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Park Elektrik Üretim Madencilik Sanayi ve Ticaret A.Ş.
February 2012
2
Contents
I. Ciner Group in Brief 3II. Park Elektrik Overview 6III. Operations 10IV. Micromine Reserve Report 13V. Planned Investments 19VI. Financial Structure 22VII. Evaluation of The Latest Financial Tables 32VIII. Corporate Governance Rating 39IX. Market Data 40
Park Elektrik February 2011
Park Elektrik 3
I. Ciner Group in Brief
Park Elektrik February 2011
Park Elektrik 4
Ciner Group, Introduction
Park Holding, the main shareholder of Park Elektrik, is controlled by Ciner Group, which is solely owned by Mr. Turgay Ciner. Ciner Group’s history goes back to 1978 when it was founded.
Ranking among the largest Groups of Turkey, Ciner Group diversified its operations from the energy and mining sectors to tourism, media and broadcasting sectors.
Ciner Group is a pioneering actor in energy and mining sector given its new and initial steps since early 1990s. In line with accelerated privatization efforts in 1990s, the Group successfully involved in mining and energy sectors which are the underlying sectors of the Group’s fast growth in recent years.
February 2011
Park Elektrik 5
Ciner Group, Main Line of Businesses
Energy & Mining Group
Ciner Group
MediaGroup
Commerce, Industry &
Services Group
Major CompaniesPark Elektrik
Park TermikPark Teknik
Eti SodaSilopi Elektrik
Park Enerji Ekipmanları
Major Companies & Brands
Ciner Yayın HoldingHaberturk NewspaperHaberturk TV, Radio,Haberturk Web Site
Bloomberg HT, FHM, Marie Claire, Newsweek
Major CompaniesPark MarinePark Aviation
Lares Park HotelsPark Insurance
Park Foreign TradeDenmar Logistics
February 2011
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II. Park Elektrik Overview
February 2011
Park Elektrik 7
The Company
Established in 1994. Initially offered to public in 1997. Park Elektrik is the sole
listed company within Ciner Group. Changed its commercial title in 2000. Commenced copper mining operations in late 2006. Merged with ISE-listed Group company, Ceytas, in May 2009. Added asphaltite mining into its operation line following
Ceytas merger. Currently operating a copper and an asphaltite mine and
plans to establish an HPP (Hydroelectricity Power Plant) in the medium term, and a NGPP (Natural Gas Power Plant) in the long term.
February 2011
Park Elektrik 8
Ownership Structure
Others, 32.00%
Park Holding A.S., 39.63%
Turgay Ciner, 6.76%
Park Enerji Ekipmanları
A.S. , 21.60%
February 2011
Park Elektrik 9
Participations, Park Termik
Park Elektrik has 10% stake in Park Termik Elektrik San. ve Tic. A.S., a Ciner Group company which is involved in thermal power generation in Çayırhan, Ankara.
Park Termik operates Cayirhan Thermal Power Plant which has a total production capacity of 620 MW, in four units.
The plant is an integrated power generator which procures coal through its own lignite mines.
February 2011
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III. Operations
February 2011
Park Elektrik 11
Park Elektrik’s Existing & Planned Facilities
Asphaltite Mine
Sırnak
Natural Gas Power Plant
Adana
Copper Mine
Siirt
HPP
Diyarbakır
February 2011
Park Elektrik 12
I) Madenköy Copper Zone
Park Elektrik acquired operation license of Madenkoy copper mine from Eti Holding, a state-owned entity engaged in mining businesses, in 2004 for TL9.4 mn.
Mine operations started in late 2006 in the copper zone. So far, around 3 mn tons of ore was extracted in the copper zone.
According to initial reports, proven reserves in the zone was determined at 13 mn tons of ore. However, based on a recent report conducted by Micromine Consulting Services, total reserves in the zone was determined at 39.8 mn tons of ore, 31.2 mn tons of which was measured.
The company has a concentration facility and it produces and sells concentrated copper that includes a varying rate of copper. Currently, copper content in the concentrate varies between 19-20% levels.
Although the Company does not posses a smelting facility, it recently initiated a trial production through a domestic subcontractor to produce A grade cathode copper that includes 99.9% copper content.
Park Elektrik exports all of its concentrated copper and cathode copper production.
February 2011
Park Elektrik 13
Micromine Reserve Report Based On JORC
According to a JORC compliant recent reserve estimation made by Micromine Consulting Services, based on the drilling and sampling works by Eti Holding (1981), Preussag AG Metall (1988) and Park Elektrik, the total reserves of Madenköy project was determined 39,821,000 tons of ore, 31,182,000 tons of which was set to be measured.
Based on the same report, average tenor rate in Madenkoy copper mine is determined as 2.4% for the whole zone. Current tenor in the zone is lower at 1.9-2.0% levels.
Source: JORC Resource Estimate Report by Micromine
Resource Category Tonnes Cu (%)
Measured 31,182,000 2.26Indicated 6,433,000 2.79Total Measured & Indicated 37,615,000 2.34Inferred 2,206,000 3.38Project's Total Resources 39,821,000 2.40
February 2011
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Capacity Expansion
In parallel with growing reserves in the Madenkoy copper zone, the company increased its concentration facility’s capacity from 750k to 1.2 mn tons as of October 2011. Total capex for this investment was Euro 3.5mn.
Furthermore, Park Elektrik plans to increase its concentration capacity to 1.8 mn tons in the short-mid term. The company plans to complete this second phase capacity expansion in 2013 with a planned investment amount of Euro 3.5-4mn.
In line with increasing capacity, Park Elektrik revised its production targets for the coming two years. The company expects 95k and 150k wmt of production for 2012 and 2013, respectively.
February 2011
Capacity Expansion & Production Targets 2011 2012 2013
Concentration Capacity (tons) 750,000* 1,200,000 1,800,000
Concentrated Copper Production Estimations (wmt) 75,000 95,000 150,000
* Capacity expansion from 750k to 1.2mn tons is valid as of October 2011.
Park Elektrik 15
2012 Production Targets
February 2011
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Ore (wmt) 91,000 87,000 91,000 91,000 94,000 91,000 94,000 94,000 91,000 94,000 91,000 91,000 1,100,000
Ore (dmt) 86,450 82,650 86,450 86,450 89,300 86,450 89,300 89,300 86,450 89,300 86,450 86,450 1,045,000
Con. Copper (wmt) 7,811 7,467 7,811 7,811 8,068 7,811 8,068 8,068 7,811 8,068 7,811 7,811 94,416
Con. Copper (dmt) 7,186 6,870 7,186 7,186 7,423 7,186 7,423 7,423 7,186 7,423 7,186 7,186 86,864
wmt= wet metric ton, dmt= dry metric ton
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Zone Plan
February 2011
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II) Silopi Asphaltite Zone
Asphaltite is a petroleum-origin hydrocarbon with a thermal value of 5,500-5,800 kcal/kg.
Park Elektrik has the operational rights of Silopi asphaltite mine until 2033. Estimated asphaltite reserve in Silopi is around 35 mn tons based on Turkish Coal Enterprise (TKI) reports.
Operations in the asphaltite zone started in June 2009. The company provides asphaltite to Silopi Elektrik Üretim A.Ş., a group company which is involved in electricity production in Silopi with fluidized bed technology and has a starting capacity of 135 MW.
Annual production amount in Silopi is around 450,000 currently and is subject to increase from 2014 onwards in line with capacity expansion of Silopi EUAS. With the expansion, annual asphaltite production will be tripled.
Park Elektrik has a profit margin of 15% on its asphaltite sales based on recently renewed contract by two companies. The contract will be valid as long as Silopi Elektrik runs the operations.
The mine will be open-pit for the first years of operation. Later on, underground mining will be done by the method of “Cut and Fill Block Caving”.
February 2011
Park Elektrik 18
Open-Pit Mining in Silopi
February 2011
Park Elektrik 19
IV. Planned Investments
February 2011
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Diyarbakır HPP
Installed capacity will be 50.5 MW.
Production license is valid for 49 years.
Estimated investment amount is US$ 60 mn according to
initial
feasibility studies.
February 2011
Park Elektrik 21
Ceyhan Natural Gas Power Plant
Park Elektrik applied to Energy Market Regulatory Authority for a license to establish a NGPP in Ceyhan, Adana.
Installed capacity will be 423 MW.
Production license will be valid for 49 years.
Estimated investment amount is Euro 250 mn.
February 2011
Park Elektrik 22
V. Financial Structure
February 2011
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Concentrate (dmt) & Cathode Sales (ton)
February 2011
13,3
63
17,0
43
15,2
59
0
5,70
8
11,2
72
12,8
05
14,7
58
14,6
98
16,9
02
17,3
36
17,4
82
12,7
44
17,2
12
12,7
78
13,3
35
10,6
43
6,81
8
6,21
7
3,05
4
12,6
38
1210
0
5,000
10,000
15,000
20,000
2006/3Q 4Q 2007/1Q 2Q 3Q 4Q 2008/1Q 2Q 3Q 4Q 2009/1Q 2Q 3Q 4Q 2010/1Q 2Q 3Q 4Q 2011/1Q 2Q 3Q
Cont. copper sales were recovered in 4Q10 following the pace of production halt in September 15.
In 3Q11 cathode sales started.
Start of operations in 2006.
First year of full operations in 2007. High demand and high
copper prices in 1st half 2008.
Global crisis hit commodity prices in 2009. But recovery started in late 2009.
Sales were hit by the slowdown and halt in production in 2010.
Recovery came without delay with surging sales in 1Q11. 2Q sales were lower due to trial cathode copper production.
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Annual Concentrate (dmt) & Cathode (ton) Sales
February 2011
9,271
60,931 59,163
43,044
47,417
32,239
1,210
2006 2007 2008 2009 2010 9M11
* In 2010, there was a production halt of four months.
** Cathode copper sales realized for the first time in 3Q11.
Park Elektrik 25
Annual Asphaltite Sales (ton)
February 2011
318,177
204,856*
476,899
2009 2010 9M11
* Asphaltite operations started in mid 2009.
Park Elektrik 26
Total Sales Revenues* (TL)
* Ignores other sales & discounts.
February 2011
64
,19
1,6
60
12
2,7
68
,87
2
80
,04
0,6
45
11
0,7
13
,83
3
69
,85
7,0
81
8,211,605 19,314,397
14,087,542
2007 2008 2009 2010 9M11
copper asphaltite
Park Elektrik 27
Breakdown of COGS, as of 9M11
February 2011
Maintanence 5%
Raw Materials3%
Machinery Rent Costs 7%
Depreciation 10%
Fuel & Energy 17%
Others13%
Machinery Spare Part Repl. Costs
20%
Labor Costs 27%
Park Elektrik 28
Unit Cash Costs For Con. Copper (TL/wmt)
February 2011
502
439
496
635
469475
2006 2007 2008 2009 2010 9M11
Park Elektrik 29
Net Earnings (TL mn)
February 2011
19.8 19.4
37.2
83.7
74.8
2007 2008 2009 2010 9M11
Park Elektrik 30
Annual Margin Comparison
February 2011
(TL mn) 2007 2008 2009 2010 9M11
Sales 80 111 79 84 138
Gross Profits 47 73 32 44 82
Gross Margin 58% 66% 41% 52% 59%
EBITDA 42 62 24 42 89
EBITDA Margin 52% 56% 30% 50% 64%
Net Earnings 20 75 19 37 84
Net Margin 25% 68% 25% 44% 61%
Park Elektrik 31
Sources of Financing (TL mn)
February 2011
88 100 130 143223
302343
426
14
66 53
60
3033
45
8
2004 2005 2006 2007 2008 2009 2010 9M11
Shareholders' Equity Total Debt
* Park Elektrik has no financial debt.
Park Elektrik 32
VI. Evaluation of 9M11 Financial Results
February 2011
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Evaluation of 9M11 Financial Results
In 1H11, Park Elektrik’s product composition changed by including cathode copper into its product range for the first time. Although still in trial period, the copper cathode production reached 1846 Mt by the end of 3Q11. By 3Q11, the company’s concentrated copper production in wmt increased by 184% as compared to the strike shaken previous year. Concentrated copper sales were realized with 153% increase in dmt, y-o-y, as some amount of concentrated copper was utilized for cathode copper production of 1846 mt by the third quarter. 1210 mt of the cathode copper has been sold by the end of 3Q11.
Revenues from total sales more than tripled under the effect of the previous year’s mine strike and soared copper prices, while revenues from the asphaltite sales were kept almost same as the previous year.
The company also had TL15mn of other operational income due to its realized contract in London Metal Exchange.
February 2011
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Production & Sales Amount
February 2011
Production 9M10 9M11 %
Concentrated Copper (wmt) 20,260 57,355 183%
Cathode Copper (MT) 0 1,846 nm
Asphaltite (ton) 347,822 318,177 -9%
Sales 9M10 9M11 %
Concentrated Copper (dmt) 16,980 43,044 153%
Cathode Copper (MT) - 1,210 nm
Asphaltite (ton) 347,822 318,177 -9%
Park Elektrik 35
Sales Breakdown (TL) & Gross Margin by Products
February 2011
9M10 9M11 %
Copper Sales 31,871,808 122,768,872 285
Gross Margin of Copper 55% 64% -
Asphaltite Sales 14,086,792 14,087,542 0
Gross Margin of Asphaltite 32% 20% -
Other Sales 87,087 1,283,988 nm
Total Sales Revenues 46,045,687 138,140,402 200
Overall Gross Margin 48% 59% -
Park Elektrik 36
Income Statement (TL)
February 2011
9M10 9M11 %Sales 46,045,687 138,140,402 200%COGS -24,019,824 -56,182,544 134%Gross Profit 22,025,863 81,957,858 272%Gross Margin 48% 59% -Marketing Selling & Dist. Exp. -2,700,398 -6,404,496 137%General Adm. Expenses -9,029,466 -11,684,286 29%Other Operating Income 3,613,846 15,706,474 335%Other Operating Expenses -5,848,635 -2,311,163 -60%Operating Income 8,061,210 77,264,387 858%Operating Margin 18% 56% -Net Financial Income/Exp 14,930,160 27,023,113 81%Profit Before Tax 22,991,370 104,287,500 354%Tax -4,369,107 -20,590,027 371%Net Profit 18,622,263 83,697,473 349%Net Margin 40% 61% -EBITDA 18,461,625 89,325,456 384%EBITDA Margin 40% 65% -
Park Elektrik 37
Margins
(%) 9M10 9M11
Gross Profit Margin 48 59
Operational Profit Margin 18 56
EBITDA Margin 40 64
Net Profit Margin 40 61
February 2011
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Summary Balance Sheets (TL)
YE10 9M11
Current Assets 278,577,962 302,771,805
Fixed Assets 96,996,526 168,684,694
TOTAL ASSETS 375,574,488 471,456,499
Short Term Liabilities 28,757,831 38,721,063
Long Term Liabilities 4,255,816 6,477,122
Shareholders Equity 342,560,841 426,258,314
TOTAL LIABILITIES 375,574,488 471,456,499
February 2011
Park Elektrik 39
Corporate Governance Rating
Park Elektrik was rated with 8.67 as a result of the Corporate Governance study done by SAHA Kurumsal Rating Agency. According to report done by SAHA, the rating means that the company performs “very good” in terms of Capital Markets Board’s corporate governance principles. It has, to varying degrees, identified and actively managed all significant corporate governance risks through comprehensive internal controls and management systems. The company’s performance is considered to represent best practice, and it had no deficiencies in any of the areas rated.
February 2011
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T H A N K Y O U.
CONTACTS
Yesim Bilginturan Selim Erdogan
IR Manager IR Manager
Phone: +90 216 531 25 33 +90 216 531 25 35
[email protected]@cinergroup.com.tr
www.parkelektrik.com.tr www.cinergroup.com.tr
February 2011
