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Park Elektrik Üretim Madencilik Sanayi ve Ticaret A.Ş.
May 8, 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 31VIII. Corporate Governance Rating 38
Park Elektrik May 2012
Park Elektrik 3
I. Ciner Group in Brief
Park Elektrik May 2012
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.
May 2012
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
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
May 2012
Park Elektrik 6
II. Park Elektrik Overview
May 2012
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.
May 2012
Park Elektrik 8
Ownership Structure
May 2012
Others32%
Turgay Ciner7%
Park Holding61%
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.
May 2012
Park Elektrik 10
III. Operations
May 2012
Park Elektrik 11
Park Elektrik’s Existing & Planned Facilities
Asphaltite Mine
Sırnak
Natural Gas Power Plant
Adana
Copper Mine
Siirt
HPP
Diyarbakır
May 2012
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.
May 2012
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
May 2012
Park Elektrik 14
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.
May 2012
Capacity Expansion & Production Targets 2012 2013
Concentration Capacity (tons) 1,200,000 1,800,000
Concentrated Copper Production Estimations (wmt) 95,000 150,000
Park Elektrik 15
2012 Production Targets
May 2012
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
Park Elektrik 16
Zone Plan
May 2012
Park Elektrik 17
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”.
May 2012
Park Elektrik 18
Open-Pit Mining in Silopi
May 2012
Park Elektrik 19
IV. Planned Investments
May 2012
Park Elektrik 20
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.
May 2012
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.
May 2012
Park Elektrik 22
V. Financial Structure
May 2012
Park Elektrik 23
Annual Concentrate (dmt) & Cathode (ton) Sales
May 2012
* In 2010, there was a production halt of four months.
** Cathode copper sales realized for the first time in 3Q11.*** 17.268 wmt concentrated copper were used to produce 2829 mt copper cathode.
9,271
60,931 59,163 55,054
32,239
47,417
1,210
2006 2007 2008 2009 2010 2011
Park Elektrik 24
Annual Asphaltite Sales (ton)
May 2012
* Asphaltite operations started in mid 2009.
434.333476.899
204,856*
2009 2010 2011
Park Elektrik 25
Total Sales Revenues* (TL)
*Revenues from other sales is 1.676.016 TL
May 2012
64
.19
1.6
60
69
.85
7.0
81
11
0.7
13
.83
3
80
.04
0.6
45 15
1.1
35
.66
4
19.709.514
19.314.3978.211.605
2007 2008 2009 2010 2011*
copper asphaltite
Park Elektrik 26
Net Earnings (TL mn)
May 2012
19.8 19.4
37.2
100.8
74.8
2007 2008 2009 2010 2011
Park Elektrik 27
Breakdown of COGS, as of YE11
May 2012
Fuel & Energy, 12%
Depreciation, 17%
Mach. Spare Part Repl.
Costs, 24%
Machinery Rent Costs, 3%
Maintanence, 4%
Labor Costs, 31%
Others, 10%
Park Elektrik 28
Annual Margin Comparison
May 2012
(TL mn) 2007 2008 2009 2010 2011
Sales 80 111 79 84 173
Gross Profit 47 73 32 44 107
Gross Margin 59% 66% 41% 52% 62%
EBITDA 43 62 24 42 112
EBITDA Margin 52% 56% 30% 50% 65%
Net Earnings 20 75 19 37 101
Net Margin 25% 68% 25% 44% 58%
Park Elektrik 29
Sources of Financing (TL mn)
May 2012
* Park Elektrik has no financial debt.
88 100 130 143223
302 343443
14
66 53
60
3033
41
8
2004 2005 2006 2007 2008 2009 2010 2011
Shareholders' Equity Total Debt
Park Elektrik 30
VI. Evaluation of 1Q12 Financial Results
May 2012
Park Elektrik 31
Evaluation of 1Q2012 Financial Results
In the first quarter of 2012, total copper concentrate production was realized as 22,646 wmt, indicating 16% increase. Total sales for copper products was realized as 14,481 dmt for concentrate copper and 1,600 mt for cathode copper. Note that 8,991 dmt concentrate copper was spent to produce the cathode sold.
Revenues from total sales increased by 52% due to the capacity expansion in the concentration center. However, profit margins of the company did not realize as high as the previous year due to the depreciation costs of an open pit copper site in which the operations ended. Based on this fact, all of the profit margins deteriorated except EBITDA margin.
The production and sales of asphaltite decreased as 37% due to the operational halt caused by a failure in the Silopi Elektrik A.Ş.
May 2012
Park Elektrik 32
Production & Sales Amount
May 2012
Production 1Q11 1Q12 %
Concentrated Copper (wmt) 19,489 22,646 16%
Cathode Copper (MT) - 902 nm
Asphaltite (ton) 118,144 74,088 -37%
Sales 1Q11 1Q12 %
Concentrated Copper (dmt) 17,043 14,481 -15%
Cathode Copper (MT) - 1,600 nm
Asphaltite (ton) 118,144 74,088 -37%
Park Elektrik 33
Sales Breakdown (TL) & Gross Margin by Products
May 2012
1Q11 1Q12 %
Copper Sales 38,986,232 60,225,584 54%
Gross Margin of Copper 73% 56%
Asphaltite Sales 4,784,832 5,084,642 6%
Gross Margin of Asphaltite 17% 13%
Other Sales 106,761 1,368,817 1182%
Total Sales Revenues 43,877,825 66,679,043 52%
Overall Gross Margin 67% 52%
Park Elektrik 34
Income Statement (TL)
May 2012
1Q11 1Q12 %Sales 43,877,825 66,679,043 52%COGS -14,502,787 -32,003,999 121%Gross Profit 29,375,038 34,675,044 18%Gross Margin 67% 52% -Marketing Selling & Dist. Exp. -2,737,203 -2,469,418 -10%General Adm. Expenses -3,561,815 -4,600,990 29%Other Operating Income 5,197,457 418,687 -92%Other Operating Expenses -724,107 -1,321,519 83%Operating Income 27,549,370 26,701,804 -3%Operating Margin 63% 40% -Financial Income 5,239,129 6,936,990 32%Financial Expenses -3,190,078 -6,673,722 109%Profit Before Tax 29,598,421 26,965,072 -9%Tax -5,818,397 -5,291,869 -9%Net Profit 23,780,024 21,673,203 -9%Net Margin 54% 33% -EBITDA 31,868,499 49,320,538 55%EBITDA Margin 73% 74% -
Park Elektrik 35
Margins
1Q11 1Q12
Gross Profit Margin 67% 52%
Operational Profit Margin 63% 40%
EBITDA Margin 73% 74%
Net Profit Margin 54% 33%
May 2012
Park Elektrik 36
Summary Balance Sheets (TL)
1Q2011 1Q2012
Current Assets 297,678,924 334,187,594
Fixed Assets 186,424,631 167,971,525
TOTAL ASSETS 484,103,555 502,159,119
Short Term Liabilities 34,255,807 31,335,792
Long Term Liabilities 6,391,196 5,693,572
Shareholders Equity 443,456,552 465,129,755
TOTAL LIABILITIES 484,103,555 502,159,119
May 2012
Park Elektrik 37
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.
May 2012
Park Elektrik 38
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
y.bilginturan@cinergroup.com.trs.erdogan@cinergroup.com.tr
www.parkelektrik.com.tr www.cinergroup.com.tr
May 2012
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