Grange Resources Limited · ASX:GRR
Grange Resources — Macquarie Australia Conference 2012
33 slides from Grange Resources's conference presentation, May 4, 2012
Slide 1: Australia's leading magnetite producer
For personal use only Australia’s leading magnetite producer Russell Clark Managing Director & CEO 4 May 2012
Slide 2: Disclaimer
Disclaimer For personal use only The material in this presentation (“material”) is not and does not constitute an offer, invitation or recommendation to subscribe for, or purchase, any security in Grange Resources Limited (“GRR”) nor does it form the basis of any contract or commitment. GRR makes no
Slide 3: Company Overview
Company Overview For personal use only Grange remains Australia’s leading magnetite producer. An ASX 300 company, with a large well managed long term cash producing mining operation, a strong balance sheet, no net debt, and paying dividends - and a larger magnetite project at DFS offering even more
Slide 4: Magnetite – The premium iron ore
Magnetite – The premium iron ore For personal use only Iron Ore Pellet ~65.5% Fe Higher ~US$1721 FOB Tasmania Magnetite Concentrate QUALITY ~67% Fe Direct Shipping Lump ~63% Fe Direct Shipping Fines Lower ~57% Fe ~US$1222 CFR China Note: 1price from March 12 quarterly 2prices from Dec 11 quarterly L
Slide 5: The future for iron ore
The future for iron ore For personal use only Iron ore, coke & limestone in Blast Furnace 101 Hot gasses out Hot gasses out Hot air in Hot air in Molten slag out Molten iron out 30 April 2012 Slide 5
Slide 6: Iron units in = Iron units out
Iron units in = Iron units out Blast Furnace 101 For personal use only 50% - 80% Sinter 20% - 50% Lump and Pellets • Sinter is made from “fines” • Lump 63% Fe, • “Pilbara fines” 62% Fe (reducing) • Pellets up to 67% Fe (low contaminants) • New products from new producers: • Availability of lump is f
Slide 7: Sinter, Lump and Pellet mix over time
Sinter, Lump and Pellet mix over time For personal use only 23 76 21 75 19 Lump & Pellets % of blast furnace feed Sinter % of blast furnace feed 74 17 15 73 13 72 11 71 9 70 7 5 69 2005 2010 2015 2020 2025 2030 2035 Lump Pellets Sinter Source: CRU 30 April 2012 Slide 7
Slide 8: In years iron ore demand doubles and pellet feed demand grows almost four fold
In 18 years iron ore demand doubles and pellet feed demand grows almost four fold For personal use only Iron ore and Pellet feed demand 3,500 400 3,000 350 300 x2 2,500 Million tonnes pellet feed Million tonnes iron ore 2,000 x4 250 200 1,500 150 1,000 100 500 50 0 0 2005 2010 2015 2020 2025 2030 20
Slide 9: Company Snapshot
Company Snapshot For personal use only Current key statistics (A$) Current Ownership Structure Ordinary shares on issue 27 April 2012 1,155m 9% Last share price 27 April 2012 $0.575 7.80% Market capitalization 27 April 2012 $664m 36.70% Cash & Receivables 31 March 2012 $274.2m Research 46.50% Bell P
Slide 10: Grange Assets
Grange Assets For personal use only Australia’s Leading Magnetite Producer Savage River (100%) Southdown Project (70%) Quality assets in Tasmania and Western Australia. 30 April 2012 Slide 10
Slide 11: Grange 2011 Highlights
Grange 2011 Highlights For personal use only • Record safety achievement – zero LTI • Record cashflow - $210.4m • Record profit - $216.6m • Record dividends – 5c/share (8% yield) • East wall recovery • Southdown project DFS completed • Southdown Mineral Resources increased The business is set for a
Slide 12: March 2012 Quarter Summary
March 2012 Quarter Summary For personal use only Production and Costs Production and Costs March Quarter March Quarter 2012 2011 Total BCM Mined 4,342,253 4,098,752 Total Ore BCM 490,301 248,221 Weight Recovery (% DTR) 43.10 38.10 Concentrate Produced (t) 573,625 349,328 Pellets Produced (t) 511,630
Slide 13: The Southdown Project DFS
The Southdown Project DFS For personal use only 4X bigger than Savage River 30 April 2012 Slide 13
Slide 14: The Southdown Project DFS Highlights
The Southdown Project DFS Highlights For personal use only • $150 million spent to date - an advanced project!! • JORC mineral resources of over 1.2 billion tonnes at 34.1% DTR • Ore reserves of 397 million tonnes at 35.69% DTR. • DFS mine life of 14 years within the current permitted area. • NPV10%
Slide 15: The Southdown Project DFS Highlights
The Southdown Project DFS Highlights For personal use only • Metallurgical test work completed, process flow sheet finalised. • Premium concentrate product confirmed with 68.6% Fe • Engineering well advanced • Mine and port environmental permits are in place. • Desalination water permit recommended
Slide 16: The Southdown Project The Resource
The Southdown Project The Resource For personal use only DFS: 14 year: 397 million tonne reserve @ 35.7% DTR LOM: 30+ years: 1.22 billion tonnes resource @ 34.1%DTR 30 April 2012 Slide 16
Slide 17: The Southdown Project Mineral Resources & Reserves
The Southdown Project Mineral Resources & Reserves For personal use only Southdown mineral resource estimate as at February 2012 Tonnes (Mt) Grade (% DTR) Measured 423.0 37.6 Indicated 87.4 38.4 Inferred 710.6 31.5 Total 1,221 34.1 Southdown ore reserves as at February 2012 Concentrate Fe Tonnes (Mt
Slide 18: For personal use only
For personal use only 30 April 2012 Slide 18
Slide 19: Magnetite Project Mining
Southdown Magnetite Project Mining For personal use only Open pit mining Conventional bulk mining methods utilising Mining Method hydraulic face shovels, dump trucks and drill and blast coupled to a Run of Mine (ROM) stockpile Material ~110 Mtpa for first six years Movement Shovel size – 650 ton
Slide 20: Magnetite Project Concentrator Flow Sheet
Southdown Magnetite Project Concentrator Flow Sheet For personal use only PRIMARY CRUSHER (x1) COARSE ORE STOCKPILE (x1) AG MILL FEED CONVEYOR 2 AG MILLS (x2) AG MILL FEED CONVEYORS (x2) P80 500um INTERMEDIATE MAGNETIC SEPARATION (2x8) MAGS BALL MILL ISAMILLS (2x4) CYCLONE P80 34um CLUSTER (x2) FINE
Slide 21: Magnetite Project Product Quality
Southdown Magnetite Project Product Quality (Process Design Criteria) For personal use only Southdown Magnetite % Concentrate Total Fe 69.5 SiO2 1.50 Al2O3 1.48 TiO2 0.38 P 0.04 S 0.08 LOI (Loss of ignition) -3.15 30 April 2012 Slide 21
Slide 22: Magnetite Project Power and Pipelines
Southdown Magnetite Project Power and Pipelines For personal use only Key Facts - Power: Estimated Length 288km Capacity 330kV transmission line Key Facts – Pipelines Estimated Length 100km 30 April 2012 Slide 22
Slide 23: Magnetite Project Water Supply
Southdown Magnetite Project Water Supply For personal use only Source Seawater reverse osmosis desalination plant Capacity 11 GL/a Location Coastal location 25km from mine 30 April 2012 Slide 23
Slide 24: Magnetite Project Port Infrastructure
Southdown Magnetite Project Port Infrastructure Vessels Cape size (18m draft) For personal use only Activities Deepen, widen and extend existing shipping channel New wharf Dewatering plant and storage shed Area Reclaimed 9ha Increases port capacity from 2.5Mt to 14Mt 30 April 2012 Slide 24
Slide 25: Magnetite Project Permitting
Southdown Magnetite Project Permitting For personal use only þ Mine environmental permit Granted November 2009, amendment required in 2011 for 10mtpa þ Port permits Granted November 2010 Water permit Desalination permit targeted Q2 2012 30 April 2012 Slide 25
Slide 26: Project DFS Capital Expenditure
Southdown Project DFS Capital Expenditure For personal use only Total Cost Description (A$ M) Mine & Concentrator 1,330 Desalination Plant, Pipelines and Transmission Line 640 Albany Port Works, Berth, Storage Facilities 380 Sub-total 2,350 Owners Costs, EPCM and Contingency 535 Total Estimate Proje
Slide 27: Project DFS Operating Cost Summary
Southdown Project DFS Operating Cost Summary For personal use only A$/t Operating Costs Concentrate Mining 24.4 Concentrator 24.6 Pipeline, Filtration and Port 5.7 Overheads 3.8 Total Operating Costs 58.5 30 April 2012 Slide 27
Slide 28: Project DFS price and FX assumptions
Southdown Project DFS price and FX assumptions Forecast Iron Ore Price For personal use only Iron Ore Price (USD per DMT) (68.5% Fe content) 180 170 160 150 140 130 120 110 100 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Year Forecast Foreign Exchange Rate (AUD:USD) 1.00 FX
Slide 29: Magnetite Project NPV Sensitivities
Southdown Magnetite Project NPV Sensitivities For personal use only Net Present Value (NPV10%) Sensitivity A$m DFS NPV = $1,008M Sensitivity Range on Average Price Adjusted NPV Adjusted NPV Downside Case DFS Base Case Upside Case Iron Ore Price $168 - 15% + 15% $1,848 US$106/t US$125/t US$143/t Fore
Slide 30: Project Extended mine life case
Southdown Project Extended mine life case • Mining eastern extent of the orebody, in addition to western side For personal use only • Total resource of 1.2 billion tonnes @ 34.1% DTR. • Potential life > 30 years • NPV ~$1.8 billion, IRR ~20% • Will use the infrastructure associated with the western
Slide 31: Magnetite Project Target Time Line
Southdown Magnetite Project Target Time Line For personal use only 2011 2012 2013 2014 2015 Pre- feasibility Definitive Feasibility Financing Construction Production 30 April 2012 Slide 31
Slide 32: Key Contacts
Key Contacts For personal use only Primary contacts: Russell Clark Managing Director & Chief Executive Officer +61 8 9327 7901 managingdirector@grangeresources.com.au Media: Tarryn Truscott “LastSay.” Communications +61 6102 7295 or +61 (0) 438 906 643 tarryn@lastsay.net.au 30 April 2012 Slide 32
Slide 33: Competent Person Statement
Competent Person Statement For personal use only Southdown Project The information in this report which relates to the Mineral Resources of the Southdown Project is based on information compiled by Mr Michael Everitt who is a full-time employee of Grange Resources Limited and a Member of the Austr
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