Mgx Resources Limited · ASX:MGX
Mgx Resources — Mount Gibson Iron — Shareholder Meeting (November 2009)
18 slides from Mgx Resources's shareholder meeting presentation, Nov 18, 2009
Slide 1: AGM Presentation
AGM Presentation For personal use only 18 November 2009 1
Slide 2: Disclaimer
Disclaimer For personal use only This Document is Confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to 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: Contents
Contents For personal use only 1 Industry Context 2 Events and Response 3 Impact – current position 4 Outlook 3
Slide 4: Long term outlook – what was said last year
Long term outlook – what was said last year For personal use only Few question longer term growth in steel, however material price pressure likely to continue for near term • The Chinese economy has proven not to be immune from the Global credit crisis and expectations of widespread recession • Chin
Slide 5: Capital markets
Capital markets For personal use only Markets recovering from the lows of 12 months ago… Major equity market indices 2007 – 2009 160 S&P 500 FTSE 100 Shanghai Composite S&P/ASX 200 150 140 130 120 110 100 Index to 1/7/07 90 80 70 60 50 40 30 20 10 0 01-Jul-07 01-Oct-07 01-Jan-08 01-Apr-08 01-Jul-08
Slide 6: Steel prices
Steel prices Steel prices have stabilised over the last 12 months… For personal use only Steel prices 2007 – 2009 200% China Domestic Slab China Export Hot Rolled Coil 180% 160% 140% Index 120% 100% 80% 60% 40% 01-Jul-07 01-Oct-07 01-Jan-08 01-Apr-08 01-Jul-08 01-Oct-08 01-Jan-09 01-Apr-09 01-Jul-09
Slide 7: Iron ore Fines prices CFR China
Iron ore Fines prices CFR China For personal use only The spot price has recovered and is trading slightly above the current benchmark (CFR) price… Iron ore Fines price – CFR China 2008 – 2009 200 Spot CFR China Benchmark - 63%Fe (Converted to CFR) 180 160 140 US$ per tonne 120 100 80 60 40 20 0 01-
Slide 8: Impact on share prices
Impact on share prices For personal use only Mid cap iron ore producer/developer share prices have increased ~140% since November 2008… Indices of Australian mining companies – majors vs. midcaps 2008 – 2009 120% Metals and Mining S&P/ASX 200 Mid-Cap Iron Ore Companies Mount Gibson Iron 100% 80% Ind
Slide 9: Contents
Contents For personal use only 1 Industry Context 2 Events and Response 3 Impact – current position 4 Outlook 9
Slide 10: Events
Events For personal use only The actions of defaulting customers placed MGI under unprecedented financial pressure… • Rapid deterioration in the spot price for iron ore • Spot volumes evaporated • MGI customers sought to defer and cancel shipments • MGI customers breached offtake agreements 10
Slide 11: Appropriate Response
Appropriate Response For personal use only Failure to act appropriately threatened MGI as a going concern… • Reconfigured business to preserve cash • Three customers terminated – Sinom (Hong Kong) Limited (Sinom) – Pioneer Iron and Steel Group Ltd (Pioneer) – Rizhao Steel Holding Group Co Ltd (Rizha
Slide 12: Contents
Contents For personal use only 1 Industry Context 2 Events and Response 3 Impact – current position 4 Outlook 12
Slide 13: 2009 Financial results - P&L
2009 Financial results - P&L 12 months For personal use only 12 months ended ended % 30 June 30 June 2008 2009 Sales volume 000 wmt 5,398 5,343 1% Sales revenue $ mill 425.4 432.7 (2%) Other revenue $ mill 6.3 2.5 152% Total revenue $ mill 431.7 435.2 (1%) Cost of sales $ mill (293.5) (244.6) (20%)
Slide 14: Current Position
For personal use only Current Position • Operations have performed according to plan this financial year – Tallering Peak to the end of October: • Lump Sales 684kt @ 62.4% Fe • Fines Sales 272kt @ 61% Fe – Koolan Island • Lump Sales 494kt @ 64.2% Fe • Fines Sales 727kt @ 61.3% Fe • Record sales expe
Slide 15: Contents
Contents For personal use only 1 Industry Context 2 Events and Response 3 Impact – current position 4 Outlook 15
Slide 16: Historic production growth and current forecast
Historic production growth and current forecast For personal use only Production growth will continue from 2009-10 after disrupted growth during 2008-09 Pre-Default Historic Current Forecast 12 10 Ore Sold (million WMT) 8 6 4 2 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Financial Year
Slide 17: Observations
For personal use only Observations • Quality of customer is more important than number of customers • Legal reciprocal contractual rights enhances performance and relationship • Relativity of spot price and contract price drove customer behaviour • Mount Gibson has demonstrated the strength of its c
Slide 18: Outlook
For personal use only Outlook • Current demand appears strong which is reflected by China’s iron ore imports and the relative spot to benchmark price • Fundamentals of the medium to long term steel industry appear strong which will translate to strong demand and increased capacity • Eventual recover
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