Saudi Arabian Mining Company (Ma’aden)...8 Earnings Call Presentation Q3, 2017 1200 1400 1600 1800...

Earnings Call Presentation Q3, 2017 1 1

Saudi Arabian Mining Company (Ma’aden) Earnings Conference Call Q3 2017

November 6, 2017


Mohammed Al Jbali

Investor Relations


This presentation contains statements that are, or may be deemed to be, forward looking statements, including statements about the beliefs

and expectations of Saudi Arabian Mining Company (the "Company"). These statements are based on the Company's current plans,

estimates and projections, as well as its expectations of external conditions and events. Forward-looking statements involve inherent risks

and uncertainties and speak only as of the date they are made. As a result of these risks, uncertainties and assumptions, a prospective

investor should not place undue reliance on these forward-looking statements. A number of important factors could cause actual results or

outcomes to differ materially from those expressed in any forward-looking statements. The Company is not obliged to, and does not intend to,

update or revise any forward- looking statements made in this presentation whether as a result of new information, future events or otherwise.

This communication has been prepared by and is the sole responsibility of the Company. It has not been reviewed, approved or endorsed by

any financial advisor, lead manager, selling agent, receiving bank or underwriter retained by the Company. This communication is provided

for information purposes only. In addition, because this communication is a summary only, it may not contain all material terms and this

communication in and of itself should not form the basis for any investment decision.

The information and opinions herein is believed to be reliable and has been obtained from sources believed to be reliable, but no

representation or warranty, express or implied, is made with respect to the fairness, correctness, accuracy reasonableness or completeness

of the information and opinions. There is no obligation to update, modify or amend this communication or to otherwise notify you if

information, opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

You are strongly advised to seek your own independent advice in relation to any investment, financial, legal, tax, accounting or regulatory

issues discussed herein. Analyses and opinions contained herein may be based on assumptions that if altered can change the analyses or

opinions expressed. Nothing contained herein shall constitute any representation or warranty as to future performance of any financial

instrument, credit, currency, rate or other market or economic measure. Furthermore, past performance is not necessarily indicative of future

results. The Company disclaims liability for any loss arising out of or in connection with your use of, or reliance on, this communication.

These materials may not be published, distributed or transmitted and may not be reproduced in any manner whatsoever without the explicit

consent of Ma’aden’s management. These materials do not constitute an offer to sell or the solicitation of an offer to buy the securities in any

jurisdiction.

Non-IFRS Financial Measures

Some of the financial information included in this presentation is derived from Ma’aden consolidated financial statements but are not terms

defined within the International Financial Reporting Standards (IFRS) as applied In the Kingdom of Saudi Arabia. Such information is provided

as the Company believes they are useful measures for investors. A reconciliation of this information with the consolidated financial statements

is included in the presentation.

Forward looking statement


Khalid Al-Mudaifer

President & Chief Executive Officer


Production

■ 78K ounces of gold, up 37% vs. Q3 2016

■ 363K tonnes of alumina, down 5% vs. Q3 2016

■ 240K tonnes of primary aluminium, up 11% vs. Q3 2016

■ 620K tonnes of ammonia, up 99% vs Q3 2016

■ 744K tonnes of ammonium phosphate fertilizer, up 5% vs Q3 2016

Strong cost

performance

Strong financial

performance

■ Sales SAR 3,151 mn, up 37% vs. Q3 2016

■ EBITDA SAR 1,360 mn, up 46% vs Q3 2016

■ Net income SAR 263 mn, up 122% vs Q3 2016

■ Operating Cashflow1 SAR 880 mn, up 54% vs Q3 2016

Growth remains

a focus

■ Focus on maximizing production continues

■ Cost performance in fertilisers and gold maintaining downward momentum

■ Ongoing program to reduce aluminium fixed cash costs to offset higher power

and raw materials costs

■ Ammonium Phosphate fertilizer production from Wa’ad Al Shamal plant ramping up

■ Next wave of gold and phosphate projects at advanced stages

■ Looking for opportunities outside the Kingdom to support our position in base

metals and in fertilisers

HIGHER VOLUMES AND IMPROVED MARKETS BUT WITH SOME HEADWINDS

Continued growth in production delivers another strong quarter

1 see appendix for details


40%

60%

80%

100%

120%

140%

160%

Aluminium Copper Gold DAP Ammonia

Margins have softened but remain strong

241

1,416 1,475

1,360

10%

52% 49% 43%

0%

10%

20%

30%

40%

50%

60%

0

200

400

600

800

1000

1200

1400

1600

Q4 2016 Q1 2017 Q2 2017 Q3 2017

EBITDA

EBITDA Margin

SA

R m

illio

n

Rebase t

o 1

00 a

s o

n 1

June 2

016

Source: Bloomberg

Commodity price movement

EBITDA and margins

Note: 2016 numbers have been restated as per IFRS


300

320

340

360

380

400

420

Source: Ma’aden SBU analysis, CRU , FMB and FERTECON

■ Ammonium phosphate fertilizer price ~US$340/t (Avg. Tampa FOB) and Ammonia price averaged ~US$ 218/t (Avg. ME FOB) in Q3

■ South America demand was lower due to high inventory levels but Indian subcontinent demand picked up in Q3 which supported the

late Q3 price improvement

■ On the supply side, US saw supply dip due to Hurricane Irma and volumes from Morocco also increased. More limited Chinese

exports also contributed to a tighter than expected market

■ Further supply from Moroccan and Wa’ad Al Shamal project ramp-ups may soften prices in the coming quarters

Phosphate market stabilised with a pick-up in late Q3

Average DAP Price Tampa Index (US$/t) % Quarterly change

Avg. DAP Prices

-7% +19% -2% -4% -9% -8% -5%

Q1 Q2 Q3 Q4 Q1 Q2 Q3


1200

1400

1600

1800

2000

2200

2400

Aluminium prices built on recent gains in Q3 2017

■ Aluminium price averaged US$ 2,012/tonne (LME), up 24% vs. Q3 2016 and up 9% vs. Q2 2017

■ LME prices should be supported by Chinese central government’s supply reform policies and for 2017 the market is

expected to remain nearly balanced with a deficit possible next year

■ Robust demand growth at 4-5% and continued implementation of supply side reforms in China to progressively reduce

overcapacity issue

Aluminium Price Movement (US$/t)

Source: Bloomberg, Ma’aden SBU analysis, CRU June 2017

+1% +16% +1% +7% +3% +0.4% +9%

Q1 Q2 Q3 Q4 Q1 Q2 Q3

% Quarterly change


800

900

1000

1100

1200

1300

1400

3000

3500

4000

4500

5000

5500

6000

6500

7000

7500

Copper Gold

Gold remains strong and copper continues its recovery

Gold and copper price movement (US$/t)

■ Gold prices averaged US$1,278/oz slightly down on Q3 2016; Copper prices increased by 34% year on year averaging US$6,383/tonne

■ Gold will remain volatile but with an overall positive long-term outlook

■ Copper prices increased by 26% during the nine months period of 2017 compared to same period last year, averaging US$5,981/tonne

■ Robust long-term outlook for copper, with forecasted supply deficit by 2020 driven by strong demand and supply offset by depletion and

closures

Source: Bloomberg, CRU June 2017, SBU secondary analysis

Q1 Q2 Q3 Q4 Q1 Q2 Q3

-12% +7% -1% +6% +16% -1% +5%

+15% +6% -1% +0.2% +5% +3% +9% Cu

% Quarterly change

Au


Darren C. Davis

Chief Financial Officer


Third quarter continued a strong year for Ma’aden

(All numbers are in SAR million, except as mentioned)

Comparative analysis - quarterly

Q3-16A vs. Q3-17A Q2-17A vs. Q3-17A

Q3-16 Q2-17 Q3-17 SR % SR %

Sales 2,308 2,995 3,151 844 37% 156 5%

Cost of sales -1,788 -1,983 -2,321 -533 30% -338 17%

Gross profit 520 1,012 831 311 60% -181 -18%

Gross profit margin% 23% 34% 26%

Selling, marketing and logistic expenses -96 -127 -103 -7 7% 24 -19%

General and administrative expenses -74 -97 -82 -8 11% 15 -16%

Exploration and technical services expenses -12 -14 -17 -5 46% -3 20%

Write-off / impairment of plant and equipment -14 -1 -15 -1 8% -14 2730%

Operating profit 325 774 614 289 89% -159 -21%

Operating income margin% 14% 26% 19%

Share in net income of jointly controlled entity -11 22 38 49 448% 16 72%

Income from time deposits 42 19 14 -28 -66% -4 -23%

Finance cost -226 -351 -384 -159 70% -34 10%

Other income / (expense) -5 -32 0 6 107% 33 101%

Profit before zakat and income tax 125 431 283 158 126% -149 -34%

Zakat and income tax expense -7 -31 -20 -14 205% 11 -35%

Profit / (loss) for the period 118 400 263 144 122% -138 -34%

Profit /(loss) % 5% 13% 8%

Profit / (loss) attrib. to shareholders' of the parent co. 107 323 243 135 126% -80 -25%

Non-cont. interest's share of the period's profit / (loss) 11 78 20 9 82% -58 -75%

EPS (SR) 0.09 0.28 0.21 0.1 126% -0.1 -25%


44%

43%

13%

44%

40%

16%

45%

43%

12%

46%

42%

12% Revenues

EBITDA

Price strength in aluminium

and gold businesses

Negative price impact on

the ammonia business

Production driven growth

for all businesses

Positive direction on

prices and costs for

aluminium and

phosphate

Negative ammonia

price movement

EBITDA Margins

improving

Aluminium Phosphate Gold & base metals

Q3 2016

SAR 1,360M

SAR 3,151M

Q3 2017

Our world scale, competitive businesses are highly profitable

+37%

+46% SAR 930M

SAR 2,308M


118

151

242

-82

-7 -8

-159

7 263

Strong operating performance and improved prices reflecting in

stronger earnings

Net income bridge Q3 2017 vs. Q3 2016

Q3 2016

IFRS

Price

effect Volume

effect

Cost

effect

Sales,

marketing

logistics

G&A Finance

charges

Others Q3 2017

IFRS

SAR MN

Key factors

Aluminum ↑

Ammonia ↓

Key factor

All products ↑

Key factors

Aluminum ↑

APF ↓

Gold ↓

+122%


Net income bridge Q3 2017 vs. Q2 2017

400

-241

167

-107

24 15 -14

-34 52

263

Market prices and rising input costs impacted Q3 earnings

Q2 2017

IFRS

Price

effect Volume

effect

Cost

effect

Sales,

marketing

logistics

G&A Write-off

PPE

Finance

charges

Others Q3 2017

IFRS

SAR MN

Key factor

Ammonia ↓

Key factors

All products ↑

Key factors

Aluminum ↑

APF, Amm ↓

Gold ↓

-52%


Operational performance


Phosphate Performance


■ During Q3, Ma’aden produced 744,000 tonnes

and sold 770,000 tonnes of ammonium

phosphate fertilizer. Production increased by

11%, and sales increased by 5% compared to Q3

2016.

■ Ma’aden produced 620,000 tonnes of ammonia,

an increase of 99% compared to the same

quarter last year and sold (external) 470,000

tonnes an increase of 211% compared to the

same quarter last year.

■ The increased sales volume of ammonia is

largely attributed to the start of commercial

operations of the Ma’aden Wa’ad Al Shamal

Phosphate Company ammonia plant.

Cost performance

■ During the quarter ammonium phosphate fertilizer

cash cost decreased slightly compared to the

same quarter of last year.

Project

■ Ma’aden Wa’ad Al Shamal Phosphate Company

produced first ammonium phosphate fertilizer in

July 2017, and the project is progressing well

toward commercial operations.

Ammonium phosphate fertilizer (Kt)

Ammonia (Kt)

708 668

744

672 733

770

335

355 341

200

220

240

260

280

300

320

340

360

380

400

450

500

550

600

650

700

750

Q3 2016 Q2 2017 Q3 2017

Production Sales Avg Prices

312

555 620

151

393 470

314 329

210

100

150

200

250

300

350

0

100

200

300

400

500

600

700

Q3 2016 Q2 2017 Q3 2017

Production Sales Avg Prices

US$/t

US$/t


Aluminium Performance


■ During the third quarter of 2017, Ma’aden

produced 239,000 tonnes of primary aluminium,

an increase of 11% compared to the same quarter

of last year

■ Ma’aden’s bauxite and alumina refinery operations

continue to focus on ramping up production

■ During Q3, Ma’aden produced 363,000 tonnes of

alumina with all production consumed

Cost performance

■ During the third quarter, aluminium cash cost

increased due to higher power and raw material

costs

■ However, alumina cash cost increased due to the

increase in key inputs such as caustic soda

Projects

■ The rolling mill operation continues to ramp up

production

Primary aluminium (Kt)

Alumina production (Kt)

216 219

240

216 217

239

1739

2055 2062

1000

1200

1400

1600

1800

2000

2200

180

190

200

210

220

230

240

250

Q3 2016 Q2 2017 Q3 2017

Production Sales Avg LME PricesUS$/t

381 349 363 373

349 363

239

305 309

0

50

100

150

200

250

300

350

90

140

190

240

290

340

390

440

Q3 2016 Q2 2017 Q3 2017

Production Sales Avg Prices (API)

US$/t


Gold and Copper Performance

Gold (‘000 ounces)

Copper volumes (Kt)¹


■ During the quarter, Ma’aden’s production of gold

increased by 37% to 78,000 ounces compared

to the same quarter last year - this was mainly

due to increased volumes from Ad Duwayhi

mine

■ During the quarter, we produced 10,500 tonnes

and sold 7,800 tonnes of copper concentrate

from the Jabal Sayid copper mine, which is

operating ahead of plan

Cost performance

■ Due to the continuous focus on costs and the

increase in production, gold cash costs

decreased by 12% compared to the same

quarter last year.

¹ Ma’aden attributable production & sales @ 50%

9.9 10.6 10.5 9.9

10.7

7.8

4762

5754

6922

0

1000

2000

3000

4000

5000

6000

7000

8000

0

2

4

6

8

10

12

Q3 2016 Q1 2017 Q3 2017

Production Sales Price

57 70

78

57 69

79

1324

1263

1308

1100

1150

1200

1250

1300

1350

0

10

20

30

40

50

60

70

80

90

Q3 2016 Q2 2017 Q3 2017

Production Sales Avg PricesUS$/oz

$/t


Financial position


4,6

88

52,5

38

2,5

72

8,4

96

26,1

62

Current Liability

All numbers are in SAR millions

20%

31%

45%

4%

MPC WAS Aluminium Others

62%

33%

5%

Banks PIF SIDF

Long term borrowing

By business By source

11,2

32

53,9

29

27,4

49

1,8

47

Capital work

in progress

Mine, plant,

property &

equipment

Current assets

Other non

current assets

Equity

Total Debt

Other non current

liability

Assets Equity and

liabilities As at 30 September 2017

Balance sheet

95%

5%

Floating Fixed

47%

53%

SAR USD

Type of loan

Financial position

Non controlling

interest


1 see appendix 2 Restated with IFRS from 2016 onwards

Financial strategy

■ Further optimization of the debt structure through refinancing (MPC in 2016, Aluminium on going)

■ Clear path to reduce leverage and ensure financial stability

■ Maintaining a strong liquidity position to ensure funding for new growth

4

12 5 7 7 6 5

33 45

45

54 54 53 53 57% 57%

56%

62% 62%

61%

60%

53%

54%

55%

56%

57%

58%

59%

60%

61%

62%

63%

0

10

20

30

40

50

60

2013 2014 2015 2016 Q1 2017 Q2 2017 Q3 2017

Cash & Cash Equivalent Long Term Borrowing Debt/Total Capital

29 33 40 47 47 47

Net debt

48

1

SRbn


Summary

Fundamentally attractive commodities with strong long-term

market outlook

▪ Overall improvement in the price environment in Q3 2017 with sustained improvement in

the aluminium market

▪ Ammonia will remain unstable and fertiliser prices could see more pressure

Robust cost performance

▪ Strong cost performance allows us to see the full benefits of improved commodity

prices

Maximizing production

▪ Our priority remains to efficiently operate our world class assets, ramping up new capacities

and increasing throughput at existing operations

Outlook for growth remain positive

▪ Wa’ad Al Shamal ramping up steadily

▪ Strong pipeline of attractive new projects in gold and phosphate

▪ Looking for opportunities outside the Kingdom to support our position in base

metals and in fertilisers


Q&A


Appendix


0

500

1000

1500

2000

2500

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

MIC

MGBM

WAS

MBAC

MRC

MAC

MPC

633

873

998

1,132

1,269

1,712

2,067

1,198

1,321

1,631

806

575 575

288

Debt repayment profile

Al numbers are in US$ million

As at 31 December 2016


Sales summary

(All numbers are in ‘000 tonnes except as mentioned)

Particulars Q3

2017

Q2

2017

%

change

q-o-q

Q3

2016

%

change

y-o-y

Phosphate business

Ammonium phosphate

fertilizer 770 733 5% 672 15%

Ammonia MPC 179 111 61% 151 19%

Ammonia MWSPC 311 282 10% - -

Aluminium business

Alumina 363 349 4% 373 -3%

Primary Aluminium 239 217 10% 216 11%

Gold & base metals

business

Gold (‘000 ounces) 79 69 14% 57 39%

Copper 7.8 10.7 -27% 9.9 -21%




Some of the financial information included in this presentation is derived from Ma’aden consolidated

financial statements but are not terms defined within the International Financial Reporting Standards

(IFRS) as applied In the Kingdom of Saudi Arabia. Such information is provided as the Company

believes they are useful measures for investors. An explanation of these terms is provided below.

■ Debt: Total Capital = (Long-term borrowings + Current portion long-term borrowings) / (Long-term

borrowings + Current portion of long-term borrowings + Total equity)

■ Operating Cashflow = Net cash generated from operating activities


Thank You!

Copyright © 2016. Ma’aden . All rights reserved.

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