riozim fy results 2012 presentation

7/27/2019 RioZim FY Results 2012 Presentation

1/25

ProudlyZimbabweanApril2013

RIOZIM2012RESULTSAND2013BUDGET


2/25

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.

2


3/25

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

3


4/25

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

4


5/25

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%


6/25

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


7/25


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


8/25


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($)


9/25

RENCO2012

9

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


10/25


11/25

ENRTURNOVER2012US$000S

11

Nickel,

4,671

Copper,

6,674

Tollrefining

fees,9,833

PGMs,8,432

Cobalt,86 Reverts,5,039

TollrefiningfeesbeforeterminaonofCentametallcontract.


12/25

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.

12


13/25

IMPEDIMENTSIN2012

Impedimentstoachieving2012targetswere:- AprolongedbutstrategicallyimportantterminaonofCentametall

onerouscontract

- ProblemswiththesmelteratBCL,thesolesourceofmaetotherefinery,resulnginmaesupplydisrupon

- DriversstrikeinSouthAfricaaffecngavailabilityofconsumablesand,inturn,goldproduconatRenco

- Highdebtlegacyandinterestratesonbankdebtsflingresourceallocaontoimproveoperaonalperformance

- DespitethesuccessatInez,theCam&Motorsandstreatmentprojectwasoverallunprofitableresulnginthecontractbeingsubsequently

terminated

Despitetheabove,fundamentalsremainstrong13


14/25

STRATEGICINITIATIVESIN2013

RioGold

JVwithDRDGoldonRencoDumps OpenCam&Motor Selecveacquisionofproducinggoldmineswithin40kmradiusofEiffel

FlatstofeedCamp@Cam&Motor

InvestmentinvampingandHilmachinestoimprovegradesandreducepowerconsumpon

RioBaseMetals

Installown20tpdOxygenPlant($318kcostsavingspm)andworkwithBOCgasestorefurbishtheexisngc17tpdPSAplant

Expandrefineryfrom14,000mtto45,000mtpa Transionfromlowsulphurtohighsulphurmae

14


15/25

STRATEGICINITIATIVES(CONT.)

RioEnergy

BuildPhase1150MWpowerplantatSengwaRioChrome

MergechromeminingandprocessingassetswithGurtaAG Re-commenceproduconifNaonalProject/Pioneerstatuscanbe

obtained

RioDiamonds

Eitherexercisepre-empontoacquire78%ownedbyRTZorsell22%dependingonoffersifanytoRTZ

Headoffice

Reduceheadcountto20 HireC00andappointCFO Raonalizesystems/controlsGroup

Debtrestructuringtoatleast24-36months

15


16/25

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

16


17/25

RENCOOUTLOOK2013

GoldproducXon

780kgv678kg

Revenue $43mv$34m

OperaXng

margin30%v25%

EBITDA $13mv$10m

17

15%

26%

32%

20%


18/25

ENROUTLOOK2013

BasemetalsproducXon

9,973tv4,623t

PGMs

producXon 162tv70t

Revenue $142mv$34m

EBITDA $10mv$5.5m

18

116%

131%

310%

83%


19/25

CONSOLIDATEDBUDGETFIGURES

Revenue $185mv$72m

EBITDA $23mv$7m

OperaXng

profit

$16mv$5m

EPS 23.5cv(12.1c)

19

156%

229%

251%

294%


20/25

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

20


21/25

GROUPCORPORATESTRUCTURE

21

RioZimGroup

RioGold

Renco

Cam&Motor

Kenilworth

OneStep

RioBaseMetals

ENR

RioEnergy

SengwaCoal

RioChrome

RMEnterprises(60%)

RioDiamonds

Murowa(22%)


22/25

GROUPMANAGEMENTSTRUCTURE

22

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


23/25

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

23


24/25

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.

24


25/25

ProudlyZimbabwean

riozim fy results 2012 presentation

Documents