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Site visit - Mogalakwena mine


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The financial community visits key assets in Anglo American’s De Beers and Platinum businesses, showcasing two of the Group’s world class assets.

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Site visit - Mogalakwena mine

  1. 1. ANGLO AMERICAN SITE VISIT MOGALAKWENA MINE – PLATINUM 23 NOVEMBER 2016 PLATINUM Mogalakwena Mine – load and haul operations including rope shovel
  2. 2. 2 Disclaimer: This presentation has been prepared for Anglo American Platinum Limited and the entities in the Anglo American Platinum group (“Anglo American Platinum”) and comprises the written materials/slides for a presentation concerning Anglo American Platinum. By attending this presentation and/or reviewing the slides you agree to the following conditions, and accept that all statements attributable to Anglo American Platinum or persons acting on their behalf are qualified in their entirety by the cautionary statements set out below: • This presentation is for information purposes only. It does not constitute an offer to sell or the solicitation of an offer to buy shares in Anglo American Platinum. Further, it does not constitute a recommendation by Anglo American Platinum or any other party to sell or buy shares in Anglo American Platinum (or any other securities). • Nothing in this presentation should be interpreted to mean that future earnings per share of Anglo American Platinum will necessarily match or exceed its historical published earnings per share. • Certain statistical and other information about Anglo American Platinum included in this presentation is sourced from publicly available third party sources. As such it presents the views of those third parties, which does not necessarily correspond to the views held by Anglo American Platinum. Forward-looking statements • This presentation includes forward-looking statements. All statements other than statements of historical facts in this presentation are forward-looking statements, including those regarding Anglo American Platinum’s financial position, business and acquisition strategy, plans and objectives of management for future operations (including development plans and objectives relating to Anglo American Platinum’s products, production forecasts and reserve and resource positions). Known and unknown risks, uncertainties and other factors may cause the actual results, performance or achievements of Anglo American Platinum, or industry results, to be materially different from those expressed in or implied by such forward-looking statements. Such forward-looking statements are based on assumptions, including in relation to Anglo American Platinum’s present and future business strategies and the environment in which Anglo American Platinum will operate in the future. • Factors that could cause Anglo American Platinum’s actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of global demand and commodity market prices, mineral resource exploration and development capabilities, recovery rates and other operational capabilities, the availability of mining and processing equipment, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, the effects of inflation, political uncertainty and operating conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or safety, health, environmental or other types of regulation in the countries where Anglo American Platinum operates, conflicts over land and resource ownership rights and such other risk factors identified in Anglo American Platinum’s most recent Integrated Report. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking statements. • These forward-looking statements speak only as of the date of this presentation. Anglo American Platinum disclaims any obligation (except as required by applicable law, the Listings Requirements of the securities exchange of the JSE Limited in South Africa and other applicable regulations) to release publicly any updates or revisions to any forward-looking statement contained herein, notwithstanding any change in any of Anglo American Platinum’s expectations or in anything on which any such statement is based. No investment advice • This presentation has been prepared without reference to your particular investment objectives, financial situation, taxation position and particular needs. You should consult your stockbroker, bank manager, solicitor, accountant, taxation adviser or other independent financial adviser (where applicable, as authorised under the Financial Advisory and Intermediary Services Act 37 of 2002 in South Africa) for financial or investment advice. CAUTIONARY STATEMENT
  3. 3. 3 MOGALAKWENA MINE – OVERVIEW  The Northern Limb of the Bushveld Complex is located in the Limpopo Province of South Africa  The Northern Limb is approximately 120km in length  Anglo American Platinum operates the Mogalakwena open pit mine – currently the only operating mine on the Northern Limb Mogalakwena overview Reserves (Contained 4E million troy ounces) 116.0 Inclusive Resources (Contained 4E million troy ounces) 286.4 Life of mine (years) >100 Number of employees 1,816 Annual Platinum production (koz) c.400 Mogalakwena mine Mogalakwena - drilling and load and haul operations
  4. 4. 4 MOGALAKWENA LEADERSHIP TEAM World class leadership team adding value through the cycle
  5. 5. 5 SAFETY PERFORMANCE Safest platinum mine in the world  Mogalakwena operation benchmarks favourably with international best practice safety performance  The team has a well structured safety strategy in place  Risk approach and progressing priority unwanted events and critical controls  Notable recent safety achievements: - North concentrator - 489 days LTI free - South concentrator - 315 days LTI free - Mining - 226 days LTI free - Mogalakwena operation - 4.3 million fatality free shifts (+4 years) - The concentrator team recently surpassed 3 million fatality free shifts (>6 years) - Awarded the John T Ryan award for best in class safety performance 0.44 1.14 1.05 1.45 1.63 2.02 2015 Incidentsper200000hours 2016 YTD2014201320122011 0.15 0.17 0.21 0.45 0.42 0.36 2011 20132012 Incidentsper200000hours 2016 YTD20152014 Total recordable case frequency rate (per 200,000 hrs) Lost time injury frequency rate (per 200,000 hrs)
  7. 7. 7 GEOLOGICAL SETTING & REGIONAL ACTIVITY Uniquely positioned for open pit mining Waterberg PGM Platreef Ivanhoe Mines Kwanda North Atlatsa/Anglo Plat Tweespalk PGM Boikgantsho Anglo Platinum Harriet’s Wish Sylvania Central Block Atlatsa Akanani Lonmin Activity Mining Actively exploring Not exploring Project Southern Platreef +120km Mogalakwena Anglo Platinum 24km  The Northern Limb complex of the Bushveld complex has a strike of 120km  Mogalakwena is the only operational mine in the region currently  The Boikgantsho mineral right added to Mogalakwena to give a strike of 24km  It is unlikely that any other company in the region will be able to start an open pit mine of scale  Ivanhoe Mines is actively developing an underground project  PTM are developing the Waterberg region which sits under significant amounts of sedimentary rock
  8. 8. 8 3,712 2,751 1,391 1,260 852 Mogalakwena Impala Northam Lonmin Ivanplats RESOURCE ENDOWMENT Most valuable PGM resource in the world  Yellow areas are scheduled resource which is within AAP’s mine plans  Highlighted within the yellow cut outs are the profiles of current pits  Green areas highlight the exclusive resource, excluding our scheduled resource, both of which are published as the inclusive mineral resource  Grey areas emphasize the pre-resource. AAP does not publish Platreef pre-resource unlike our competitors Published inclusive mineral resources (million tonnes) (1) (1) 31 December 2015, (2) 30 June 2015, (3) 30 June 2016, (4) 30 September 2015, (5) Platreef Project as at 22 April 2016, reported only (not inclusive) ~852 Mt at a 2 g/t 3PE+Au cut-off. (2) (3) (4) Mogalakwena super-pit Sandsloot Tweefontein North Tweefontein HillZwartfonteinBoikgantsho 100 600 1 100 1 600 2 100 Resource publication boundary Scheduled resource Pre-resource boundary Pre resource 2 600 3 100 3 600 Drenthe Fault Mohlosane Fault Dolomite Tongue Sandsloot River ≈ 6.5km ≈ 8.0km≈ 2.0km Exclusive resource 750 Extraction limit metres (5)
  9. 9. 9 DELIVERING VALUE Valuable basket of metals in high quality concentrate 14% 20% 6% 64% 30% 56%41% 39% 30% 23,961 6% 63% 31% 23,500 LonminImplats 32,850 Mogalakwena AAP Total 23,413 3E (Pd, Rh & Au) PlatinumBase metals 2015 revenue split between metals  Highest Rand basket price in the industry at R32,850 per platinum ounce  The major differentiator of Mogalakwena concentrate is base metal loading from nickel and copper  Relatively low amounts of impurities in the concentrate is also favourable from a smelting perspective – low chrome content (1) 1 Basket price = Total revenue from all metals / platinum ounces
  11. 11. 11 A FOCUS ON CONTINUOUS IMPROVEMENT Mining strategy improvements creating significant value  Mine planning driving significant value  Optimised cut-back schedule  Strike extensions preferred to down dip pushbacks  Slope angle optimisation leading to further reduction in stripping ratio  For period 2017 to 2045 reduced waste mining by ~374Mt 0 20 40 60 80 100 120 140 160 180 200 220 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 2014 mine plan 2015 mine plan 2017 mine plan Planned mining volumes (Mt) Stripping ratio (waste to ore ratio) 10.8 10.9 8.4 5.8 6.7 6.8 3.9 5.9 4.8 2017 - 2031 2032 - 2041 2017 - 2045 2014 mine plan 2015 mine plan 2017 mine plan
  12. 12. 12 Platinum production (‘000 ounces) DELIVERING HIGHER PRODUCTION AND CASH FLOW Mogalakwena production continues to improve 304 325 354 369 4001 16 22 23 2012 21013 2014 2015 2016F (inc Baobab) Mogalakwena Baobab Unit cost (R/Pt oz) & Cash operating margin (%) 305 341 376 392 c.400 15,464 16,148 18,930 17,502 17,647 39% 46% 49% 52% 49% 0% 10% 20% 30% 40% 50% 60% 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 2012 2013 2014 2015 H1 2016 Cash Operating cost / Pt oz Cash Operaing Margin  Record production performance in 2015 – up 6% to 392 koz  Forecast to improve production in 2016  Unit costs reduced 7% in 2015 due to cost management and productivity initiatives  Highest Rand basket price in the portfolio at R32,850 per platinum ounce  Generated R4.4bn of economic free cash flow  Cash operating margin maintained at 50% despite weaker prices due to benefit of the basket of metals
  13. 13. 13 A FOCUS ON CONTINUOUS IMPROVEMENT Ongoing concentrator improvements 12,754 33,215 11,031 2013 11,725 30,222 2014 +21% 10,480 2015 34,848 32,140 2016F 11,731 2012 28,712 North conc. (MNC) South conc. (MSC)Daily mean (tonnes milled) Baobab conc.  Concentrator capacity increase – exceeding expectation  Baobab opportunity seized with further benefits to come through as a result of the Pandora transaction with Lonmin  Asset management implemented since 2014 to eliminate defects  Operating model implementation at North and South concentrator  Identifying opportunities for optimisation of the North concentrator dry section to increase stability and sustainability  Assessing recovery improvement in the wet section of North concentrator  Expansion options study to look at where further optimisation can exist in downstream processing Annual throughput (tonnes milled kt)
  14. 14. 14 TONNES MINED Focus on stability and removing volatility has led to an increase in tonnes mined  Average daily tonnes mined increased 48% between 2012 and 2016F  Focus on maintaining stability and removing volatility in mining  Improvement in overall equipment effectiveness on total heavy mining equipment fleet  Equipment availability and utilisation improved through business improvement initiatives  Increased drilling accuracy improved blasting fragmentation  Improvement in fragmentation positively impacting productivity to negate increased vertical lift and hauling distances 64,384 95,594 92,406 97,725 263 267 259 2012 2016F 180 +48% 2014 74,943 2013 2015 208 Annual tonnes minedDaily mean (kilo tonnes mined) Annual mining volumes (tonnes mined kt)
  15. 15. 15 OVERALL EQUIPMENT EFFECTIVENESS World-class performance from a world-class fleet  Benchmarking of 170 operations globally places Mogalakwena in the top 10% of all global Komatsu 930E truck fleets in terms of overall equipment effectiveness  Mogalakwena fleet’s annual truck hours are sustainably above industry benchmark  Whole of life cost of the fleet trending among the lowest globally 50% 60% 70% 80% Frequency Overall equipment effectiveness (avail.% x util.% x productivity %) 30%20% 40% 930E OEE = 71% 930E OEE = 68% Global best in class Current performance 40,0000 80,00060,000 100,00020,000 1,000 2,000 1,500 500 0 Equipment operating hours Cumulativecosts(Rand/hr) Global cost distribution Actual Forecast DT62 DT72 DT67 DT77 DT64 DT76 DT61 DT65 DT79 6,000 DT60 DT63 DT71 DT73 DT69 DT75 DT80 DT66 DT68 Ø 6,491 DT74 DT78 DT70 Industry benchmark Mogalakwena fleet average Komatsu 930E truck fleet hours for 2016 (annualised) Global benchmark – overall equipment effectiveness Whole of life forecast – 930E fleet
  16. 16. 16 Baobab tonnes treated (kt) BAOBAB CONCENTRATOR THROUGHPUT Baobab increasing throughput with further value to be realised from Pandora transaction  Optimised feed ore ratio resulting in increased throughput  Integrated into Mogalakwena North concentrator dry circuit  Additional value will be realised through logistical optimisation of both ore crushing and ore transportation  As a result of Pandora transaction, will be able to treat ore from mining productivity improvements and from value accretive stockpile blending Baobab average monthly throughput (kt milled) 38 51 50 73 2013 2014 2015 2016 YTD +94% 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 Jan-13 Jan-16Jan-15 Jul-15Jul-14Jan-14 Jan-17Jul-16Jul-13 +111%
  17. 17. 17 SOCIAL PERFORMANCE CLIMATE Community relations improving through engagement at all levels  Good relations with the National Union of Mineworkers (NUM) – the major union  All engagement structures in place and effective  High literacy level with minimum entry level matric mathematics and science  Challenge on improving literacy levels (employment pipeline)  High performance culture  93% of our total workforce are local  Weekly bilateral leadership forum is in place  Several award winning community engagement projects  Three communities have been relocated, two in total and one near completion  Line management direct involvement with communities yielding results Mogalakwena Groenfontein Training Initiative, a partnership with local residents from surrounding villages Aletuke Community Centre, built by Mogalakwena Mine. Pictured, community members being trained to be community care givers
  18. 18. 18 CONCLUSION  World class operation in the Northern limb with the only operational open-pit mine  Safest platinum mine in the world – no fatalities for 5 years  Extremely long life asset with large reserves and resources  Expansion potential – but competing for capital in current environment  Sustainable production – no major project capital needed to increase production 31% since 2012 – but maintained waste stripping and SIB capital  Focus on community relationships as our social license to operate
  19. 19. PLATINUM Q&A