H1 FY19 Results Presentation February/March 2019 Black Rock
Assore Executive Team Charles Walters Chief Executive Officer (CEO) Patrick Sacco Executive: Marketing & Sales (Deputy CEO) Ross Davies Chief Financial Officer (CFO) Tiaan van Aswegen Executive: Operations Kieran Daly Executive: Growth & Strategic Development Bongani Phakathi Executive: HR & Corporate Affairs Mandla Tobela Executive: Legal H1 FY19 Results Presentation 2
Assore Group Structure Assore Boleng Fricker Oresteel Public Employee Trust Road Trust Investments (Free Float) Trust 52.4% 14.3% 11.8% 21.5% Assore Ltd (ASR: JSE) 50% 100% 100% 100% 31% Assmang Dwarsrivier Marketing & Shipping Other IronRidge (IRR: AIM) Iron Ore Ore & Metal Dwarsrivier Exploration Khumani Mine African Mining & Trust Wonderstone Chrome Mine (Africa/Australia) Beeshoek Mine Minerais (51%) Manganese Ore Black Rock Complex (Gloria Mine & Nchwaning Mine) Manganese Alloys Cato Ridge Works Cato Ridge Alloys (50%) Sakura (54%) H1 FY19 Results Presentation 3
H1 FY19 Group Highlights Revenue Profit After Tax (pre-Assmang) 3% 7% R3 948m R813m Attributable Earnings Headline Earnings 19% 20% R2 916m R2 917m HEPS DPS 0% 20% R28.28 R10.00 Free Cash Flow Net Cash (excluding Assmang) 29% 16% R4 754m R7 647m H1 FY19 Results Presentation 4
H1 FY19 Group Highlights Slight deterioration in safety performance HEPS up 20% y/y to R28.28; EPS up 19% to R28.27 Iron Ore and Chrome Ore sales volumes down y/y; Manganese volumes up Iron Ore (especially lump) and Manganese Ore prices up; Chrome Ore down 10% y/y Tailwind also from 5% weaker R/US$ Assmang (100%) headline earnings of R4.3bn up 23% y/y (73% of Assore) Dwarsrivier Chrome earnings down 26% y/y on sales volumes and prices Net Cash decreased to R7.6bn from R7.9bn at Jun-18 (working capital build at Minerais) Interim dividend of R10/sh - equivalent to H1 FY18 ~92% of R6.7bn Black Rock Expansion Project capex now committed H1 FY19 Results Presentation 5
Key Drivers - Sales volumes & prices H1 FY19 vs. H1 FY18 40% 36% 30% 20% 11% 10% 5% 3% 2% 1% 0% -4% -5% -10% -10% -14% -20% -30% Market Lump Sales Market Sales Market Sales Market Sales R/US$ Price Premium Volume Price Volume Price Volume Price Volume Iron Ore Manganese Ore Manganese Alloys Chrome Ore Exchange Rate Note: Market Prices & Sales Volumes per Slides 15-20 H1 FY19 Results Presentation 6
Headline Earnings - Dwarsrivier share down on FY18 (11% vs. 18%) Rm 6000 5209 5109 5000 653 713 843 4000 875 2917 3000 503 327 1976 1744 2000 3722 290 3555 377 2145 1000 1628 1433 0 FY15 FY16 FY17 FY18 H1 FY19 -1000 Assmang Dwarsrivier Marketing & Shipping H1 FY19 Results Presentation 7
Headline Earnings - Iron Ore share up on FY18 (50% vs. 39%) Rm 6000 5209 5109 5000 1241 845 * 4000 1501 2917 2211 3000 318 1976 1744 2000 1132 374 272 2509 1000 2004 1458 1423 1413 0 FY15 FY16 FY17 FY18 H1 FY19 -1000 Iron Ore Manganese Chrome H1 FY19 Results Presentation 8
Cash Flow - Working Capital build impacted Net Cash Rm 10000 290 1750 848 9000 277 225 7865 7647 8000 1238 7000 1366 6000 5000 4000 3000 2000 1000 0 Net Cash Operating Working Assmang Net Net Tax Dividends Net Cash June 18 CF Capital Dividend Interest Additions/ Paid Dec 18 (pre-WC) (Disposals) H1 FY19 Results Presentation 9
Dividends - Payout remains in line with the sector R/sh 60.00 50.49 49.53 50.00 40.00 28.28 30.00 22.00 19.15 20.00 16.90 14.00 10.00 10.00 7.00 6.00 0.00 FY15 FY16 FY17 FY18 H1 FY19 HEPS DPS *103m shares **140m shares H1 FY19 Results Presentation 10
Assmang* - Iron Ore benefitting from lump premium LTIFR in line with FY18 at 0.13 Contribution to Assmang Headline Earnings Headline Earnings up 23% y/y to R4.3bn (FY18: R7.1bn) 100% 10% Iron Ore 57% of earnings (FY18: 47%) 90% Net Cash of R4.1bn 80% 43% 31% 54% 70% Iron Ore 60% Production down 4% y/y to 8.7mt 50% Sales down 4% y/y to 8.8mt 40% Unit production cost up 6% y/y 30% 59% 57% Manganese Ore & Alloys 47% 20% Black Rock production of 1.7mt (-7% y/y) 10% Black Rock unit production cost up 14% y/y 0% Black Rock Expansion Project 92% committed FY17 FY18 H1 FY19 Sakura running well, but ore price squeezing Iron Ore Manganese Chrome margin *All figures 100% Assmang basis H1 FY19 Results Presentation 11
Dwarsrivier Chrome - Negatively impacted by logistics and prices LTIFR down from 0.23 to 0.18 Dwarsrivier Chrome Ore Production (mt) 1.8 Headline Earnings down 26% y/y to R327m (FY18: R875m) 1.6 1.6 Chrome Ore production up 7% y/y; but 1.4 sales down 5% y/y due to logistical 1.4 challenges 1.2 US$ market price (44% Cr) down 10% y/y, 1.2 1.1 but less volatile 1.0 Unit production cost up 17% y/y 0.8 0.8 Capex up 77% y/y to R214m (H1 FY18: 0.6 R121m) due to spend for productivity improvement and compliance 0.4 0.2 0.0 FY15 FY16 FY17 FY18 H1 FY19 H1 FY19 Results Presentation 12
Outlook Global economy expected to be weaker in 2019 Impact of potential US/China “trade war” still hard to quantify Chinese economy slowing but (as usual) stimulus likely to provide a buffer Positive impact of Chinese environmental restrictions continues Demand for high quality raw materials expected to remain strong Iron Ore price rise and weaker R/US$ augur well for full year FY19 performance Management focussed on streamlining and modernising the business Actively looking for appropriate, value-accretive, growth opportunities H1 FY19 Results Presentation 13
Questions & Answers Beeshoek Mine
Production & Sales Volumes (100%) Units H1 FY19 H1 FY18 y/y Production Volumes Iron Ore mt 8.7 9.1 (4%) Manganese Ore mt 1.7 1.9 (7%) Manganese Alloys kt 194 190 2% Chrome Ore kt 765 717 7% Sales Volumes Iron Ore mt 8.8 9.1 (4%) Manganese Ore* mt 1.6 1.6 3% Manganese Alloys kt 164 162 1% Chrome Ore kt 794 757 (5%) *Excluding intergroup sales to Cato Ridge Works H1 FY19 Results Presentation 15
Iron Ore Price (62% Fe CFR China) US$/t 100 H1 FY19 = US$69.18 H1 FY18 = US$68.15 80 60 40 20 0 Oct-16 Feb-17 Apr-17 Oct-17 Feb-18 Apr-18 Oct-18 Jul-16 Aug-16 Sep-16 Nov-16 Dec-16 Jan-17 Mar-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Nov-17 Dec-17 Jan-18 Mar-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Nov-18 Dec-18 Source: Platts H1 FY19 Results Presentation 16
Iron Ore Lump Premium (65% Fe) US$/t 30 25 H1 FY19 = US$20.49 20 H1 FY18 = US$15.03 15 10 5 - Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Source: Platts H1 FY19 Results Presentation 17
Manganese Ore Price (44% Mn CIF China) US$/mtu 10.00 8.00 H1 FY19 = US$7.02 6.00 H1 FY18 = US$6.30 4.00 2.00 0.00 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Source: Metal Bulletin H1 FY19 Results Presentation 18
Manganese Alloy Price (HCFeMn) US$/t 1600 H1 FY18 = US$1443 1400 1200 H1 FY19 = US$1244 1000 800 600 400 200 0 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Source: CRU H1 FY19 Results Presentation 19
Chrome Ore Price (44% Cr Concentrate CFR China) US$/t 500 400 300 H1 FY18 = US$207 200 H1 FY19 = US$186 100 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 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Source: CRU H1 FY19 Results Presentation 20
Other Segments Marketing & Shipping Commissions in line with Assmang revenue Significant interest income Other Operations Wonderstone - Renewal study underway IronRidge Resources (AIM: IRR) Assore now has a ~31% stake following November 2018 capital raise Listed on AIM with ~£60m current market cap Promising exploration work at Cape Coast lithium project in Ghana H1 FY19 Results Presentation 21
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