Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Macquarie Australia Conference 2018
33 slides from Fortescue's conference presentation, May 1, 2018
Slide 1: Macquarie Australia Conference May 2018
For personal use only Macquarie Australia Conference May 2018
Slide 2: Forward looking statements
Forward looking statements For personal use only Disclaimer Important Notice Additional Information The purpose of this presentation is to provide general information about This presentation should be read in conjunction with the Annual Report at Fortescue Metals Group Limited ("Fortescue"). It is n
Slide 3: Building a world class company
Building a world class company For personal use only Safety focus: engagement, empowerment, leadership Core supplier 1 billion tonnes Shipped to China Low cost 170mt producer Production rate 3
Slide 4: Generating shareholder value
Generating shareholder value Focus on safety, productivity and efficiency For personal use only Market strategy Operational performance Long life resources Capital discipline Shareholder returns 4
Slide 5: Corporate video placeholder
For personal use only • PLACEHOLDER – NEW CORPORATE VIDEO 5
Slide 6: Year to date Q3 results
Year to date Q3 results For personal use only Sustainable cost reduction and consistent production performance TRIFR 3.1 C1 cost Net debt Maintained US$12.43/wmt US$3.1bn 123.2mt US$11.90/wmt Interest savings At Fx 0.75 and Oil $53/bbl US$130m pa Shipped 6
Slide 7: Sustainable cost improvements
Sustainable cost improvements Initiatives delivering long term low cost outcomes – US$12.43/wmt YTD For personal use only C1 US$/wmt Structural improvements 48 44 Solomon + Blending + Processing 34 Productivity and Efficiency 27 Utilisation, Recoveries, Maintenance 15 13 12-12.50 Innovation and Tech
Slide 8: Maintaining position on the cost curve
Maintaining position on the cost curve For personal use only China's Iron Ore Supply CFR Costs (including royalties & ocean freight) 2012 2018 (projected) Source: Metalytics – October 2017 8
Slide 9: Financial performance
For personal use only Financial performance
Slide 10: HY18 financial outcomes
HY18 financial outcomes For personal use only Operational performance delivering financial results US$681m US$892m US$1.4bn Cash on hand Cash from NPAT operations US$0.22 US$1.8bn A$0.11 Earnings Underlying Interim dividend per share EBITDA 40% pay-out 10
Slide 11: Price and margins
Price and margins For personal use only Managing operations to maximise margins US$/dmt 90 80 70 60 50 40 30 20 10 20 15 17 24 33 27 24 - 1HY15 2HY15 1HY16 2HY16 1HY17 2HY17 1HY18 Underlying EBITDA per dmt 62 Platts CFR Index Fortescue realised price Avg Underlying EBITDA per dmt 11
Slide 12: Balance sheet
For personal use only Balance sheet
Slide 13: Proforma debt maturity
Proforma debt maturity For personal use only Lowering borrowing costs and improving flexibility of capital management 2,500 2,000 1,500 160 Volume (US$bn) 1,000 1,400 500 750 750 500 0 2018 2019 2020 2021 2022 2023 2024 Senior Unsecured Notes Syndicated Loan Facility Senior Secured Notes Refer to at
Slide 14: Capital expenditure
Capital expenditure For personal use only Sustaining iron ore business with low cost growth options Capital spend FY18 Guidance on track YTD 90 68 Sustaining capital $3/wmt 50 510 Development and exploration 190 in line Ore carriers and tugs on schedule Sustaining Ore carriers Exploration Developmen
Slide 15: The New Force in Iron Ore
The New Force in Iron Ore Fortescue
Slide 16: Core supplier to Asia
Core supplier to Asia For personal use only Well established market share of imported iron ore to China 2017 global steel production 1,691mt Low impurity products Competitive Diverse 572 value in use customer base 832 82 Responsive Proximity 101 to market needs to high growth region 105 China Japan
Slide 17: Variation between iron ore products driven by steel mill profitability
For personal use only 110% 120% 130% 140% 50% 60% 70% 80% 90% 100% 4/01/2016 4/02/2016 4/03/2016 4/04/2016 Iron ore price 4/05/2016 4/06/2016 Platts 62 4/07/2016 4/08/2016 4/09/2016 4/10/2016 4/11/2016 Platts 65 4/12/2016 4/01/2017 4/02/2017 4/03/2017 4/04/2017 4/05/2017 MBIOI 58 Premium 4/06/2017 4
Slide 18: Product strategy – maximise margins
Product strategy – maximise margins For personal use only Pathway to developing >60% iron content product Eliwana Blending Key to 60% Fe Chichester + product Solomon + Eliwana Greater Optimise margins operational Product spec flexibility Cost Mine lives 18
Slide 19: Innovation
For personal use only Innovation
Slide 20: Innovation projects
Innovation projects For personal use only Delivering future operational and cost improvements AHS* >500mt 10 autonomous material moved drills in operation at Solomon Chichester Relocatable 100 AHS* trucks conveyor >3 years at Cloudbreak *AHS - Autonomous Haulage System 20
Slide 21: Reserves and resources
For personal use only Reserves and resources
Slide 22: Resource portfolio supports asset base
Resource portfolio supports asset base For personal use only 20.9bn tonnes in mineral resources, including 7.9bn tonnes of magnetite 14,000 12,000 2,463 Mineral Resources dry in situ (Mt) 2,463 2,463 2,463 10,000 2,463 2,125 740 740 740 8,000 2,013 624 1,032 624 624 6,000 4,877 4,793 4,755 4,767 3,5
Slide 23: Focus on core iron ore business
Focus on core iron ore business For personal use only Large tenement footprint 23
Slide 24: Active exploration
Active exploration For personal use only Developing low cost growth options across Iron Ore, Lithium, Copper and Gold Pilbara New South Wales ~2,000km2 tenure South Australia ~6,000km2 tenure South America Ecuador, Colombia, Argentina 24
Slide 25: Building strong communities
For personal use only Building strong communities
Slide 26: Creating positive social change
Creating positive social change For personal use only By building local communities and empowering Aboriginal people 15% $2billion Aboriginal Contracts with employment Aboriginal businesses Training $50million VTEC 775 trained Guaranteed Trade Up Leasing Facility 26
Slide 27: Setting high standards
Setting high standards For personal use only Practical initiatives to creating a supportive and encouraging environment for women 17.5% 25% Female employment Female management Fortescue Family Room Job Share 25% Females in Trade Up Flexible work 27
Slide 28: Focussed strategy
For personal use only Focussed strategy
Slide 29: FY18 guidance
FY18 guidance For personal use only Sustainable performance driven by innovation 170mt US$12-12.50/wmt 65% Shipments C1 cost Price realisation US$3/wmt Depreciation Dividend policy Sustaining capital US$7.30/wmt 50-80% pay-out of NPAT 29
Slide 30: Key strategic focus
Key strategic focus For personal use only Disciplined capital management Balance sheet strength and flexibility Long term sustainability Low cost growth options Returns to shareholders 30
Slide 31: Celebrating years of milestones
Celebrating 15 years of milestones For personal use only Together we are Fortescue 31
Slide 32: For personal use only
For personal use only www.fmgl.com.au @FortescueNews Proudly supporting: 32
Slide 33: Glossary
Glossary For personal use only C1: Operating costs of mining, processing, rail and Underlying EBITDA: Earnings before interest, tax, depreciation and port on a per tonne basis, including allocation of amortisation, exploration, development and other direct administration charges and production expen
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