Park Elektrik Üretim Madencilik Sanayi ve Ticaret A.Ş. January 2014.

Park Elektrik Üretim Madencilik Sanayi ve Ticaret A.Ş.

January 2014

2

Contents

I. Company & Operations 3II. Planned Investments

18III. Ownership Structure & Participation

22IV. Ciner Group 25V. Financial Structure 28VI. Evaluation of The Latest Financial Tables

37VII. Corporate Governance Rating

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Park Elektrik January 2014Park Elektrik Madencilik

Park Elektrik 3

I. Company & Operations

3January 2014Park Elektrik Madencilik

Park Elektrik 4

Introduction

Initially offered to public in 1997, Park Elektrik is the sole copper mining company on the ISE. The company currently operates two mines namely; a copper mine in Siirt and an asphaltite (a kind of hydrocarbon) mine in Sırnak.

Making up 90% of total sales revenues, concentrated copper is the main product of the company. Park Elektrik’s end product is concentrated copper which involves around 20% copper content. Park Elektrik sells all of its concentrated copper production to international commodity brokers. Park Elektrik took over operational rights of copper mine in 2004 and commenced copper mining operations in late 2006.

In mid 2009, following its merger with ISE-listed Group company Ceytas, Park Elektrik added asphaltite mining into its operation line. Asphaltite is sold to a sister company with a long term cost plus contract.

As of YE2013, employees working in copper and asphaltite mines are 430 and 87, respectively. With remaining administrative staff, company’s total work force is 577 as of year end 2013.


5

Park Elektrik’s Existing & Planned Facilities

Asphaltite Mine

Sırnak

Natural Gas Power Plant

Adana

Copper Mine

Siirt

HPP

Diyarbakır

Natural Gas Power Plant

Edirne

January 2014Park Elektrik Madencilik

http://upload.wikimedia.org/wikipedia/en/7/78/Pick_shovel.jpg

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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.

Mine operations started in late 2006 in the copper zone. So far, around 7 mn tons of ore was extracted in the copper zone.

According to initial reports, proven reserves in the zone was determined as 13 mn tons of ore. However, according to a reserve report issued by Micromine Consulting Services in November 2011, total reserves in the zone was determined as 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 copper content of around 20% level.

Park Elektrik exports all of its concentrated copper production to an international commodity broker namely Traxys, while the end customer is China.


Park Elektrik 7

Micromine Reserve Report Based On JORC

According to a JORC (Joint Ore Resources Code) compliant reserve report issued by Micromine Consulting Services in November 2011, based on the drilling and sampling works done by different companies since 1981, the total reserves of Madenköy project was determined as 39,821,000 tons of ore, 31,182,000 tons of which was measured.

According to the same report, average grade in Madenkoy copper mine is 2.4% for the whole zone. Current grade in the zone is lower, at 1.8-1.9% levels in average.

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


Park Elektrik 8

Capacity Expansion & Condemnation

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 of ore processing as of October 2011. Total capex for this investment was Euro 3.5mn.

Furthermore, Park Elektrik has completed it’s second phase of capacity expansion project to 1.8 mn tons of ore processing by December 2012 with an investment amount of Euro 3.5 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.


Concentration Facility 2011 2012 2013

Ore Processing Capacity (ton) 750,000 1,200,000 1,800,000* Capacity increase to 1,2 mn tons was realized in October 2011.

Park Elektrik 9

Production Volumes & Targets


2011 2012 2013E 2014 E 2015E

Ore (tons, wet) 973,628 1,213,013 1,500,000 1,600,000 1,500,000

Growth %96 25% 24% %7 -%6

Concentrated Copper (wmt) 77,510 89,253 105,000 105,000 115,000

Growth 107% 15% 18% - %10

Park Elektrik 10

Shift To Open Pit Mining & Stripping Expenses

Having being operated underground mining since the beginning of operations in the Madenköy copper zone, Park Elektrik recently 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 2013-2030 for 17 years.

Regarding this shift, the company started pre-stripping in Madenköy copper zone by subcontractors. Pre-stripping of 13 mn m3 from mid of 2012 until mid of 2013 costed TL65 mn. Including pre-stripping, total planned stripping cost for 2013 is TL 82mn.


Park Elektrik 11

2013 Estimated Expenses In Copper Zone


Expenses TL mn

ORE PRODUCTION 88

- Stripping 82

- Others 6

FACILITY 30

OTHER 26

TOTAL 144


Open Pit Site View


Main Ore Body

Topography

Open Pit Topographic View – I


Open Pit Topographic View - II

Main Ore Body


Open Pit Site Intersection

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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 135MW.

Annual production amount in Silopi is around 450,000 tons and is subject to increase from 2014 onwards in line with capacity expansion of Silopi EUAS from 135MW to 405MW. With the expansion, annual asphaltite production of Park Elektrik is also estimated to be tripled.

Based on recently renewed contract by two companies, sale price of asphaltite is determined as “Costs + 15%”.


17

Open-Pit Mining in Silopi


18

II. Planned Investments


19

Diyarbakır HPP


Installed capacity will be 50.5 MW.

Production license is valid for 49 years.

According to recent feasibility studies, estimated

investment amount is

US$ 100 mn.

The compay plans to start HPP investment in the second

half of 2013

with an estimated investment amount of TL27mn for 2013.

20

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.


*The technological advances took place since the application to EMRA allow us to reach max. 570 MW in one unit.

Park Elektrik 21

Edirne Natural Gas Power Plant

Park Elektrik applied to Energy Market Regulatory Authority for a license to establish a NGPP in Edirne.

Installed capacity will be 423 MW.

Estimated investment amount is Euro 250 mn.


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III. Ownership Structure & Participation


Park Elektrik 23

Ownership Structure

Others32%

Turgay Ciner7%

Park Holding61%


Park Elektrik 24

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 June 2012, Park Termik paid TL5.2 mn dividends to Park Elektrik & Madencilik.


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IV. Ciner Group


Park Elektrik 26

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,UCZ Retail Chain

Park Holding Ciner Yayın Holding

Major CompaniesPark Elektrik, Park

Termik, Silopi Elektrik, Park Teknik, Park

Toptan, Eti Soda, Rio Tur Soda, Park Cam


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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.

As of year-end 2012, Park Holding has TL1.4 bn of consolidated sales and TL5 bn of total assets. Total number of employees within the Group is 6,000.


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V. Financial Structure


Park Elektrik 29

Annual Concentrated Copper Production (wmt)

* Annual production declined due to production halt of four-month in 2010.


2006 2007 2008 2009 2010 * 2011 2012 2013E

13,771

52,55464,371 63,138

37,426

77,510

89,253

105,000

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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.


2006 2007 2008 2009 2010 2011 2012

9,271

47,417

60,931 59,163

32,239

55,054

73,367

1,210 2,521

Park Elektrik 31

Annual Asphaltite Sales (ton)

* Asphaltite operations started in mid 2009.


2009 2010 2011 2012

204,856*

476,899

434,333363,848

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Total Sales Revenues (TL)


2007 2008 2009 2010 2011 2012

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

8,211,605 19,314,397

19,709,514

30,816,836

copper asphaltite

Park Elektrik 33

Net Earnings (TL mn)


2007 2008 2009 2010 2011 2012

19.8

74.8

19.4

37.2

100.9107.3

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Breakdown of COGS, as of YE12


Direct Labor Costs 24%

Materials & Machinery Replacement

15%

Fuel & Energy12%

Depreciation34%

Others10%

Rents4%

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Annual Margin Comparison

(TL mn) 2008 2009 2010 2011 2012

Sales 111 79 84 173 265

Gross Profit 73 32 44 107 134

Gross Margin 66% 41% 52% 62% 51%

EBITDA 62 24 42 112 165

EBITDA Margin 56% 30% 50% 65% 62%

Net Earnings 75 19 37 101 107

Net Margin 68% 25% 44% 58% 40%


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Sources of Financing (TL mn)

* Park Elektrik has no financial debt.


2004 2005 2006 2007 2008 2009 2010 2011 2012

88 100 130 143223

302 343443 450

814

66 53

60

3033

41 53

Shareholders' Equity Total Debt

37

VI. Evaluation of 9M13 Financial Results


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Evaluation of 9M13 Financial Results

In 9M13, total copper concentrate production has been realized as 75.084 wmt, indicating 10.3% increase compared to 9M13. In 9M13, copper concentrate sales increased by 37%, y-o-y. However, taking into account 2,521 mt ton of cathode copper sales in 9M12 period which corresonds roundly 14.000 DMT of concentrate sales, volume growth deteriorates to around 9%, y-o-y.

In 9M13, asphaltite production and sales were realized as 249.142 tons along with the demand by Silopi Elektrik, indicating %10 increase.

Despite increase in volume sales, total revenues increased by only 1.2% due to decline in the average copper prices. Profit margins of the company dropped significantly due to utilizing very low grade stockpile as well as low grade ore in the early stages of the open pit in the transition period.


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Production & Sales Amount

Production 9M12 9M13 %

Concentrated Copper (wmt) 68.060 75.084 10.3%

Cathode Copper (MT) 902* - nm.

Asphaltite (ton) 226.256 249.142 10.1%

Sales 9M12 9M13 %

Concentrated Copper (dmt) 54.225 74.261 37%

Cathode Copper (MT) 2.521** - nm

Asphaltite (ton) 226.256 249.142 10.1%


* 5,010 dmt of concentrated copper is used for production of 902 mt cathode. ** 14,000 dmt of concentrated copper is used for production of 2,521 mt of cathode.

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Sales Breakdown (TL) & Gross Margin by Products

9M12 9M13 %

Copper Sales 175.925.695 175.484.942 -0,3%

Gross Margin of Copper 57% 34%

Asphaltite Sales 18.707.416 25.626.498 37,0%

Gross Margin of Asphaltite 14% 13%

Other Sales 4.650.991 684.421 -85,3%

Total Sales Revenues 199.284.102 201.795.861 1,3%

Overall Gross Margin 52% 31%


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Income Statement (TL)


9M12 9M13 Chg. Sales 199.284.102 201.795.861 1%COGS -95.927.254 -139.318.972 45%Gross Profit 103.356.848 62.476.889 -40%Gross Margin 52% 31%R&D Expenses 0 -58.550 -Marketing, Sales, Distribution Exp. -9.689.055 -10.399.602 7%General Adm. Expenses -11.790.410 -14.638.268 24%Other Operating Income 30.244.254 39.194.224 30%Other Operating Expenses -9.466.270 -11.393.362 20%Operating Income 102.655.367 65.181.331 -37%Operating Margin 52% 32%Financial Income 5.140.429 6.104.747 19%Financial Expenses -117.349 -437.276 273%Profit Before Tax 107.678.447 70.848.802 -34%Tax -19.988.158 -12.960.720 -35%Net Profit 87.690.289 57.888.082 -34%Net Margin 44% 29%EBITDA 140.001.432 118.106.163 -16%EBITDA Margin 70% 59%

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Summary Balance Sheets (TL)

2012 9M13

Current Assets 296,579,212 321,597,173

Fixed Assets 206,692,571 252,187,794

TOTAL ASSETS 503,271,783 573,784,967

Short Term Liabilities 32,226,892 43,756,302

Long Term Liabilities 20,574,734 21,168,700

Shareholders Equity 450,470,157 508,859,965

TOTAL LIABILITIES 503,271,783 573,784,967


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VII. Corporate Governance Rating


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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.


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

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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


mailto:[email protected]

mailto:[email protected]

http://www.parkelektrik.com.tr/

http://www.cinergroup.com.tr/

Park Elektrik Üretim Madencilik Sanayi ve Ticaret A.Ş. January 2014.

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