2008 exxaro interim results presentation...5 safety • regrettably two fatalities • 2q08 fatality...

GROUP INTERIM RESULTS (Reviewed)for the six-month period ended 30 June 2008

INTRODUCTION

SIPHO NKOSI

CHIEF EXECUTIVE OFFICER

3

OVERVIEW

• Safety commitment to zero harm

• Status of mining rights conversion

• Good increase in coal production

• Coal expansion on track

• Mineral Sands business challenging

• Headline earnings up 54%

• Interim dividend 175 cps

OPERATIONAL REVIEW

MIKE KILBRIDECHIEF OPERATING OFFICER

5

SAFETY

• Regrettably two fatalities

• 2Q08 fatality free

• LTIFR* increased from 0.36 to 0.45

• Seven units have had zero lost time injuries for the year to date

• Management focus areas:

– improving risk awareness

– executive SHE audits

– Visible Felt Leadership

• Nine Presidential audits completed by DME

Fatalities

LTIFR

* Lost time injury frequency rate per 200 000 man hours

1H06 2H06 1H07 2H07 1H08

4

2

3

2 2

1H06 2H06 1H07 2H07 1H08

0.48

0.42

0.33 0.36 0.

45

6

• Programmes implemented to reduce employee exposure to noise and dust

• Committed to achieve mining sector targets

• Focus to increase participation in HIV/Aids prevention, detection and treatment programmes

HEALTH

2004 2005 2006 2007 2008

42

22 21

3 3

Focus on noise reduction

Num

ber o

f cas

es

7

0 4

317• Each business unit has plans to

mitigate environmental impact• Exxaro’s carbon footprint

baseline assessment completed - target setting to follow

• ISO & OHSAS certification:– 71% completed– 100% target by December

2008• Integrated SHE audits initiated

ENVIRONMENT

Environmental incidents (1H08)

Significant Moderate Minor

Significant: Widespread irreversible impact, permanent loss of ecological value

Moderate: Reversible impact with temporary loss of ecological value

Minor: Reversible impact within 48 hours with no loss of ecological value

8* Sources: SA Coal Report, CRU

COAL MARKETS

Steam coal and coke prices* (USD/t)

• Very strong domestic and international demand

• Steam coal prices are at record highs

• Coke prices showed significant upward movement

• Hard coking coal prices have more than doubled 2004 2005 2006 2007 2008

40

80

120

160

150

300

450

600

RBCT steam coal FOBChinese market coke exports

9

• Total production at 21.9Mt

– excellent results in 2Q08

– 1.3Mt additional sales to Eskom

• Record output at Grootegeluk and Leeuwpan

• Power station coal at 18.1Mt

– improved performance at Matla and Arnot

• Increased production at North Block Complex and Inyanda

COAL OPERATIONS

Production volumes (Mt)

Power station Steam coal Coking coal

16.8

2.3

17.8

2.3

16.8

2.0

17.4

2.1

18.1

2.4

1H06 2H06 1H07 2H07 1H08

1.1 1.4 1.5 1.5 1.4

10

MINERAL SANDS MARKETS

• Increased demand:

– mainly from Asia-Pacific and China

– for pigment from developing countries

– for feedstocks from titanium sponge and welding rod industries

– for LMPI

• Improved pricing outlook

Prices* (USD/t – FOB)

* Source: TZMI

Zircon PigmentCP Slag

300

400

500

600

700

800

2004 2005 2006 2007 20080

500

1000

1500

2000

2500

11

MINERAL SANDS OPERATIONS

KZN Sands• CP Slag affected by Furnace

2 outage• Zircon and rutile impacted by

declining mineral grades

Attributable production (kt)Australia Sands• Improved synthetic rutile plant

performance • Pigment production lower due

to rebuild of four chlorinators• Power supply affected by gas

outages• Zircon and rutile impacted by

lower in-situ grades

CP SlagSynthetic Rutile

Zircon Pigment

1H06 2H06 1H07 2H07 1H087272

54

44

27

62

4442

27

77

48

38

26

73

52

3228

5656

29

22

12

KZN SANDS FURNACE PERFORMANCE

• Furnace 1 performance:

– Operation has been stable

– Current output 93% of cold-design capacity of 110ktpa

– Initiatives to further improve performance

– Significant improvement on centre piece life

• Furnace 2 rebuild:

– To be completed by year end

– First tap expected in January 2009

– Insurance claim in process

• Feasibility study of furnace hearth technology to be completed by year-end

13

ZINC MARKETS

• Realised zinc price declined by 36%

• Oversupply expected with further downward pressure on prices

• Strong local demand for zinc metal

• Treatment charges at a strong level due to global concentrate surplus

Zinc metal price

1 0000

2 0000

3 000

4 000

5 000

• -

10

20

30

40

2004 2005 2006 2007 2008

USD/t R’000/t

14Chifeng Zincor

1H06 2H06 1H07 2H07 1H08

48

8

42

8

51

10

50

13

47

13

BASE METALS OPERATING RESULTS

Zinc concentrate (kt)• Volumes down at Rosh Pinah

due to plant breakdowns• Focus on asset management

programme

Zinc metal (kt)• Production lower at Zincor due to

acid plant and load shedding• Planned maintenance shut 2H08• Chifeng Phase 3 expansion fully

ramped-up

Zinc metal production (kt)

Concentrate production (kt)

55

13

49

8

53

11

42

11

47

12

Zinc Lead

1H06 2H06 1H07 2H07 1H08

15

INDUSTRIAL MINERALS

Ferrosilicon (t)• Stable production • High off-take from iron ore

industry

Dolomite production (Mt)

• Lower demand from steel sector

• Crusher breakdowns impacted on performance

Ferrosilicon (t)

Dolomite production (Mt)1H06 2H06 1H07 2H07 1H08

3 08

7

2 56

1 3 09

6

3 04

1

2 92

3

1H06 2H06 1H07 2H07 1H08

0.66

0.73

0.65

0.69

0.62

FINANCIAL REVIEW

DIRK VAN STADEN

CHIEF FINANCIAL OFFICER

17

FINANCIAL OVERVIEW

17

27

88

(10)

26

19

% Change

(1 296)

2 308

26

728

14

1 444

(8 713)

10 157

FY07

2815Effective tax rate (%) (1)

401753Post-tax equity accounted income

1 1991 523Cash retained from operations

(396)(465)Capital expenditure incurred

891806EBIT

(3 961)(4 976)Operating expenses

1814Operating margin (%)

4 8525 782Revenue

1H071H08R million

(1) Including post-tax equity accounted income

18

REVENUE

7.267.337.54Realised ZAR/USD rate

0.830.810.93Realised USD/AUD rate

941577244– Rosh Pinah2 5581 3581 032– Zincor(767)(519)(213)– Inter-segmental

984480460– KZN Sands1 188560575– Australia Sands

1 7688381 106– Tied operations3 3191 4812 491– Commercial operations

2 7321 4161 063Base Metals

10 1574 8525 782Total

2 1721 0401 035Mineral Sands

1667787Other

5 0872 3193 597CoalFY071H071H08R million

Coal revenue up 55%

19

EBIT AND MARGINS (%)

2618

1457356

123617(%)

2 2421 444

(32)(67)29845768860

(157)(97)79788

885FY071H07(%)1H08R million

2214

7238

35726

33057– Rosh Pinah19269– Zincor(20)(37)– Other

(28)(27)– KZN Sands36(139)– Australia Sands

5072– Tied operations343863– Commercial operations

50289Base Metals

891806Total EBIT

8(166)Mineral Sands

1 2611 286Total EBITDA

(12)(52)Other

393935Coal

Coal commercial margin 35%

20

NET OPERATING PROFIT: 1H07 vs 1H08

R million

891

224

16898 (251)

(265)

(59)806

1H07 1H08Price Volume Exchange Inflation Cost Other

21

EARNINGS

2--Income from investments

53

54

48

48

46

32

88

20

(10)

% Change

425246377Headline earnings per share (cents)

1 4488391 292Headline earnings

16060175Dividend per share (cents)

2.54.02.0Dividend cover (times attributable earnings)

418246363Attributable earnings per share (cents)

1 4278391 244Attributable earnings(20)(14)(2)Minority interest

1 4478531 246Profit after taxation(512)(330)(226)Taxation

728401753Post-tax equity accounted income

(215)(109)(87)Net financing cost

1 444891806EBIT

FY071H071H08R million

22

NET DEBT VARIANCE: 1H08

(483)

1 523 (45) (216)

(348)

(465)

(10)

352240

(68)

Openingbalance

Cashretained

Tax CapexDividends Other Closingbalance

Net financing

cost

Dividend received

Investingactivities

R million

23

DIVIDEND – CASH FLOWS

17

192

58

297

564

2.5

160

425

Totaldividend

FY07

6

72

21

112

211

4.0

60

246

Interimdividend

1H07

61– Anglo

326– BEE Holdco

214– Public

19– Employee share participation scheme (MPower)

2.0Dividend cover (times attributable earnings)

175Dividend declared (cents per share)

620Dividend declared (Rm)


Interimdividend

1H08

24

CAPITAL STRUCTURE

1516Return on capital employed (%)1012Return on equity - attributable income (%)1215Net financing cost cover (times) - EBITDA

1H071H08Ratios for 6-month periods:

240Net cash

1 4241 664Cash and cash equivalentsAfter 20118601 424Total debt

2011346-Short term201045475477– Australia Sands2009323 450947– Corporate20081413 9251 424Long term

Maturity profileUndrawnDrawnR million

Healthy financial metrics

GROWTH AND OUTLOOK

SIPHO NKOSI

CHIEF EXECUTIVE OFFICER

26

EXXARO’S 2008 HIGH LEVEL STRATEGIC FOCUS

• deliver on growth aspirations

• enter high yielding commodities

• develop current project pipeline

• build capacity• innovative growth• top quartile performer• leading company in

mining sector

Short term: consolidate

Medium term:optimise

Longer term:innovate

• operational excellence• optimise cash flow• implement new

organisational structure

27

GROWTH PROJECTS

Pre-feasibility Feasibility Construction Ramp-up/OperationCoal Mineral Sands Base Metals

* Replacements

Belfast 3.0MtpaBelfast 3.0Mtpa

Moranbah South

3.5Mtpa

Moranbah South

3.5Mtpa

Dongara*200ktpa

Dongara*200ktpa

Port Durnford*550ktpa*

Port Durnford*550ktpa*

Medupi14.6MtpaMedupi

14.6Mtpa

Market Coke450ktpa

Market Coke450ktpa

Toliara Sands*560ktpa

Toliara Sands*560ktpa

AlloyStream20ktpa

AlloyStream20ktpa

Diepspruit1.3Mtpa

Diepspruit1.3Mtpa

Char 160ktpaChar

160ktpa

Mafube5.0MtpaMafube5.0Mtpa

Inyanda 1.5Mtpa

Inyanda 1.5MtpaBlesbok

expansion2.4Mtpa

Blesbok expansion

2.4Mtpa

Eerstelingsfontein1.0 Mtpa

Eerstelingsfontein1.0 Mtpa

Turkey exploration

Turkey exploration

Fairbreeze*300ktpa

Fairbreeze*300ktpa

On-site powergeneration

On-site powergeneration

Kwinana 40ktpa

Kwinana 40ktpa

28

OUTLOOK

• Coal– higher volumes

– strong prices

– improved results in 2H08 expected

• Sands– adverse impact of KZN Furnace 2 rebuild

– expected positive contribution from Namakwa

– negative effect of strong AUD

• Lower prices will affect zinc results

• Challenging cost environment

• Favourable coal and iron ore market conditions expected to result in significantly improved earnings

• Strengthening Rand will impact on earnings

ADDITIONAL SLIDES

30

PRO FORMA REVENUE CONTRIBUTION*

Iron OreCoalBase MetalsMineral SandsOther

* Includes Namakwa Sands, 26% of Black Mountain/Gamsberg, 20% of Sishen Iron Ore Company and the effective interest in ChifengNot comparable with revenue as per generally accepted accounting practice

R1 810m20%

R3 597m41%

R1 553m17%

R1 885m21%

R87m 1%

R2 319m33%

R1 086m16%

R1 633m23%

R1 851m27%

R77m 1%

R3 464m24%

R3 692m25%

R5 087m34%

R2 299m16%

R167m 1%

1H08

FY07

1H07

31

PRO FORMA EBITDA CONTRIBUTION*

Iron OreCoalBase MetalsMineral Sands

R1 289m33%

R1 246m31%

R529m13%

R916m23%

1H08

FY07

1H07R617m

29%

R578m27%

R305m14%

R641m30%

R350m12%

R1 142m41%

R1 083m38%R246m

9%

* Includes Namakwa Sands, 26% of Black Mountain/Gamsberg, 20% of Sishen Iron Ore Company and the effective interest in ChifengNot comparable with revenue as per generally accepted accounting practice

32

NET OPERATING PROFIT: 2H07 vs 1H08

2H07 1H08Price Volume Exchange Inflation Cost Other

55381 (58)

117 (191)

348 (44)806

R million

33

HEADLINE EARNINGS

(6)(6)-– Reversal of impairment of assets

(7)--– Share of associate’s recycling of re-measurements from equity to the income statement

341

425

1 448

(3)

-

(3)

17

23

1 427

FY07

-(1)– Reversal of impairment of PPE

(1)-– Share of associate’s gains on disposal of PPE

341343Weighted average number of shares in issue (million)

(1)(16)– Taxation effect of adjustments

258– Gains or losses on disposal of PPE

67– Impairment of Property, Plant and Equipment (PPE)


8391 292Headline earnings

Adjustments:

8391 244Attributable earnings

1H071H08R million

34

DEPRECIATION AND AMORTISATION PER SEGMENT

368

9

17

16

33

64

78

142

160

24

184

1H07

763

17

31

35

66

134

162

296

338

46

384

FY07

18– Zincor

22– Rosh Pinah

82– Australia Sands

86– KZN Sands

22– Tied operations

176– Commercial operations

416

10

40

168

198

1H08

Other

Total

Base Metals

Mineral Sands

Coal

R million

35

CAPITAL EXPENDITURE AND COMMITMENTS

2 173– Namakwa Sands acquisition**

ACTUALESTIMATE*Capex:

3969004651 4935 154Total capex

680– Mafube Coal Joint Venture (50%)

180– Black Mountain/Gamsberg (26% interest)

85– Igoda Coal Joint Venture net outflow

Major cash flow commitments for investments not included in capex:

12

372

1 310

2 600

4 294

860

FY09

14

17

321

532

884

609

2H08

41714– Base Metals1

1

205221

2441H08

511– Mineral Sands

110– Other

180499– Coal190537Expansion

206363Sustaining and environmental1H072H07R million

* Excludes capital expenditure of Namakwa Sands** Subject to disclosed price adjustments for acquisition of Namakwa Sands

36

EBITDA

1 261

(3)

(20)

210

346

536

156

(6)

150

505

73

578

1H07

2 242

(42)

(65)

329

492

756

286

(48)

238

1 157

133

1 290

FY07

(35)– Other

79– Rosh Pinah

(3)– Australia Sands

59– KZN Sands

1 048– Commercial operations

94– Tied operations

1 286Total EBITDA

(42)Other

86– Zincor

130Base Metals

56Mineral Sands

1 142Coal

1H08R million

37

310

(5)

10

71

(192)

(396)

822

(4)

(309)

(64)

1 199

1H07

388

5

50

379

(257)

(1 296)

1 507

(223)

(462)

(116)

2 308

FY07

86Other

352Dividend income from equity investments

(465)Fixed assets

914Cash available

(216)Taxation

(45)Net financing costs

791Net cash inflow

3Proceeds from sale of non-core assets & investments

(99)Investments acquired

(348)Dividends

1 523Cash retained from operations

1H08R million

CASH FLOW

38

NET FINANCING COST

215

99

116

(96)

59

153

FY07

4543Interest adjustment on non-current provisions

(44)(54)Interest income

6444Net interest expense

10987Net financing cost as per income statement

3031Finance leases

7867Interest expense and loan costs

1H071H08R million

39

MPOWER TRUST

9 292

5 310

3 186

17 788

R ‘000

8 015

As at 30 June 2008

Share of total dividends paid or declared to date

– Declared on 13 August 2008

– Paid on 17 March 2008

– Paid on 10 September 2007

Number of beneficiaries

Substantial value accretion since inception

40

COMPARABLE PHYSICAL INFORMATION

46

228

1 131

1 405

171

1 199

1 370

1H08

597798273648– Other

628660592381246262– Export

1 5901 8172 3077548141 113– ArcelorMittal

2 2772 5542 9971 1621 0961 423 Sales

414364463205180242– Tshikondeni

1 8592 1322 4999699291 237– Grootegeluk

2 2732 4962 9621 1741 1091 479Production

COKING COAL

FY05FY06FY071H051H061H07‘000 tonnes

41


1 092

45

2 116

6 846

584

7 435

18 118

1H08

1 7841 4811 892854450841– NBC

36133115626821192– NCC

4 9763 9853 7022 5501 8791 805– Arnot

12 47013 61313 0305 7486 7596 547– Matla

513921956194442417– Leeuwpan

14 06014 26814 5107 1377 1087 128– Grootegeluk

34 16434 59934 24616 75116 84916 830Production

POWER STATION COAL


42


1 047

35

2 116

6 826

608

7 248

17 880

1H08

1 7841 4811 855854388868– NBC

6182551203688648– NCC

4 9763 9853 7022 5501 8791 805– Arnot

12 42713 61312 9975 7166 7446 532– Matla

540915965222450447– Leeuwpan

14 16314 41614 5877 2147 0076 904– Grootegeluk

34 50834 66534 22616 92416 55416 604Sales

POWER STATION COAL


43


------125– Inyanda

1 056

1 428

2 484

223

539

778

762

2 427

1H08 FY06

1 534469391767326246– NBC

5 7944 7724 0612 8652 4451 961Sales

4 2512 9982 8322 1631 5991 411– Domestic

1 5431 7741 229702846550– Export

9961 107814559537324– NCC

1 4421 5041 421676672680– Leeuwpan

1 5511 5851 485765804766– Grootegeluk

5 5234 6654 1112 7672 3392 016Production

STEAM COAL

FY05FY071H051H061H07‘000 tons

44


5347

712

4547

1H08

LEAD CONCENTRATE(ROSH PINAH)

ZINC CONCENTRATE (ROSH PINAH)

10290101534851– Production1049999535248– Sales

ZINC METAL(ZINCOR)

35321911127– Sales: export252122131311– Production

11910897606155– Sales: inter company12610495645553– Production


45


6

4

1213

1H08

ZINC CONCENTRATE(BLACK MOUNTAIN**)

ZINC METAL(CHIFENG*)

161811788– Production

LEAD CONCENTRATE (BLACK MOUNTAIN**)

17187988– Production

151623789– Sales1516237810– Production


* Exxaro’s effective interest in Chifeng** Pro formas to include 26% of Black Mountain/Gamsberg

46


10

56

8

29

7

16

133

1H08

MINERAL SANDS

KZN SANDS

Production

23251712129– Rutile

303626121814– Sulphate slag

134134150567277– Chloride slag

81020559– Scrap Iron

897590374148– Pig Iron (LMPI)

475034242619– Zircon

356319367153160187– Ilmenite


47


6

49

6

39

7

22

20

1H08

MINERAL SANDS

KZN SANDS

183118999– Rutile

Sales

41302920108– Sulphate slag

150104163656481– Chloride slag

1198654– Scrap Iron

796091292945– Pig Iron (LMPI)

474827262314– Zircon

605050303030– Ilmenite (external sales)


48


86

57

13

64

162

1H08

MINERAL SANDS

NAMAKWA SANDS*

292824151410– Rutile

Production

164134151848174– Slag tapped

10589102535351– Iron tapped

129128115636448– Zircon

316272300163165140– Ilmenite


* Pro formas to include Namakwa Sands

49


22

6

56

6

13

85

1H08

MINERAL SANDS

AUSTRALIA SANDS*

161817898– Rutile

Production

535454262726– Pigment

121416578– Leucoxene

11198100555448– Synthetic Rutile

353636171819– Zircon

220227216105116111– Ilmenite


* Exxaro’s effective interest in Tiwest joint venture with Tronox Inc.

50


8

27

5

14

-

1H08

MINERAL SANDS

AUSTRALIA SANDS*

181816882– Rutile

Sales

141017447– Leucoxene

592757271921– Synthetic Rutile

363229171616– Zircon

13302010-10– Ilmenite

FY05FY06FY071H051H061H07‘000 tons

* Exxaro’s effective interest in Tiwest joint venture with Tronox Inc.

51

BASE METAL HEDGING: 01 JULY 2008 - 31 DECEMBER 2011

15 744 1 756 20 100 19 066 1 967 5 500 2011

15 692 1 713 5 175 2010

13 509 1 591 6 675 2009

19 365 2 187 93 000

2008

2011

2010

2009

2008

Year

2 750

26 700

26 400

26 400

13 500

Tonnes hedged

1 814

2 061

2 216

2 251

2 256

Average USDprice

14 625

19 976

19 944

18 939

17 854

AverageZAR price

Zinc

Lead

52

PROJECT DETAILS

3Q08Ramp-upR389m160ktpaAug 2005Char project - Grootegeluk

1Q12Pre-feasibilityTBD550ktpaPort Durnford (51%)

2011Pre-feasibilityTBD200ktpaDongara (Australia 100%)

2010Pre-feasibilityR600m3MtpaBelfast

2011AwardedR9bn14.6MtpaMay 2006Medupi

2011Feasibility studyR1.9bn450ktpaMarket coke

4Q08ConstructionR136m1.3MtpaNov 2007Diepspruit

2012Pre-feasibilityTBD3.5MtpaMoranbah South (Australia 50%)

1Q08OperationR1.96bn5MtpaNov 2006Mafube Coal (50%)

2Q08OperationR269m1.5MtpaNov 2006Inyanda

2014Pre-feasibilityTBD560ktpaToliara Sands (Madagascar)

2010Pre feasibilityTBD20ktpaAlloyStream - Furnace 1

4Q08ConstructionR10m1.0MtpaEerstelingsfontein

2008OperationR10m2.4MtpaBlesbok expansion

3Q10Planned 4Q08R780m300ktpaMay 2006Fairbreeze

1Q10ConstructionAUD100m40ktpaFeb 2008Kwinana expansion (Australia 100%)

Boardapproval

Status Estimatedstart-up

Estimated CapexScopeOwnership

(100% unless indicated otherwise)

Base MetalsCoal Mineral Sands

53

SALIENT DATES

Last day to trade cum dividend 12 September 2008

Shares trade ex dividend 15 September 2008

Record date 19 September 2008

Payment date 22 September 2008

2008 exxaro interim results presentation...5 safety • regrettably two fatalities • 2q08 fatality...

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