Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Corporate Update (September 2005)
38 slides from Fortescue's corporate update, September 2005
Slide 1: Progress Update
Fortescue Metals Group Ltd Progress Update Sydney, September 2005 DISCLAIMER Data and amounts shown in this presentation relating to capital costs, operating costs and project timelines are internally generated best estimates only. All such information and data is currently under review as part of F
Slide 2: The Chichesters: part of Fortescue's 18,300 sq km Pilbara holdings
The Chichesters: part of Fortescue’s 18,300 sq km Pilbara holdings >2.3 billion tonnes in 18 months Location Map Distance equivalent: Los Angeles to San Francisco
Slide 3: Company Overview
Overview Company • Top 200 S&P ASX Company • $80 million invested to date • $70 million in cash, plus receivables, at 30 June 2005 • Highly experienced executive team in place
Slide 4: Project Overview
Overview Project • Situated in world’s best region for iron ore – the Pilbara • Largest tenement holding in the Pilbara • In excess of two billion tonne resource, reserve declaration in Q4 2005 • Ore body accessible: amenable to efficient mining techniques • Initially 45Mtpa expanding to 60Mtpa
Slide 5: Fortescue – developing Australia's largest iron ore tenements
Fortescue – developing Australia’s largest iron ore tenements
Slide 6: The Pilbara, the Lowest Cost
The Pilbara, the Lowest Cost Australia’s iron ore is cheaper than Brazil’s.
Slide 7: Australian ore is competitive
Australian ore is competitive Australia is a reliable long term steel partner • Freight is fluctuating and exposes buyers to long term freight risk in the case of the long distance suppliers • 2004 average iron ore delivered price per tonne into China Australian Ore $US 42.85 South Africa Ore $US 61
Slide 8: The implication for infrastructure: Rio's move on Hope Downs
The implication for infrastructure: Rio’s move on Hope Downs • Repeats history – North Ltd • The oligopoly continues • Another potential infrastructure supplier removed • The steel industry is facing a restricted Pilbara • Fortescue a real solution
Slide 9: Geology and Mineral Resources
Geology and Mineral Resources • Highly successful drilling program • 2.3 billion tonnes of resources discovered in last 12 months • One third (806Mt) high grade (>60% Fe) • All resources well within requirements of major steel mills • Marra Mamba ore with microplaty hematite • Ore body extends acros
Slide 10: Drilling
Drilling Over 6,500 holes ~ 300kms of metallurgical samples Project area Drilling statistics to September 2005 RC Diamond Bulk sampling Holes Metres drilled Holes Metres drilled Holes Metres drilled Christmas Creek 3,420 142,772 118 2,638 15 336 Cloud Break 2,044 102,040 45 1,323 16 501 Mt Lewin 388
Slide 11: The Largest Bedrock Hosted Iron Ore Discovery in Australia
The Largest Bedrock Hosted Iron Ore Discovery in Australia HI reserve Mines and Committed Projects HI resource Robe resource Robe reserve 2500 BHPB reserve 2.34 2.34 Bt 2000 FMG resource million tonnes BHPB resource 1500 Hancock Portman 1000 500 0 CHICHESTER RANGE Nammuldi / Brockman 2 Mt Jackson /
Slide 12: Iron Ore Comparison – Fe content of Australian shipping grade
Iron Ore Comparison – Fe content of Australian shipping grade 62.00 61.50 Weighted Average Fine Iron Ores - Fe Grade 61.00 60.50 Fe % 60.00 BHP FMG 59.50 Rio 59.00 58.50 58.00 Data Sources: Robe River – Website, BHPB – Direct from Company, HI – Industry Sources, FMG – Own Tests, AME
Slide 13: Two high grade >60% Fe products
Two high grade >60% Fe products • >100% covered by Letters of Intent • Lump and Fines • Greater demand than availability Fe SiO2 Al2O3 P S CaO TiO2 Mn MgO K2O Na 2O LOI Tot Brand % % % % % % % % % % % % High Grade Lump 61.00 2.80 1.45 0.052 0.025 0.04 0.04 0.31 0.07 0.017 0.044 7.10 High Grade Fines
Slide 14: Marketing
Marketing • Focus on Asia including the rapidly expanding steel mills of China • 61% lump, 60.2% fines, excellent sinter properties • Highly experienced marketing team • 15 Mtpa under contract and with over 80 Mtpa in Letters of Intent • Targeting 30 Mtpa long term contracts • Active discussions wit
Slide 15: Mining, shallow and effective with Surface Miners
Mining, shallow and effective with Surface Miners • Surface Miner streamlines ore retrieval and optimises grade control • Overburden removed by shovel and truck with waste dumped in-pit • Rapid ramp up facilitated by multiple pits
Slide 16: Fortescue's SM2600 Surface Miner cutting iron ore
Fortescue’s SM2600 Surface Miner cutting iron ore and stockpiling behind
Slide 17: Surface Miner cutting iron ore and stockpiling - Christmas Creek
Surface Miner cutting iron ore and stockpiling - Christmas Creek
Slide 18: Fortescue Cut Material from Surface Miner
Fortescue Cut Material from Surface Miner
Slide 19: Open Pit Mining, simple, smart
Open Pit Mining, simple, smart Road trains for ore, conveyors for waste
Slide 20: Open Pit Cross Section - Showing Mining
Open Pit Cross Section - Showing Mining
Slide 21: Production Targets Evolve with Successful Exploration
Production Targets Evolve with Successful Exploration DFS Case Mine - Mt Yr-1* Yr 0** Yr 1 2 3 4 5 6 7 8 9 10 11 12 Cloud Break 20 30 35 45 25 20 15 25 23 22 20 20 - - High Grade Christmas Break - - - - 20 25 30 20 17 13 10 10 15 15 Cloud Break - - - - - - - 10 10 10 10 10 20 20 Beneficiated Christm
Slide 22: Fortescue's Bulk Sample Rig Drilling CB - August 05
Fortescue’s Bulk Sample Rig Drilling CB - August 05
Slide 23: Drop Tower Conditioning Bulk Samples
Drop Tower Conditioning Bulk Samples –Cloud Break August 05
Slide 24: Infrastructure – the First Large Scale Open Access Port at Port Hedland
Infrastructure – the First Large Scale Open Access Port at Port Hedland
Slide 25: Infrastructure – the First Large Scale Open Access Port at Port Hedland
Infrastructure – the First Large Scale Open Access Port at Port Hedland
Slide 26: Infrastructure – at Port Hedland
Infrastructure – at Port Hedland
Slide 27: Railway – Track
Railway – Track • Quantm in conjunction with a train performance calculator has been used to ensure an optimised rail alignment • 288km of track in total including sidings, marshalling yard • Ruling gradient: 0.55% loaded 1.5% empty • Standard gauge (1435mm) track • 40t axle load
Slide 28: Sustainable Development
Sustainable Development • Environmental approvals on track, Infrastructure to be approved shortly • Native Title agreement expected in next month • Heritage surveys completed for key parts of Project to ensure construction to proceed on schedule
Slide 29: Government – Helping Open Access Infrastructure
Government – Helping Open Access Infrastructure • Act of Parliament for Infrastructure State Agreement in 2004 • Federal Government awards Major Project Facilitation in 2005 • Mining State Agreement expected shortly • Infrastructure expansion over 45 Mtpa in the State Agreement • BHPB declaration al
Slide 30: WorleyParsons Definitive Feasibility Study
WorleyParsons Definitive Feasibility Study • Infrastructure capital cost estimate of A$1.95bn • High level accuracy +/-10% • High level technical confidence – WorleyParsons is a top 5 global engineering house • High level financial confidence – capital cost number well within Fortescue’s funding par
Slide 31: Feasibility Study Complete
Feasibility Study Complete Rail • 255 kms of railway length from Cloud Break to Port Hedland • 4 train sets each comprising 3 locomotives and 200 wagons Port • 2 berths – a live berth and a lay-by berth designed to handle ships up to 250,000 DWT • 12,500 tph shiploader • 2.4 million tonnes live stoc
Slide 32: Strong Interest from Suppliers to Deliver Project
Strong Interest from Suppliers to Deliver Project Area Major component Probable supplier Port Dredging Jans de Nul, Boskalis, Dredco, Van Ord Marine Structures Clough, McConnell Dowell Ore handling ThyssenKrupp, ZPMC, Metso Electrics Siemens, ABB, GE Rail Earthworks BGC, Simto, Leighton, Barclay Mow
Slide 33: Project Management
Project Management • Several international construction and project management companies are in discussions with FMG for the major Project roles • These include - Leighton Holdings WorleyParsons Barclay Mowlem
Slide 34: Project Construction
Project Construction • Utilising best elements of existing iron ore producers updated to 2005 technologies • 22 month construction period with six month “pre-construction” activities underway to deliver first ore to ship in late 2007 • Overall EPCM contractor managing three main sites - port, rail a
Slide 35: Project Construction Timeline
Project Construction Timeline
Slide 36: Project Finance
Project Finance 8f World’s largest bank Leading Australian Corporate Adviser Leading U.S. Steel Industry Investment Bank World’s Leading Steel Information Service
Slide 37: Economics, Finance and Delivery
Economics, Finance and Delivery • Capex now settled • Robust economics established • Equity and Debt discussions advanced • US Capital Markets, Bank Group and Export Credit Agencies working • Finance strategy with EPCM and Financial Advisors in place • On track for late 2007early 08 deliveries
Slide 38: Fortescue Metals Group Ltd
Fortescue Metals Group Ltd LEGEND NJ a Se The New Force in Iron Ore
Fortescue Metals Group — Corporate Update (September 2005) on 6ix