Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — BAML Conference (May 2016)
24 slides from Fortescue's conference presentation, May 12, 2016
Slide 1: BAML Conference
For personal use only BAML Conference Working together. Delivering results.
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 Fortescue Metals Group Limited ("Fortescue"). It is not recomme
Slide 3: Building a world class company
Building a world class company For personal use only Core supplier to China’s growth Safety focus First ore Low cost Engagement producer Empowerment Leadership in 2008 Shipped over 165mt 650mt Production rate Unique culture 3
Slide 4: Our Vision: The safest, lowest cost, most profitable iron ore producer
Our Vision: The safest, lowest cost, most profitable iron ore producer w Fortescue Integrity Determination The New Force in Iro1
Slide 5: Strategic delivery of targets
Strategic delivery of targets For personal use only Focus on safety, productivity and efficiency and response to market 165mt achieved & maintained Cost target $13/t June 16 Sustaining capex below $2/t Net debt $5.9bn Consistent dividend policy 5
Slide 6: Operating and Financial Performance
For personal use only Operating and Financial Performance
Slide 7: Snapshot
Snapshot For personal use only Operational performance + sustainable cost reductions support financial results $14.79/wmt US$2.3bn Controlling the controllable C1 Cost costs + Debt repaid (March quarter) production FY16 Strong operating Net debt 42mt shipped cashflows US$5.9bn 7 9
Slide 8: Continuous, sustainable cost improvements
Continuous, sustainable cost improvements For personal use only Development of assets, efficiencies, productivity and cost savings US$/wmt 60 1 Solomon operations 50 48 2 Blending strategy 58% Fe 44 40 3 Processing, wet plants + de-sands 34 30 27 4 Operational efficiencies 20 15 5 Fx and fuel decrea
Slide 9: Breakeven index price
Breakeven index price For personal use only US$13/wmt exit rate by June challenged by FX and oil US$/t 40 1.9 28.4 30 3.7 22.7 2.5 0.4 18.3 1.9 20 1.4 3.5 13.0 10 0 C1 Shipping Royalty Admin Delivered Moisture Dmtu Total dmt Interest Capex Breakeven cost to adjustments cost price China 9
Slide 10: Pro-forma Debt maturity profile
Pro-forma Debt maturity profile For personal use only FY16 US$2.3bn of debt repaid, reducing interest expense by US$164m p.a. 5,000 4,500 650 4,000 4,176 3,500 3,000 US$m 2,500 2,000 1,500 1,000 2,160 500 577 0 478 0 CY2016 0 CY2017 CY2018 CY2019 CY2020 CY2021 CY2022 Senior Secured Credit Facility S
Slide 11: Market
For personal use only Market
Slide 12: Core supplier to Asia
Core supplier to Asia For personal use only Well established 17% market share of imported iron ore to China • Low impurity 58% Fe average • High value in use • Large diverse customer base • Reliable consistent delivery • Proximity to high growth region 12
Slide 13: China's share of global GDP
China’s share of global GDP For personal use only Approaching 20% by 2020 China now produces 50% of the world’s steel Share of World’s GDP 2013 - 2020 Crude Steel Production 2015 (mt) 40 89 35 208 30 25 GDP 803 20 301 15 10 154 5 41 0 2013Source: International 2014 2015 Fund2016 Monetary 2017Outlook
Slide 14: China's One Belt One Road
China’s One Belt One Road For personal use only Generating regional demand for steel 14
Slide 15: Steel consumption to build economy
Steel consumption to build economy For personal use only Steel demand – driven by policy decisions Source: Wood Mackenzie 15 Source: Wood Mackenzie 15
Slide 16: Iron ore supply in balance
For personal use only Days Coverage 10 20 30 40 50 0 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 Source: Bloomberg and Umetal May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Port stocks remaining stable Sep-12 Nov-12 Jan-13 sentiment driving price Mar-13 May-13 Jul-13 Iron ore supply in balance… Sep-
Slide 17: Supporting our local community
For personal use only Supporting our local community
Slide 18: Ending Aboriginal disparity in the Pilbara
Ending Aboriginal disparity in the Pilbara For personal use only Creating opportunities through training, employment and business opportunity 18
Slide 19: Focused strategy
For personal use only Focused strategy
Slide 20: Moving down the global cost curve
Moving down the global cost curve For personal use only China's Iron Ore Supply CFR Costs (including royalties & ocean freight) 2012 2015 20
Slide 21: Strategic delivery
Strategic delivery For personal use only Culture, continuous improvement, speed and flexibility maximise asset base Consistent 165mtpa Lowering costs to US$13/wmt Maximising cash flows Debt repayment Expect further improvements 21
Slide 22: The new force in iron ore
The new force in iron ore For personal use only Continuous improvement, reliable and efficient delivery Sustainable low cost World class producer assets & people 165mt Unique culture drives performance Production rate 22
Slide 23: For personal use only
For personal use only www.fmgl.com.au @FortescueNews Proudly supporting:
Slide 24: Glossary
Glossary For personal use only C1: Operating costs of mining, processing, rail and port. The reconciliation of C1 to the amounts disclosed in the financial statements prepared under the Australian accounting standards is provided in the Financial Report for the half year ended 31 December 2015 accom