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2013 Annual Results
Corporate Presentation
2 April 2014
Disclaimer
1
This presentation has been prepared based on publicly available information and information provided by China Vanadium Titano-
Magnetite Mining Company Limited (the “Company”). The information contained in this presentation has not been independently
verified. No representation or warranty expressed or implied is made as to, and no reliance should be placed on, the fairness,
accuracy, completeness or correctness of the information or opinions contained herein.
The Company does not intend to provide, and you may not rely on this presentation as providing, a complete or comprehensive
analysis of the Company’s financial or trading position or prospects. The information contained herein is subject to change and
readers are cautioned not to place undue reliance on forward-looking information contained in this presentation. Such forward-looking
information reflects various assumptions of the management concerning the future performance of the Company, and the
assumptions may or may not prove to be correct. The Company is under no obligation to correct or update any such forward-looking
information.
The views contained in this presentation are based on financial, economic, market and other conditions prevailing to date. This
presentation is not intended to form the basis of any investment decision and does not constitute or form part of any advice or any
offer to sell or an invitation to subscribe for, hold or purchase any securities or any other investment, and neither this presentation nor
any of its contents shall form the basis of or be relied on in connection with any contract or commitment whatsoever. This
presentation is not, and should not be treated or relied upon as investment research or a research recommendation under the
applicable regulatory rules.
None of the Company nor any of its respective affiliates, advisors or representatives shall have any liability whatsoever (in negligence
or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with
the document. No person is authorised to give any information or to make any representation not contained in this document and, if
given or made, should not be relied upon.
Agenda
1
2
3
Market Overview 3
2013 Annual Results Overview
Business Update & Outlook 13
8
2
Market Overview
3
Chengdu Steel’s Price Trend (1)
(RMB/t)
Source: www.steelhome.cn
Note:
(1) Earthquake resistant rebar, HRB335E, diameter 28-32mm, including VAT
• Unfavourable market environment
characterised by overcapacity, high production
cost, low selling price and air pollution
• Steel production capacity in China was nearly
1 billion tonnes, but the utilisation rate was only
72%
• Shortage of capital resources is another key
issue that hovered over the steel industry
• Crisis started to spread to large steel
companies and the trading companies
Industry Overview
Steel
Industry
90
95
100
105
110
115
120
125
Jan-1
2
Apr-
12
Jul-12
Oct-
12
Jan-1
3
Apr-
13
Jul-13
Oct-
13
Jan-1
4
Apr-
14
China Steel Price Index
Source: China Iron & Steel Association
4
3,000
3,400
3,800
4,200
4,600
5,000
Jan
-12
Apr-
12
Jul-12
Oct-
12
Jan
-13
Apr-
13
Jul-13
Oct-
13
Jan
-14
Apr-
14
China Iron Ore Price Index (1)
Source: China Iron & Steel Association
• The China Iron Ore Price Index experienced
greater fluctuations during the year, recording
an amplitude of 26%
• The amplitude in the selling prices of country’s
ordinary iron concentrates has also reached
13%
Industry Overview (cont’d)
Ordinary
Iron Ore
Titanium
• Weak demand dragged down the selling price
of titanium
• The price of high-grade titanium concentrates
dropped significantly in Panzhihua during the
year
0
500
1,000
1,500
2,000
2,500
Jan-1
2
Apr-
12
Jul-12
Oct-
12
Jan-1
3
Apr-
13
Jul-13
Oct-
13
Jan-1
4
Apr-
14
High-grade Titanium Concentrates’ Price Trend (2)
Source: www.cnv168.com
Note:
(2) Dry base packaging, TiO2 46%, not including VAT
(RMB/t)
5
Note:
(1) Based on ordinary iron ore
160
210
260
310
360
410
460
510
560
Jan-1
2
Apr-
12
Jul-12
Oct-
12
Jan-1
3
Apr-
13
Jul-13
Oct-
13
Jan-1
4
Apr-
14
Favourable Government Policies and Industry Developments
Urbanisation
and
construction
drives fresh
demand for
steel
Government's
strong
determination to
eliminate backward
steel production
capacity
China’s great
western
development
strategy
New
application
of titanium
dioxide
Launching
major
infrastructure
projects in
Sichuan
6
Severe Market Challenges
7
Upstream
• Unfavourable downstream business and operating environment
• Difficulties in identifying quality mine resources
• Rising costs
• Professional and technical staff retention
Downstream
• Low concentration of steel plants over the country
• Thin profitability or even become loss making
• Problems arising from the elimination of backward steel production capacity including:
• Repayment of huge debt
• Layoff staff handling
• Tight capital liquidity
• Strict implementation of environmental protection and energy saving policies
2013 Annual Results Overview
8
2013
(RMB mm)
2012
(RMB mm)Change(%)
Revenue 1,429.9 1,533.7 (6.8)
Gross Profit 504.5 734.0 (31.3)
Gross Profit Margin 35.3% 47.9% (12.6) pts
EBIT 366.4 612.8 (40.2)
EBITDA 553.5 762.7 (27.4)
Profit before Tax 266.2 571.7 (53.4)
Profit and Total Comprehensive Income 182.5 441.2 (58.6)
Profit and Total Comprehensive Income Attributable
to Owners of the Company179.1 433.7 (58.7)
Net Profit Margin (1) 12.5% 28.3% (15.8) pts
(RMB) (RMB)
Basic and Diluted Earnings per Share (2) 0.09 0.21 (57.1)
(HKD) (HKD)
Proposed Final Dividend per Share 0.022 - -
Financial Performance Overview
Notes:
(1) Net profit margin = Profit and total comprehensive income attributable to owners of the Company / Revenue
(2) Weighted average number of shares of 2,075,000,000 in issue
9
2,750 2,750
1,3601,000
280280
31-Dec-12 31-Dec-13
Iron concentrates Iron pellets High-grade titanium concentrates
665
671
621595
875 891
845859
534
1,075
1,174
714
2010 2011 2012 2013
Iron concentrates Iron pellets High-grade titanium concentrates
1,517.2
2,113.8
494.2
153.1 196.3
Iron concentrates Iron pellets Titanium concentrates
38.3
(3)
Operating Performance
Sales Volume Breakdown by Products
Sales Revenue
1,533.7 1,429.9
2012 2013
(RMB mm)
(kt)
(RMB/t)
Self Annual Production Capacity (1)
(ktpa)
Selling Prices by Products
2012 2013
10
(2)
Notes:(1) Production capacity on a wet basis(2) Including both vanadium-bearing iron concentrates and ordinary iron concentrates(3) Including both medium-grade titanium concentrates and high-grade titanium concentrates(4) Weighted average selling prices of vanadium-bearing iron concentrates and ordinary iron concentrates.
(4)
(2)
734.0
504.5
47.9%
35.3%
Cost and Margins
Gross Profit and Gross Profit Margin
Profit and Total Comprehensive Income Attributable to
Owners of the Company and Net Profit Margin (2)
(RMB mm)
433.7
179.1
28.3%
12.5%
2012 2013
(RMB mm)
45.9 50.7
118.1 152.6
10.7%
14.2%
2012 2013
Selling & distribution expenses Administrative expenses
Total SD&A expenses as % of Revenue
Selling & Distribution and Administrative Expenses
Effective Tax Rate (1)
22.8%31.4%
2012 2013
Notes:(1) Effective tax rate = Income tax expense / Profit before tax(2) Net profit margin = Profit and total comprehensive income attributable to owners of the Company / Revenue
2012 2013
(RMB mm)
11
(33.0%)
(21.9%)
2012 2013
18.6x
5.5x
2012 2013
0.5x
0.7x
2012 2013
10.4% 10.3%
2012 2013
Maintained Low Leverage
Total Debt / Total Capitalisation (1)Net Debt / Total Capitalisation (1)
Total Debt / EBITDA EBITDA / Interest Expenses (2)
Notes:(1) Total capitalisation = Total debt + Total equity(2) Interest expense included capitalised interest
12
Business Update & Outlook
13
Business Presence in China
Increase Resources and Production Capacity through Organic Growth, Acquisition and Cooperation
* Haibaodang mine: Acquisition pending completion with forecasted resources of at least 100.0 mt.
Maoling-Yanglongshan mine
Xiushuihe processing plant
Baicao processing plant
Hailong processing plant
Heigutian processing plant
Maoling processing plant
Baicao mine
Xiushuihe mine
Yangqueqing mine
Cizhuqing mine
Iron pelletising plant
1
2
3
4
5
6
7
9
10
11
8
14
7
• However, the two independent research
institutes had concluded in their reports
that the niobium and tantalum ore
resources cannot be economically
recovered from the ore
• The board has decided to terminate the
exploration work and resumed normal
mining two months earlier than planned at
the Baicao mine
• Reduction of production volume of
vanadium-bearing iron concentrates for the
first half of 2014 reduced from previously
not more than 250,000 tonnes to not
more than 125,000 tonnes
Pingchuan MineBaicao Mine
Update on the Baicao Mine & Pingchuan Mine
March
2014
July
2013January
2014
• Preliminary survey conducted by the
Sichuan Geochemistry Exploration Team
indicated that the Baicao mine may
contain economically mineable niobium
and tantalum ore resources and the
Group accepted the recommendations to
adjust normal mining operation
• Decided to voluntarily wind-up the joint
venture established for the development of
the Dashanshu section of the Pingchuan
Mine due to uncertainty on the timing to
obtain the necessary mining permit for its
operation and additional expenses would
incur to reach commercial production
• Such action will not lead to any adverse
material impact on the business of the
Group
15
Diversify
into new
resources
Acquisition
of new
mines
Boundary
extensions
of existing
mines
Prudent
investments
overseas
Measures to Achieve Sustainable Development
16
Thank you!
Contact:
Mandy Go
Strategic Financial Relations Limited
Director
Tel:+852 2864 4812
Email: [email protected]