Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Asia Pacific Fixed Income Investor Conference 2006
38 slides from Fortescue's conference presentation, Jan 25, 2006
Slide 1: Chichester Iron Ore and Infrastructure Project
Chichester Iron Ore and Infrastructure Project Asia Pacific Fixed Income Investor Conference 20 January 2006 The New Force in Iron Ore | 4 costs and project:timelines are internally genérated best estimates only.” ‘Kil such’ information and, data is currently under review art of Fortescue’s ongoing
Slide 2: Asian growth = steel growth = high iron ore demand
Asian growth = steel growth = high iron ore demand one tonne of steel Two tonnes of iron ore
Slide 3: Overview
Overview Developing world class Chichester Iron Ore and Infrastructure Project * ASX listed - US$1 billion market cap * US$100 million equity invested to date * 2,400 Mt of Resources (incl. 1,100 Mt of Reserves) * Highly experienced executive team
Slide 4: Management and board
Ken Ambrecht Herb Elliott Gorden Toll Andrew Forrest. Graeme Rowley Non-Executive Deputy Chairman Chairman Chief Executive Executive Director Scrimshaw Director Officer Operations Executive re DrJohn Clout Eamon Hannon Jim Williams Bill Ramsey Peter Huston Chris Cattow Peter Thomas Alan Watling Rod
Slide 5: Operational team members
» Operational team members Gordon Toll Chairman Chairman in May 2005 Previously held senior executive positions with BHP Billiton Lid and Rio Tinto pic Experience in the development of iron ore projects within the Pilbara region of Western Australia Alan Watling Chief Operating Officer The Pilbara I
Slide 6: Significant asset backing
Significant asset backing * Robust iron ore demand * Optimal location * Huge reserves * Simple construction * Low cost producer * Powerful economics - rapid payback
Slide 7: Risks managed out
, Risks managed out Risk Mitigant Market v _|30 Mtpa contracts Ore Body v¥ |Huge, 2.4 Bt Resource, 1 Bt Reserve Approvals v Key arrangements in place Construction ¥ |- Infrastructure DFS complete + EPCM underway * Critical contracts ready to be awarded Operations v Experienced management team establ
Slide 8: Wanted: more iron ore
_ “Wanted: more iron ore” Ivan Fadel, 28 Sept 2005 “Higher long term prices for iron ore” Glyn Lawcock/Fleur Grose, 16 Sept 2005 “Structural change in the iron ore industry to drive higher long term prices” Andrea Weinberg/Vicky Binns, 21 Sept 2005 “Iron ore market extremely tight — we have increase
Slide 9: Strong demand
: Strong demand 4,100 . South Korea 4,000 & Taiwan 900 "ey aon Asian 5 (Manufacturing Driven) @ 700 2 600 gvapan o 500 4» Canada 2 400 Eu (15) _ » Australia US. Western ~~ — 300 * (Services 200 H . @ china Dominated) 100 4,500 9,500 14,500 49,500 24,500 29,500 34,500 39,500 44,500 2004 GDP per Capit
Slide 10: Australia's iron ore is cheaper than Brazil's
Australia’s iron ore is cheaper than Brazil’s.
Slide 11: Australian ore is reliable and the most competitive
, Australian ore is reliable and the most competitive Australian Ore $US 42.85 South Africa Ore $US 61.01 Brazilian Ore $US 62.35 Indian Ore $US 80.78 “In iron ore, you can’t compete with the Pilbara” ~ Grant Samuel Source: China Metallurgical Daily - 2004 average landed price
Slide 12: Fortescue has largest iron ore holdings in the Pilbara
Fortescue has largest iron ore holdings in the Pilbara LEGEND @ Tow Higwvay Desicage Bat -exsting Fiat conor - proposed FUG Nowent Galdiworty FG Rio Tinte BaP Robe River ‘ro Ore deposit ee Gee ine Location Map 16,800 square kms of tenements / 2.4 bn tonnes of iron ore from less than 10% of these hol
Slide 13: Project overview
. Project overview * Avery basic project, shallow mine and simple infrastructure * One of the world’s lowest cost producers with over 20 years mine life * Resources for 60+% iron ore for well over 10 years at 45 Mtpa * Strong Government support / Approvals nearly complete
Slide 14: Developing Australia's largest iron ore tenements
Fortescue — developing Australia’s largest iron ore tenements
Slide 15: Discovery
iscovery d iron ore « The largest bedrock hosted fa Australi in Hireserve Robe resource Robe reserve HF resource FG resource FMG reserve (1.07 Bt) Buiqqeuesjacy Bupepuim / uosyser WAL oopinqeieg €2/S8O weuueyo, B1dO. sobuey weajyseg | (vA) seqaiquuir fr eseyy 08/6780 Z UeWDPONg / IPINWWEN 89d WO] UG
Slide 16: Geology and mineral resources
Geology and mineral resources * Highly successful drilling program * 2.4 billion tonnes of resources defined in last 18 months * One third (811 Mt) high grade (>60% iron) + Resource specification well within requirements of major steel mills * Initial Reserve Statement 1.1 billion tonnes nn
Slide 17: Immediate project tenements
Inamediate project, tenements ge so Otter. Chichester Range tenements Mt @ 60.5% Fe. Note - Mineral Resources are inclusive of Ore Reserves
Slide 18: Marketing
Marketing — _ Target of 30 Mtpa under contract achieved * Focus on Asia including the rapidly expanding steel mills of China * 61% Fe lump, 60.2% Fe fines, excellent sinter properties * Highly experienced marketing team * 30 Mtpa under contract * Over 80 Mtpa in Letters of Intent * Active discussion
Slide 19: Iron ore comparison
lron ore comparison — , Fe content of Australian shipping grade e 62.00- e150: Weighted Average Fine lron Ores - Fe Grade 61.00- 60.50- 60.00- Fe % 59.50- Rio 59.00- 58.50- 58.00- Data Sources: Robe River — Website, BHPB — Direct from Company, H1— Industry Sources, FMG — Own Tests, AME
Slide 20: Mining - shallow and effective with Surface Miners
: , Mining - shallow and effective with Surface Miners * Surface Miner - simple ore retrieval and excellent grade control * Overburden - bucket wheel excavator and conveyor with waste dumped in-pit + Rapid ramp up facilitated by multiple pits
Slide 21: Surface Miner cutting iron ore and stockpiling
Surface Miner cutting iron ore and stockpiling a yee py
Slide 22: Fortescue Trial Pit - actual mining proves economics
Fortescue Trial Pit — actual mining proves economics 1, 12 November 2005
Slide 23: Fortescue November 2005
Fortescue 14 November 2005 — ¢-| Unparalleled progress Tron Ore ready to be shipped
Slide 24: Fortescue Trial Pit
fe Fortescue Trial Pit - - . 25 November 2005
Slide 25: Open Pit Mining, simple, smart
Open Pit Mining, simple, smart Dump trucks load road trains from windrows Le Oe i
Slide 26: Open Pit Mining, simple, smart
Open Pit Mining, simple, smart Road trains for ore, conveyors for waste ne
Slide 27: Infrastructure - Large scale open access port at Port Hedland
_ Infrastructure — , Large scale open access port at Port Hedland
Slide 28: Infrastructure at Port Hedland
Hedland infrastructure — at Port
Slide 29: Government approvals
Government approvals ¢ Mining and Infrastructure State Agreements executed * Environment - Infrastructure & Mining (Stages A & B) Environmental Approval granted / Residual Mining Environmental Approval imminent * Aboriginal - Native Title agreements executed / Heritage surveys completed
Slide 30: Project construction
, Project construction * Mine is simple - outsourced * Straightforward rail and port — no processing risk * WorleyParsons Infrastructure capital cost estimate of US$1.46 Billion with accuracy of +/- 10% * 22 month construction period with six month “pre-construction” activities should deliver first
Slide 31: Project underway
: , Project underway AREA SUPPLIER CURRENT STATUS Dredging Preferred supplier selected Award contract Jan 06 Wharfs Final selection & contract close Jan 06 orcas ag FREED! surerenconmn See Dialed dan any a wae —— CSR p ‘YP = EDI Engineering capability review ad completed Locos ; Seven din nti — ay?
Slide 32: Project underway
Project underway = AREA SUPPLIER CURRENT STATUS Competitive tendering Port Bulk Material = completed Handling Equipment WAE oe Selection of preferred supplier & final negotiations Competitive tendering Mine Material Handling Final negotiations EPCM WorleyParsons FEED Contract signed resources 8 ener
Slide 33: Project Milestones
Activity Description Project Milestones FEED |Ore Handling Engineering Design Procurement & Contracts Construction Port Facilities Engineering Design Procurement & Contracts {Construction Rail Services Engineering Design Procurement & Contracts Construction {Commi ng Comwrissioning wai [Ang] Sep] Oc
Slide 34: Project financing
, Project financing Sources US$m_ | Uses US$m Equity 450 Rail and Port 1,460 Additional Cost Overrun Reserves 110 Pre-funded Interest 230 Debt 1,425 | Mining 75 Total 1,875 | Total 1,875 With Sunk Equity, Leverage ~ 70/30
Slide 35: To conclude, the risks have been managed out
, To conclude, the risks have been managed out Risk Mitigant Market v _|30 Mtpa contracts Ore Body v¥ |Huge, 2.4 Bt Resource, 1 Bt Reserve Approvals v Key arrangements in place Construction ¥ |- Infrastructure DFS complete + EPCM underway * Critical contracts ready to be awarded Operations v Experie
Slide 36: Why finance Fortescue?
Why finance Fortescue? _ Massive security, cashflows and likely ratings growth * Long Life Ore Reserves — 20++ Year Mine life * Low operating cost / high margin / high interest and asset coverage + Ore Quality matches market leaders BHP and Rio Tinto * No Technology Risk — Open Pit Mine, Rail, Port
Slide 37: Because borrowing will be at sub-investment grade
... because borrowing will be at sub-investment grade, moving to investment grade * Environmental and government approvals in place * Advanced project with engineering and infrastructure costs well known * Ready, hungry market — 70% of production in firm offtake agreements * On track for late 2007 e
Slide 38: Fortescue Metals Group Ltd
Fortescue Metals Group Ltd The New Force in Iron Ore Fortescue House 50 Kings Park Road West Perth Western Australia west fine! con. BU Asia Pacific Fixed Income Investor Conference 25 January 2006
Fortescue Metals Group — Asia Pacific Fixed Income Investor Conference 2006 on 6ix