Grange Resources Limited · ASX:GRR
Grange Resources — Sydney Resources Round-up (May 2010)
34 slides from Grange Resources's conference presentation, May 11, 2010
Slide 1: Sydney Resources Round-up
For personal use only Grange g Resources Sydney Resources Round-up 11th May 2010 Russell Clark Managing Director & CEO NOT FOR DISTRIBUTION IN THE US Level 11, 200 St Georges Terrace NOT FOR DISTRIBUTION IN THE US Perth Western Australia 6000 1
Slide 2: Disclaimer
Disclaimer For personal use only • The material in this presentation (“material”) is not and does not constitute an offer, ff invitation i it ti or recommendation d ti to t subscribe b ib for, f or purchase, h any security it iin Grange Resources Limited (“GRR”) nor does it form the basis of any con
Slide 3: Iron Ore Value
Iron Ore Value For personal use only • Iron Ore Pellet ~65-69% Fe 40% Value & price • Direct Shipping pp g Lump p ~63% Fe Qualitty • Magnetite Concentrate ~ 67% Fe • Direct Shipping Fines ~58% Fe NOT FOR DISTRIBUTION IN THE US 3
Slide 4: Grange Share Price
Grange Share Price “ It’s(Penfolds) ( ) Grange g all round for holders in iron ore miner Grangeg Resources, the best stock in the all-ordinaries index with a 122 per cent gain.” Australian 9/4/10 For personal use only NOT FOR DISTRIBUTION IN THE US 4
Slide 5: Company snapshot
Company p y snapshot p For personal use only Board of Directors Current ownership p Structure Mr Xi Zhiqiang Chairman Free float Mr Neil Chatfield Deputy Chairman Mr Russell Clark g g Director,, CEO Managing 31.70 PML Mr Wei Guo Non Executive Director 46.90 Mr Clement Ko Non Executive Director RGL G
Slide 6: Grange Board
Grange g Board For personal use only Grange has a board with a diverse range of experience. Xi Zhiqiang: Chairman Neil Chatfield: Deputy Chairman • Extensive experience in the Chinese steel industry • Recently Executive Director and CFO of Toll Holdings, a position • Baosteel employee for 30 years,
Slide 7: Grange Resources – Australia's Leading Magnetite Producer
Grange Resources – Australia’s Australia s Leading Magnetite Producer For personal use only Grange’s position is supported by quality assets in Tasmania and Western Australia. Southdown Project (70%) Savage River (100%) 90km northeast of the Port Northwest Tasmania of Albany Annualised product
Slide 8: Grange Highlights
Grange g Highlights g g For personal use only 9 Australia’s leading exporter of iron ore pellets, producing 2.2Mtpa from the Savage River operations in Tasmania in CY2009 9 Completed capital restructure in November 2009, raising $153m 9 NPAT of $50m, EBITDA of $5m for the first half 2009/10 9 Cost a
Slide 9: Jiangsu Shagang
Jiangsu Shagang A strong partnership For personal use only Shagang Overview Grange’s largest shareholder Demonstrated continuing support for Grangeg with an attractive LOM offtake agreement at Savage River at market prices and agreement to negotiate at fair market price for Grange’s share of off
Slide 10: Savage River Overview
Savage g River Overview For personal use only Ownership • Grange 100% • Mineral Resource of 316Mt magnetite at Resources and 50.7% DTR Reserves • Ore Reserve of 124Mt magnetite at 49 49.2% 2% DTR • 2.6Mtpa blast furnace pellets and Production concentrate (annualised basis) • Potential to expand to 2
Slide 11: Key Information – March 2010 Quarter
Key Information M h 2010 Q March Quarter t For personal use only Quarter on Quarter comparison March March Savage River Quarter Quarter 2010 2009 Total volume mined (‘000 bcm) 5,267 4,883 Total ore mined ((‘000 bcm)) 321 237 Concentrate produced (‘000 tonnes) 589 513 Pellets produced (‘000 tonnes) 5
Slide 12: Large Scale Operations
Large g Scale Operations p For personal use only NOT FOR DISTRIBUTION IN THE US 12
Slide 13: Own Downstream Infrastructure
Own Downstream Infrastructure For personal use only NOT FOR DISTRIBUTION IN THE US 13
Slide 14: Own Port and Shiploading Infrastructure
Own Port and Shiploading p g Infrastructure For personal use only NOT FOR DISTRIBUTION IN THE US 14
Slide 15: Increased Production
Increased Production For personal use only 2009/10 Pellet Production 700,000 650,000 600,000 550,000 500,000 450,000 400,000 350,000 300,000 Jan- Mar Apr - Jun Jul-Sep Oct-Dec Jan- Mar 15 NOT FOR DISTRIBUTION IN THE US Pellet production 15
Slide 16: Costs reduced and maintained 2009/10
Costs reduced and maintained 2009/10 For personal use only 60 55 50 quarter 45 A$185m/yr 40 A$ milliion per q Overhead 35 Pipeline to Pellet Crusher to Pipeline Shared Expenses 30 Mine to Crusher 25 20 15 10 16 Jan- Mar Apr - Jun Jul-Sep Oct-Dec Jan - Mar NOT FOR DISTRIBUTION IN THE US 16
Slide 17: Direct Operating Costs Reduced 2009/10
Direct Operating Costs R d Reduced d 2009/10 For personal use only Cost Reductions Maintained 160 oduced 140 cost A$/t pellet pro 120 100 80 perating c 60 40 Direct Op 20 0 17 NOT FOR DISTRIBUTION IN THE US 17
Slide 18: Solid Customer Base
Solid Customer Base Long term offtake agreements – providing revenue stability For personal use only Agreements are in place for both Savage River and Southdown production at index based market prices. 0.5mtpa available for spot sales • China’s largest private steel mill, producing 22 Mtpa of pig ir
Slide 19: Growth - Southdown
Growth - Southdown For personal use only Pellet Plant producing 4. 6.8Mtpa direct reduction and blast furnace pellets 3. Co 3 Concentrate ce a e shipped s pped 2. to100km 100k slurry l pipeline Albany Port i li 1. 6.6Mtpa mining and concentrating operations for 30 years 19 NOT FOR DISTRIBUTION IN TH
Slide 20: Southdown Project
Southdown Project High grade magnetite project with advanced infrastructure For personal use only Ownership • Grange 70% 70%, Sojitz Corporation 30% Resources and • Mineral Resource of 654Mt magnetite at 36.5% DTR1,2 Reserves1 • Ore Reserve of 388Mt magnetite at 35.5% DTR1,3 • 6 6Mt magnetite 6.6Mtp
Slide 21: For personal use only
For personal use only 21 NOT FOR DISTRIBUTION IN THE US 21
Slide 22: Southdown Infrastructure – Port of Albany
Southdown Infrastructure – Port of Albany For personal use only 22 NOT FOR DISTRIBUTION IN THE US 22
Slide 23: Resources and Reserves
Resources and Reserves Supporting Long Mine Lives For personal use only Grange has 774Mt of attributable Mineral Resources and 396Mt of attributable O Reserves. Ore R Mineral Resources (inclusive of reserves) Ore Reserves Tonnes Grade Tonnes Grade ((Mt)) ((%DTR)) ((Mt)) ((%DTR)) Savage River 4 Savag
Slide 24: Grange Resources – production growth prospects
Grange Resources – production growth prospects For personal use only kt 10000 9000 Upside 8000 7000 6000 5000 4000 Southdown 3000 2000 1000 Savage g River 0 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 (Production shown is attributable to Grange) NOT FOR DISTRIBUTION IN THE US 24
Slide 25: What is "Market Price"?
What is “Market Price”? For personal use only Historicallyy Grange g has taken the Tubaro Pellet Benchmark p price for its p pellet p products - a p price negotiated annually between Vale and the Japanese. • No recognition of freight differentials between Australia and Brazil and China or Japan. • I
Slide 26: Leveraged to price
Leveraged g to price p For personal use only Margin leverage to price @2.6Mtpa 500 450 400 M a on 350 A$ millio r 300 g i Revenue A 250 n Costs 200 A$185m/yr $ y 150 100 26 NOT FOR DISTRIBUTION IN THE US 26
Slide 27: Grange – Historically complicated, Now very simple
Grange – Historically complicated Now very simple Now….very For personal use only Before Now • Junior development company • Producing company • Large, unknown, Chinese ownership • Profitable with positive cash flow • Low free float (~20%) • Major development project • Low trading volumes <0.5m/day /
Slide 28: The largest producing magnetite company
The largest producing magnetite company For personal use only Out of the numerous junior companies with magnetite assets, Grange is the only l one in i production. d ti NOT FOR DISTRIBUTION IN THE US 28
Slide 29: Current Focus and Future Milestones
Current Focus and Future Milestones For personal use only Operational p improvements p at Savage g River being g implemented p ¾ Management Operating System continues to be installed ¾ New equipment to replace old less productive units ¾ Inventory and cost reductions Will announce additional res
Slide 30: Grange Resources – Summary
Grange g Resources – Summary y For personal use only Australia's Australia s leading magnetite producer Australia’s largest iron ore pellet producer High grade quality products Solid customer and revenue base Strong cashflow forecasts Long life assets Major development project Low so
Slide 31: Key Contacts
Key y Contacts For personal use only Primary contacts: Russell Clark Managing Director & Chief Executive Officer +61 8 9321 1118 managingdirector@grangeresources.com.au i di t @ NOT FOR DISTRIBUTION IN THE US 31
Slide 32: Competent Person Statement
Competent p Person Statement For personal use only • Southdown Project j • The information in this presentation which relates to the Mineral Resources of the Southdown Project is based on information compiled by James Farrell who is a full-time employee of Golder Associates Pty Ltd and a Member of t
Slide 33: Appendix A – Southdown Project
Appendix pp A – Southdown Project j For personal use only In situ Mineral Resource Estimate Classification Measured Resources Indicated Resources Inferred Resources Total Resources Tonnes (Mt) 219.7 210.3 224.4 654.4 DTC wt% 37.4 38.9 33.4 36.5 DTC Fe% 69.2 69.3 69.1 69.2 DTC SiO2% 1.72 1.94 2.07 1.
Slide 34: Appendix B – Savage River
Appendix pp B – Savage g River For personal use only Mineral Resource and Ore Reserve Estimates Mineral Resource Tonnes (Mt) Grade (%DTR) Ore Reserve Tonnes (Mt) Grade (%DTR) Measured 88.01 52.7 Proved 52.39 49.6 Indicated 135.96 51.7 Probable 72.00 48.9 Inferred 92.22 47.2 Total 124.40 49.2 Total 3
Grange Resources — Sydney Resources Round-up (May 2010) on 6ix