Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Diggers and Dealers 2015
28 slides from Fortescue's conference presentation, Aug 4, 2015
Slide 1: Diggers and Dealers
Diggers and Dealers For personal use only 4 August 2015
Slide 2: Disclaimer
Disclaimer For personal use only Important Notice The purpose of this presentation is to provide general information about Fortescue Metals Group Limited ("Fortescue"). It is not recommended that any person makes any investment decision in relation to Fortescue based on this presentation. This prese
Slide 3: Building a world class company
Building a world class company Reliable and competitive supplier to Asia For personal use only • Founded in 2003 • First ore 2008 • Low cost producer • Over 550mt shipped • 165mt production rate • Unique culture 3
Slide 4: For personal use only
For personal use only 4
Slide 5: For personal use only
For personal use only 5
Slide 6: The safest, lowest cost, most profitable iron ore producer
at O J R V/ I S I @ The safest, lowest cost, Fortescue most profitable iron ore producer Our Values | Safety Family oxAVIOy, . ty Frugality Empowerment A x ¢ 3 an 9 . oo Integrity Dy) Fortescue © Enthusiasm Generating ideas Determination Set yourself stretch targets
Slide 7: Safety is at the heart of Fortescue's family values
Safety is at the heart of Fortescue’s family values “My brothers’ / sisters’ keeper” For personal use only • Safety Priorities 1 Look after yourself 2 Look after your mates • Engagement active participation • Empowerment to make decisions • Encouragement to speak up • Leadership strong and visible 7
Slide 8: Operating performance – June Quarterly
Operating performance – June Quarterly Cost and efficiency focus For personal use only 42.4mt C1 $22/t Shipped 14% improvement 165 mtpa US$2.4bn cash on hand Annualised run rate C1 $18/t US$39/dmt FY16 Guidance Breakeven price 8
Slide 9: Underlying C1 costs – net of inventory cost averaging
Underlying C1 costs – net of inventory cost averaging Post ramp up cost optimisation continuing For personal use only Cost savings 30 Initiative Implementation /wmt Consolidation of End April 2015 US$1.20 25 Christmas Creek mining contractors 20 Roster changes End May 2015 US$0.90 Procurement initia
Slide 10: Costs reduction journey
Costs reduction journey C1 Cost in June of $19/wmt, FY16 Forecast of $18/wmt For personal use only 90 8 All in cost per wmt, inc interest + 9 6 sustaining capex 60 9 7 18 5 6 6 18 4 Delivered cost 20 16 2 4 2 13 30 10 4 50 2 7 C1 – mining 39 34 33 30 processing rail 25 and port 18 - 1HY13 2HY13 1HY1
Slide 11: Break-even Price
Break-even Price Continuing to reduce breakeven price on 62% Platts equivalent basis For personal use only US$/dmt 50 USD:AUD of 0.77 40 5 39 3 2 31 30 4 2 0.5 25 5 20 18 10 - C1 Shipping Royalty Admin Delivered Interest Sustaining Total wmt Moisture Price Breakeven cost to China capex cost adjustme
Slide 12: Balance Sheet
For personal use only Balance Sheet
Slide 13: Debt Maturity Profile
Debt Maturity Profile No repayments until June 2019 with flexibility for early repayments For personal use only 5,000 4,863 4,500 4,000 3,500 3,000 Pre-payable at US$m Fortescue's 2,500 option Pre-payable at 2,000 Fortescue's option from Mar 1,500 2018 2,300 1,000 Pre-payable at Pre-payable at Forte
Slide 14: Capital expenditure
Capital expenditure Ex growth capex, current with US$2/wmt guidance sustainable For personal use only Capital profile FY15 Capital – US$626m US$bn mt shipped 7.5 175 Exploration 47 6.0 140 Operational capital 4.5 105 271 3.0 70 308 Development and optimisation 1.5 35 projects 0.0 0 FY10 FY11 FY12 FY
Slide 15: Market
For personal use only Market
Slide 16: Core supplier to China
Core supplier to China Well established 17% market share of imported iron ore For personal use only • Optimised product range • Low impurity 58% Fe average product • High value in use • Large diverse customer base • Reliable consistent delivery 16
Slide 17: China's growth remains strong
China’s growth remains strong Long term fundamentals remain positive For personal use only • RMB 10 trillion in projects approved • One Belt One Road US$1.6 trillion • 300 million people to urbanize • Pro-business structural reform • GDP growth ~7% in 2015 • Real estate shows signs of improvement 17
Slide 18: Demand for seaborne supply
Demand for seaborne supply New coastal capacity moving away from domestic iron ore For personal use only Iron Ore Reserves New/proposed steel capacity Seaborne iron ore Seaborne iron ore imports (Ex. Australia, Brazil etc.) 18 Source: ANZ Research
Slide 19: Iron ore supply in balance…sentiment driving price
For personal use only Days Coverage 19 10 20 30 40 50 0 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Source: Bloomberg and Umetal Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-1
Slide 20: Price Realisation
For personal use only 20 10 20 30 40 50 60 70 80 90 0 US$/dmt 100 29/07/2014 19/08/2014 9/09/2014 30/09/2014 Price Realisation 21/10/2014 11/11/2014 Platts 62 CFR 2/12/2014 23/12/2014 13/01/2015 MBIO58 [P] CFR 3/02/2015 Realising consistently at 85-90% of Platts 62% 24/02/2015 17/03/2015 7/04/2015 2
Slide 21: Reserves and resources
Reserves and resources For personal use only
Slide 22: Resource portfolio supports asset base
Resource portfolio supports asset base Drilling as required and extend through near mine exploration For personal use only 12,000 2,463 Mineral Resources dry in situ (Mt) 10,000 2,463 2,013 740 8,000 624 624 1,032 624 4,877 6,000 3,246 3,504 3,070 2,860 4,000 1,715 2,224 695 695 491 695 695 695 695
Slide 23: Supporting our local community
Supporting our local community For personal use only
Slide 24: Ending Aboriginal disparity in the Pilbara
Ending Aboriginal disparity in the Pilbara Creating opportunities through training, employment and business opportunity For personal use only Total Aboriginal 982 employees Aboriginal people 13% directly employed in Fortescue workforce Contracts to Aboriginal +A$1.8bn companies and JV’s VTEC Roebour
Slide 25: Clear strategy
For personal use only Clear strategy
Slide 26: Moving down the global cost curve
Moving down the global cost curve China's 2015 Iron Ore Supply CFR Costs (including royalties & ocean freight) For personal use only 150 China Domestic concentrate Australia Brazil India South Africa Other 100 US$/dry tonne Brazil Pellets *China Domestic 66% Fe *Pellet 65% Fe 50 *Fines 65% Fe Other
Slide 27: The New Force in Iron Ore
The New Force in Iron Ore For personal use only • Low cost producer 165mtpa • Reliable efficient delivery • World class hardware + software • Unique culture drives performance 27
Slide 28: For personal use only
For personal use only www.fmgl.com.au @FortescueNews Proudly supporting: