Mgx Resources Limited · ASX:MGX
Mgx Resources — Mount Gibson Iron — Investor Presentation (August 2008)
37 slides from Mgx Resources's investor presentation, Aug 25, 2008
Slide 1: Investor Presentation cover letter
Mount Gibson Iron Limited ABN 87 008 670 817 First Floor, 7 Havelock Street West Perth 6005, Western Australia PO Box 55, West Perth WA 6872 Telephone: 61-8-9426-7500 VIA: WWW.ASX.ONLINE.COM Facsimile: 61-8-9485 2305 For personal use only E-mail: admin@mtgibsoniron.com.au 25 August 2008 Pages = 37 T
Slide 2: Investor Presentation August 2008
Investor Presentation For personal use only August 2008 1 24/08/2008
Slide 3: 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 4: Company overview
Company overview For personal use only Corporate • Issued capital 804.2 million shares, 9.9 million options • Market cap1 A$1,793 million • Cash2 A$49 million • Total debt2 A$105 million • EV A$1,737 million • Index S&P/ASX 100 • Finance facilities A$200m (includes A$25m contingent debt) Financials
Slide 5: Company overview
Company overview For personal use only • Australian based multi-operation hematite iron ore producer exporting 6 Mtpa to China • Increasing production from current Ore Reserves to 10 Mtpa by 2010 • 3 open pit mining operations • Experienced management team • Strong iron ore price market driven by Ch
Slide 6: Mount Gibson key event timeline
Mount Gibson key event timeline For personal use only $4.00 $3.50 4 3 $3.00 Shares Trading Price (A$) Mount Gibson Ordinary $2.50 $2.00 2 $1.50 $1.00 1 $0.50 $0.00 Jan-04 Jun-04 Nov-04 Apr-05 Sep-05 Feb-06 Jul-06 Dec-06 May-07 Oct-07 Mar-08 Aug-08 Tallering Peak production Production stabilised & gr
Slide 7: Key investment themes
Key investment themes For personal use only 1 Quality assets 2 Solid growth profile 3 Earnings leverage to strong iron ore price outlook 4 Disciplined financial strategy & strong performance 5 Experienced - disciplined Board & executive team with proven track record … Mount Gibson has a solid invest
Slide 8: Koolan Island, Tallering Peak, Extension Hill
1 Quality assets For personal use only Koolan Island - production Tallering Peak - production Extension Hill - near-term production 7 24/08/2008
Slide 9: Tallering Peak
1 Quality assets For personal use only Tallering Peak Main Range Pits looking west & east - June 2008 • Simple process – mine, crush, road, rail and load vessels • First hematite ore shipped Feb 2004 • Producing 3 Mtpa • 65% Lump & 35% Fines ratio • Quality high grade, low contaminant product 12 mon
Slide 10: Extension Hill
1 Quality assets For personal use only Extension Hill • Under development – first ore shipped June qtr 2009 • Low capital cost: $100m • Simple process – mine, crush, road, rail and load vessels • 3 Mtpa production rate • Low strip ratio – 0.7:1 • 50% Lump & 50% Fines ratio • Quality grade, low conta
Slide 11: Geraldton Port
1 Quality assets For personal use only 10 Geraldton Port – Berth24/08/2008 4&5
Slide 12: Koolan Island provides significant upside potential
1 Quality assets For personal use only Koolan Island provides significant upside potential … 11 24/08/2008
Slide 13: Koolan Island
1 Quality assets For personal use only Koolan Island Crushing, port & ship-loading facilities • Ex BHP mine – closed 1992 • Mine, crush and shipload • First hematite ore shipped June 2007 • Production ramping up to 4 Mtpa by June qtr 2010 • Currently mining from satellite orebodies • Access premium
Slide 14: Koolan Main Pit - World class grade and quality
1 Quality assets For personal use only Koolan Main Pit - World class grade and quality – 66.5% Fe, 3.48% SiO2, 0.69% Al2O3, 0.019% P, 0.3 LOI 13 24/08/2008
Slide 15: Koolan Island Main Pit – World class high grade DSO
1 Quality assets For personal use only Koolan Island Main Pit – World class high grade DSO • 37 metres wide Crusher Hill • 1.5 km along strike • 205,000 ore tonnes per Starter embankment vertical metre • Access to Main Pit requires: Sea wall – Construct seawall construction – De-water – Footwall reh
Slide 16: Main West ore-body has ensured timely access to Main Pit
1 Quality assets For personal use only Main West ore-body has ensured timely access to Koolan Island Main Pit as satellite pits are mined … East Barramundi Mangrove Acacia Mullet Main Arbitration Cove Main West 90mRL 94mRL Ore zone Arbitration Cove 98mRL Blinker Hill Crusher Hill 15 24/08/2008
Slide 17: Koolan – Ore sources
1 Quality assets For personal use only Koolan – Ore sources 5.0 Main Mullet / Acacia Eastern / Barramundi Barramundi West 4.5 4.0 3.5 tonnes (millions) 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 • Satellite pits contain lower grade and quality than main pit • Increase p
Slide 18: Key Statistics
1 Quality assets For personal use only Key Statistics Tallering Peak Koolan Island Extension Hill Combined Reserves and Resources1 Reserves (Mt) 18.3 29.9 12.8 62.0 Proven & Probable Mineral Resources (Mt) 21.0 62.8 19.5 103.3 Measured, Indicated & Inferred Reserve Specifications Fe % 61.7 % 64.8 %
Slide 19: Key Statistics
1 Quality assets For personal use only Key Statistics Tallering Peak Koolan Island Extension Hill Combined Operations Data Annual production (Mtpa) 3 4 (target) 3 (target) 10 Expected minimum mine life 6 8 6 Lump : Fines ratio 65% : 35% 30% : 70% 50% : 50% Truck (km) 65 - 85 Rail (km) 107 - 240 Stri
Slide 20: Projects have amongst the lowest capital intensity of peers
1 Quality assets For personal use only Mount Gibson’s projects have amongst the lowest capital intensity of any of its peers … 200 ‘Greenfields’ infrastructure requirement 180 Balmoral South Magnetite Southdown 160 140 Capital intensity (US$/t) Karara magnetite 120 100 Rapid growth project 4 80 Pard
Slide 21: Solid growth profile
2 Solid growth profile For personal use only Production growth to reach full production by 2010 … based on reserves 11 10 Extension Hill 9 Koolan Island 8 Tallering Peak 7 Million WMT 6 5 4 3 2 1 0 2006 Actual 2007 Actual 2008 Actual 2009 Forecast 2010 Forecast 2011 Forecast 20 24/08/2008
Slide 22: Solid growth profile – strip ratios
2 Solid growth profile For personal use only Life of Mine strip ratio’s continue to decline … based on reserves 12 11 10 9 Tallering Peak Strip ratio t(waste):t(ore) 8 Koolan Island 7 Extension Hill 6 5 4 3 2 1 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 21 24/08/2008
Slide 23: Organic growth opportunities
2 Solid growth profile For personal use only Organic growth opportunities … • T1 & North Ridge at Tallering Peak • Extension Hill conversion of resource to reserve • Koolan: – Western side of the Island unexplored with known surface hematite identified – Main Pit underground potential – outstanding
Slide 24: Tallering Peak – North Ridge and T1 gravity survey
2 Solid growth profile For personal use only Tallering Peak – North Ridge and T1 gravity survey Plan showing baseline gravity survey – T1 Plan showing location of gravity survey station points – North Ridge 23 24/08/2008
Slide 25: Extensive mineralised surfaces to be drill tested
2 Solid growth profile For personal use only Extensive mineralised surfaces to be drill tested on Koolan Island and further tenements to be explored … 24 24/08/2008
Slide 26: Recent drilling in Acacia & Barramundi
2 Solid growth profile For personal use only Recent drilling in Acacia & Barramundi – increasing grade and width with depth Section 2900E, Acacia East Section 3900E, Barramundi West 25 24/08/2008
Slide 27: M&A opportunities in core steel production inputs
2 Solid growth profile For personal use only M&A opportunities in core steel production inputs – iron ore & quality coal Acquisitions that: • Lift Mount Gibson production to +15Mtpa • Provide longer life (>15 years) and lower cost • Produce quality sought after products • Are at pre-feasibility or f
Slide 28: Earnings leverage to strong iron ore price
3 Earnings leverage to strong iron ore price For personal use only Substantial increases in iron ore prices… 250 12 Mount Gibson has captured Sales volume the sweet spot of the cycle … Consensus Lump price 10 200 Current production with 9 Sales Million WMT 8 developments to reach full Usc / dmtu 150
Slide 29: Disciplined financial strategy & strong performance
4 Disciplined financial strategy & strong performance For personal use only Good operating margins… 2005-2008 sales revenue 2005-2008 net profit 450 433 113.3 400 CAGR 2005 – 2008: 78% CAGR 2005 – 2008: 103% 100 Sales revenue (A$m) 350 NPAT (A$m) 300 250 200 163 47.81 50 150 77 73 23.5 100 13.5 50 0
Slide 30: Experienced Board & executive team
5 Experienced - disciplined Board & executive team with proven track record For personal use only Mr Neil Hamilton Mr Luke Tonkin Mr Alan Rule Chairman Managing Director CFO LLB B.E., MAusIMM, AICD B.Comm, B.Acc, CA • Appointed Non–Exec Chairman in April • Appointed CFO in Jun 07 07 • Appointed in O
Slide 31: Tallering Peak
Tallering Peak For personal use only Access to infrastructure – full production 30 24/08/2008
Slide 32: Koolan Island
Koolan Island For personal use only Installed infrastructure – capacity 6Mtpa 31 24/08/2008
Slide 33: 2008 Financial results - P&L
2008 Financial results - P&L For personal use only 12 months 12 months ended ended % 30 June 30 June 2008 2007 Sales volume 000 wmt 5,343 2,418 121% Sales revenue $ mill 432.7 162.7 166% Other revenue $ mill 2.5 2.3 11% Total revenue $ mill 435.2 165.0 164% Cost of sales $ mill (244.6) (109.0) 125%
Slide 34: 2008 Financial results - P&L
2008 Financial results - P&L For personal use only Net Profit before tax ($ mill) 350 325 71.6 (135.7) 300 275 250 198.3 225 200 0.8 (13.4) 175 163.9 150 125 100 75 42.3 50 25 0 2007 NPBT Sales volume Price, FX & Fe% Cost of Sales Other revenue Finance costs 2008 NPBT Average FOB cost including fina
Slide 35: 2008 Financial results – Balance Sheet
2008 Financial results – Balance Sheet For personal use only 12 months 12 months ended ended % 30 June 30 June 2008 2007 Current assets $ mill 230.3 111.3 106% Total assets $ mill 894.0 692.5 29% Total senior debt $ mill 105.0 87.5 20% Finance leases and HP’s $ mill 56.6 66.8 (15%) Net assets $ mill
Slide 36: 2008 Financial results – Cash Flow
2008 Financial results – Cash Flow For personal use only 12 months 12 months ended ended % 30 June 30 June 2008 2007 Operating cash flows $ mill 45.8 3.1 43% Investing cash flows $ mill (64.1) (18.6) 100% Financing cash flows $ mill 6.2 68.9 (91%) Net (decrease) / increase in cash $ mill (12.1) 53.4
Slide 37: 2008 Ratios
2008 Ratios For personal use only 0.80 0.74 0.70 EPS per share 0.58 0.60 0.50 NAV per share 0.40 0.30 0.27 0.21 0.20 0.14 0.08 0.06 0.10 0.04 0.04 0.00 30-Jun-04 30-Jun-05 30-Jun-06 30-Jun-07 30-Jun-08 -0.10 -0.04 36 24/08/2008
Mount Gibson Iron — Investor Presentation (August 2008) on 6ix