Mgx Resources Limited · ASX:MGX
Mgx Resources — Mount Gibson Iron — FY2014 Earnings Presentation
29 slides from Mgx Resources's earnings presentation, Aug 20, 2014
Slide 1: FY2014 Financial Results
FY2014 Financial Results For personal use only Built on quality MGX 20 August 2014
Slide 2: Disclaimer
Disclaimer This Document is Confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person, or published, For personal use only 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 snapshot – strong fundamentals
Company snapshot – strong fundamentals For personal use only A leading mid-tier iron ore exporter • Issued capital 1090.8 million shares • Index S&P/ASX 200 • Market cap1 A$818 million • Cash and term deposits2 A$520 million • Debt3 A$9.5m equipment leases Financials (year ended 30 June) 2009 2010 2
Slide 4: Business overview
Business overview For personal use only Koolan Island • Premium DSO lump and fines • Ramping up to 4 Mtpa run rate by end 2014 • Long life asset with extension potential • Simple logistics, remaining LOM strip ratio ~4.5:1 Mid West Region Tallering Peak, Extension Hill, Shine & Geraldton Port facili
Slide 5: FY2014 Another strong financial performance delivered
FY2014 Another strong financial performance delivered For personal use only • Record sales revenue of $898m, up 5% yoy • Net profit after tax of $96.4m • Underlying net profit after tax of $117.7m* excluding MRRT non-cash accounting charge • Net operating cash flow of $238m, up 32% • Cash up $144m t
Slide 6: FY2014 Another strong financial performance delivered
FY2014 Another strong financial performance delivered For personal use only 12 months ended: 30-Jun-14 30-Jun-13 Tonnes mined Mwmt 7.9 5.8 Tonnes sold Mwmt 9.7 8.8 Sales revenue $ mill 898.0 852.9 Interest income $ mill 15.5 11.9 Cost of goods sold $ mill (724.2) (698.3) Gross profit $ mill 189.3 16
Slide 7: Cash operating costs continue to be driven lower
FY2014 Cash operating costs continue to be driven lower For personal use only 12 months ended 30 June: 2014 2013 Sales Volume (Mwmt) 9.7 8.8 Sales Revenue (A$m) 898.0 852.9 Realised Price (A$/wmt sold) 92.55 97.24 Cost breakdown A$m A$/wmt sold A$m A$/wmt sold Total Cost of Goods Sold 724.2 74.64 69
Slide 8: Significantly increased operating cashflow
FY2014 Significantly increased operating cashflow For personal use only 8
Slide 9: Cash levels continue to build
FY2014 Cash levels continue to build For personal use only 9
Slide 10: 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 11: Optimising the sales profile
Optimising the sales profile For personal use only Ore sales history and indicative outlook* 12 Actual Forecast 10 First 8 priority goal Ore Sales 6 (Mwmt) 4 2 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Year to 30 June FY'15 guidance 6.6 -7.0 Mt Shine
Slide 12: MGX – ore grade and quality set us apart
MGX – ore grade and quality set us apart For personal use only High quality ores: • Average Group Ore Reserves grade 62.1% Fe* − Koolan Island 64.1% Fe − Extension Hill 58.3% Fe − Shine 59.3% Fe − Low moisture content (MGX average ~3%) • Low in contaminants − Low Alumina - average 1.16% (Group Ore R
Slide 13: MGX – moving further up the quality curve
MGX – moving further up the quality curve Following the conclusion of low grade sales, Mount Gibson’s superior quality For personal use only product mix protects it against increasing discounts for low grade products WA Iron Ore Projects - Iron Grade and Phosphorus Content 65 64 MGX Koolan Island (R
Slide 14: Koolan Island – a unique high quality asset
Koolan Island – a unique high quality asset For personal use only 1km N West End targets Main Pit 14
Slide 15: Koolan Island – a unique high quality asset
Koolan Island – a unique high quality asset For personal use only • Long life asset: ~7 years* • High quality DSO product • 3.7 Mt sold in FY14, including RSP • On track to achieve ramp up to ~4 Mtpa run rate by end CY2014 • Ramp-up reducing unit mining costs and increasing productivity • Unit minin
Slide 16: Koolan Island – recapitalising for strong future cashflow
Koolan Island – recapitalising for strong future cashflow For personal use only Indicative Koolan Island waste stripping and iron ore sales profile 12 Actual Forecast 10 8 6 4 2 0 Year to 30 June 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Iron Ore Sales (Mwmt) Indicat
Slide 17: Koolan Island – West End exploration
Koolan Island – West End exploration For personal use only • Program of Works (PoW) approved for 33 hole RC programme • Contractor selection underway • Work planned to commence in current quarter • Drilling will test for West End extensions of hematite exploration sandstone mineralisation targets fr
Slide 18: Mid West – established infrastructure and potential to grow resources
Mid West – established infrastructure and potential to grow resources For personal use only • Established infrastructure footprint gives MGX a competitive edge • Extension Hill region shaping as a potential resources hub • Shine Hematite Project – Low-capex DSO opportunity • Positive results from in
Slide 19: Geraldton Port – a competitive advantage
Geraldton Port – a competitive advantage For personal use only Ship Loader Rail Unloader MGX Berth 5 MGX Shed Berth 4 Shed 19
Slide 20: Extension Hill – a low cost growth platform
Extension Hill – a low cost growth platform For personal use only • Established road, rail and port solutions • ~0.6:1 remaining LOM strip ratio • +3 years life at 3Mtpa* • High potential near-mine exploration targets with known mineralisation • Potential regional operations hub 4 *Refer Slide 27 fo
Slide 21: Extension Hill South – high potential target
Extension Hill South – high potential target • For personal use only Multiple known hematite targets located 1-3km from crusher • Iron Hill Prospect Exploration Target of 5-7 Mt @ 58-61% Fe.* N • Significant intercepts in 15 of 16 holes targeting primary Iron Hill hematite, including: • 22m @ 63.8%
Slide 22: Shine – low-capex DSO option
Shine – low-capex DSO option For personal use only • Hematite Mineral Resource of 7.8 Mt @ 59.0% Fe* • Ore Reserves of 5.6Mt @ 59.3% Fe* • Advanced approvals/permitting • Indicative ore production target of 1.6 Mtpa • Indicative $9-11m development cost (<$7/t installed capacity) • Close to existing
Slide 23: Plateau Prospect, Fields Find
Plateau Prospect, Fields Find For personal use only • Plateau located ~75km from Extension Hill • Unconventional setting - iron-enriched laterite over ultra-mafic basement • 228 hole RC programme completed November 2013* • 114 significant intersections +50% Fe*, including: • 18m @ 59.2% Fe, 16m @ 58
Slide 24: Tallering Peak – a final year of adding value
Tallering Peak – a final year of adding value • For personal use only Tenth anniversary of sales February 2014 • Life of mine ore sales +25 Mt • FY14 ore sales of 3 Mt vs 2.5 Mt forecast • LG stockpile sales generated strong cash margins while market window was open • Final year contribution from T6
Slide 25: Summary
Summary For personal use only • An established mid-cap iron ore producer • Strong operating cashflows and balance sheet • Increasing ore grade and quality profile • Established transport infrastructure and long term customer contracts • Exploration upside and disciplined value-focused growth strateg
Slide 26: 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 26
Slide 27: Appendix – Reserves and Resources information
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 28: Appendix – Reserves and Resources information
Appendix – Reserves Supplementary and Resources information Shine Hematite Mineral Resources For personal use only Resource Category Tonnes Fe SiO2 Al2O3 P LOI (Mt) % % % % % Measured 2.65 59.7 7.58 2.18 0.085 4.18 Indicated 4.17 58.7 9.14 1.72 0.078 4.06 Inferred 0.95 58.0 9.80 1.51 0.079 4.68 Tota
Slide 29: Five Year Performance Summary
Five Year Performance Summary For personal use only 30 June 30 June 30 June 30 June 30 June 12 months ended: 2010 2011 2012* 2013 2014 Mineral Resources Mt 108.6 103.3 95.2 88.6 To be released Mineral Reserves Mt 56.4 52.0 44.3 45.2 To be released Operating Mines # 2 3 3 3 3 Sales M wmt 6.5 5.2 5.2