Mgx Resources Limited · ASX:MGX
Mgx Resources — Mount Gibson Iron — H1 2014 Earnings Presentation
29 slides from Mgx Resources's earnings presentation, Feb 19, 2014
Slide 1: Interim Financial Results H1 2014
Interim Financial Results H1 2014 For personal use only MGX 19 February 2014 1
Slide 2: Disclaimer
Disclaimer This Document is Confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to For personal use only any other person, or published, in whole or in part, for any purpose without prior written approval from Mount Gibson Iron Limited. This Document is not a
Slide 3: MGX at a glance
MGX at a glance For personal use only Member S&P/ASX-200 FY14 sales guidance Market cap $1.3 billion 9.0 to 9.5 Mt *@ $1.20/share , 18/2/2014. 1,090.6m shares on issue Dividends paid Financially strong $130m since Sept 2011 $484m cash, minimal debt* Cash increased by $108m since 30 June *at 31/12/13
Slide 4: Business overview
Business overview For personal use only Koolan Island Mine • Premium DSO lump and fines • Ramping up to 4 Mtpa by end 2014 • Long life asset with life extension potential • Simple logistics Mid West Region Tallering Peak, Extension Hill & Geraldton Port facilities Tallering Peak Extension Hill • Min
Slide 5: H1 2014: Another strong financial performance delivered
H1 2014 Another strong financial performance delivered For personal use only • Record sales revenue of $509.5m, up 22% v pcp • Net profit after tax of $78.3m, up 111% • Net operating cash flow of $170.6m, up fourfold • EBITDA of $212.1m • Cash reserves up $107.9m to $483.9m net of $21.8m final divid
Slide 6: H1 2014: Another strong operating performance delivered
H1 2014 Another strong operating performance delivered • Record ore sales of 5.1 Mt, up 15% v pcp For personal use only • Koolan ore sales of 2.0 Mt • Mid West ore sales of 3.1 Mt • On track to achieve record ore sales of 9.0 – 9.5 Mt in FY14 • Increase in ore reserves inventory* • Exploration confi
Slide 7: Strong earnings driven by stockpile sales and cost reductions
H1 2014 Strong earnings driven by stockpile sales and cost reductions For personal use only 31-Dec- 31-Dec- Six months ended: 2013 2012 Ore tonnes mined Mwmt 3.6 3.6 Ore tonnes sold Mwmt 5.1 4.4 Sales revenue $ mill 509.5 416.2 Interest income $ mill 7.4 5.9 Cost of goods sold $ mill (395.8) (349.3)
Slide 8: Cash operating costs driven lower
H1 2014 Cash operating costs driven lower For personal use only 6months ended 31 December: 2013 2012 Sales Volume (Mwmt) 5.1 4.4 Sales Revenue (A$m) 509.5 416.2 Realised FOB Price (A$/wmt sold, including 100.28 94.00 penalties and FX hedging) Cost breakdown A$m A$/wmt sold A$m A$/wmt sold Total Cost
Slide 9: Significantly higher operating cashflows
H1 2014 Significantly higher operating cashflows driven by higher sales volumes and prices, with falling unit cash costs For personal use only 9
Slide 10: Cash levels continue to build
H1 2014 Cash levels continue to build For personal use only Movement in Closing Cash & Term Deposits 700 600 170.6 6.7 (32.6) (14.0) (21.8) 500 (1.1) 483.9 A$ million 400 376.0 300 200 100 0 June Operating Interest Capex Lease/debt Dividends Other December 2013 activities received (PP&E) repayments
Slide 11: Maximising value – a simple strategy
Maximising value – a simple strategy For personal use only • Cost reduction and elimination of waste Leverage off • Operational optimisation and business improvement • Extension of production profile: existing asset – Optimise resources and reserves inventory – Brownfields exploration base to extrac
Slide 12: Maximising value – years of achievement
Maximising value – 2 years of achievement For personal use only Completed executive team rebuild Achieved permanent ongoing savings of ~$50m per annum Optimised and commenced Koolan Island ramp-up to 4 Mtpa Koolan Island unit mining costs reduced to <$9/t moved in H1 2014, within lower half
Slide 13: Focused on adding to the sales profile
Focused on adding to the sales profile For personal use only Ore sales history and current indicative outlook* 10 Actual Forecast Stage Two 8 target Stage One target 6 Ore Sales (Mwmt) 4 2 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Year to 30 June FY'14 gu
Slide 14: Koolan Island – a quality asset with upside
Koolan Island – a quality asset with upside For personal use only • Long life asset: +7 years • Sought-after high-quality iron ore products • Simple logistics - dedicated shiploader and no road or rail • Optimised ramp up to 4Mtpa - reducing unit mining costs and increasing productivity • Value-add
Slide 15: Koolan Island - a quality asset with upside
Koolan Island - a quality asset with upside For personal use only 1km West End exploration targets N Main Pit 15
Slide 16: Mid West footprint – our competitive edge
Mid West footprint – our competitive edge For personal use only 16
Slide 17: Geraldton Port – established infrastructure
Geraldton Port – established infrastructure For personal use only Ship Loader Rail Unloader MGX Berth 5 MGX Shed Berth 4 Shed 17
Slide 18: Tallering Peak – extracting extra value
Tallering Peak – extracting extra value For personal use only • Total ore sales of 2.5Mt targeted for FY2014 • T6 pit life extended to Feb 2014 • T1 ore production commenced in September 2013 • Mining operations to conclude mid 2014 • Stockpile sales of ~700kt in FY2014, final sales in Sept Qtr 2014
Slide 19: Extension Hill – simple low-cost operation
Extension Hill – simple low-cost operation For personal use only • Simple low-cost operation • 3Mtpa operation with +3 years of mine life. • Established road, rail and port solutions • High potential near-mine exploration targets with known mineralisation 4 • Potential processing hub for regional op
Slide 20: High potential to grow Mid West resources
High potential to grow Mid West resources For personal use only • Extension Hill region shaping as a potential resources hub • Positive results from initial RC drilling at Extension Hill South • Positive initial drilling from Plateau Prospect at Fields Find Project • 2nd round drilling planned at bo
Slide 21: Extension Hill South
Extension Hill South For personal use only • Multiple hematite targets located 1-3km from existing N crusher, with known mineralisation • 65 RC holes completed at Iron Hill Prospect in December 2013 with positive results* • 2nd round drilling planned mid 2014, subject to approvals 3km Extension Hill
Slide 22: Extension Hill South – Iron Hill Prospect
Extension Hill South – Iron Hill Prospect For personal use only • Significant intercepts in 15 of 16 holes • Planned 2nd round infill and confirmation drilling targeting primary hematite, including: to help validate historical data • 22m @ 63.8% Fe from 18m downhole • Iron Hill Prospect Exploration
Slide 23: Plateau Prospect, Fields Find
Plateau Prospect, Fields Find • Unconventional setting - iron-enriched laterite For personal use only over ultra-mafic basement • 228 hole RC program completed November 2013* • 114 significant intersections +50% Fe, including: • 18m @ 59.2% Fe, 16m @ 58.4% Fe, 7m @ 60.5% Fe • Only 5% of 10sqkm prosp
Slide 24: Shine – a quality near-term opportunity
Shine – a quality near-term opportunity For personal use only • Purchase agreement signed 9 December 2013* • Reported Hematite Mineral Resource of 6.1 Mt @ 59.8% Fe • Potential for near term, low-capex development • High grade hematite resource • Substantial technical work completed • Advanced appro
Slide 25: Market outlook remains positive
Market outlook remains positive For personal use only In the short term… • Ore inventories at Chinese ports have undergone seasonal rebuilding typical around Chinese New Year • Chinese steel mill production remains high • Chinese economic growth is forecast to remain healthy at ~7% pa on a larger ba
Slide 26: Summary
Summary • For personal use only An established mid-cap iron ore producer • On track to sell a record 9.0 - 9.5 million tonnes in FY2014 • Strong operating cashflows and balance sheet • Established transport infrastructure and long term customer contracts • Exploration upside and disciplined value-fo
Slide 27: Thank You
Thank You For personal use only MGX For more information: Phone: +618 9426 7500 Email: admin@mtgibsoniron.com.au Web: www.mtgibsoniron.com.au 27
Slide 28: Appendix – Reserves and Resources
Appendix – Reserves Supplementary and Resources information For personal use only Mineral Resources and Ore Reserves at 30 June 2013 Total Group Mineral Resources and Ore Reserves at 30 June 2013 Koolan Island Total Group Mineral Resources and Ore Reserves at 30 June 2013 Tonnes Fe SiO2 Al2O3 P mill
Slide 29: Appendix – Shine Hematite Mineral Resource
Appendix – Reserves Supplementary and Resources information For personal use only Shine Hematite Mineral Resource Resource Tonnes Fe SiO2 Al2O3 P LOI Category (Mt) % % % % % Measured 2.2 60.5 6.76 1.96 0.085 3.99 Indicated 3.2 59.6 8.23 1.61 0.074 3.90 Inferred 0.7 58.6 9.04 1.37 0.078 4.63 Total 6.