply 6.8Mt of new mine 24 production required by 2029 22 - Supply challenges : New projects / expansions continue to 20 be delayed or shelved – more complex projects, declining Mt 18 grades, sovereign risk and govt. expectations, 16 environmental, community and employee expectations, cost pressures. 14 12 Demand growth – EV & renewable energy demand, - 10 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 urbanisation, One Belt One Road. EVs to add ~3mt to copper demand by 2025 6 Source: Wood Mackenzie, Q2 2019
Peru Logistics ROAD Peru Southern Mining Corridor ▪ Peru Southern mining corridor currently experiencing RAIL heightened community protest. ▪ Matarani now world’s largest Cu port and 49% of Peru production - Las Bambas, Constancia, Antapaccay, Cerro Verde and Projects - Quellaveco and Tia Maria. Las Bambas ▪ Las Bambas has a complex logistics route - road through remote Andean communities and rail Pillones to Matarani port. ▪ Following extended block in March/April - dialogue tables again established with community, government and company. ▪ Transport continues while demands (compensation, ‘framework’ agreements and amnesties) are heard. 7
Financial results Ross Carroll Chief Financial Officer
Financial performance 2019 Key Financial Metrics (US$ million) 1H2018 v 1H2019 2018 Income statement (continuing operations) Revenue 1,387.4 1,898.8 (27%) EBITDA 646.7 984.2 (34%) (Loss)/Profit After Tax (73.0) 188.8 (139%) Attributable to: Equity holders (81.0) 124.2 (165%) Non-controlling interests 8.0 64.6 (88%) Basic /(loss) earnings per share (continuing ops) US (1.01) cents US 1.55 cents (165%) 9
EBITDA waterfall 1H2018 vs 1H2019 1,200.0 1,000.0 23.7 0.2 (154.5) 33.2 800.0 (451.5) (12.8) 600.0 217.1 984.2 (6.0) 13.1 400.0 646.5 200.0 - EBITDA: 1H Dugald River Price FX Volume Production Corporate/Ex Movement EBITDA: 1H expenses Other Continuing Operations Royalties, Continuing Operations Selling ploration Stock 2018 2019 10
Underlying profit to MMG equity holders ▪ MMG is focused on improving 2019 NPAT attributable to equity holders 1H2018 v 1H2019 financial and operational (US$m) 2018 performance in 2H19: Profit after tax – Las Bambas 62.5% interest 13.3 107.4 (88%) ➢ Cash flow and earnings expected to Profit after tax – Other continuing operations (22.1) 93.4 (124%) improve as stockpiled inventory is sold following 1H logistics disruption Exploration expenses (13.4) (15.2) 12% ➢ Holistic business improvement and Administration expenses (11.5) (22.8) 50% cost reduction programs Net finance costs (excluding Las Bambas) (53.7) (65.3) 18% ➢ Reducing debt and interest costs – Other 6.4 31.2 (79%) LIBOR has reduced by ~85bps since 31 December 2018 (Loss)/profit for the period (81.0) 128.7 (163%) ➢ Continued capital discipline Less discontinued operation - 4.5 (100%) (Loss)/profit for the period from continuing (81.0) 124.2 (165%) operation 11
Earnings sensitivity High earnings and cash flow leverage to copper and zinc prices Estimated impact on FY19 underlying EBITDA from changes in commodity prices and currency Sensitivity EBIT Impact (US$m) Copper US$/lb $0.10/lb / ($0.10/lb) 94/(94) Zinc US$/lb $0.10/lb / ($0.10/lb) 46/(46) Lead US$/lb $0.10/lb / ($0.10/lb) 10/(10) Gold US$/oz $100/oz / ($100/oz) 13/(13) Silver US$/oz $1.00/oz / ($1.00/oz) 9/(9) AUD:USD 1 AUD (10%) / 10% 33/(33) PEN:USD 2 PEN (10%) / 10% 25/(25) 1. AUD:USD FX exposure relates to FX gain/loss on production expenditure at Rosebery and Dugald River, administration expenses at Group Office and A$ denominated financial assets and liabilities. 2. PEN:USD FX exposure predominantly relates to translation of Las Bambas tax receivables balance and production expenditure. 12
Free cash flow sensitivity to copper and zinc Illustrative Free Cash Flow (US$ million) for FY19 at different copper and zinc prices* Copper Price – US$/lb 2.50 2.60 2.70 2.80 2.90 3.00 3.10 3.20 0.80 (0.80) 31.1 95.7 160.4 225.0 289.6 354.3 418.9 0.90 (1.8) 62.9 127.5 192.2 256.8 321.4 386.1 450.7 Zinc Price – US$/lb 1.00 30.0 94.7 159.3 223.9 288.6 353.2 417.9 482.5 1.10 61.8 126.5 191.1 255.7 320.4 385.0 449.7 514.3 1.20 93.6 158.2 222.9 287.5 352.2 416.8 481.5 546.1 1.30 125.4 190.0 254.7 319.3 384.0 448.6 513.3 557.9 1.40 157.2 221.8 286.5 351.1 415.8 480.4 545.1 609.7 1.50 189.0 253.6 318.3 382.9 447.6 512.2 576.9 641.5 * This analysis is based on the mid point of MMG’s guidance for production, C1 and capital expenditure. A detailed breakdown of illustrative EBITDA and FCF based on spot commodity prices and MMG guidance can be found in the appendix to this report. 13
Recommend
More recommend
