Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Diggers and Dealers 2012
24 slides from Fortescue's conference presentation, Aug 8, 2012
Slide 1: FY13 - The year of delivery
For personal use only FY13 - The year of delivery Diggers and Dealers Kalgoorlie 8 August 2012
Slide 2: Disclaimer
Disclaimer For personal use only Important Notice The purpose of this presentation is to provide general information about Fortescue Metals Group Ltd ("Fortescue"). It is not recommended that any person makes any investment decision in relation to Fortescue based on this presentation. This presentat
Slide 3: FY2012 – Year in review
FY2012 – Year in review A year of records For personal use only Strong culture delivers record results Record Port Expansion 57.5mt 3rd berth, 2nd shiploader The first major infrastructure step shipped in FY2012 towards 155mtpa mtpa run rate 55 Production exceeds nameplate 55mtpa maintained capacity
Slide 4: June quarter operations exceed targets
June quarter operations exceed targets For personal use only Mining Rail Port Ore Mined (wmt) Ore Processed (wmt) Ore Shipped (wmt) 35.0 30.0 35.0 30.0 25.0 30.0 Million tonnes (mt) Million tonnes (mt) Million tonnes (mt) 25.0 25.0 20.0 20.0 20.0 15.0 15.0 15.0 10.0 10.0 10.0 5.0 5.0 5.0 0.0 0.0 0.0
Slide 5: The quarterly milestone calendar
The quarterly milestone calendar The countdown to re-rating! For personal use only Solomon Kings Christmas Creek 2nd OPF JUN QTR SEP QTR FY MAR QTR 2013 DEC QTR Solomon Firetail Train unloaders 5
Slide 6: The business transformation
The business transformation For personal use only June 2012 Dec 2012 June 2013 • Production run • Production run • Production run rate 60mtpa actual rate 95mt target rate 155mt target • Port capacity • Port capacity • Port capacity 65mtpa 115mtpa 155mtpa • Rail 400km of • Rail 630km of • Rail 650km
Slide 7: Balancing operations with construction
Balancing operations with construction Culture provides seamless interface For personal use only FY12 record production combined with rapid expansion Construction tie ins with minimal delays Operational readiness teams work along side construction contractors Bolt on expansion shows benefit of big p
Slide 8: Flexible design for future growth
Flexible design for future growth For personal use only Fortescue 8
Slide 9: Financial highlights
Financial highlights Record FY12 revenues bolstered by strong June quarter For personal use only 2012 Full Year Summary Results * 55.8mt Fortescue tonnes shipped up 38% yoy $6.7bn Revenues up 23% yoy $48/wmt C1 average $2.3bn cash at bank at 30 June 2012 $1.86bn of undrawn facilities at end June $1.
Slide 10: Cash cost “C1” margin still strong
Cash cost “C1” margin still strong * C1 cost structural reduction when Solomon comes on line For personal use only Average selling price dry metric tonne (dmt) C1 margin (dmt) C1 cost (dmt) $105 $86 $98 $70 $74 $44 $38 * C1 = FOB cost as reported in quarterly reports (converted to dry tonne basis) b
Slide 11: Financial strength will follow expansion
Financial strength will follow expansion Cashflow will be harnessed for financial de-risking For personal use only Strong operations: • Expanded product range • Low Solomon Strip Ratio < 2 : 1 • Target Solomon C1 cost of US$25 - 30/wmt* • Total average C1 cost target for FY14 of US$38-$42/wmt* • Eco
Slide 12: New facility structured for short term flexibility
New facility structured for short term flexibility Broad range of maturity profiles For personal use only $1.5bn raising provides funding certainty 2500 2000 1500 US$m $750 1000 $2,040 $1,500 500 $1,000 $900 $965 $1,000 $750 $600 $600 $490 $154 $100 0 CY2012 CY2013 CY2014 CY2015 CY2016 CY2017 CY2018
Slide 13: The market
For personal use only The market 13
Slide 14: Strong Chinese engagement
Strong Chinese engagement Chairman Forrest meets Vice Premier Wang Qishan For personal use only 14
Slide 15: Chinese steel production 1H2012 annualising 710mt
Chinese steel production 1H2012 annualising 710mt Strong steel production continuing strong steel production forecast For personal use only Chinese forecast steel production Chinese regime change in Oct 2012 1000 4.5% YOY growth Market looks for growth policy bias 900 800 • Targeted Inflation reduct
Slide 16: A market snapshot
A market snapshot Iron ore prices soften but Chinese steel production still strong For personal use only • Record HY12 Chinese steel production of 360mt • Current overshoot in steel making capacity • Steel inventory build now reducing • Destocking of iron ore inventory depressing prices • Domestic p
Slide 17: History shows the cost curve floor in action
History shows the cost curve floor in action Price rebounds in Jun 10 and Oct 11 reflect support levels For personal use only 17
Slide 18: Chinese cost curve to support prices
Chinese cost curve to support prices For personal use only 18
Slide 19: Development
For personal use only Development 19
Slide 20: Resource portfolio sets expansion platform
Resource portfolio sets expansion platform 14,000 For personal use only Annualised growth of 12,000 1.5bt 3,236 Mineral Resources (Mt) 10,000 per annum 2,465 8,000 2,013 1,032 624 624 1,230 6,000 1,230 3,070 3,070 2,860 4,000 1,715 2,224 695 695 695 695 695 2,000 2,266 2,227 2,143 2,550 2,550 0 2008
Slide 21: A differentiated model
A differentiated model Delivering results For personal use only Culture Fortescue’s unique culture is the key Relationships Direct relationships with sub contractors and local suppliers China Leveraging China’s growth and manufacturing capability Speed Speed of delivery – time is money Planning Plan
Slide 22: Making a difference
Making a difference VTEC – in operation since 2006 For personal use only • VTEC training and support to over 1000 people • 412 direct indigenous employees (10% of workforce) • A further 630 with contractors • $580 million in contracts to Aboriginal contractors & JV’s • Billion Opportunities program
Slide 23: Exceeding expectations
Exceeding expectations Current business powers the expansion For personal use only • Strong FY12 production results • Infrastructure operating above nameplate capacities • Near term growth profile without parallel • Deleveraging will follow expansion tonnes • Flexible expansion pipeline • Unique cul
Slide 24: Forging Ahead
For personal use only Forging Ahead Sign up to alerts online www.fmgl.com.au