COVER AMANGO IN- DE PT H ANAL YSIS RE PORT Pre se nte d b y: - PowerPoint PPT Presentation

COVER AMANGO IN- DE PT H ANAL YSIS RE PORT Pre se nte d b y: Cindy T andiani, F e lic ia Nasse ri, Mic hae l Musto po , Vinso n Budiman

itization ior Issue s Pr

uc tion and ganization ate Risk Pro file : At the limit s of Value por Re c onstr Pillar Cor Re or

Re c omme ndations Contr ibution to E BIT Diamond 25.72% L ar ge E BIT Contr ibutor , P Signific ant PGM marke t E PGM 6.06% KE shar e & High Gr owth Ra te Coppe r 16.57% Signific ant E BIT WAIT Ir on Or e 33.68% Contributor & Soc io Politic al Pr e ssur e Coal 14.44% ST Insignific ant e ar nings Niobium & Phosphate s 3.91% DIVE c ontr ibutor & High unc e r tainty Nic ke l - 0.28% Corporate Australia Brazil Strategic De‐leverage or Divisional JV in Canada Reconstruction Operational Risk Disposal Share Buy‐back Performance

Imple me ntation T ime line 2017 2018 2019 2020 2021 Ma r Jun Se p De c Ma r Jun Se p De c Ma r Jun Se p De c Ma r Jun Se p De c Ma r Jun Se p De c Diamond Ke e p PGMs Coppe r Coal Wait Iron Ore Nic ke l Dive st Niobium & Phosphate s Corporate Australia Brazil Strategic De‐leverage or Divisional JV in Canada Reconstruction Operational Risk Disposal Share Buy‐back Performance

Imple me ntation Re c omme ndation 1 Evaluate worth of segments to be divested ‐ Nickel 2 Find potential buyers while focusing on current segments  Se a rc h fo r most be ne fic ial syne r gy while str e ngthe ning its c oal, ir on or e , diamond, PGM, c oppe r Re‐evaluate decisions every 3 years, in line with 3‐year‐ 3 viability statement evaluation ‐ to stay competitive Corporate Australia Brazil Strategic De‐leverage or Divisional JV in Canada Reconstruction Operational Risk Disposal Share Buy‐back Performance

ational Risk and ial Ac tion in Risk Pro file : At the limit alia s of Value Austr Pillar Industr Ope r

Situational Analysis – Australia Ope ratio nal Risk Curre nt sha ft c o sts US$130 million , b ut fa ile d in 1 st we e k atal inc ide nt due to sa fe ty F sta nda rds we re no t he ld Contr olle d shutdown of 1 c oppe r mine in Austr alia Alte r native : Re plac e with ne w mine shaft CE O: Ope ra tio na l b y Mar c h 1, 2018 Re sume at Pre ta x CF o f US$30.34million e a c h ye a r fo r 9 ye ar s , c ur r e nt shaft re c la ma tio n o f US$5million b y F e br uar y 2027 (Co sts US$130m in 2017 and US$5m o f c lo sure c o st) Corporate Australia Brazil Strategic De‐leverage or Divisional JV in Canada Reconstruction Operational Risk Disposal Share Buy‐back Performance

E valuation of Str ate gic Options Continue to use Constr uc t a ne w 1 2 c ur r e nt shaft mine shaft F ina nc ia l I mpa c t F ina nc ia l I mpa c t NPV = $48.73million No fur the r c ost (I nitial c o st o f $135 millio n inc ur r e d in 2017) Ope ra tio na l I mpa c t Ope ra tio na l I mpa c t Safe ty hazar ds as Inc r e ase safe ty and ac c ide nts may e ffic ie nc y c ontinue to happe n Risks Risks L ic e nse r e voke d, F aulty de sign and bad public ity, and c ontinue d pr e se nc e of wor kfor c e str ike safe ty hazar ds Corporate Australia Brazil Strategic De‐leverage or Divisional JV in Canada Reconstruction Operational Risk Disposal Share Buy‐back Performance

Ke y: Ope r ational Safe ty & He alth Manage me nt 3 1 2 Pr oc e dur e s, T r affic Infor mation T r aining, & Manage me nt Syste m Auditing Re duc e Safe ty Hazar ds & E nsur e E me r ge nc y Pr e par e dne ss Corporate Australia Brazil Strategic De‐leverage or Divisional JV in Canada Reconstruction Operational Risk Disposal Share Buy‐back Performance

Ke y: Produc tion? Option 1: Re sume with c ur r e nt shaft with highe r ope r ational safe ty standards  Sho uld de te c t and addr e ss issue with the c urre nt sha ft  e ve nue to maintain ma rke t sha re Ge ne r ate r  E nsure e mployme nt Option 2: Stop pr oduc tion  e ve nue a nd lose ma rke t sha re No r  Une mployme nt  wo rkfo rc e strike  Se c ure safe ty stanc e Option 3: Par tne r ship with loc al mining c ompany  e ve nue to maintain ma rke t sha re Ge ne r ate r  Une mployme nt  wo rkfo rc e strike Corporate Australia Brazil Strategic De‐leverage or Divisional JV in Canada Reconstruction Operational Risk Disposal Share Buy‐back Performance

Re c omme ndation & Imple me ntation 1 Conduct extensive research 2 Communicate with involved parties  Public Re lations – inve sto rs, c o mmunitie s, a nd re g ula to rs  c e Manage me nt – tra ining a nd la b o r Human Re sour re la tio ns 3 Address problem with current shaft: Resume production for the moment 4 Improve evaluation policies & engage in frequent maintenance routine Corporate Australia Brazil Strategic De‐leverage or Divisional JV in Canada Reconstruction Operational Risk Disposal Share Buy‐back Performance

ate gic Disposal Risk Pro file : Within the limit azil s of Value in Br Pillar Str

Situational Analysis – Strate g ic Dispo sal in Brazil CMOC o ffe re d US$ 1,500 million to b uy AMANGO’s Niobium and Phosphate s se g me nt E valuation of Str ate gic Options F ORGO ACCE PT F inanc ial I mpac t F inanc ial I mpac t 1. De c r e ase in Ne t De bt o f US$ Ge ne r ate ope r ating 450.12 mio inc ome fro m the se g me nt 2. Inc r e ase AMANGO’ s c r e dit r ating Risks Risks 1. Se g me nt mig ht c o ntinue 1. Miss out on r ising Nio b ium to unde r- pe rform a nd Pho spha te s de mand 2. Ne t de bt r e mains high 2. Sc r utiny fro m sha re ho lde rs Corporate Australia Brazil Strategic De‐leverage or Divisional JV in Canada Reconstruction Operational Risk Disposal Share Buy‐back Performance

Re c omme ndation Offe r fro m CMOC US$ 1,500 million ACCE PT De spite b e ing o ffe re d tha n ma rke t va lue , we re c o mme nd AMANGO to ac c e pt b e c a use the o ffe r is KPIs : inline with the ir 1. De c r e ase ne t de bt 2. Dive st unfa vo ra b le mining se g me nts *F ig ure s are e xpre sse d in millio ns Corporate Australia Brazil Strategic De‐leverage or Divisional JV in Canada Reconstruction Operational Risk Disposal Share Buy‐back Performance

Imple me ntation 1 Conduct due diligence 2 Accept offer from CMOC 3 Communicate with all stakeholders  s , e spe c ia lly AMANGO’ s Infor m all stake holde r sta ke ho lde rs re g a rding the be ne fits and dr awbac ks of the ac quisition Corporate Australia Brazil Strategic De‐leverage or Divisional JV in Canada Reconstruction Operational Risk Disposal Share Buy‐back Performance

De - le ve rage or e Buy- bac k Balanc e She e t Risk Pro file : At the limit s of Value Pillar Shar

Situational Analysis inkage o f E mplo ye e s Shr 160,000 to 60,000 Unutilize d Re side ntial va lue d US$8.184b illio n Available Options Unde r go a Shar e Paybac k De bt Buy- bac k and De - le ve r age Bo o k va lue o f US$6.4billion , g e ne ra te CF o f 14% fro m BV Sc he me Balanc e She e t Ope ra tio na l Co st re duc tio n o f US$736million Corporate Australia Brazil Strategic De‐leverage or Divisional JV in Canada Reconstruction Operational Risk Disposal Share Buy‐back Performance

E valuation of Str ate gic Options Shar e Buy- bac k Shar e Buy- bac k Paybac k De bt & 1 2 Sc he me Sc he me De - le ve r age F ina nc ia l I mpa c t Ra tio I mpa c t De c r e ase Ne t De bt Inc r e ase E PS (do wn to b e lo w US$10b illio n Inc r e ase DE R ) inline with K PI F ina nc ia l I mpa c t Sha re ho lde r I mpa c t Inc r e ase Cr e dit Rating Inc r e ase stoc k ( re duc e c re dit spre a d 30 pric e b a sis po ints) Risks Risks Miss out the pr obability Cr e dit r ating of inc r e asing stoc k worse n pr ic e Corporate Australia Brazil Strategic De‐leverage or Divisional JV in Canada Reconstruction Operational Risk Disposal Share Buy‐back Performance

Ke y: Soc io- Politic al South Afr ic an Gove r nme nt & BE E P 3 1 2 De sign and Imple me nt Re ne gotiate with Comply with 26% Community South Afr ic an Blac k Owne d Polic y De ve lopme nt Gove r nme nt Pr ogr ams Gain Public and L oc al Wor kfor c e T r ust, Str e ngthe n Re lation with South Afr ic an Gove r nme nt Corporate Australia Brazil Strategic De‐leverage or Divisional JV in Canada Reconstruction Operational Risk Disposal Share Buy‐back Performance

e with Ce phas Canada Risk Pro file : Within the limit (Quinta) Joint Ve ntur s of Value Pillar

Situation – JV in Canada T he c o mme nc e me nt o f 1st c oal mining proje c t in Ca na da with Ce pha s Re q uire s 2 ye ar s o f le ng thy a nd c ostly c o nstruc tio n uc tion de sign with diffe re nt risks a nd 3 available c onstr b e ne fits pro file L o c a l c o mmunity “ Idle no Mor e ” AMANGO’ s inade quate e nvir onme ntal ac c ounting Corporate Australia Brazil Strategic De‐leverage or Divisional JV in Canada Reconstruction Operational Risk Disposal Share Buy‐back Performance