Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Macquarie Australia Conference 2014
20 slides from Fortescue's conference presentation, May 7, 2014
Slide 1: Macquarie – Australia Conference
Macquarie – Australia Conference For personal use only Nev Power, CEO 7th May 2014
Slide 2: Disclaimer
Disclaimer For personal use only Important Notice The purpose of this presentation is to provide general information about Fortescue Metals Group Limited ("Fortescue"). It is not recommended that any person makes any investment decision in relation to Fortescue based on this presentation. This prese
Slide 3: Building a World Class Company
Building a World Class Company Mature, reliable and competitive supplier For personal use only • Founded 2003 • First ore 2008 • 100mt expansion complete • Over 334mt shipped to date • Achieved 155mtpa production rate • Unique culture drives success 3
Slide 4: Q314: delivering 155mtpa
Q314: delivering 155mtpa World’s fourth largest seaborne exporter For personal use only shipped 31.5mt in Q314 $US3.1bn 85.5mt YTD debt reduction Infrastructure complete 155March 2014 mtpa Ramped up across mines and processing facilities Strong operating cashflows US$1.9bn Costs 20% cash on ha
Slide 5: Continued growth in all operational areas
For personal use only 5 Million tonnes Million tonnes 10 15 20 25 30 35 40 0 5 10 20 0 15 25 30 35 40 5 Q308 Q308 Q408 Q408 Q109 Q109 aspects Q209 Q209 Q309 Q309 Q409 Q409 Q110 Q110 Q210 Q210 Q310 Q310 Q410 Q410 Q111 Q111 Q211 Q211 Q311 Q311 Q411 Q411 Q112 Q112 Q212 Q212 Ore mined (wmt) Q312 Ore shi
Slide 6: Operating margins support
Operating margins support Fortescue’s average realised selling price and C1 costs For personal use only US$/wmt 62% Platts US$/dmt 180 180 160 160 $146 140 140 $119 $115 120 $110 $115 $114 $111 120 $73 $102 $103 $97 100 100 $40 $89 $42 $49 $58 $33 $60 $61 80 $21 $48 80 $45 60 $23 $23 60 $21 $18 $18
Slide 7: Breakeven index price low US$70's/t
Breakeven index price low US$70’s/t Operational efficiencies driving down breakeven price For personal use only Iron Ore Price (62% Fe CFR - Platts IODEX China) $180 $170 $160 $150 $140 $130 $120 $110 $100 $90 $80 $70 Required breakeven price including US$70’s interest + sustaining capital $60 $50 J
Slide 8: US$3.1bn paid off peak debt
US$3.1bn paid off peak debt Flexible debt structure enables further repayment For personal use only 5,000 Callable at 4,925 4,500 Fortescue's option 4,000 3,500 3,000 US$m 2,500 Callable at 2,000 Fortescue's option 1,500 1,500 1,000 1,000 1,000 900 500 0 0 CY2014 CY2015 CY2016 CY2017 CY2018 CY2019 C
Slide 9: Disciplined capital management
Disciplined capital management Track record of debt repayment delivering investment grade metrics For personal use only • Lower debt costs ~ US$300m p.a • Committed to additional repayments of US$2 - $2.5bn: – Gearing ~ 40% – Net debt to Equity ~ 50% • Increased cashflow through operations and lower
Slide 10: Market
For personal use only Market
Slide 11: Long term confidence in China
Long term confidence in China GDP growth of 7.5% forecast in 2014 For personal use only “China is still a developing country… development remains the key to solving all our country’s problems… We must keep development as the central task and maintain a proper economic growth rate.” Premier Li Keqian
Slide 12: Steel consumption per capita
Steel consumption per capita China has only just reached levels of consumption of a developed country For personal use only 2014-2020 Kg per capita Forecast 800 700 600 500 400 300 200 GDP 100 0 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 China US Source: Macquarie Research 12
Slide 13: Demand for seaborne supply
Demand for seaborne supply New coastal steel capacity moving away from domestic iron ore For personal use only Iron Ore Reserves New/proposed steel capacity Seaborne iron ore Source: ANZ Research Seaborne iron ore imports (Ex. Australia, Brazil etc.) 13
Slide 14: Clear Strategy
For personal use only Clear Strategy
Slide 15: Moving down the global cost curve
Moving down the global cost curve Targeting bottom quartile For personal use only October 2013 CFR Cost of China's Iron Ore Supply (including royalties & freight) 200 Domestic Chinese Ore Australia Brazil India 150 South Africa Other US$/dry tonne 100 50 Fortescue 0 0 100 200 300 400 500 600 700 800
Slide 16: Port – flexible design for future growth
Port – flexible design for future growth Fourth berth commissioned with fifth berth in construction For personal use only AP3 AP2 AP1 AP4 AP5 2014 16
Slide 17: Resource portfolio supports asset base
Resource portfolio supports asset base Drilling as required and extend through near mine exploration For personal use only 12,000 10,000 2,463 2,463 Mineral Resources (Mt) 8,000 2,013 624 624 1,032 624 624 6,000 3,247 3,504 3,070 3,070 2,860 4,000 2,224 1,715 695 695 695 695 695 695 695 5,205 5,205
Slide 18: Beyond 155mtpa
Beyond 155mtpa Focused on delivering shareholder value For personal use only • Strong cashflows from operations + lower capex • Debt reduction - investment grade metrics • Sustaining low cost operational performance • Increasing dividends to 30-40% • Flexible incremental growth within extensive Pilb
Slide 19: For personal use only
For personal use only Sign up to alerts online: www.fmgl.com.au Proudly supporting: 19
Slide 20: Glossary
Glossary Definition of non-IFRS items For personal use only EBITDA = profit before income tax adjusted for depreciation and amortisation, impairment expense, other write-offs, net finance costs and gain or loss on refinancing Return on equity = profit for the year after income tax divided by total e
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