FY18 Results Presentation September 2018 Black Rock
Assore Executive Team ▪ 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 2
Assore Group Structure Assore Boleng Fricker Public Oresteel Employee Trust Road Trust Investments (Free Float) Trust 52.4% 14.3% 11.8% 21.5% Assore Ltd (ASR : JSE) 50% 100% 100% 100% ~29% Assmang Dwarsrivier Chrome Marketing & Shipping Other IronRidge (IRR: AIM) Ore & Metal Wonderstone Exploration Iron Ore Dwarsrivier African Mining & Trust Zeerust Chrome (Africa / Australia) Khumani Mine Chrome Mine Minerais (51%) RMDC (56%) Beeshoek Mine Manganese Ore Black Rock Complex (Gloria/Nchwaning) Manganese Alloys Cato Ridge Cato Ridge Alloys (50%) Sakura (54%) Machadodorp FY18 Results Presentation 3
FY18 Group Highlights Revenue Profit After Tax (pre-Assmang) 12% 8% R7 805m R1 667m Attributable Earnings Headline Earnings 2% 2% R5 119m R5 109m HEPS DPS 2% 57% R49.53 R22.00 Free Cash Flow Net Cash (excluding Assmang) 56% 29% R4 754m R7 865m FY18 Results Presentation 4
FY18 Group Highlights ▪ 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 Results Presentation 5
Key Drivers - Sales volumes & prices FY18 vs. FY17 30% 25% 22% 22% 19% 20% 10% 7% 3% 0% -1% -6% -10% -20% -30% -28% Market Sales Market Sales Market Sales Market Sales Market Price Volume Market Price Volume Market Price Volume Market Price Volume R/US$ R/US$ Price Volume Price Volume Price Volume Price Volume Iron Ore Manganese Ore Manganese Alloys Chrome Ore Exchange Exchange Iron Ore Manganese Ore Manganese Alloys Chrome Ore Rate Rate Note: Market Prices & Sales Volumes per Slides 15-20 FY18 Results Presentation 6
Headline Earnings - Dwarsrivier delivers again Rm 6000 5209 5109 5000 653 713 4230 843 505 4000 875 3000 1976 2000 1744 3772 3723 290 3555 377 1000 1628 1433 0 FY14 FY15 FY16 FY17 FY18 Assmang Dwarsrivier Marketing & Shipping Other Assore FY18 Results Presentation 7
Headline Earnings - Manganese outperformed Iron Ore Rm 6000 5209 5109 5000 * 1241 845 4230 4000 593 1501 2211 3000 1976 2000 1744 3488 374 272 2509 1000 2004 1423 1413 0 FY14 FY15 FY16 FY17 FY18 Iron Ore Manganese Chrome Other Assore * includes dividend received in Assmang upon its sale of Dwarsrivier to Assore (50% share) FY18 Results Presentation 8
Cash Flow - Net Cash increased by 56% y-o-y Rm 12000 367 683 457 10000 3000 1931 7865 8000 442 6000 1900 5047 4000 2000 0 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 Net Cash Operating Working Assmang Net Net Tax Dividends Net Cash at end CF Capital Dividend Interest Additions/ Paid at end FY17 (pre-WC) (Disposals) (Net) FY18 FY18 Results Presentation 9
Dividends - Payout ratio in line with the sector R/sh 60.00 50.49 49.53 50.00 40.98 40.00 30.00 22.00 19.15 20.00 16.90 14.00 10.00 10.00 7.00 6.00 0.00 FY14 FY15 FY16 FY17 FY18 HEPS* DPS** *103m shares **140m shares FY18 Results Presentation 10
Assmang* - A strong production performance ▪ LTIFR down from 0.17 to 0.13 Contribution to Assmang Headline Earnings ▪ Headline Earnings down 5% y/y to R7.1bn 100% (FY17: R7.4bn) 10% 90% ▪ Manganese 54% of earnings (FY17: 31%) 80% ▪ Net Cash of R4.8bn (post-R6.0bn dividend) 31% 54% 70% ▪ Iron Ore 60% ▪ Khumani production of 14.7mt (+1% y/y) 50% ▪ Beeshoek production of 3.9mt (+22% y/y) 40% ▪ Unit production cost up 2% y/y (Khumani) 30% 59% ▪ Manganese Ore & Alloys 47% 20% ▪ Black Rock production up 21% y/y to 3.7mt 10% ▪ Black Rock unit production cost up 16% y/y 0% ▪ Black Rock Expansion Project 90% complete; FY17 FY18 R2.7bn capex for Gloria Iron Ore Manganese Chrome ▪ Sakura produced 244kt (Nameplate: 216kt) *All figures 100% Assmang basis FY18 Results Presentation 11
Dwarsrivier Chrome - Another record year ▪ LTIFR down from 0.20 to 0.19 Dwarsrivier Chrome Ore Production (mt) ▪ Headline Earnings up 4% y/y to R875m 1.8 (FY17: R843m) 1.6 ▪ Record Chrome Ore production of 1.6mt 1.6 (FY17: 1.4mt) 1.4 1.4 ▪ Record Chrome Ore sales of 1.6mt 1.2 (FY17: 1.3mt) 1.2 1.1 ▪ Unit production cost down 1% y/y 1.0 1.0 ▪ US$ market price (44%Cr) down 28% y/y, 0.8 but less volatile ▪ Realised price only marginally down on 0.6 mix and timing 0.4 ▪ Capex of R300m (FY17: R141m) ▪ Free Cash Flow of over R1bn 0.2 0.0 FY14 FY15 FY16 FY17 FY18 FY18 Results Presentation 12
Outlook ▪ 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 FY18 Results Presentation 13
Questions & Answers Beeshoek Mine
Production & Sales Volumes (100%) Units FY18 FY17 y/y Production Volumes Iron Ore mt 17.7 18.6 5% Manganese Ore mt 3.1 3.7 21% Manganese Alloys mt 0.5 0.4 15% Chrome Ore mt 1.6 1.4 16% Sales Volumes Iron Ore mt 17.3 17.9 3% Manganese Ore* mt 3.0 3.2 7% Manganese Alloys mt 0.4 0.3 25% Chrome Ore mt 1.6 1.3 22% *Excluding intergroup sales to Cato Ridge Works FY18 Results Presentation 15
Iron Ore Price (62%Fe CFR China) US$/t 100 80 FY17 = US$69.53 FY18 = US$69.08 60 40 20 0 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Source: Platts FY18 Results Presentation 16
Iron Ore Lump Premium US$/t 30 25 20 15 FY18 = US$13.34 10 FY17 = US$7.39 5 - Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Apr-18 May-18 Jun-18 Mar-17 Mar-18 Source: Platts FY18 Results Presentation 17
Manganese Ore Price (44%Mn CIF China) US$/mtu 10.00 8.00 FY18 = US$6.88 6.00 FY17 = US$5.77 4.00 2.00 0.00 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Apr-18 May-18 Jun-18 Mar-17 Mar-18 Source: Metal Bulletin FY18 Results Presentation 18
Manganese Alloy Price (HCFeMn) US$/t 1600 FY18 = US$1430 1400 1200 FY17 = US$1176 1000 800 600 400 200 0 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Apr-18 May-18 Jun-18 Mar-17 Mar-18 Source: CRU FY18 Results Presentation 19
Chrome Ore Price (44%Cr Concentrate CFR China) US$/t 500 400 FY17 = US$310 300 200 FY18 = US$224 100 0 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Apr-18 May-18 Jun-18 Mar-17 Mar-18 Source: CRU FY18 Results Presentation 20
Other Segments 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 FY18 Results Presentation 21
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