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Park Elektrik Üretim Madencilik Sanayi ve Ticaret A.Ş.
November 19, 2014
2
Contents
I. Company & Operations 3II. Ownership Structure & Participation
18III. Ciner Group 21IV. Financial Structure 24V. Evaluation of The Latest Financial Tables
32VI. Corporate Governance Rating
37
Park Elektrik November 2014Park Elektrik Madencilik
Park Elektrik 3
I. Company & Operations
3November 2014Park Elektrik Madencilik
Park Elektrik 4
Introduction
Park Elektrik is the sole copper mining company on the ISE. The company operates Madenköy copper mine in Siirt, in the southeast of Turkey, since late 2006.
Total resources of Madenköy copper mine was determined as 41.5 mn tons of ore according to a JORC based report conducted by Micromine Consulting Services in February 2014. So far, Park Elektirk extracted approximately 7.6 mn tons of ore in the zone.
The company has a concentration facility and it produces and sells concentrated copper that includes copper content of around 20% level. Park Elektrik sells all of its concentrated copper production to an international commodity broker, namely Traxys.
As of YE2013, number of employees working in copper mine is 430.
4November 2014Park Elektrik Madencilik
Park Elektrik 5
Merger Process with Silopi Elektrik
On September 1st, 2014, Park Elektrik announced a plan by the BOD to merge with Silopi Elektrik, the sister company which is engaged in electricity production in Silopi, in its 135 MW thermal power plant.
The merger has rationale of product diversification, managerial and financial scales of economies and the Group’s perspective to have a bigger entity in the capital markets.
It is planned to have general meetings of both companies through the end of 2014.
Exit price and merger ratio were determined so far and announced to the public on Sep. 1st and Sep. 12nd respectively. Exit price is TL4.20 per share, while merger ratio was determined as 0.186914 by an independent third party.
5November 2014Park Elektrik Madencilik
6
Location of Copper Mine
Copper Mine
Siirt
November 2014Park Elektrik Madencilik
7
I) Madenköy Copper Zone
Park Elektrik acquired operation license of Madenkoy copper mine in 2004 from Eti Holding, a state-owned entity engaged in mining businesses, for TL9.4 mn.
Copper mine operations started in late 2006 in Madenköy copper zone. So far, 7.6 mn tons of ore have been extracted in the copper zone, while the remaining resources is 33.9 mn tons of ore as of 3Q14.
According to initial reports, proven reserves in the zone was determined as 13 mn tons of ore when Park Elektrik commenced its operations in 2006. However, according to latest reserve report issued by Micromine Consulting Services in February 2014, total resources in the zone was determined as 41.5 mn tons of ore, 36.3 mn tons of which was measured.
Park Elektrik exports all of its concentrated copper production to an international commodity broker namely Traxys, while the end customer is China.
November 2014Park Elektrik Madencilik
Park Elektrik Madencilik November 2014 8
Micromine October 2011 Resource Report
Micromine February 2014 Resource Report
Tonnes Grade (%) Tonnes Grade (%)
Measured 31.182.000 2,26 36.264.000 1,95
Indicated 6.439.000 2,79 5.002.000 2,45
Inferred 2.206.000 3,38 225.000 3,52
Total Resources 39.821.000 2,40 41.500.000 2,02
According to a JORC (Joint Ore Resources Code) compliant reserve report issued by Micromine Consulting Services in February 2014, total resources of the project has increased to 41.5 million tonnes from previously declared 39.8 million tonnes.
According to the same report, average grade in Madenkoy copper mine is 2.02% for the whole zone and average grade of the measured resources is 1.95%.
Micromine Reserve Report Based On JORC
Park Elektrik 9
Capacity Expansion & Condemnation
In parallel with growing reserves in Madenkoy copper zone, the company increased its concentration facility’s capacity from 750k to 1.8 mn tons of ore processing in two phases with a total investment amount of €7 mn.
Condemnation process due to expanding area of open pit mine continued in 2013 in line with the mine’s developmental needs. Company paid TL12mn in 2012 and TL11mn in 2013 for condemnation expenses. For 2014, TL10mn of condemnation expense is included in the Company’s budgets.
9November 2014Park Elektrik Madencilik
Concentration Facility 2011 2012 2013
Ore Processing Capacity (ton) 750,000 1,200,000 1,800,000
Park Elektrik 10
Production Volumes & Targets
10November 2014Park Elektrik Madencilik
2011 2012* 2013 2014 E 2015E
Stripping (m3) - 4,024,000 15,000,000 9,000,000 9,000,000
Ore Production (tons, wet) 1,024,871 1,276,856 1,540,031 1,700,000 1,600,000
Ore Used In Con. Center (tons, dry) 949,731 1,138,232 1,463,029 1,600,000 1,500,000
Grade of Ore (%) 1,73 1,77 1,47 1,25 1,75
Con. Copper Production (wmt) 77,510 89,253 96,038 96,000 115,000
Con. Copper (dmt) (~92% of wmt) 71,309 82,113 88,354 88,300 105,800
Copper (mt) (~20% of dmt con. copper) 14,262 16,423 17,670 17,600 21,160
* Pre-stripping started in 2012. ** Production through open-pit started in mid of 2013.
Park Elektrik 11
Long Term Planning in Open Pit
Having being operated by underground mining since the beginning of operations in the Madenköy copper zone, Park Elektrik shifted its copper mining operations from underground to open-pit mining by the mid of 2013.
Based on projections, the company plans to continue open pit mining between 2013-2031. Throughout open pit mining for 18 years, the company plans to produce 26.4 mn tons of ore with 246 mn m3 stripping with an average strip ratio of 9.3 by the end of 2031.
11November 2014Park Elektrik Madencilik
Period Estimated Total Stripping(m3)
Estimated Total Ore Production(ton)
Estimated Strip Ratio
Estimated Total Con. CopperProduction (wmt)
2013-2031 246,000,000 26,400,000 9,31 2,107,702
12November 2014Park Elektrik Madencilik
Open Pit Site View
Current View From Mine
Park Elektrik Madencilik November 2014 13
Views From The Pit
Park Elektrik Madencilik November 2014 14
15November 2014Park Elektrik Madencilik
Main Ore Body
Topography
Open Pit Topographic View – I
16November 2014Park Elektrik Madencilik
Open Pit Topographic View - II
Main Ore Body
17November 2014Park Elektrik Madencilik
Open Pit Site Intersection
Power Plant Projects
Withdrew natural gas power plant applications for Edirne and Ceyhan regions due to the complexities of the investment stages and uncertainities.
Obtained environmental impact assessment report for Hydroelectricity power plant of 50MW in Diyarbakır/Tarihler.
Transmission aggreement with TEIAS was achieved.
Tender offer for construction of the facility will be made soon.
Park Elektrik Madencilik November 2014 18
19
II. Ownership Structure & Participation
Park Elektrik November 2014Park Elektrik Madencilik
Park Elektrik 20
Ownership Structure
Others32%
Turgay Ciner7%
Park Holding61%
20November 2014Park Elektrik Madencilik
Park Elektrik 21
Participation, 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 has operating rights of Çayırhan 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.
In 2014, Park Termik paid TL6 mn dividends to Park Elektrik & Madencilik.
21November 2014Park Elektrik Madencilik
22
III. Ciner Group
Park Elektrik November 2014Park Elektrik Madencilik
Park Elektrik 23
Ciner Group, Main Line of Businesses
Energy & Mining Group
Ciner Group
MediaGroup
Commerce, Industry &
Services Group
Major Companies & Brands
Haberturk NewspaperHaberturk TV, Radio,Haberturk Web Site
Bloomberg HT, Aks TV (Show TV)
Major CompaniesCiner Marine,Ciner Aviation,
Lares Park Hotels,Park Insurance,
Denmar Logistics,
Park Holding Ciner Yayın Holding
Major CompaniesPark Elektrik, Park
Termik, Silopi Elektrik, Park Teknik, Park
Toptan, Eti Soda, Rio Tur Soda, Park Cam
23November 2014Park Elektrik Madencilik
24
Ciner Group
Park Holding, the main shareholder of Park Elektrik with 61% share, is solely owned by Mr. Turgay Ciner.
Ranking among the largest Groups of Turkey, Ciner Group’s history goes back to 1978 when it was founded. The Group has a diversified business portfolio. However, the Group’s main line of businesses are mining and energy in which it has a wide expertise.
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.
November 2014Park Elektrik Madencilik
25
IV. Financial Structure
November 2014Park Elektrik Madencilik
26
Annual Concentrated Copper Production (wmt)
* Annual production declined due to production halt of four-month in 2010.
26November 2014Park Elektrik Madencilik
2006 2007 2008 2009 2010 * 2011 2012 2013 2014E
13,771
52,55464,371 63,138
37,426
77,510
89,253
96,038 96,000
27
Annual Con. Copper (dmt) & Cathode (ton) Sales
* In 2010, there was a production halt of four months.
** 6,613 dmt of concentrated copper were used to produce 1,210 mt copper cathode. This pushes 2011 total sales up to 61,667 dmt.
*** 14,296 dmt of concentrated copper were used to produce 2,521 mt copper cathode, that is increasing 2012 total sales volume up to 87,663 dmt.
November 2014Park Elektrik Madencilik
2006 2007 2008 2009 2010 2011 2012 2013
9,271
47,417
60,931 59,163
32,239
55,054
73,367
93,049
1,210 2,521
28
Total Sales Revenues (TL)
November 2014Park Elektrik Madencilik
2007 2008 2009 2010 2011 2012 2013
80
,04
0,6
45
11
0,7
13
,83
3
69
,85
7,0
81
64
,19
1,6
60
15
1,1
35
,66
4
22
9,2
64
,82
1
22
6,5
24
,68
6
8,211,605
19,314,397
19,709,514
30,816,836 33,704,018
copper asphaltite
Park Elektrik 29
Net Earnings (TL mn)
29November 2014Park Elektrik Madencilik
2007 2008 2009 2010 2011 2012 2013
19.8
74.8
19.4
37.2
100.9107.3
69
30
Breakdown of Cost of Production, as of YE13, (copper only)
November 2014Park Elektrik Madencilik
Depreciation 48%
Direct Labor Costs 19%
Fuel & Energy 12%
Materials7%
Chemicals3%
Others 11%
31
Annual Margin Comparison
(TL mn) 2008 2009 2010 2011 2012 2013
Sales 111 79 84 173 265 261
Gross Profit 73 32 44 107 134 72
Gross Margin 66% 41% 52% 62% 51% 28%
EBITDA 62 24 42 112 165 147
EBITDA Margin 56% 30% 50% 65% 62% 57%
Net Earnings 75 19 37 101 107 70
Net Margin 68% 25% 44% 58% 40% 27%
November 2014Park Elektrik Madencilik
32
Sources of Financing (TL mn)
* Park Elektrik has no financial debt.
November 2014Park Elektrik Madencilik
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
88 100 130 143223
302 343443 450
520
814
66 53
60
3033
41 53
64
Shareholders' Equity Total Debt
33
V. Evaluation of 3Q14 Financial Results
November 2014Park Elektrik Madencilik
34
Evaluation of 3Q14 Financial Results
In 9M14, copper concentrate production has been realized as 67,223 wmt indicating a 10% decline as compared to 9M13 results. Copper concentrate sales also decreased to 62,558 dmt with a 16% drop, y-o-y.
Due to the development costs of open pit in the first stages of the project, having not had faced full copper ore and low prices in the LME, our profit ratios continued to deteriorate in third quarters as well.
November 2014Park Elektrik Madencilik
35
Production & Sales Amount
Production 9M13 9M14 %
Concentrated Copper (wmt) 75,084 67,223 -10%
Asphaltite (ton)* 249,142 101,600 -59%*
Sales 9M13 9M14 %
Concentrated Copper (dmt) 74,261 62,558 -16%
Asphaltite (ton)* 249,142 101,600 -59%*
November 2014Park Elektrik Madencilik
* Park Elektrik sold the entire asphaltite operations to Silopi Elektrik for TL61 mn resulting TL14 mn profit in the end of 1Q14 due to regulatory obligations.
36
Income Statement (TL)
November 2014Park Elektrik Madencilik
9M13 9M14 %Sales 201.795.861 169.426.777 -16%COGS -139.318.972 -149.231.805 7%Gross Profit 62.476.889 20.194.972 -68%Gross Margin 31,0% 11,9% Marketing, Distribution Exp -10.399.602 -11.324.172 9%General Adm. Expenses -14.638.268 -22.542.326 54%R&D Expenses -58.550 0 nmOther Operating Income 39.194.224 18.048.580 -54%Other Operating Expenses -11.393.362 -22.406.446 97%Operating Income 65.181.331 -18.029.392 -128%Operating Margin 32% -11% Income From Investments 6.104.747 23.526.319 285%Expense From Investments 0 -304.079 nmIncome Before Financial Exp. 71.286.078 5.192.848 -93%Financial Income 0 207.265nmFinancial Expenses -437.276 -576.538 32%Profit Before Tax 70.848.802 4.823.575 -93%Tax Income / Expense -12.960.720 12.675.309 -198%Net Profit 57.888.082 17.498.884 -70%Net Margin 29% 10%
37
Summary Balance Sheets (TL)
YE13 9M14
Current Assets 315,080,736 291,534,113
Fixed Assets 269,102,374 245,297,123
TOTAL ASSETS 584,183,110 536,831,236
Short Term Liabilities 42,409,599 44,869,254
Long Term Liabilities 21,567,541 18,001,464
Shareholders Equity 520,205,970 473,960,518
TOTAL LIABILITIES 584,183,110 536,831,236
November 2014Park Elektrik Madencilik
38
VI. Corporate Governance Rating
November 2014Park Elektrik Madencilik
39
Corporate Governance Rating
Park Elektrik’s corporate governance rating increased to 8.98 according to a recent report conducted by SAHA Corporate Rating Agency in June 2013. Based on the report, 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.
November 2014Park Elektrik Madencilik
Board of Directors
Stakeholders
Public Disclosure & Transparency
Shareholders
82 84 86 88 90 92 94 96 98
87.06
87.93
96.65
87.86
MAIN SECTORS AVERAGE: 89.80
40
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
November 2014Park Elektrik Madencilik