Grange Resources Limited · ASX:GRR
Grange Resources — Diggers & Dealers 2011
45 slides from Grange Resources's conference presentation, Aug 2, 2011
Slide 1: Australia's leading magnetite producer
For personal use only Australia s leading Australia’s magnetite producer Russell Clark Diggers & Dealers Managing Director & CEO 2nd August 2011
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 d ti tto subscribe b ib ffor, or purchase, h any security it iin G Grange R Resources Li Limited it d (“GRR”) nor does it form the basis of any contra
Slide 3: Company Overview
Company Overview For personal use only Grange remains G i AAustralia’s t li ’ lleading di magnetite tit pproducer. An ASX 300 index company, p y, with a strong balance sheet, no net debt , a large producing mine and a larger magnetite project. project August 2011 Slide 3
Slide 4: Magnetite – The premium iron ore
Magnetite g – The p premium iron ore For personal use only Iron Ore Pellet Higher ~65-69% Fe ~US$220 FOB Tasmania Magnetite Concentrate ALITY ~67% Fe QUA Direct Shipping Lump ~63% Fe Direct Shipping Fines LLower ~58% Fe ~US$170 $ CFR China Lower Price Higher August 2011 Slide 4
Slide 5: Company Snapshot
Company p y Snapshot p For personal use only Current key statistics (A$) Current Ownership Structure Ordinary shares on Free float 29 July 2011 1,154m issue Last share price 29 July 2011 $0.535 33.85% PML 46.81% Market capitalization 29 July 2011 $617m RGL Group 7.84% Cash & Receivables 30 June 2011
Slide 6: Grange Board
Grange g Board For personal use only Grange has a board with a diverse range of relevant experience. Xi Zhiqiang: Chairman Neil Chatfield: Deputy Chairman (Independent) Extensive experience in the Chinese steel industry Recently Executive Director and CFO of Toll Holdings, a position held Baos
Slide 7: Jiangsu Shagang – Cornerstone Shareholder
Jiangsu g g – Cornerstone Shareholder g Shagang For personal use only A strong partnership Grange’s G ’ llargestt shareholder h h ld Major customer with a LOM offtake agreement at Savage River at market prices. Agreement to negotiate at fair market price for Grange’s share of offtake from Asse
Slide 8: Grange Resources: Australia's Leading Magnetite Producer
Grange g Resources For personal use only Australia’s Leading Magnetite Producer Grange’ss position is supported by quality assets In Tasmania and Western Australia. Grange Australia Southdown Project (70%) Savage River (100%) 90km northeast of the Northwest Tasmania Port of Albany Annualised p
Slide 9: Savage River Overview
Savage River Overview For personal use only Ownership Grange 100% Mineral Resource of 306Mt magnetite at 52.3% Resources DTR and Reserves g Ore Reserve of 119Mt magnetite at 51.2% DTR 2.0 Mtpa blast furnace pellets (2011 guidance) Production Potential to expand to 2.6Mtpa Operating A$98/
Slide 10: Savage River Large Scale Operations
Savage River Large Scale Operations For personal use only August 2011 Slide 10
Slide 11: Savage River Downstream Infrastructure
Savage River Downstream Infrastructure For personal use only August 2011 Slide 11
Slide 12: Savage River Port & Shiploading Infrastructure
Savage River Port & Shiploading Infrastructure For personal use only August 2011 Slide 12
Slide 13: Savage River Solid Customer Base
Savage River Solid Customer Base For personal use only Long term offtake agreements – providing revenue stability Agreements are in place for both Savage River and Southdown production at index based market prices. prices Shagang China’s largest private steel mill, producing p of p 29Mtpa pig g ir
Slide 14: Savage River - Leveraged to price
Savage g River - Leveraged g to p price For personal use only Margin leverage to price @2.0Mtpa 500 June 2011 450 400 350 MARGIN A$ milliion 300 250 200 Revenue 150 C t Costs 100 120 130 140 150 160 170 180 190 200 210 220 230 Price US$/t August 2011 Slide 14
Slide 15: June Quarter Summary
June Quarter Summaryy For personal use only Production and Production and Production and Costs Costs Costs June Quarter March Quarter June Quarter 2011 2011 2010 Total BCM Mined (million) 4.1 4.1 3.8 Total Ore BCM (thousand) 511 248 313 Weight Recovery (% DTR) 32.3 38.10 46.2 Concentrate Produced (k
Slide 16: Southdown Project Key Facts
Southdown Magnetite g Project j Key y Facts For personal use only Ownership Grange 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 Targeting 10Mtpa magnetite concentrate for premium Product
Slide 17: Southdown Project PFS Highlights
Southdown Magnetite g Project j PFS Highlights g g For personal use only • Mine Capex, including infrastructure A$2.57 billion; • Operating costs per tonne of concentrate produced < A$60 per tonne;; • Positive NPV with favourable IRR; • Mine life of 19 19-40 40 years @10mtpa of concentrate; • Defini
Slide 18: Southdown Project Location Plan
Southdown Magnetite g Project j Location Plan For personal use only August 2011 Slide 18
Slide 19: Southdown Project Orebody
Southdown Magnetite g Project j Orebody y For personal use only 654 Mt at 36.5% magnetite August 2011 Slide 19
Slide 20: Southdown Project Resources and Reserves
Southdown Magnetite g Project j Resources and Reserves For personal use only Mineral Resources Classification Measured Indicated Inferred 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 1.91 DTC Al2O3% 1 43 1.43 1 2
Slide 21: Southdown Project Orebody Potential
Southdown Magnetite g Project j Orebody y Potential For personal use only Short Term PFS Case Longg Term Potential D t il Details P t ti l Potential Western Resource Western/Eastern Resource Full Western Resource Mine Life 19 years 21 years 40 years Ore (million tonnes) 430 ~575 ~1,200 Ore Grade %DT
Slide 22: Southdown Project Mining
Southdown Magnetite g Project j Mining g For personal use only Open pit mining Conventional bulk mining methods utilising Mi i M Mining Method th d hydraulic face shovels, dump trucks and drill and blast coupled to a Run of Mine (ROM) stockpile Material ~110 Mtpa for first six years Movement
Slide 23: Southdown Project Monster Pit
Southdown Magnetite Project 12 kilometre Monster Pit For personal use only Southdown Open Pit Savage outline River Open Pit 3 Kilometres August 2011 Slide 23
Slide 24: Southdown Project Concentrator Flow Sheet
Southdown Magnetite Project Concentrator Flow Sheet For personal use only August 2011 Slide 24
Slide 25: Southdown Project Product Quality
Southdown Magnetite Project Product Quality For personal use only Southdown Magnetite Southdown Iron % % Concentrate Ore Pellets Total Fe 68.9 Total Fe 67 SiO2 1.56 B2 0.54 Al2O3 1.45 SiO2+Al2O3+TiO2 3.31 CaO 0 11 0.11 P <0.01 MgO 0.16 S 0.01 TiO2 0.38 P 0.04 S 0.08 LOI (Loss of ignition) -3.18 Augu
Slide 26: Southdown Project Power and Pipelines
Southdown Magnetite g Project j Power and Pipelines p For personal use only Key Facts - Power: Estimated Length 288km Capital Cost A$272 million 330kV transmission line Ongoing discussions with Capacity Status Western Power Key Facts – Pipeline: Estimated Length 100km (1.5 metres deep) Cap
Slide 27: Southdown Project Water Supply
Southdown Magnetite g Project j Water Supply pp y For personal use only Seawater reverse Source osmosis desalination plant Capacity 10GL/a Capital cost A$170 million Coastal location 25km from mine and pumped Location to the mine site after treatment August 2011 Slide 27
Slide 28: Southdown Project Albany Port Infrastructure
Southdown Magnetite g Project j Albany y Port Infrastructure For personal use only Vessels Cape size (18m draft) Deepen; widen and extend existing shipping channel Activities New wharf Filtration plant and storage shed 9ha Increases port Area Reclaimed capacity from 2.5Mt to 14Mt New Ber
Slide 29: Southdown Project Environmental Permits
Southdown Magnetite g Project j Environmental Permits For personal use only 3 Mi Environmental Mine E i t l permit it Granted November 2009,, amendment required in 2011 for 10mtpa 3 Port p permits Granted November 2010 Water permit Desalination permit expected in 2011 August 2011 Slide 29
Slide 30: Southdown Project PFS Capital Expenditure
Southdown Magnetite g Project j PFS Capital p Expenditure p For personal use only SOUTHDOWN CAPITAL EXPENDITURE A$m Mine (1) 560 Concentrator 850 Slurry Pipeline 200 Transmission Line 320 Desalination and Water Supply 200 Albany Concentrate Filtration and Storage 20 Port of Albany 400 Allowances for
Slide 31: Southdown Project Australia - Malaysia
Southdown Project Australia - Malaysia For personal use only 4. Pellet Plant (7Mtpa) ( p ) 3. Concentrate shipped (10Mtpa) 2. 100km slurry pipeline to Albany Port 1. Mine and concentrator targeting 10Mtpa of concentrate production for over 25 years August 2011 Slide 31
Slide 32: The Kemaman Pellet Plant Location Plan
The Kemaman Pellet Plant Location Plan For personal use only August 2011 Slide 32
Slide 33: Kemaman Project PFS Capital Expenditure
Kemaman Project PFS Capital Expenditure For personal use only KEMAMAN A$m Pellet Plant 640 Kemaman Port Facilities and Materials Handling 300 All Allowances f Provisional for P i i l Sums S 1 Total Costs (2) – Malaysian Operations 941 (2) Includes EPCM, Owners Costs, Estimate Accuracy and Project Co
Slide 34: Southdown Project PFS Operating Cost Summary
Southdown Project PFS Operating Cost Summary For personal use only Unit Rates Cost per tonne of concentrate produced <A$60 Cost per tonne of pellets produced <A$75 (1) Excludes WA Mineral Royalty August 2011 Slide 34
Slide 35: Forecast Project Schedule
Forecast Project j Schedule For personal use only 2011 2012 2013 2014 Definitive Feasibility Fi Financing i Construction Commissioning & Production August 2011 Slide 35
Slide 36: Southdown Project PFS Highlights
Southdown Magnetite g Project j PFS Highlights g g For personal use only Why is this project different to other magnetite projects being built? • Grange’s G ’ cashflow, f extensive operating experience and existing IP dramatically reduces execution risk, • The project is well advanced: ¾ Major j p p
Slide 37: Resources and Reserves 2011
Resources and Reserves 2011 For personal use only Supporting Long Mine Lives Mineral Resources (inclusive of reserves) Ore Reserves Tonnes Grade Tonnes Grade ((Mt)) ((%DTR)) ((Mt)) ((%DTR)) Savage River 4 Savage River Measured 81 54.2 Proved 48 51.6 Indicated 132 53.5 Probable 66 51.4 Inferred 87 48
Slide 38: Production growth prospects
Production g growth p prospects p For personal use only 14000 12000 10000 on tonness 8000 Southdown Millio 6000 4000 2000 S Savage River Ri 0 2006 2008 2010 2012 2014 2016 2018 2020 (S thd (Southdown production d ti includes i l d Sojitz S jit 30% share)) h )) August 2011 Slide 38
Slide 39: The Largest Producing Magnetite Company
Grange g - The largest g Producing g Magnetite g Company p y For personal use only 2,000 1,800 2.17b Out of the numerous junior companies with magnetite assets, Grange 1 96b 1.96b is the only one in production. production 1,600 2.17b Marrkeet Capitalisatioon A$M 1,400 20.1b 1,200 1,000 800 600 400 2
Slide 40: Current Focus and Future Milestones
Current Focus and Future Milestones For personal use only Position Savage g River for longg term sustainable production: p – Replacement ball mill installed February 2011 2012 – Replacement AG mill purchased – Trucking T ki fleet fl t re-build b ild almost l t complete l t – Reviewing options for
Slide 41: Summary
Summaryy For personal use only Australia's leading magnetite & iron ore pellet producer Solid investor, customer and revenue base Extensive magnetite technical and operational expertise Strong balance sheet and strong cashflow forecasts Healthy H lth mix i off Cornerstone, C t Institutiona
Slide 42: Key Contacts
Keyy Contacts For personal use only Primary contacts: Russell Clark Managing Director & Chief Executive Officer +61 8 9327 7901 managingdirector@grangeresources.com.au August 2011 Slide 42
Slide 43: 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 the A
Slide 44: Appendix A – Southdown Project Mineral Resource Estimate
Appendix pp A – Southdown Project j For personal use only 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 1.91 DTC A
Slide 45: Appendix B – Savage River Mineral Resource and Ore Reserve Estimates
Appendix pp B – Savage g River For personal use only Mineral Resource and Ore Reserve Estimates Mineral Resource Tonnes (Mt) Grade (%DTR) Grade Ore Reserve Tonnes (Mt) (%DTR) Savage-River Total Measured 86.4 54 S Savage-River Ri Total T t l Indicated 131.9 53 Proved 50.6 51 Inferred 87.8 49 Probable