![9
Attractive Portfolio – with Significant Upside Potential
AMG has significant
potential upside within
certain critical materials
based on historical price
ranges
Note: Metal Positions are measured on a scale of 0 to 10, with 0 being the minimum price and 10 being the maximum price. They are calculated using the formula [(Jun ‘06 month avg –
min. monthly avg) / (max. monthly avg – min. monthly avg) *10] where maximum and minimum monthly averages are measured over the period 1 Jun ‘06 through 30 Jun ‘16.
1.9
1.2
0.3
1.5
2.5
1.7
0.9
1.7
5.8
0.8
1.8
3.9
0.8
1.1 1.1
4.5
2.1 2.2
5.3
5.8
1.7
3.2
0
2.5
5
7.5
10
Scale
Metals
Jun 2016 Position Jun 2015 Position
Cr Mo Ni FeV Ti Al C Si Ta Sb
Highest
Price in
10 years
Lowest
Price in
10 years
[unchanged]
• Metal prices are measured on a
scale of 0 to 10, with 0 and 10
representing the minimum and
maximum average quarterly
prices occurring during the past
10 years
• The positions demonstrate the
current price level of each metal
with respect to their various
historical price points over the
past 10 years
Nb](https://image.slidesharecdn.com/amgpresentationseptember2016final-160909140015/85/AMG-for-Investors-September-2016-9-320.jpg)
AMG for Investors - September 2016
- 1. LEADING THE CRITICAL MATERIALS REVOLUTION AMG Advanced Metallurgical Group N.V. September 2016
- 2. 2 Company Overview 4 Lithium Project 15 Financials: Q2 2016 30 TABLE OF CONTENTS
- 3. 3 THIS DOCUMENT IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION BY AMG ADVANCED METALLURGICAL GROUP N.V. (THE “COMPANY”) AND MAY NOT BE REPRODUCED IN ANY FORM OR FURTHER DISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF APPLICABLE SECURITIES LAWS. This presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries nor should it or any part of it, nor the fact of its distribution, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This presentation has been prepared by, and is the sole responsibility of, the Company. This document, any presentation made in conjunction herewith and any accompanying materials are for information only and are not a prospectus, offering circular or admission document. This presentation does not form a part of, and should not be construed as, an offer, invitation or solicitation to subscribe for or purchase, or dispose of any of the securities of the companies mentioned in this presentation. These materials do not constitute an offer of securities for sale in the United States or an invitation or an offer to the public or form of application to subscribe for securities. Neither this presentation nor anything contained herein shall form the basis of, or be relied on in connection with, any offer or commitment whatsoever. The information contained in this presentation has not been independently verified. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information or the opinions contained herein. The Company and its advisors are under no obligation to update or keep current the information contained in this presentation. To the extent allowed by law, none of the Company or its affiliates, advisors or representatives accept 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 presentation. Certain statements in this presentation constitute forward-looking statements, including statements regarding the Company's financial position, business strategy, plans and objectives of management for future operations. These statements, which contain the words "believe,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “will,” “may,” “should” and similar expressions, reflect the beliefs and expectations of the management board of directors of the Company and are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, the achievement of the anticipated levels of profitability, growth, cost and synergy of the Company’s recent acquisitions, the timely development and acceptance of new products, the impact of competitive pricing, the ability to obtain necessary regulatory approvals, and the impact of general business and global economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Neither the Company, nor any of its respective agents, employees or advisors intend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this presentation. The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice. This document has not been approved by any competent regulatory or supervisory authority. Cautionary Note
- 4. COMPANY OVERVIEW AMG Advanced Metallurgical Group N.V.
- 5. 5 AMG IS A GLOBAL SUPPLIER OF CRITICAL MATERIALS TO: MARKET LEADING PRODUCER OF HIGHLY ENGINEERED SPECIALTY METALS AND VACUUM FURNACE SYSTEMS ~3,000 Employees ~$1 billion Annual Revenues At the forefront of CO2 Reduction Q2 2016 REVENUE AMG at a Glance TRANSPORTATIONENERGY INFRASTRUCTURE SPECIALTY METALS AND CHEMICALS BY END MARKET: BY REGION:BY SEGMENT: 44% Europe 32% North America 20% Asia 4% ROW 27% Engineering 73% Critical Materials 22% Infrastructure 23% Specialty Metals & Chemicals 39% Transportation 16% Energy
- 6. 6 Critical Materials Antimony Aluminum ChromeTAC Graphite Tantalum VanadiumSilicon Heat TreatmentEngineering AMG Engineering UnitsEnd-UseMarketsCompetitorsCustomers • FLAME RETARDANTS • AEROSPACE • BATTERY ANODES • MICRO CAPACITATORS • SUPER-ALLOYS • INFRASTRUCTURE • AEROSPACE • AUTOMOTIVE • AMETEK, INC. • IMERYS S.A. • FERROGLOBE PLC • LARGO RESOURCES LTD. • SYRAH RESOURCES LTD. • GLENCORE PLC • CONSARC CORPORATION • RETECH SYSTEMS LLC • BODYCOTE PLC • SECO/WARWICK S.A. AMG End Markets, Competitors and Customers 2015 REVENUE: $757.5M 2015 EBITDA: $60.8M 2015 REVENUE: $219.7M 2015 EBITDA: $14.8M • MIDURAL GROUP • ERAMET • ELKEM • EXPANDED POLYSTYRENE • ALUMINUM ALLOYS • SOLAR
- 7. 7 Key Investment Highlights 1) Attractive portfolio of critical materials with significant upside potential 2) Growth across diverse end markets driven by strong global regulatory and environmental trends 3) Leader in advanced technologies to address CO2 reduction goals 4) Industry leading engineering division, focused on high-end aerospace and automotive applications 5) Portfolio effect results in stable earnings compared to industry peers 6) Consistent cash flow generation has delivered ample liquidity 7) Excellent platform for organic and acquisition-led growth 8) Highly accretive Lithium project 9) Deep bench of experienced management
- 8. 8 Attractive Portfolio of Critical Materials CRITICAL MATERIAL PRICES OUTPERFORM THE LME-50% 0% 50% 100% 150% 200% 1. AMG EU Critical Materials 2. AMG Portfolio (includes #1) 3. LME Metals 4. Oil 10 Yr CAGR: -3.7% 10 Yr CAGR: 2.2% 10 Yr CAGR: 2.7% 10 Yr CAGR: -4.1% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 AMG: EU Critical Materials OIL LME Metals AMG Portfolio Note: Compound annual growth rates are calculated over the period Jun ‘06 through Jun ‘16 using the equation ((Ending Value / Beginning Value) ^ (1 / # of years) - 1) where ending value is avg monthly price in Jun ‘16 and beginning value is avg monthly price in Jun ‘06; and where AMG EU Critical Materials include Sb, Cr, Graphite & Si; AMG Portfolio includes Sb, Cr, FeV, Li, Nb, Si, Sr, Graphite, Ta, Sn & Ti; and LME Metals include Al, Co, Cu, Pb, Mo, Ni, & Zn. Avg annual growth rates (plotted above) are calculated over the same period using the equation ((Ending Value / Beginning Value) -1) and considering the same metal categorizations where ending value is avg monthly price in Jun of the given year and beginning value is avg monthly price in Jun ‘06. The cumulative average 10 year price appreciation of the AMG Portfolio was 6.4 percentage points higher than LME Metals and 6.8 points higher than oil, while the AMG EU Critical Materials outperformed LME Metals and oil by 5.9 and 6.3 percentage points, respectively AMG Critical Materials • Vanadium • Superalloys • Tantalum & Niobium • Antimony • Titanium Alloys & Coatings • Aluminum Alloys • Graphite • Silicon
- 9. 9 Attractive Portfolio – with Significant Upside Potential AMG has significant potential upside within certain critical materials based on historical price ranges Note: Metal Positions are measured on a scale of 0 to 10, with 0 being the minimum price and 10 being the maximum price. They are calculated using the formula [(Jun ‘06 month avg – min. monthly avg) / (max. monthly avg – min. monthly avg) *10] where maximum and minimum monthly averages are measured over the period 1 Jun ‘06 through 30 Jun ‘16. 1.9 1.2 0.3 1.5 2.5 1.7 0.9 1.7 5.8 0.8 1.8 3.9 0.8 1.1 1.1 4.5 2.1 2.2 5.3 5.8 1.7 3.2 0 2.5 5 7.5 10 Scale Metals Jun 2016 Position Jun 2015 Position Cr Mo Ni FeV Ti Al C Si Ta Sb Highest Price in 10 years Lowest Price in 10 years [unchanged] • Metal prices are measured on a scale of 0 to 10, with 0 and 10 representing the minimum and maximum average quarterly prices occurring during the past 10 years • The positions demonstrate the current price level of each metal with respect to their various historical price points over the past 10 years Nb
- 10. 10 AMG: MITIGATING TECHNOLOGIES Products and Processes saving raw materials, energy and CO2 emissions during manufacturing (i.e., recycling of Ferrovanadium) AMG: ENABLING TECHNOLOGIES Products and Processes saving CO2 emissions during use (i.e., light-weighting and fuel efficiency in the aerospace and automotive industries) AMG HAS DEVELOPED INTO A LEADER IN ENABLING TECHNOLOGIES A GLOBAL IMPERATIVE FOR THE 21ST CENTURY CO2 REDUCTION LEADER IN ADVANCED TECHNOLOGIES TO ADDRESS CO2 REDUCTION
- 11. 11 Industry Leading Engineering Division – Select Recent Innovations 2014 Syncrotherm®: Newly-developed one-piece flow heat treatment furnace system for automotive market New furnace for glass forming of critical components in ultra-resistant glass for automotive and consumer markets Newly developed plasma hearth melting furnaces for the recycling and reuse of titanium scrap to several key customers in the aerospace industry New, high-productivity super alloy powder atomizer with the world´s largest melting capacity 2015
- 12. 12 Portfolio Effect Results in Stable Earnings versus Industry Peers 0.00 25.00 50.00 75.00 100.00 2012 2013 2014 2015 Critical Materials Engineering $76Mean $80M -150% -50% 50% 2012 2013 2014 2015 AMG Volatility Dedicated Miner Volatility EBITDA ($m) % EBITDA Volatility1 1 EBITDA Volatility defined as annual variance from average EBITDA for years 2012-2016 2 Dedicated Miners: BHP, Vale, Newmont, Anglo American, Fortescue & Rio Tinto; data pulled from ThomsonOne 2 - • AMG’s portfolio of critical materials lessens its exposure to price volatility of a single metal, enabling more stable performance on a consolidated basis over time • AMG Engineering has historically provided a further measure of earnings stability, given its lack of metal price exposure • AMG’s combined production and engineering capabilities provide superior metallurgical know-how and market insight, enabling additional growth opportunities • In contrast to AMG’s relatively stable financial performance, competitors who lack an diversified and integrated business model have experienced significant financial volatility through the most recent cycle $85 $73 $86
- 13. 13 Financial Data: Net Debt & Operating Cash flowConsistent Cash Flow Generation, Delivering Ample Liquidity • Net debt: $6.2 million – $188.0 million reduction of net debt since December 31, 2012 – Net Debt to LTM EBITDA: 0.08x • AMG’s primary debt facility is a $400 million multicurrency term loan and revolving credit facility – 5 year term (until 2021) with an accordion feature that allows the Company, subject to certain conditions, to increase the commitment amount by up to $100 million – In compliance with all debt covenants • Q2 ‘16 cash flows from operating activities were $24.3M • Cash flows from the first half of 2016 exceeded those from the first half of 2015 by 33% -$10 $5 $20 $35 $50 Q1 Q2 Q3 Q4 2012 2013 2014 2015 2016 OPERATING CASH FLOW (IN MILLIONS OF US DOLLARS) H1 2016 CASH FLOW 33% HIGHER THAN H1 2015 $194.2 $160.5 $87.8 $41.9 $6.2 2012 2013 2014 Q2 '15 Q2 '16 NET DEBT (IN MILLIONS OF US DOLLARS) $188M REDUCTION IN NET DEBT SINCE 2012
- 14. 14 AMG – Ready for Growth 2012 2013 2014 2015 2016 to 2020 Cost Reduction Product Mix Optimization Supply Chain Excellence Targeted W/C & Debt Levels Scaling Profitable Growth Cost-reduction and capex discipline in response to global economic slowdown Competitive advantage through manufacturing and supply chain excellence, accelerating cost-reduction efforts Properly positioned, financially and operationally, to pursue growth targets across portfolio Streamlined operations and improved operating performance by eliminating low-margin product lines Further reduction in both working capital and net debt, strengthening the balance sheet
- 15. LITHIUM PROJECT AMG Advanced Metallurgical Group N.V.
- 16. 16 • 2002 – 2013: AMG began development of a pilot plant process route for the flotation of Mica and Feldspar from tailings • 2007 – 2008: Flotation equipment installed • 2009 – 2010: Dry magnetic separator installed • 2011: First set of samples produced and tested by industrial customer • 2012: Electric rotate dryer was installed to enable batch trials for technical grade Spodumene • 2013: AMG provided 43,603kg of spodumene to industrial customer to develop a tank test, following which pilot plant operations were halted • 2015: The pilot plant received basic maintenance and wet magnetic separators were rented, placing the pilot plant back into operational condition AMG LITHIUM – PROJECT HISTORY
- 17. 17 PHASE I – Lithium Concentrate OBJECTIVE Monetization of substantial lithium mineral deposits currently residing in AMG Mineração's tailings ponds and tailing stockpiles AMG will construct a lithium concentrate (spodumene) production facility, co-located with AMG Mineração's tantalum mine and upgrading plant in Brazil PLANNED PRODUCTION 90,000 metric tons per year of lithium concentrate, with an option to expand to 140,000 metric tons STATUS Phase I capital investment of approximately $50M was approved by the AMG Supervisory Board on July 19th, 2016 Lithium concentrate operations to commence in the first quarter of 2018 AMG’s objective is to be the low-cost producer of spodumene globally PHASE II – Lithium Chemical OBJECTIVE Downstream conversion of lithium concentrate into lithium hydroxide monohydrate and/or lithium carbonate PLANNED PRODUCTION 14,000 metric tons lithium carbonate equivalent (LCE) per year (hydroxide and/or carbonate), expandable to 20,000 metric tons STATUS Affirmative scoping and site location studies completed Pre-feasibility study for the construction of a lithium chemical plant will be completed in the fourth quarter 2016 AMG LITHIUM – PROJECT OVERVIEW
- 18. 18 AMG has operated the Mibra mine for 38 years • Existing management and mining infrastructure – not a new mine project • Strong understanding of the mine geology • AMG Mineração's last mineral resource estimate, published in 2013 and prepared in accordance with National Instrument 43-101 Guidelines, and endorsed and signed-off by Coffey, identified 19.3 million tons of measured, indicated and inferred resources, which includes tantalum, niobium, tin and lithium • Mining infrastructure already in place and operational • Ore extraction and crushing costs absorbed by profitable tantalum operation • Lithium concentrate (spodumene) plant will be fed via lithium deposits in existing tailings, as well as incremental lithium-bearing tailings generated via tantalum production • 2.8 million metric tons of spodumene plant feed stock already extracted in the form of on-site tailings • AMG has operated a spodumene pilot plant since 2010 (see slide 7) • Phase 2 lithium chemical plant pre-feasibility work being performed by Hatch, the world’s leading builder of lithium plants AMG LITHIUM – PROJECT STRENGTHS
- 19. 19 • Sample production of lithium concentrate for glass / ceramic industry • Updated 43-101 compliant resource statement – life of mine extended • Lithium concentrate (spodumene) plant studies completed Q4 2015 by Outotec Conceptual study Pre-feasibility study • Spodumene plant basic engineering completed July 2016 by Outotec • AMG Supervisory Board approval July 19th, 2016 • Spodumene plant construction to commence Q3 2016 • Resource expansion drilling campaign to start Q3 2016 • Updated 43-101 compliant resource statement to be completed • Spodumene plant construction to be completed Q4 2017 • Spodumene plant to be at full capacity Q3 2018 PHASE I 2013-14 2015 2016 2017 2018-202010-12 • Spodumene concentration processing route development Mineralogical characterization on tailings from Ta2O5 plant Laboratorial scale flotation tests Pilot plant operation Industrial production scoping study AMG LITHIUM – PHASE I TIMELINE
- 20. 20 HARD ROCK LITHIUM CONCENTRATE (SPODUMENE) CHEMICALS CATHODE PASTE BRINE BATTERIES LITHIUM INDUSTRY BASICS & BATTERY VALUE CHAIN
- 21. 21 Source: Morgan Stanley FUNDAMENTALS Lithium-ion battery costs are falling rapidly as global battery producers expand manufacturing facilities Global lithium demand was 182k MT lithium carbonate equivalent (LCE) in 2015, with EV demand doubling YoY and accounting for 14% of global demand Global lithium supply has increased at a 7% compound average growth rate (CAGR) from 1995 to 2015 to meet increased demand from mobile phones and other electronics PRICING OUTLOOK Rapidly growing market driven by growth in electric vehicles and falling cost of production of lithium-ion batteries New production Hard rock mining projects at higher cost Disjointed pricing Chinese lithium hydroxide spot prices are currently estimated at US$19,315/MT with medium term forecasts around $10,000/MT (Roskill) Source: Citibank Deep Dive | Commodities report, Oct 16, 2015, Figure 2. Lithium Supply Demand Balance, pg. 5 LITHIUM DEMAND BY APPLICATIONS (2015 ACTUAL) Industrial Applications 66% Consumer Electronics 28% Electric Vehicles 6% 188k MT LCE GLOBAL LITHIUM DEMAND AND PRICING OUTLOOK
- 22. 22 Transportation & Renewable Energy: two key end markets driving long term growth, with further upside potential Renewable Energy (Grid Storage) Driven by growth in renewable energy and need for resources to provide system flexibility and balance supply/demand Global installed base of ~1.1 GW, projected annual installations reaching up to >12 GW by 2025 (Navigant Research) Transportation Fast-growing market for hybrids and electric vehicles driven by regulations on CO2 emissions, falling battery costs, expanding charging infrastructure and desire for an enhanced driving experience Consumer Electronics & Devices Slowing demand for laptops and conventional mobile phones are offset by robust demand growth for smart phones, tablets and wearables, driven by trend towards higher- capacity batteries WORLD MARKET FOR RECHARGEABLE LITHIUM BATTERIES BY END-USE 0 50 100 150 200 250 2010 2015 2020F 2025F GWh Renewable: >30% CAGR Source: Roskill 2016 Lithium Market Report Transportation: 25% CAGR Consumer: 6% CAGR BATTERY SEGMENT GROWTH
- 23. 23 OVERVIEW Global lithium carbonate market has been short of supply since 2013 It is estimated that there is ~6k MT of pure EV driven lithium demand today Leading automakers are committing to developing a wider range of EV models which are more lithium-intensive than hybrid EVs or plug-in EVs Lithium only accounts for 3% of battery costs Source: Morgan Stanley LIMITED EFFECT OF LITHIUM COSTS ON BATTERY PRICING 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 ‐ 4.0 8.0 12.0 EV PRODUCTION (MM) EV PRODUCTION (MM) EV PENETRATION OF PRODUCTION (%) Anode 16% Separator 33% Cell Housing 10% Electrolyte 14% Lithium 11% Other 89% Cathode 27% EV PENETRATION OF PRODUCTION Source: Journal of Power Sources, Volume 320 LITHIUM ELECTRIC VEHICLE (“EV”) MARKET FORECAST
- 24. 24 Source: Morgan Stanley FUNDAMENTALS Global supply of lithium minerals has been historically dominated by large-scale lithium brine operations in South America Global lithium supply has increased at a 7% compound average growth rate (CAGR) from 1995 to 2015 to meet increased demand from mobile phones and other electronics 2016 global lithium supply is around 164k MT LCE, split roughly 50:50 between hard-rock and brines 99 114 126 124 136 146 164 177 185 127 135 148 162 172 182 189 197 208 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E ‐ 50 100 150 200 250 k MT LCE Supply Demand Chile 37% Australia 33% Argentina 11% China 10% US 3% Zimbabwe 3% Portugal 2% Brazil 1% LITHIUM SUPPLY AND DEMAND OVER TIME LITHIUM SUPPLY BY COUNTRY (2015 ACTUAL) Source: Deutsche Bank 146k MT LCE GLOBAL LITHIUM SUPPLY
- 25. 25 Source: Roskill 2016 Lithium Market Report US$/MTLITHIUMCONCENTRATECIF AMG expected cost including transportation $206/MT (FOB) 0 100 200 300 400 500 600 700 800 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Low Base High MARKET PRICE FORECASTS – LITHIUM CONCENTRATE (SPODUMENE)
- 26. 26 0 50 100 150 200 250 300 350 400 GREENBUSHES TIANQI LITHIUM1 (TALISON) WHABOUCHI NEMASKA PILGANGOORA PILBARA MINERALS2 MT. CATTLIN GENERAL MINING/ GALAXY MT. MARION NEOMETALS PILGANGOORA ALTURA MINING ROSE CRITICAL ELEMENTS CORP. Source: Roskill 2016, Ehren Gonzalez Ltda, Hatch; Note – Operating costs only, not including transportation Note: AMG cost estimates per Outotec of $127/MT; includes production costs and SG&A costs; does not include cost of transportation to port Estimate of AMG operating cost of $127/MT (excl. transportation) US$/MTLITHIUMCONCENTRATE 1 Greenbushes cost includes G&A but excludes selling expenses 2 Pilbara Minerals figure includes credits from tantalite production; includes transport and loading costs of $37/t concentrate LITHIUM PRODUCER / PROJECT COST POSITION – LITHIUM CONCENTRATE (SPODUMENE)
- 27. 27 Outlook for lithium consumption remains optimistic. Additional supply needed to feed strong demand in multiple markets. Demand Overall cumulative average growth rate (CAGR) from FY12 to FY25 of 6.4% (Base Case) Battery demand CAGR of 12.6% High Case – stronger global economy, surging demand for battery and energy applications – 9.5% per annum growth 1% increase in electric vehicle penetration would increase demand by 70k MT lithium carbonate equivalent (LCE) per year MineProduction(kMTLCE) Source: Roskill 2016 Lithium Market Report Note: new mine projects include Orocobre, Galaxy Resources, RB Energy, Lithium Americas/SQM, Eramet, Neometals, Nemaska Lithium, and Western Lithium. Supply Forecasted production is based upon current capacity, as well as publicly announced expansions - 50 100 150 200 250 300 350 400 450 500 2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F Tianqi Lithium (Talison) SQM Albemarle (Rockwood) FMC Other New Projects Roskill Base Case Demand Roskill High Case Demand LITHIUM MARKET BALANCE, THROUGH 2025
- 28. 28 History and Overview The mine was founded in 1945 and acquired by Metallurg / AMG in 1978 Activities include open pit mining, crushing/grinding, gravimetric and electromagnetic concentration Extract tantalum and niobium bearing ores and sells as tantalum concentrate Current production of 300k pounds of tantalum concentrate annually Present Product Lines Tantalum concentrate sold exclusively to United States under long term contract Feldspar sold in local market to ceramics and glass producers Tin sold primarily in local market • Smelting of byproduct into tin metal occurs at third party operations AMG MINERAÇÃO – MIBRA MINE
- 29. 29 RESOURCE EXPANSION – OBJECTIVES • Update new resource in the west area of the mine, not included in 2013 resource statement • Upgrade existing mineral resources from Inferred to Indicated and / or Indicated to Measured • Exercise to be completed 1H 2017 Source MT Material (ore/Tailings) % Li20 Contained MT Li20 Contained in Ore MT LCE Contained MT Li20 Contained in Spodumene Concentrate MT Spodumene Concentrate Ore source – 2013 19,360,000 1 146,363 361,019 90,745 1,463,630 Less consumption 3,214,584 3 15,517 38,274 9,620 155,167 Net Ore Balance 16,145,416 2 0.81% 130,846 322,745 81,125 1,308,463 Tailings-Ponds 1&2 4 2,070,110 1.00% 20,701 51,061 13,870 223,705 Net Ore & Tailings Ponds 18,215,526 151,547 373,807 94,994 1,532,168 Tailings-Stockpiles 4 750,000 1.15% 8,625 5,779 5,779 93,206 Total Resources 18,965,526 160,172 379,586 100,773 1,625,374 1 Ore balance per 2013 NI 43-101 Statement 2 Prior to resource expansion 3 AMG estimate of ore consumed in Ta and Feldspar production; residual quantities to tailings ponds 4 Preliminary AMG estimates MIBRA MINE – MINERAL RESOURCES
- 30. FINANCIALS: Q2 2016 AMG Advanced Metallurgical Group N.V.
- 31. 31 AMOUNTS IN $M (EXCEPT EARNINGS PER SHARE) Q2 2016 Q2 2015 % CHANGE REVENUE $248.3 $257.4 (4%) GROSS PROFIT $53.8 $44.6 20% GROSS MARGIN % 21.6% 17.3% 25% PROFIT BEFORE INCOME TAXES $15.6 $8.3 88% EBITDA $26.0 $25.1 4% EBITDA MARGIN % 10.5% 9.8% 7% NET DEBT $6.2 $41.9 (85%) RETURN ON CAPITAL EMPLOYED (ROCE) 17.8% 15.7% 13% NET INCOME ATTRIBUTABLE TO SHAREHOLDERS $13.4 $3.8 253% EARNINGS PER SHARE 0.48 0.14 243% Q2 2016 at a Glance • Q2 ‘16 EBITDA up 4% versus Q2 ‘15 due to improved profitability within AMG Engineering • Annualized ROCE increased to 17.8% versus 15.7% in Q2 2015 • Q2 ‘16 revenue declined by $9 million, or 4%, compared to Q2 ‘15, driven largely by weak metal prices • Net debt: $6.2 million – $35.7 million reduction of net debt since Q2 2015 – Net debt to LTM EBITDA: 0.08x INCREASES IN EARNINGS PER SHARE OF 243%, COMPARED TO Q2 2015
- 32. 32 Financial Data: ROCE & EBITDA • Q2 ‘16 EBITDA up 4% versus Q2 ’15 due to improved profitability within AMG Engineering • Q2 2016 annualized ROCE improved to 17.8% from 15.7% in Q2 2015 • ROCE improvements are the result of efficient use of capital and improved profitability ANNUALIZED ROCE EBITDA (IN MILLIONS OF US DOLLARS) $25.1 $20.4 $9.7 $21.2 $26.0 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q2 ‘16 ROCE IMPROVED TO 17.8% FROM 15.7% IN Q2 ‘15 Q2 ‘16 EBITDA UP 4% VERSUS Q2 ‘15 9.2% 7.4% 11.9% 12.0% 15.7% 17.8% 2012 2013 2014 2015 Q2 '15 Q2 '16
- 33. 33 $201.2 $187.7 $166.3 $176.6 $181.6 $21.0 $15.5 $7.0 $16.5 $20.5 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Revenue EBITDA $2.8 $4.8 $10.0 $4.5 $6.2 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Financial Data: Net Debt & Operating Cash flowAMG Critical Materials REVENUE & EBITDA (IN MILLIONS OF US DOLLARS) CAPITAL EXPENDITURES (IN MILLIONS OF US DOLLARS) Q2 2016 REVENUE IMPACTED BY WEAK METALS PRICES INCREASE OF $3.4M Q2 ‘16 VS. Q2 ’15 DUE TO EXPANSION PROJECTS AND AMG ENGINEERING RELOCATION • Q2 2016 revenue down $19.6 million, or 10%, vs. Q2 2015 due to double-digit declines in average quarterly prices of Nickel, Aluminum, Chrome, Niobium and Antimony • Q2 ‘16 EBITDA margin increased to 11.3% from 10.4% in Q2 ‘15. • Capital expenditures increased to $6.2 million in Q2 2016 compared to $2.8 million in Q2 2015 • The largest capital expansion projects are AMG’s Ancuabe graphite mine project and AMG TAC’s titanium aluminide expansion
- 34. 34 KEY PRODUCT Q2 ‘16 REV ($M) Q2 ‘15 REV ($M) VOLUME PRICE CURRENCY FeV & FeNiMo $22.8 $28.1 Al Master Alloys & Powders $43.0 $45.7 Chromium Metal $19.9 $20.5 Tantalum & Niobium $17.2 $23.8 Titanium Alloys & Coatings $21.1 $21.2 Antimony $19.0 $24.9 Graphite $16.4 $14.9 Silicon Metal $22.4 $22.1 AMG Critical Materials – Quarterly Revenue Drivers • Double-digit declines in the average quarterly prices of Nickel, Aluminum, Chrome, Niobium and Antimony negatively affected revenue in the second quarter of 2016 • Strong sales volumes of Aluminum Master Alloys & Powders, Titanium Alloys & Coatings, and Graphite were partially offset by lower sales of Niobium and Antimony • AMG’s ferrovanadium sales prices are indexed to the prior month’s average market price
- 35. 35 $56.3 $54.1 $54.6 $60.8 $66.7 $4.2 $4.9 $2.6 $4.6 $5.6 Revenue EBITDA $81.8 $67.4 $48.0 $50.5 $92.8 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Financial Data: Net Debt & Operating Cash flowAMG Engineering REVENUE & EBITDA (IN MILLIONS OF US DOLLARS) ORDER INTAKE (IN MILLIONS OF US DOLLARS) EBITDA IMPROVEMENT DUE TO HIGHER SALES AND LOWER COSTS BOOK TO BILL RATIO OF 1.39X IN Q2 2016 • Q2 2016 revenue up 19% vs. Q2 2015 due to strong sales of plasma remelting furnaces for the aerospace market • EBITDA increased by $1.4 million in Q2 2016 versus Q2 2015, the highest quarterly EBITDA in twelve quarters due to higher levels of gross profit • AMG Engineering Order backlog of $158.8 million as of June 30, 2016, a 17% increase versus March 31, 2016 • AMG Engineering signed $92.8 million in new orders during the second quarter of 2016, a 1.39x book to bill ratio