Download - RioZim FY Results 2012 Presentation
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ProudlyZimbabweanApril2013
RIOZIM2012RESULTSAND2013BUDGET
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BASISOFPREPARATION
Certaininformaonincludedinthisstatementisforward-lookingandinvolvesrisksand uncertaines that could cause actual results to differmaterially from thoseexpressedorimpliedbytheforwardlookingstatements.
Forward-looking statements include, without limitaon, projecons relang toresultsofoperaonsandfinancialcondionsandtheGroupsplansandobjecves
for future operaons, including, without limitaon, discussions of the
GroupsFuture Size and Shapeprogram, expected future revenues, financing
plansandexpectedexpendituresanddivestments.Allforward-lookingstatements
inthisreportarebaseduponinformaonknowntotheGrouponthedateofthis
report. The Group undertakes no obligaon to publicly update or revise any
forwardlookingstatementwhetherasaresultofnewinformaon,futureevents
orotherwise.
Itisnotreasonablypossibleto itemizeallofthemanyfactorsandspecificeventsthatcouldcausetheGroupsforwardlookingstatementstobeincorrectorthat
couldotherwisehaveamaterialadverseeffectonthefutureoperaonsorresults
oftheGroup.
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TABLEOFCONTENTS
RioZimayearago................................................................................................ 4
FinancialResults2012vs2011. 5
Highlights2012. 6
Renco&ENRin2012 9
Successesandimpedimentsin2012.. 12
Strategiciniavesin2013. 14Rencooutlookin2013. 17
ENRoutlookin2013. 18
Consolidatedbudgetfigures2013.. 19
CorporateSocialResponsibility. 20
Corporateandmanagementstructures. 21
Keyrisks. 23
Thefuture. 24
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RIOZIMAYEARAGO
TheGroupwasindeepfinancialdistress:- owedover$91mtocreditors,including$60mtobanks- accumulangexorbitantinterestratesonsomeofitsbankdebt- suppliers were charging exorbitant mark-ups on cost and had ceased
providingcredit
- produconfromRencogoldminewasatall-melow,ENRhadlongbeenlossmaking,andprojectswerestalledduetolackofcapital
- fivemajorbankswereseekingtoappointajudicialmanager inFebruary2012
The GemGroup lead the restructuring of the RioZim Groupwhich involvedcapital injecon, renegoaonofbanking facilies, strategicoverhaulof thebusiness,andappoinngnewmanagement
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FINANCIALRESULTS2012-2011
5
2012 2011
1stHalf 2ndHalf Total Total 2012vs.2011
IncomestatementTurnover 30,974 41,409 72,383 54,544 33%
EBITDA 2,654 4,247 6,901 1,654 317%
Operangprofit/(loss) 1,472 3,167 4,639 (1,475) 415%
margin% 4.75% 7.65% 6.41% -2.70% 337%
Financecosts (6,303) (5,540) (11,843) (13,615) 13%
Netloss (4,892) (2,579) (7,471) (14,495) 48%
Balancesheet
Non-currentassets 54,727 58,373 58,373 55,235 6%
Currentassets 58,275 60,147 60,147 44,213 36%
113,002 118,520 118,520 99,448 19%
Currentliabilies 26,681 33,222 33,222 21,977 -51%
BCLcreditor 0 7,830 7,830 0 n/a
Trade&othercreditors 26,681 25,392 25,392 21,977 -16%
Shorttermbankdebt 51,604 44,527 44,527 58,827 24%Longtermliabilies 11,860 17,679 17,679 2,160 -718%
Equity 22,857 23,092 23,092 16,484 40%
113,002 118,520 118,520 99,448 19%
RaXos
Currentrao 0.74 0.77 0.77 0.55 41%
Gearing(netdebt:equity) 2.59 2.25 2.25 3.55 36%
DebtServiceCoverageRao(operangprofit:netdebt) 0.02 0.06 0.09 (0.03) 453%
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2012HIGHLIGHTS(CONT.)
6
34 28
35
25
4
1
-
20
40
60
80
2012 2011
RevenueUS$milRenco
ENR
Other
2.7 3.4
4.2
(1.7)
(4.0)
(2.0)
-
2.0
4.0
6.0
8.0
2012 2011
EBIDTAUS$mil
2nd
half
1SThalf
Totalrevenuegrowthof33%ENRcontribuonincreasedin2012
Totalincreased317%2ndhalf2012contribuonincreasedto$4.2mil
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2012HIGHLIGHTS(CONT.)
7
1.5 2.1
3.1
(3.6)
(6.0)
(4.0)
(2.0)
-
2.0
4.06.0
2012 2011
OperaXngProfit/(Loss)US$mil
2nd
half
1ST
half
(4.9)(5.3)
(0.6)
(7.0)
(14.0)
(12.0)
(10.0)
(8.0)
(6.0)
(4.0)
(2.0)
-
2012 2011
NetLossUS$mil
2nd
half
1st
half
Netloss2ndhalf2012was$0.6milagainst20112ndhalflossof$7mil.
Increasein2012of415%2ndhalfof2012wasprofitableagainstalosslastyear
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2012HIGHLIGHTS(CONT.)
8
17.8
11.8
-
2
4
6
8
10
12
14
16
18
20
Capital Interest
PaidToBanks($'m)
33
113
0
20
40
60
80
100
120
2012 2011
HeadOfficeHeadCount
ReducXon
(726,000)
175,434
(800,000)
(700,000)(600,000)
(500,000)
(400,000)
(300,000)
(200,000)
(100,000)
0
100,000
200,000
300,000
Retrenchment SaleofMsasa
ExcepXonalitems($)
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RENCO2012
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RENCO 2012 2011 Comments
OreMilled:MineTons 222,090 217,219
OreGrade:Mineg/t 3.51 3.02
Operaonalcut-offgradeRenco2.4g/t.StricterqualitycontrolofstopeheightsConsistencyinblendingmatrix
Recovery:Mine% 87 88
Rencotarget89%.Actuallowerduetobreakdownsatplant.
Bullionkg 678 576 Duetoincreaseinoremilled&gradeAveragegoldpriceUS$/oz 1,669 1,581 WorldgoldpricesincreasedTotalproduconcostUS$/oz 1,171 1,233
MostcostsfixedDecreaseduetoincreasedoutput
Turnoverincreaseexplained $000's %
Duetoprice 1,630 26
Duetovolume 4,532 74
Rencorevenueincrease 6,162 100
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ENRTURNOVER2012US$000S
11
Nickel,
4,671
Copper,
6,674
Tollrefining
fees,9,833
PGMs,8,432
Cobalt,86 Reverts,5,039
TollrefiningfeesbeforeterminaonofCentametallcontract.
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SUCCESSESIN2012
RecapitalisaXoncompletedatthebeginningofthesecondquarterwhere$11.6mwasraisedthroughaprivateplacementtoGEMInvestmentandarightsissue.Thefundswereusedpartlytoreredebt.
RelaXonships with banks improved aer successful recapitalisaon andintroducon of new management, resulng in the withdrawal of the
judicialmanagementapplicaonbythebanks.
RelaXonshipswithsuppliersimprovedandanewprocurementmanagerwas recruited leading to significant reducon of mark-ups charged by
suppliersandcredittermsresumedwithsomekeysuppliers.
Approved retrenchment exercise completed resulng in cost savings ofapproximately$2mperannum.
TerminaXon of the unviable Centametall agreement leading to RioZimchanging its business model from toll refining to being principal in the
produconofmetalsandtothere-openingoftherefinery.
230 tons of revertswere sold to Xstrata in Canada and revenuewill bechanneledtowardsfurtherreduconofbankdebt.
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IMPEDIMENTSIN2012
Impedimentstoachieving2012targetswere:- AprolongedbutstrategicallyimportantterminaonofCentametall
onerouscontract
- ProblemswiththesmelteratBCL,thesolesourceofmaetotherefinery,resulnginmaesupplydisrupon
- DriversstrikeinSouthAfricaaffecngavailabilityofconsumablesand,inturn,goldproduconatRenco
- Highdebtlegacyandinterestratesonbankdebtsflingresourceallocaontoimproveoperaonalperformance
- DespitethesuccessatInez,theCam&Motorsandstreatmentprojectwasoverallunprofitableresulnginthecontractbeingsubsequently
terminated
Despitetheabove,fundamentalsremainstrong13
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STRATEGICINITIATIVESIN2013
RioGold
JVwithDRDGoldonRencoDumps OpenCam&Motor Selecveacquisionofproducinggoldmineswithin40kmradiusofEiffel
FlatstofeedCamp@Cam&Motor
InvestmentinvampingandHilmachinestoimprovegradesandreducepowerconsumpon
RioBaseMetals
Installown20tpdOxygenPlant($318kcostsavingspm)andworkwithBOCgasestorefurbishtheexisngc17tpdPSAplant
Expandrefineryfrom14,000mtto45,000mtpa Transionfromlowsulphurtohighsulphurmae
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STRATEGICINITIATIVES(CONT.)
RioEnergy
BuildPhase1150MWpowerplantatSengwaRioChrome
MergechromeminingandprocessingassetswithGurtaAG Re-commenceproduconifNaonalProject/Pioneerstatuscanbe
obtained
RioDiamonds
Eitherexercisepre-empontoacquire78%ownedbyRTZorsell22%dependingonoffersifanytoRTZ
Headoffice
Reduceheadcountto20 HireC00andappointCFO Raonalizesystems/controlsGroup
Debtrestructuringtoatleast24-36months
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STRATEGICINITIATIVES(CONT.)
FurthercostcungexercisesatENRandRencoareunderway. TherewillbeafurtherreviewoftheHeadofficestructure.Atthemoment
thereare33employeesdownfrom113employees
Thecompany expects to generate $11m cash in totaland$8mover thenext3monthsfromthesaleofrevertstoXstrata
Corporate restructuring of the Group is gathering speed (expectedcompleonQ2).RioZimwillholdamajoritystakeinthe5newenes(Rio
Gold,RioBaseMetals,RioDiamonds,RioEnergyandRioChrome)whilst
ulizing the remaining 49% shareholding to raise capital, acquire assets
and/orsourceexperse
SignificantincreaseintheacviesofRioZimFoundaontodomoreworkinourhostcommunies.Severalprojectsareunderway
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RENCOOUTLOOK2013
GoldproducXon
780kgv678kg
Revenue $43mv$34m
OperaXng
margin30%v25%
EBITDA $13mv$10m
17
15%
26%
32%
20%
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ENROUTLOOK2013
BasemetalsproducXon
9,973tv4,623t
PGMs
producXon 162tv70t
Revenue $142mv$34m
EBITDA $10mv$5.5m
18
116%
131%
310%
83%
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CONSOLIDATEDBUDGETFIGURES
Revenue $185mv$72m
EBITDA $23mv$7m
OperaXng
profit
$16mv$5m
EPS 23.5cv(12.1c)
19
156%
229%
251%
294%
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CORPORATESOCIALRESPONSIBILITY
The RioZim foundaXon, aCommunity Trust,was created in 1974andwill be 40yearsoldnextyear.Itisthethirdlargestshareholderinthecompanyandhasaconnuousrecordofcommunitywork
Over thenext three years theGroup has commied to providing aminimumof$500,000 indirect funding to supportTheRioZim FoundaXonsgoal to improve
thelivesoftheZimbabweanpeople.Thefundswillhelpfund:
* EducaXonalenrichmentprograms* Healthcareimprovementprograms* SanitaXonimprovementprograms* EmploymentgeneraXonprograms* TheRioZimFoundaXonsaward-winningRupikeIrrigaXonandTugwaneDam
schemes: helpstoprovideareliablesourceofwaterandadamofsufficient
sizetosupportanirrigaonscheme,whichhelpedtodevelopthegrowthpointinthearea
* Financialassistancegrantsandscholarships: offerstwoscholarshipsperyearforsixthformstudiesleadingtothefirstdegreeinengineeringoragricultureatalocaluniversity
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GROUPCORPORATESTRUCTURE
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RioZimGroup
RioGold
Renco
Cam&Motor
Kenilworth
OneStep
RioBaseMetals
ENR
RioEnergy
SengwaCoal
RioChrome
RMEnterprises(60%)
RioDiamonds
Murowa(22%)
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GROUPMANAGEMENTSTRUCTURE
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Board
10members
CEO
AN
AcngCFO
BN
FC
TBA
CompanySecretary
RT
SupplyChainManager
LD
COO
TBA
RencoGM
CK
ENRGM
CK
GroupTechnicalManager
DK
GroupGeologist
LM
HR
JN
GeneralCounsel
TBA
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KEYRISKS
PoliXcal uncertainty: best illustrated by recent saga at Renco, where anumberofindividualsunlawfullyhi-jackedthemine,disrupngoperaons.
ReliablesuppliesfromBCL:basedinBotswana,BCListhesolesupplieroflow sulphur mae, which is a crical component of ENR operaons.
Historically they have experienced problems at their smelter which
disruptedsuppliestotherefinery.Thecompanyhasnocontroloversuchissueshappeninginthefutureasevidencedbytheforcemajeuredeclared
byBCLinJanuarythisyearwhichinterruptedsuppliesforoverthreeweeks
Short-termliquidity:mostcashgeneratedfromtheoperaonsisdivertedtorepaythedebtburdenthattheGroupaccumulatedovertheyearsand
toservicecurrentdebtatpuniveinterestrates.Restructuringofthebank
debtfromshorttolongertermwillbeessenalforthesuccessfulfuture
operaonsoftheGroup
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THEFUTURE
1. Connuing efforts will be made to reduce and restructure the debtburden
2. Sustainable improvement throughbeer focus and capital expenditure,thatwillhelpexpandandgrowourbusinessfootprint
3. RioZimwillsoonreturntoitsrighulplaceasoneofthiscountry'sbluechipinstuons,supporngemploymentandgrowth.
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