Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — 13th Annual Global Iron Ore and Steel Forecast Conference 2010
66 slides from Fortescue's conference presentation, Mar 23, 2010
Slide 1: The Evolution to a Formidable Tier One Iron Ore Major
For personal use only The Evolution to a Formidable Tier One Iron Ore Major AJM 13th Annual Global Iron Ore and Steel Forecast Conference 23rd March 2010
Slide 2: Disclaimer
For personal use only Disclaimer Important Notice The purpose of this presentation is to provide general information about Fortescue Metals Group Ltd ("Fortescue"). It is not recommended that any person makes any investment decision in relation to Fortescue based on this presentation. This presentat
Slide 3: Operational overview
For personal use only overview Operational
Slide 4: Integrated Business ~ 55Mt shipped
Integrated Business ~ 55Mt shipped For personal use only 55Mtpa annual capacity imminent
Slide 5: Overview
For personal use only Overview 1 • Current run rate of ~ 40Mtpa annualised • Chichester Hub expansion in progress • Target production 55Mtpa within 12 months • Cash costs US$27/tonne • Strengthening outlook for iron ore prices • Strong liquidity – over US$700m cash (Dec 09)
Slide 6: Overview
For personal use only Overview 2 • ONLY GLOBAL SCALE PURE IRON ORE INVESTMENT • Chichester Hub will consolidate at 95Mtpa • Solomon feasibility 60Mtpa study nears completion • Utilises Port Hedland capacity of 155Mtpa • New Pilbara Port allows an initial additional100Mtpa • Studies contemplate total
Slide 7: Mining overview – Chichester Hub
For personal use only Mining overview – Chichester Hub Production Optimising Cloudbreak and expanding 12 Christmas Creek operations 10 • Cloudbreak production stable at 8 ~ 40Mtpa 6 4 • Christmas Creek expansion 2 underway to 15Mtpa 0 • Strip ratios gradually increasing Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
Slide 8: Infrastructure overview – Chichester Hub
For personal use only Infrastructure overview – Chichester Hub State of the art logistics – Rail Fortescue 40 BHP 37.5 • World’s heaviest haul rail system Rio 35.7 » 40 tonne axle loads Vale 31.5 • Shortest rail cycle times in the US (best) 32.7 Pilbara ~ 18 hrs QCCM 32.7 LKAB 30 State of the art lo
Slide 9: Proven skills in operations – ramp up records
For personal use only Proven skills in operations – ramp up records 50,000 45,000 FMG Cloudbreak 40,000 Annual Production (kt) 35,000 30,000 25,000 20,000 15,000 10,000 5,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 RIO Hope Downs RIO IOC (pellets and concentrate) RIO Robe River R
Slide 10: Fortescue Forging Ahead - Video
Fortescue Forging Ahead - Video For personal use only
Slide 11: Production costs
Production costs For personal use only Cash costs per tonne US$/t Q1FY10 Q2FY10 Mining and processing 21 22 Rail and port 5 5 Total Direct Costs 26 27 Despite AUD/USD appreciation, cost per tonne held at US$27
Slide 12: Exploration
For personal use only Exploration 6.3 billion tonnes in 5 years • Christmas Creek drilling commenced May 2004; • Cloudbreak commenced November 2004; • Solomon drilling commenced June 2007. • Reserves now 1.6 billion tonnes • Resources now 5.1 billion tonnes • Additional 1.2 billion tonnes of magneti
Slide 13: Financial highlights – HY2010
For personal use only Financial highlights – HY2010 • Revenues up 17% on previous period despite 20% price reduction • Despite AUD/USD appreciation of 22%, cost per tonne held at US$27 • Net equity up nine per cent on previous period • Exceeded previous production guidance
Slide 14: Reconciliation of Half Year Underlying EBITDA
Reconciliation of Half Year Underlying EBITDA Dec 08 and Dec 09 (US$M) For personal use only 800 283 2 27 110 700 224 600 475 500 400 400 300 200 400 100 0
Slide 15: Income statement
Income statement For personal use only 6 Months to 6 Months to 2008-2009 (US$m) 31/12/2009 31/12/2008 US$m US$m Revenue 1,189 1,015 EBITDA 426 479 EBIT 315 458 Net Profit After Tax 43 760 Result reflects strong ramp up and market conditions
Slide 16: Balance Sheet
Balance Sheet For personal use only As at As at 2008-2009 31/12/2009 31/12/2008 US$m US$m Current assets 1,013 961 Non-current assets 3,628 3,448 Current liabilities 737 746 Non-current liabilities 2,978 2,812 Net assets 926 851 Total equity 926 851 Strong balance sheet – massive operating and futur
Slide 17: Debt maturity
Debt maturity For personal use only US$ face 54.0 / paid 38.3 1200 US$ 1,026m 1000 Senior Secured Notes 800 EUR face 16.2 / paid 10.1 US$ face 2.5 / paid 1.8 600 EUR 299m 400 US$318m US$250m Subordinated Notes 200 US$100m 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Long-term repayment p
Slide 18: For personal use only
For personal use only Iron ore for generations
Slide 19: Captive market – Asian growth engine
Iron ore for generations For personal use only Captive market – Asian growth engine • 3 billion people, rapid urbanisation and industrialisation; • Competitive advantage of the Pilbara is growing; China’s ability to meet its own requirement declining – fast; • Fortescue has delivered ~55Mt to ~45 st
Slide 20: Proven Value in Use for Customers
For personal use only Iron ore for generations Proven Value in Use for Customers Most mills using Rocket Fines at 30-45% of their sinter blend with 57.3-58.3% sinter Fe. Larger size mills using 20-35%
Slide 21: Tenements and Resources
For personal use only Iron ore for generations Tenements and Resources
Slide 22: Fortescue has a dominant Pilbara land position
For personal use only Iron ore for generations Fortescue has a dominant Pilbara land position FMG: 71,400km2 Rio: 11,000km2 (Robe 4,200km2) BHP: 6,500km2
Slide 23: Strong reserve position
Iron ore for generations Strong reserve position For personal use only Reserve Tonnes Fe (%) SiO2 (%) Al2O3 (%) P (%) LOI (%) Category (Mt) Proven 123 59.7 3.61 1.89 0.051 8.1 Probable 1,459 58.8 4.23 2.40 0.057 7.6 Total 1,582 58.8 4.18 2.36 0.056 7.6
Slide 24: Resources supporting future generations
Iron ore for generations Resources supporting future generations For personal use only Current Resources (Bt) Current Targets (Bt)* Further Potential (Bt)* TOTAL (Bt) Chichester Hub • CB, CC, environs 2.87 1.8 1.3 6.0 • Eastern Pilbara 0.5 .05 1.0 Solomon Hub • Greater Solomon 2.45 1.0 1.5 4.9 • Adj
Slide 25: Three Hub Production Strategy
For personal use only Iron ore for generations Three Hub Production Strategy
Slide 26: Three Hub Production Strategy
Three Hub Production Strategy Fortescue Infrastructure Chichester, Solomon and Western Fortescue Rail For personal use only Port Proposed Hedland Fortescue Rail New Pilbara Dampier API Joint Venture Port Karratha Rio Tinto Rail BHP Rail Solomon Hub Chichester Western Hub Hub Tom Price Paraburdoo New
Slide 27: Chichester Hub
For personal use only Iron ore for generations Chichester Hub
Slide 28: Chichester Hub
Iron ore for generations Port For personal use only Hedland • Tier 1 asset • Christmas Creek Rail advanced • Mine, port and construction rail operation • 95Mtpa long-term • 55Mt shipped capacity Chichester • 55Mtpa capacity Hub • underway • Newman
Slide 29: Chichester Hub map
To Port Chichester Hedland For personal use only Mining Existing Mine Proposed Mine Camp village Cloudbreak accommodation Christmas Ore Processing Creek Battle Hill Facility Mt Lewin Airport Fortescue Rail Mindy Mt Nicholas Mindy Proposed Fortescue Rail Rio Tinto Rail Horatio BHP Rail Newman
Slide 30: Chichester Hub – Short Term
Chichester Hub – Short Term PORT For personal use only Total volume capacity to expand to 55Mtpa by early 2011 RoM (unprocessed) Mtpa 55 Product (processed) Mtpa SOLOMON CHRISTMAS CREEK OPF with wet front-end 39 and desand plant Hauled to Christmas CLOUDBREAK OPF with dry front-end and 16 Creek OPF
Slide 31: Chichester Hub – Medium Term
Chichester Hub – Medium Term PORT For personal use only Growing from 55mtpa to 95mtpa 95 SOLOMON 39 Cloudbreak 56 Christmas Creek
Slide 32: Pit operations – Cloudbreak
Iron ore for generations Pit operations – Cloudbreak For personal use only Employing techniques matched to our ore body characteristics Excavator Overburden trucks Surface miner OVERBURDEN Ore trucks ORE BODY
Slide 33: Christmas Creek on the move
Iron ore for generations Christmas Creek on the move For personal use only October 2009
Slide 34: Solomon Hub
For personal use only Iron ore for generations Solomon Hub
Slide 35: Solomon Hub - video
For personal use only Solomon Hub - video
Slide 36: Solomon Hub Stage 1
Iron ore for generations Port For personal use only Hedland Solomon Dampier Hub Chichester and 155 Stage 1 Solomon Hub* • Initial production target 60Mtpa • Total Hedland operation growing to Solomon Stage 1 155Mtpa Hub 60 Chichester Hub Tom Price 95 Fortescue Rio Tinto 100 BHP Paraburdoo Newman Sta
Slide 37: Solomon Hub map
To Pilbara Solomon Port For personal use only Mining To Port Hedland Planned Feasibility Mine Firetail Serenity Proposed Mine Investigator Raven Camp village accommodation Mt Sheila Kings Ore Processing East Facility Flying Airport Fish Tom Price Fortescue Rail Proposed Fortescue Rail Rio Tinto
Slide 38: Solomon Momentum
Iron ore for generations Solomon Momentum For personal use only Three years in Progress - DFS underway, completion due end 2010 • Exploration success 2.4 5km billion tonnes and growing; 20 Mtpa BID • Land Access and Environmental 40 Mtpa CID consents / approval well advanced; and • Mining leases app
Slide 39: Firetail project
For personal use only Iron ore for generations Firetail project • Firetail north (including Joffre) and Firetail south all within close proximity; • Additional BID targets in region from drilling of mapped mineralisation
Slide 40: Firetail Project
For personal use only Iron ore for generations Firetail Project • Resource 300Mt including 116Mt of ‘high grade’ @ 60.3% Fe • Low strip ratio – above water table • Standard Pilbara style Brockman • Traditional mining / traditional Vertical exaggeration product = 4 times No Vertical exaggeration
Slide 41: Kings CID
For personal use only Iron ore for generations Kings CID • More than 30km Firetail Joffre strike length of Valley of the Queens CID in valleys; Trinity Firetail North • Additional Firetail South tonnages to be gained by Valley of the Kings exploring other valleys and infill some areas.
Slide 42: Kings CID
For personal use only Iron ore for generations Kings CID • Resource of 2Bt with upper CID grades ~ 58% Fe • Standard Pilbara CID – comparable Yandi • Low strip ratios ~ 2.5 : 1 Vertical exaggeration = 4 times No Vertical exaggeration
Slide 43: Solomon Stage 1 – Indicative Capex / Opex
Iron ore for generations Solomon Stage 1 – 60 mtpa For personal use only • Decision to mine in 2010 / 2011 • Shipping from Port Hedland Item Capex Opex Port US$1,080m US$1.38/tonne Rail US$765m US$2.16/tonne (Solomon Rail Spur, not including rollingstock which will be leased) Mine US$765m US$17.60/t
Slide 44: Solomon Stage 2
Iron ore for generations Solomon Stage 2 For personal use only Additional 100Mtpa Operation • Target timeline – 2013/14 • Shipping from New Pilbara Item Capex $UA Port • Mine ~900 million • Rail ~1.17 billion • Port ~3.6 billion Total ~$5.7 billion • All figures are represented by Scoping estimates
Slide 45: Western Hub
For personal use only Iron ore for generations Western Hub
Slide 46: Iron Hubs – Three ore hubs for generations
Iron Hubs Three ore for– generations Twin Ports New Pilbara For personal use only Dampier Port • Third major Karratha • First one billion planned iron ore tonne target production hub identified • Resources • Infrastructure targeted in plans initiated excess of 2Bt Western • Approvals • Exploration H
Slide 47: Western Hub map
To Pilbara Western Port To Pilbara For personal use only Mining Port Proposed Mine Camp village accommodation Delphine Eliwana Ore Processing Facility 1 &2 Airport Fortescue Rail Wyloo Flying Fish Proposed Fortescue Rail API Joint Venture Rio Tinto Rail BHP Rail
Slide 48: Western Pilbara projects
For personal use only Iron ore for generations Western Pilbara projects • Existing target developments • Maximizes use of total rail infrastructure • Rail spurs to access API new heavy axle western rail • Rail spurs to Fortescue Central Rail • Expansion provision at New Pilbara port • Can be deliver
Slide 49: Magnetite
For personal use only Iron ore for generations Magnetite
Slide 50: Magnetite Development
Magnetite No. 1 Development North Star Investors FMG 2 Glacier Valley FMG/Baosteel JV Multiple developments 3 Tom Price Steel Mill For personal use only Port 4 Neptune Metal Corporation New Pilbara Hedland 5 Jupiter Steel Mill 6 Millers Monster Steel Mill Dampier Port 7 Lawrences Reward Steel Mill K
Slide 51: Magnetite development notes – Chichester Hub
1 2 Magnetite development notes 1&2 Feasibility Study with slurry pipeline to existing rail line Chichester Hub To Port For personal use only 4&5 Adjacent to proposed mine and Mt Newman township Hedland Magnetite 6&7 8&9 Located at existing mine sites Slurry pipeline to existing rail siding, mine in
Slide 52: Magnetite – Solomon Hub
To Pilbara Port Solomon Hub For personal use only Magnetite To Port Hedland HAEMATITE MAGNETITE Firetail Existing Mine Existing Mine Serenity 10 Investigator Proposed Mine Proposed Mine Raven Kings Camp village Camp village 13 12 Mt Sheila accommodation accommodation East Ore Processing Ore Proces
Slide 53: Magnetite – Western Hub
To Pilbara Port Western Hub To Pilbara For personal use only Port Magnetite HAEMATITE MAGNETITE Existing Mine Existing Mine 17 Proposed Mine Proposed Mine Delphine 16 Eliwana Camp village Camp village 14 1 &2 accommodation accommodation Ore Processing Ore Processing Facility Facility Wyloo Flying
Slide 54: Magnetite – long-term source of equity
For personal use only Iron ore for generations Magnetite – long-term source of equity • China needs magnetite • Progressive rollout of magnetite with infrastructure hubs • All projects either adjacent to existing rail or suitable for slurry line from mine to existing/planned rail • Many projects adj
Slide 55: Northern and Central Magnetite Provinces
For personal use only Iron ore for generations •Magnetite is common to Fortescue •Magnetite is BIF (banded iron formation) Northern Magnetite Province Two major developments in progress: • FMG/Baosteel JV – Feasibility about to commence, 1.23Bt Resource • FMG North Star – Scoping study completed & i
Slide 56: Two Ports for Three Hubs
For personal use only Iron ore for generations Two Ports for Three Hubs
Slide 57: Two Ports – Three Hubs
Two Ports – Three Hubs Fortescue Infrastructure For personal use only Fortescue Rail Port New Pilbara Hedland Proposed Fortescue Rail Dampier Port API Joint Venture Karratha Rio Tinto Rail BHP Rail Solomon Hub Chichester Western Hub Hub Tom Price Paraburdoo Newman
Slide 58: Current 1st port infrastructure
Current 1st port infrastructure For personal use only Herb Elliott Port at Port Hedland Record breaking speed of ramp up
Slide 59: Port infrastructure: 55, 95, 155Mtpa
Capacity (Mtpa) 55 95 155 Berths 2 3 5 Shiploaders 1 2 3 For personal use only Capacity (Mtpa) 55 95 155 Stackers 2 2 4 Reclaimers 1 2 3 Capacity (Mtpa) 55 95 155 Train unloaders 1 2 3 Port infrastructure: 55, 95, 155Mtpa 5th berth at South West Creek awaiting approval by Port Authority
Slide 60: Two ports for three hubs
For personal use only Two ports for three hubs 2nd Pilbara Port (New) 100Mtpa from Solomon Hub • 220 kilometre Central FMG Rail (if no access to Rio line) • New multi-user Pilbara Port to 400Mtpa; • Multi-user port start-up capex only $4 billion • Can be delivered in 2013/2014 • Total capex of port,
Slide 61: Pilbara Port - staged development
For personal use only Two ports for three hubs Pilbara Port - staged development
Slide 62: New Pilbara port project – early cash flow option
For personal use only Two ports for three hubs New Pilbara port project Early cash flow option • Access to Rio Rail • Early Port beach head with 25Mtpa trans shipping load-out • Potential to share trans-ship costs with MCC • CID or Brockman from Solomon deposits adjacent to rail • Development Plan i
Slide 63: Proven skills – low risk
For personal use only Iron ore for generations Proven skills – low risk
Slide 64: Proven skills in Construction – Completion Records
For personal use only Iron ore for generations Proven skills in Construction – Completion Records From concept To reality Herb Elliott Port Port 2006 2008 Fortescue Rail Railway 2007 2008 Mine Cloudbreak Minesite 2006 2008 FACT: Fortescue built its infrastructure faster than any other mining company
Slide 65: Expansion risk considerations - answered
For personal use only Iron ore for generations Expansion risk considerations - answered Risk Mitigant • Massive JORC resource base of 6.3 billion tonnes and Resource growing • Low tech civil works and very similar to works recently Construction completed • Proven team that has presided over the fast
Slide 66: Sign up to alerts online
For personal use only Sign up to alerts online www.fmgl.com.au
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