Grange Resources Limited · ASX:GRR
Grange Resources — BBY Conference 2008
41 slides from Grange Resources's conference presentation, May 5, 2008
Slide 1: Pursuing the most attractive niche in iron ore
For personal use only Pursuing the most attractive niche in iron ore Southdown Magnetite and Kemaman Pellet Project BBY Conference 5 May 2008 Russell Clark Managing Director and CEO Grange Resources Limited (GRR) Level 11, 200 St Georges Terrace Perth, WA 6000, Australia Phone + 618 9321 1118 Fax +
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
Slide 3: Pursuing the most attractive niche in iron ore
Pursuing the most attractive niche in iron ore For personal use only The niche…..DR pellets Steelmaking 101: Integrated vs Electric Arc Furnace Supply & Demand DR pellet price and premium Grange - positioned to capture the DR Pellet opportunity Southdown magnetite project in Australia
Slide 4: The most attractive niche in the iron ore industry: DR Pellets
The most attractive niche in the iron ore industry: DR Pellets For personal use only We all understand the China boom – massive, growing demand for iron ore to China. In Australia that demand is being met by Rio, BHP, FMG and some Juniors primarily with DSO. Less understood is an iron ore oppo
Slide 5: Steelmaking
Steelmaking 101 For personal use only • As pricey as it’s become, iron ore has no inherent value: it is only valuable as a feedstock for steelmaking • So, the attractiveness of supplying iron feedstocks to the steel industry starts with the competitiveness of the steelmaking process to which they co
Slide 6: Integrated Steelmaking process
Integrated Steelmaking process For personal use only • End-to-end, the Integrated Steelmaking route (the traditional and still dominant route for steel) is both capital intensive and environmentally unattractive Feeds for standard (carbon) steel: DSO Mining Sintering Ironmaking Steelmaking • Fines S
Slide 7: Electric Arc Furnace process
Electric Arc Furnace process For personal use only • In contrast to integrated steelmaking, the Electric Arc Furnace steelmaking route is less capital-intensive and more environmentally attractive Feeds for standard (carbon) steel: Mining/ DR pellet production Ironmaking Steelmaking concentrating Gr
Slide 8: Feedstock for DRI and EAF
Feedstock for DRI and EAF For personal use only 72% 71% 70% Cumulative content 69% 68% 67% CaO+Mgo 66% SiO2+Al2O3 65% Fe 64% 63% 62% Southdown Carajas DR Carajas BF Typical HG Typical HG DR Pellet Pellet Pellet Lump Fines Source: CVRD, Grange Resources EAFs require suitable high grade pellets (pre-p
Slide 9: Scrap steel vs DRI for the EAF steelmaker
Scrap steel vs DRI for the EAF steelmaker • Historically, scrap steel < US$200/t. For personal use only • The price of scrap steel has increased hugely, due to overwhelming steel demand from China and other emerging economies: SCRAP STEEL PRICE HISTORY Source: Iron Age Scrap Price Bulletin • The dem
Slide 10: Growing shortage of DR pellets
Growing shortage of DR pellets Credit Suisse Brazil─in the heartland of world DR pellet supply─sees DR pellet For personal use only undersupply increasing for the foreseeable future. Seaborne Pellet Supply and Supply/Demand balance 180 4.0% Over Supply 3.2% Supply 2.2% 2.0% 160 140 0.0% (mt) Under S
Slide 11: Demand for DR Pellets
Demand for DR Pellets DR pellet demand is projected to increase significantly in SE Asia and the Gulf Region. For personal use only SE 70 SEAsia Asia Perwaja +94% PerwajaSteel Steel Mega 60 MegaSteel Steel Krakatau KrakatauSteel Steel 50 Gulf Gulf 40 +50% Hadeed SE Asia Hadeed Mt
Slide 12: Prices…the Pellet opportunity is attractive
Prices…the Pellet opportunity is attractive… With increasing demand, future price forecasts continue to look strong, with a good For personal use only premium for BF pellets over DSO… Iron Ore and pellet Prices US$/t FOB Europe 200 180 160 Settlement 140 US$/tonne 120 100 80 60 BF Pellets Lumps 40 F
Slide 13: …but the DR Pellet opportunity is even more attractive
…but the DR Pellet opportunity is even more attractive with a further 10% premium for DR pellets over BF pellets. For personal use only Iron Ore and pellet Prices US$/t FOB Europe 200 180 160 For DR pellets expect a Settlement premium of: 140 US$/tonne 120 US$17/t over BF 100 US$20/t over Lump (DSO)
Slide 14: Price – this year's result
Price – this year’s result Prices 2007 ==> 2008 For personal use only $180.00 $160.00 +86.67% $140.00 $120.00 2007 +71% US$/tonne FOB * $100.00 2008 $80.00 $60.00 $40.00 $20.00 $0.00 Carajas lump DR pellets Iron feedstock * Benchmark prices in US¢/dmtu, translated to US$/tonne FOB @ 67% Fe for ease
Slide 15: In Summary
In Summary: For personal use only Iron Ore consumption is increasing worldwide, particularly in China. With abundant gas and expanding infrastructure, demand for DR grade pellets is increasing exponentially in the Middle East and South East Asia Supply is not matching demand in the DR market
Slide 16: Grange – Southdown/Kemaman overview
Grange – Southdown/Kemaman overview For personal use only 1 Grange Resources Limited 2 The Southdown and Kemaman Project 3 The Southdown Magnetite Deposit 4 Project Infrastructure 5 Markets 6 Economics 7 Recent Developments and Current Status 16
Slide 17: Grange Overview
Grange Overview For personal use only Board of Directors Shares Anthony Bohnenn Non Executive Chairman ASX Code: GRR Russell Clark Managing Director Current shares on Issue: 115,201,099 Alex Nutter Technical Director Unlisted Options on Issue to Rio Tinto: 17,500,000 Richard Krasnoff Non Executive D
Slide 18: Grange – Southdown/Kemaman overview
Grange – Southdown/Kemaman overview For personal use only 1 Grange Resources Limited 2 The Southdown and Kemaman Project 3 The Southdown Magnetite Deposit 4 Project Infrastructure 5 Markets 6 Economics 7 Recent Developments and Current Status 18
Slide 19: Project Highlights
Project Highlights Advanced Project ; For personal use only Initial Feasibility Study Completed ; Infrastructure Solutions in Place ; Ability to produce High Quality (DR Grade) Pellets with very low Phosphorus content ; Growing DR Pellet Market in SE Asia & Middle East ; Pellet Plant Close to Key Ma
Slide 20: Project Overview
Project Overview For personal use only Dual Location PELLET PLANT PRODUCING 4. Southdown DIRECT REDUCTION AND Open pit mine operation BLAST FURNACE PELLETS Magnetite concentrate production 6.6mtpa @ 69% Fe Slurry pipeline to existing port Shipping in Capesize vessels Kemaman Pellet product
Slide 21: Grange – Southdown/Kemaman overview
Grange – Southdown/Kemaman overview For personal use only 1 Grange Resources Limited 2 The Southdown and Kemaman Project 3 The Southdown Magnetite Deposit 4 Project Infrastructure 5 Markets 6 Economics 7 Recent Developments and Current Status 21
Slide 22: Tenement & Deposit Location
Tenement & Deposit Location For personal use only 70% Grange / 30% Sojitz JV 100% Grange Resources Ltd 22
Slide 23: Southdown Resource
Southdown Resource For personal use only Mining Leases (Western Area) Over 230 drill holes to date Indicated and inferred resources: 479 MT at 37.3 % magnetite Exploration Licence (Eastern Area) Only 23 drill holes to date Target Potential Resources: Approximately 500 MT (est) Total Southdown open c
Slide 24: Metallurgical & Pelletising Testwork
Metallurgical & Pelletising Testwork Kobelco Kobelco For personal use only Concentrate Pellets Comprehensive programme of metallurgical % % test work completed, culminating in the Fe 69.76 67.23 successful production of high quality DR and BF grade pellets from Kobelco (Japan) SiO2 1.00 1.24 and Lur
Slide 25: For personal use only
For personal use only 25
Slide 26: Grange – Southdown/Kemaman overview
Grange – Southdown/Kemaman overview For personal use only 1 Grange Resources Limited 2 The Southdown and Kemaman Project 3 The Southdown Magnetite Deposit 4 Project Infrastructure 5 Markets 6 Economics 7 Recent Developments and Current Status 26
Slide 27: Project Infrastructure – Southdown & Albany
Project Infrastructure – Southdown & Albany All key infrastructure in place or well advanced For personal use only ; Water Pit dewatering, site water harvesting, retreating Albany waste water, groundwater ; Power Premier Power (Wesfarmers) (coal and natural gas potentially augmented by wind power) ;
Slide 28: Project Infrastructure – Southdown & Albany
Project Infrastructure – Southdown & Albany For personal use only Slurry Pipeline Optimal transport method Finalising easements with landowners Power Western Power Networks 220kv line from Muja (150MW capacity). No EPA Assessment Interconnected to SWIS1 Transmission line easement progressi
Slide 29: Project Infrastructure – Port of Albany
Project Infrastructure – Port of Albany For personal use only Concentrate Storage Shed & Channel to be Filter Plant dredged and widened Proposed Berth 7 (170,000 DWT vessels) Existing Berth 6 (woodchips export) • Work advancing on port design and pre-development engineering • Heads of Agreement sign
Slide 30: Project Infrastructure - Kemaman
Project Infrastructure - Kemaman All key infrastructure in place For personal use only ; Deep Water Port Existing Wharf at Kemaman (West Wharf) Suitable for Capesize vessels ; Transport Conveyor corridor between Port and pellet plant ; Power, Gas & Water Power – TNB (substation adjacent to site) Gas
Slide 31: Project Infrastructure – Kemaman Site
Project Infrastructure – Kemaman Site For personal use only 31
Slide 32: Project Infrastructure – Kemaman Port
Project Infrastructure – Kemaman Port For personal use only 32
Slide 33: Grange – Southdown/Kemaman overview
Grange – Southdown/Kemaman overview For personal use only 1 Grange Resources Limited 2 The Southdown and Kemaman Project 3 The Southdown Magnetite Deposit 4 Project Infrastructure 5 Markets 6 Economics 7 Recent Developments and Current Status 33
Slide 34: Kemaman Pellet Plant – Strategic Position
Kemaman Pellet Plant – Strategic Position Proximity to Customers For personal use only DR PELLET CONSUMERS COUNTRY 1 Perwaja Steel Malaysia 2 Amsteel Malaysia 3 Krakatau Steel Indonesia 4 Megasteel Malaysia 5 Qasco Qatar 6 Hadeed Saudi Arabia 7 Various UAE 8 Various India BF PELLET CONSUMERS COUNTRY
Slide 35: Kemaman Pellet Plant – Strategic Position
Kemaman Pellet Plant – Strategic Position Kemaman Freight Advantage Kemaman has distinct freight advantages over South American pellet For personal use only producers • Close to key markets hence reduced shipping costs • Panamax size vessels can economically deliver smaller quantities to ports not a
Slide 36: Grange – Southdown/Kemaman overview
Grange – Southdown/Kemaman overview For personal use only 1 Grange Resources Limited 2 The Southdown and Kemaman Project 3 The Southdown Magnetite Deposit 4 Project Infrastructure 5 Markets 6 Economics 7 Recent Developments and Current Status 36
Slide 37: Operating and Capital Costs
Operating and Capital Costs Project costs are well understood and are the product of a detailed feasibility study For personal use only (Note: Costs below are as at June 2007) Operating & Capital Costs US$ Operating Costs (US$/t pellets) Southdown Mining & Processing1 35.4 Shipping to Malaysia (
Slide 38: Grange – Southdown/Kemaman overview
Grange – Southdown/Kemaman overview For personal use only 1 Grange Resources Limited 2 The Southdown and Kemaman Project 3 The Southdown Magnetite Deposit 4 Project Infrastructure 5 Markets 6 Economics 7 Recent Developments and Current Status 38
Slide 39: Project Status
Project Status The Southdown & Kemaman projects are well advanced with feasibility complete, For personal use only most infrastructure in place and approvals in progress. Item Status Expected Timing Initial Feasibility Study ; Refinement of process flowsheet work underway with Metso Minerals (Q3 200
Slide 40: Summary of Grange's DR Pellet opportunity
Summary of Grange’s DR Pellet opportunity For personal use only An advanced Iron Ore Project for the Direct Reduction Pellet Market Grange has the ore, the land and access to infrastructure. Grange’s Pellets will be a premium Direct Reduction grade. Our pellets will be sold into a niche market
Slide 41: Key Contacts
Key Contacts For personal use only Russell Clark Managing Director & CEO, Grange Resources Limited Tel: +61 8 9321 1118 rclark@grangeresources.com.au 41