Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Mines and Money Conference (April 2016)
30 slides from Fortescue's conference presentation, Apr 6, 2016
Slide 1: Mines and Money Conference
For personal use only Mines and Money Conference Working together. Delivering results.
Slide 2: Forward looking statements
Forward looking statements For personal use only 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 Report at 30 Fortescue Metals Group Limited ("Fortescue"). It is not recom
Slide 3: Building a world class company
Building a world class company Core supplier to China’s growth For personal use only Safety focus First ore Low cost Engagement Empowerment Leadership in 2008 producer Shipped over 165mt Production rate 620mt 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 4: Ww Fortescue Integrity Determination Set yourself Enthusiasm Empowerment Generating ideas Frugality
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 $6.1bn Consistent dividend policy 5
Slide 6: Continuous, sustainable cost improvements
Continuous, sustainable cost improvements For personal use only Through development of assets, efficiencies, productivity and cost savings US$/wmt 1 Solomon operations 60 50 48 44 2 Blending strategy 58% Fe 40 34 3 Processing, wet plants + de-sands 30 27 20 15 4 Operational efficiencies Exit FY16 at
Slide 7: Allocation of cost reductions across initiatives
For personal use only 0 10 20 30 40 50 US$/wmt FY12 48 9 Fx Firetail 3 Blending C1 cost reductions Wet 2 Processing Strip Ratio Chichester Fortescue 2 Blend Allocation of cost reductions across initiatives Mining 3 Sequence Solomon 3 Development 1 Diesel Operational 8 Efficiencies Leases and 1 Suppo
Slide 8: Continuing to reduce breakeven price
Breakeven index price For personal use only Continuing to reduce breakeven price US$/t 40 USD:AUD 0.71 30 1.7 28.8 3.5 3.3 23.6 2.0 20 0.4 18.3 1.4 3.5 13.0 10 0 C1 Shipping Royalty Admin Delivered cost Moisture Dmtu Total dmt cost Interest Sustaining Breakeven to China (wmt) adjustments capex price
Slide 9: Lowest all in cash producer
Lowest all in cash producer For personal use only Factoring in capital and interest Source: Shaw and Partners – 6 November 2015 9
Slide 10: Operating and financial performance
For personal use only Operating and financial performance
Slide 11: 1HY16 Earnings
1HY16 Earnings For personal use only Operational performance + sustainable cost reductions support financial results Underlying NPAT EBITDA 1 84mt shipped US$319m Rate maintained US$1.3bn US$200m Net debt Interim dividend A$0.03/share Sustaining capital FY16 US$1.1bn lower 1 Refer to attached glossa
Slide 12: Underlying EBITDA
Underlying EBITDA For personal use only Cost and production performance offsetting price weakness Underlying EBITDA, US$ millions Cash savings since achieving full operating capacity US$bn 1,387 4.0 3.0 0.8 1,440 27 96 2.0 1.1 1,301 3.5 54 27 1,568 2.7 0.8 1.0 0.8 - HY15 Volume Cost Price Royalty Fx
Slide 13: Debt maturity profile
Debt maturity profile For personal use only Net gearing 44% with net debt of US$6.1bn US$ millions 5,000 4,839 4,000 3,000 2,000 1,000 2,160 Extended Runway 577 478 0 CY2016 0 CY2017 CY2018 CY2019 CY2020 CY2021 CY2022 Senior Secured Credit Facility Senior Unsecured Notes Senior Secured Notes 13
Slide 14: Fortescue and Vale
Fortescue and Vale For personal use only Memorandum of Understanding announced • Long term opportunities to add value for our Chinese customers • Potential blending Joint Venture • Address customer needs and improve supply chain efficiency • Minority share acquisition or asset investment to be explo
Slide 15: Market
For personal use only Market
Slide 16: 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 16
Slide 17: China's share of global GDP approaching 20% by 2020
China’s share of global GDP approaching 20% by 2020 China now produces 50% of the world’s steel For personal use only 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 2013 2014 2015 2016 2017 2018 2019 2020 China India Rest of Asia
Slide 18: China's One Belt One Road
China’s One Belt One Road For personal use only Generating regional demand for steel
Slide 19: Steel consumption to build economy
Steel consumption to build economy Steel demand – driven by policy decisions For personal use only Source: Wood Mackenzie 19
Slide 20: Iron ore supply in balance…sentiment driving price
For personal use only Days Coverage 10 20 30 40 50 0 Jul-10 Sep-10 Nov-10 Source: Bloomberg and Umetal Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Port stocks remaining stable Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14
Slide 21: Reserves and resources
For personal use only Reserves and resources
Slide 22: Resource portfolio supports asset base
Resource portfolio supports asset base For personal use only Largest Pilbara tenement footprint 12,000 2,463 2,463 Mineral Resources dry in situ (Mt) 10,000 2,463 740 740 8,000 2,013 624 1,032 624 624 6,000 4,877 4,793 3,504 3,070 3,070 2,860 4,000 2,224 1,715 695 303 491 695 695 5,504 695 695 695 5
Slide 23: Supporting our local community
For personal use only Supporting our local community
Slide 24: Ending Aboriginal disparity in the Pilbara
Ending Aboriginal disparity in the Pilbara For personal use only Creating opportunities through training, employment and business opportunity 24
Slide 25: Focused strategy
For personal use only Focused strategy
Slide 26: 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) 2015 Source: Metalytics 25
Slide 27: 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 27
Slide 28: 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 28
Slide 29: For personal use only
For personal use only www.fmgl.com.au @FortescueNews Proudly supporting:
Slide 30: 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
Fortescue Metals Group — Mines and Money Conference (April 2016) on 6ix