Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — 9th Annual Global Iron Ore & Steel Forecast Conference 2006
48 slides from Fortescue's conference presentation, Feb 24, 2006
Slide 1: ASX cover letter: latest Fortescue presentation
61 8 9266 OLE + 61% 9266 0186 o wwefinglcam.ae Porteseue Metals Group Ltd ACN: O02 594 872 Fortescue House 50 Kings Park Ruad West Porth Western Australia GO0% PQ Bos 910, West Berth, Western Australia 6872 23 February 2006 The Companies Officer Australian Stock Exchange Ltd. Exchange Plaza 2 The Es
Slide 2: The Pilbara Iron Ore and Infrastructure Project
The Pilbara Iron Ore and Infrastructure Project Global Iron Ore and Steel Forecast Conference 23 February 2006 The New Force in Iron Ore | Data and amounts stan 10 thls presentation telating « eapltal sists, operating casts and project timelines are internally generated best estimates only. der revi
Slide 3: 2 tonnes of iron ore = 1.2 tonne of steel
2 tonnes of iron ore = 1.2 tonne of steel
Slide 4: ASX listed — 2.4Bt Resources, 1.1Bt Reserves JORC
ASX listed — 2.4Bt Resources, 1.1Bt Reserves JORC Developing world class Chichester Iron Ore and Infrastructure Project * Short term target Reserves 1.55 Bt * First Major project underway: >US$1bn EBITDA p.a. * Dominant landholder of the worlds richest iron ore region — The Pilbara * All finance str
Slide 5: Fortescue Ownership
Fortescue Ownership Institutions dominate register after management (with 30%) + Global Institution * Asian Institution + American Institution + European Institution * Australian Institution + European Institution * American Institution « American Institution * American Institution « American Instit
Slide 6: Significant asset backing
Significant asset backing * Robust iron ore demand * Optimal location * Huge reserves * Simple construction * Lowest cost producer + Powerful economics - rapid payback
Slide 7: The largest bedrock hosted iron ore discovery in Australia
The largest bedrock hosted iron ore discovery in Australia Hi reserve Robe rasourca Hiresource: 2500 Robe reserve 2000 + BHPB teserve- FMG resource g 2 1500 4 & : s BHPB resoureo. FMG reserve § Portman (1.07 Bt) = 1000 aH — —_ & La ea ee ee ee ee see) oT 500 5 beet ell boa el ee Ime | bea ron bee be
Slide 8: BHP Billiton
BHP Billiton (Pilbara contributes ~ 25% of BHPB’s market cap) Location ‘hount Goldsworthy, Town Highway Drainage Rall exsing Raifcomiéor - proposed MG Terements BHP Bilton Iron Ore deposit | Won Ore mine Source: BHPB / Rio Sector Analysis
Slide 9: BHP and Rio Tinto
BHP and Rio Tinto (Pilbara contributes ~ 50% of Rio’s market cap) LEGEND Town Heoraay Drainage C4 2 clout Geldsweethy Rail- sisting ioe Rai order OO eposed FS Tenements Rio Tato Group BHP Biiton ‘fon Cre weposit ee Fron Ore sine Le suomes.o sone Source: BHPB / Rio Sector Analysis
Slide 10: Pilbara tenement holdings
Part LEGEND Tours Heghwray eo Brainaee wpe Ral eating Ral comidor- proposed ENG. Tenements FG EMG - Mining Siafe Agreement io Tirto Group HP Bilton Robe ton Ore deposit * on Ore mine Sq km Holdings FMG — >32,500 BHPB - 5,500 Rio — 9,100 >32,500 square kms of tenements - already 2.4 Bt of iron ore fr
Slide 11: Price outlook, 2006
_ Price outlook, 2006.... * CRU (Citibank market consultant) forecasts global iron ore demand to reach 2 Billion tonnes (Bt) by 2015 and 2.275Bt in 2020 - Anew Fortescue Project needs to be added every year + Continuing demand growth out of Asia demonstrates need for a number of Fortescue’s projects
Slide 12: Australia's iron ore is cheaper than Brazil's
Australia’s iron ore is cheaper than Brazil’s.
Slide 13: Pilbara Ore is reliable and the most competitive
, Pilbara Ore is reliable and the most competitive Australian Ore $US 42.85 South Africa Ore $US 61.01 Brazilian Ore $US 62.35 Indian Ore $US 80.78 “In iron ore, you can’t compete with the Pilbara” - Grant Samuel Source: China Metallurgical Daily - 2004 average landed price
Slide 14: Marketing — International endorsement of Fortescue Iron Ore quality
Marketing — _ International endorsement of Fortescue Iron Ore quality Successful testwork conducted by: * Major Asian Country — Market Leader * Australia — Market Leader, CSIRO * China — China’s Central South University + Germany — SGA : + Major Asian Country — Market Leader
Slide 15: Sintering and Blast Furnace Performance
1. Sintering Performance Productivity is superior to close competitors due to: * Ultra fines is relatively low * Consistent size distribution . = Superior throughput * Superior tumble strength * High permeability 2. Blast Furnace Performance Productivity is superior to close competitors due to: + Ke
Slide 16: Iron ore comparison — Fe content of Australian shipping grade
lron ore comparison — , Fe content of Australian shipping grade e 62.00- 6150. Weighted Average Fine Iron Ores - Fe Grade 61.00- 60.50- 60.00- Fe % 59.50- Rio 59.00- 58.50- 58.00- Data Sources: Robe River — Website, BHPB — Direct from Company, H1— Industry Sources, FMG — Own Tests, AME
Slide 17: 2004 Iron ore comparison — Fe content of Australian shipped ores
_ 2004 Iron ore comparison — ‘, _/Fe content of Australian shipped ores Rio and BHP sold 84 Mt of ores with Fe less than Fortescue HG Rio and BHP sold 62 Mt of ores with Fe less than Fortescue SV Fortescue’s ore is very attractive to Asian mills with most production under contract Asian steel mills
Slide 18: Metallurgical results conclude
Metallurgical results conclude: | Fortescue ore is a “have to have” for Asian Steel Mills Fortescue ore performs at the top end of its competitors Analogy: * Brazilian Carajas and premium Australian Brockman (in decline) - BMW Series 7 * Fortescue HG, BHP MAC, RIO HIM and West Angeles ores —- BMW Se
Slide 19: Total cost per tonne US$7.50
Total cost per tonne US$7.50, comprising: ev * Cash Cost US$4.65 62% eee * Capex component US$1.20 16% HG Stockpile * Contractor’s Profit US$0.80 12% “eee * Contingency US$0.75 10% Oo Oo f,oO_ Mining Feasibility Study Ol TRUNK CONVEYOR O Feeder Hopper Lt 5 i interim Stockpiles. | Truck Cat 777 [L_s#
Slide 20: Fortescue November 2005 — Unparalleled progress
Fortescue 14 November 2005 — (A, Unparalleled progress as Iron Ore ready to be shipped
Slide 21: Fortescue Trial Pit - November 2005
Fortescue Trial Pit - 25 November 2005 ready for market
Slide 22: Open Pit Mining, simple, smart
Open Pit Mining, simple, smart Dump trucks load road trains from windrows a
Slide 23: Open Pit Mining, simple, smart
Open Pit Mining, simple, smart Road trains for ore, conveyors for waste elena ay mormon
Slide 24: Infrastructure — Large scale open access port at Port Hedland
Infrastructure — . Large scale open access port at Port Hedland
Slide 25: Infrastructure – at Port Hedland
Slide 26: Government approvals
Government approvals * Mining and Infrastructure State Agreements executed * Project commenced 8 February 2006 * Strong Aboriginal support — Native Title and Heritage surveys completed * National Competition Council delivers draft declaration in favour of Fortescue
Slide 27: Project construction
, Project construction * Mine is simple - outsourced * Straightforward rail and port — no processing risk * WorleyParsons Infrastructure capital cost estimate of US$1.46 Billion with accuracy of +/- 10% * 22 month construction period with six month “pre-construction” activities should deliver first
Slide 28: Slide 28
Slide 29: oo ay
ly oo ay | yy | | L ao ay an i iy oe Ly |
Slide 30: Slide 30
Slide 31: Project underway — Locos
», Project underway — Locos I RAIL 4, CMG OF GOMER E00 LEAFED
Slide 32: Project underway — Rail Steel
Project underway — Rail Steel
Slide 33: Project underway — Sleepers
., Project underway — Sleepers
Slide 34: Project underway — Dredging
Slide 35: Project underway — Ore Cars
Slide 36: Project underway — EPCM
©, Project underway — EPCM WorleyParsons resources & energy
Slide 37: Barclay Mowlem
BARCLAY VIOWLEM Pereannionce Gunlt ca truat
Slide 38: Project underway — Mining
», Project underway — Mining LEIGHTON ’ q , * Ai Roche MIMING
Slide 39: Project underway
, Project underway AREA SUPPLIER CURRENT STATUS Preferred Li lected Dredging referred supplier selecte Award contract Jan 06 Wharfs Final selection & contract close Jan 06 Ore Cars y 4 a5 EDI sunrepconinaN aaa Detailed design and/or E Qresr construction of prototype ek PSE —_—————— = EDI Engineering
Slide 40: Project underway
, Project underway AREA SUPPLIER CURRENT STATUS Competitive tendering completed Selection of preferred supplier & final negotiations Port Bulk Material Handling Equipment Competitive tendering Mine Material Handling Final negotiations WorleyParsons resources 2 energy, EPCM FEED Contract signed Compe
Slide 41: Project underway
Project underway AREA SUPPLIER CURRENT STATUS Competitive tendering completed Selection of preferred supplier & final negotiations Port Bulk Material Handling Equipment Competitive tendering Mine Material Handling Final negotiations EPCM WorleyParsons FEED Contract signed raseunces & eneriy Earthwor
Slide 42: Project schedule and milestones
Activity Description Sep] Oct [Nov] Dac | Jan] Feb] wu [Aug] Sep] Oct] Nov] Dec| Jan Way] Jun 49[ 20 [a [a 23 | 24 | 25 Project Mitestones FEED ]Ore Handing Enginoaring Design Procurement & Contracts Construction Port Facilities Engineering Design Procurement & Contracts {Construction Rail Services
Slide 43: Winters Dorsey and Co. appointed by Citigroup
Winters Dorsey and Co. appointed by Citigroup * Draft report close to finalisation * Key comments include “Geologic work done by Fortescue is of very high quality and provides a sound basis for the resource modeling and estimation done by Snowdens” “WDC is in agreement with the capital cost estimate
Slide 44: To conclude, the risks have been managed out
, To conclude, the risks have been managed out Risk Mitigant Market v¥ |30 Mtpa contracts Ore Body v | Huge, 2.4 Bt Resource, 1.1 Bt Reserve Approvals ¥ |All pre-requisites in place Construction v * Infrastructure DFS complete + EPCM underway * Critical contracts ready to be awarded Operations v Exp
Slide 45: Letter from BHPB Iron Ore to Andrew Forrest
Garbon Steet Materiate President - ron Gre ne wil ‘estes \ ‘vou ora sot | Soca cab As Berets gb to Sah Nir, Andrew Forrest Shief Executive Officer Fortescua Meiafs Group Ltd Ground Floor, Fortescue House 80 Kings Park Rowd West Perth, Western Australia 6! SS Septernber 2008. Dest Andrew, ‘Thank you
Slide 46: Catch — Sufficiently Advanced?
OQ, Catch 22 — Sufficiently Advanced? e “,.. When your plans for Mindy Mindy are sufficiently well advanced to make this practicable.” “In light of the above, | believe that there would be little point to a meeting at this time. Yours sincerely Graeme P Hunt President BHPB Iron Ore”
Slide 47: Catch — It makes no commercial sense
» Catch 22 — It makes no commercial sense e Three Judges of the Full Court of the Supreme Court of WA “It makes no commercial sense to require a prospective mine operator to undertake the huge expense of establishing a mining operation without having the slightest idea how much he will have to pay t
Slide 48: Fortescue Metals Group Ltd
Fortescue Metals Group Ltd The New Force in Iron Ore Fortescue House 50 Kings Park Road West Perth Western Australia veww. fring! com au
Fortescue Metals Group — 9th Annual Global Iron Ore & Steel Forecast Conference 2006 on 6ix