Mgx Resources Limited · ASX:MGX
Mgx Resources — Mount Gibson Iron — Corporate Update (August 2010)
36 slides from Mgx Resources's corporate update, Aug 13, 2010
Slide 1: Koolan site visit
Koolan site visit For personal use only 13 August 2010 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: Company overview
Company overview For personal use only • Australian A t li based b d multi-operation lti ti h hematite tit iiron ore producer exporting to China • Increasing gpproduction from current Ore Reserves • 3 open pit mining centres within two geographic regions • Access to infrastructure • Experienced E i
Slide 4: Key investment themes
Key investment themes For personal use only 1 Qualityy assets Q 2 SSolid g growth p profile 3 Earnings leverage to strong iron ore price outlook 4 Disciplined financial strategy & strong performance … Mount Gibson has a strong investment case 4
Slide 5: Quality assets
1 Quality assets For personal use only Koolan Island – 4 mtpa production Tallering Peak – 3 Mtpa production Extension Hill – 3 Mtpa production 5
Slide 6: Quality assets: Mid-West Region of Western Australia
1 Quality assets For personal use only Mid-West Region of Western Australia 6
Slide 7: Quality assets: Tallering Peak
1 Quality assets For personal use only Tallering Peak Main Range Pits looking west – June 2010 • Simple process – mine, crush, road, rail and load vessels • First hematite ore shipped Feb 2004 • Producing 3 Mtpa • 65% Lump & 35% Fines ratio • Remaining LOM contains quality high grade, low contaminan
Slide 8: Tallering Peak
1 Quality assets For personal use only Tallering Peak • Approx 3 years mine life remaining • Strip ratio reduces significantly after FY2011 • Limited exploration p potential • Strong cash generating asset over next 3 years 8
Slide 9: Tallering Peak Main Range Pits looking east
1 Quality assets For personal use only Tallering Peak Main Range Pits looking east – June 2010 9
Slide 10: Extension Hill
1 Quality assets For personal use only Extension Hill • Under development – first ore shipped Sept qtr 2011 p • Low capital cost: $74 million remaining • Simple process – mine, crush, road, d rail il and d lload d vessels l • 3 Mtpa production rate • Low strip ratio • 50% Lump & 50% Fines ratio • Op
Slide 11: Extension Hill
1 Quality assets For personal use only Extension Hill • Project on track : – all substantial contracts awarded – completion of all construction by M 2011 May – first ore mined Feb 2011 – first ore crushed May 2011 – railing commencing June 2011 11
Slide 12: Koolan Island provides significant upside potential
1 Quality assets For personal use only Koolan Island provides significant upside potential … 12
Slide 13: Koolan Island Port & ship-loading facilities
1 Quality assets For personal use only Koolan Island Port & ship-loading facilities • Ex BHP mine – closed 1992 • Historical BHP production 66.5% Fe, 3.48% SiO2, 0.69% Al2O3, 0.019% P, 0.3 LOI • Mine, crush and shipload • First hematite ore shipped June 2007 • Currently mining from satellite orebodi
Slide 14: Koolan Island Seawall
1 Quality assets For personal use only Koolan Island Seawall – June 2010 14
Slide 15: Solid growth profile: total material movement
2 Solid growth profile For personal use only Total material movement (BCM’s) Millions 35 Forecast 30 25 Extension Hill Koolan Island 20 Tallering Peak 15 10 5 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 15
Slide 16: Solid growth profile: strip ratio
2 Solid growth profile For personal use only Strip ratio (tonnes) 14 13 Forecast 12 Tallering Peak 11 Koolan Island 10 Extension Hill 9 8 Averageg 7 6 5 4 3 2 1 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 16
Slide 17: Solid growth profile: total sales
2 Solid growth profile For personal use only Total sales (WMT’s) Millions 11 10 Forecast 9 Extension Hill 8 Koolan Island 7 Tallering Peak 6 5 4 3 2 1 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 17
Slide 18: Solid growth profile: forecast capex
2 Solid growth profile For personal use only Forecast Capex 12 months ended Annually 30 June thereafter 2011 Tallering Peak $ mill 3.0 3.0 K l IIsland Koolan l d $ mill ill 42 0 42.0 50 5.0 Extension Hill $ mill 74.0 4.0 Total $ mill 119.0 12.0 18
Slide 19: Organic & M&A growth opportunities
2 Solid growth profile For personal use only Organic & M&A growth opportunities … • Koolan: – Western side of the Island unexplored with known surface hematite identified – Exploration and Heritage Agreement executed g Impact – Heritage p Assessment completed p – Work Program Clearance completed – S
Slide 20: Earnings leverage to strong iron ore price
3 Earnings leverage to strong iron ore price For personal use only Increasing trend in iron ore prices… 250 12 Sales volume CRU Fines FOB price (nominal) 10 200 8 Sales Million WMT T 150 Uscc / dmtu 6 100 97 9.7 10.0 4 6.5 6.5 5.6 5.4 50 2 25 2.5 0 0 2007 2008 2009 2010 2011 2012 2013 Actual Actual
Slide 21: Physicals comparison 2009 with 2010
4 Disciplined financial strategy & strong performance p For personal use only Physicals comparison 2009 with 2010 30,000,000 28 000 000 28,000,000 1,088,000 27,033,000 407,000 26,000,000 858,000 1,299,000 24,000,000 1,367,000 22,014,000 22,000,000 20,000,000 2009 tonnes Mined Crushed Trucked Railed
Slide 22: P&L comparison 2009 with 2010
4 Disciplined financial strategy & strong performance p For personal use only P&L comparison 2009 with 2010 12 months 12 months ended ended % 30 June 2010 30 June 2009 Sales volume 000 wmt 6,487 5,398 20% Sales revenue $ mill 536.3 425.5 26% Other revenue $ mill 19.0 6.2 206% Total revenue $ mill 55
Slide 23: P&L comparison FY2009 with FY2010
4 Disciplined financial strategy & strong performance p For personal use only P&L comparison FY2009 with FY2010 200 33.4 (1.2) (36.8) 160 25.1 (64.1) 14.5 85 7 85.7 132.4 33.2 120 $millions 80 42.6 40 0 2009 NPAT Sales Price, FX & Cost of Sales Interest and Corporate FX Interest Tax 2010 NPAT volume
Slide 24: Balance Sheet comparison 2009 with 2010
4 Disciplined financial strategy & strong performance p For personal use only Balance Sheet comparison 2009 with 2010 12 months 12 months ended ended % 30 June 30 June 2010 2009 Cash and term deposits $ mill 347.4 222.2 56% Current assets $ mill 526.8 370.7 42% Non current assets $ mill 769.2 742.2
Slide 25: Cash Flow comparison 2009 with 2010
4 Disciplined financial strategy & strong performance p For personal use only Cash Flow comparison 2009 with 2010 12 months h 12 months h ended ended % 30 June 30 June 2010 2009 Cash inflows from operations $ mill 169.1 99.5 70% Cash (outflows) from investing activities $ mill (22.2) (50.2) 56% Cash
Slide 26: Disciplined financial strategy & strong performance
4 Disciplined financial strategy & strong performance p For personal use only 2005-2010 sales revenue 2005-2010 net profit Disciplined risk management strategy Strong cash flow generation Mount Gibson has… Growing production profile First mover status & access to existing infrastructure Robust
Slide 27: Dividends
4 Disciplined financial strategy & strong performance p For personal use only Dividends • Factors to consider before paying dividends: – Completion of major capital works at Extension Hill and Koolan Island – Tax position to enable franked dividends to be paid – Cash and debt position – M&A opportun
Slide 28: Mount Gibson Attachments
Mount Gibson For personal use only Attachments 28
Slide 29: Company overview
Company overview For personal use only Corporate • Issued capital 1079.2 million shares, 5 million options • Market cap1 A$1,931 million • Cash2 A$347 million • Total debt2 A$85 million • EV A$1,669 million • Index S&P/ASX 200 • Finance facilities A$150m (includes A$65m contingent debt) Fi Financial
Slide 30: Mount Gibson key event timeline
Mount Gibson key event timeline For personal use only 3 ading Price (A$) 2 Mount Gibson Ordinary 5 1 4 Shares Tra Production stabilised & Koolan Island production Volatile Equity Markets, Markets Equity Market Recovery Volatile Equity Markets growth explored commences Record Profits July & Oct 200
Slide 31: Operations Key Statistics
Operations Key Statistics For personal use only Key Statistics Tallering g Peak Koolan Island Extension Hill Combined Reserves and Resources1 Reserves (Mt) 12.2 30.2 14.3 56.7 Proven & Probable Mineral Resources (Mt) 14.9 67.7 22.1 104.7 Measured, Indicated & Inferred Reserve Specifications Fe % 61.
Slide 32: Operations Key Statistics
Operations Key Statistics For personal use only Key Statistics Tallering g Peak Koolan Island Extension Hill Operations Data Annual production (Mtpa) 3 4 3 Expected minimum mine life 3 8 5 End of mine life 2013 2019 2016 Lump : Fines ratio 65% : 35% 30% : 70% 50% : 50% Truck (km) 65 - 85 Rail ((km))
Slide 33: Tallering Peak
Tallering Peak For personal use only Access to infrastructure – full production 33
Slide 34: Koolan Island layout
Koolan Island layout For personal use only Access to Koolan Island Main Pit and associated high grade is achieved whilst mining satellite pits … Air strip East Pit Accommodation Camp Crushing Plant Mullet Pit Main Pit Ship Berth & Ship-loader Main West Pit 34
Slide 35: Koolan Island
Koolan Island For personal use only Installed infrastructure – capacity 6Mtpa 35
Slide 36: Attributions
Attributions For personal use only The information in this report relating to Mineral Resources is based on information compiled by Rolf Forster, who is a member of the Australasian Institute of Mining and Metallurgy. Rolf Forster is a consultant to Mount Gibson Mining Limited, and has sufficient ex