Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Macquarie Bank Conference 2012
28 slides from Fortescue's conference presentation, May 2, 2012
Slide 1: Macquarie Bank Conference
For personal use only Macquarie Bank Conference Sydney 2- 4 May 2012
Slide 2: Disclaimer
Disclaimer For personal use only Important Notice The purpose of this presentation is to provide general information about Fortescue Metals Group Ltd ("Fortescue"). It is not recommended that any person makes any investment decision in relation to Fortescue based on this presentation. This presentat
Slide 3: Fully integrated – large scale efficiency
Fully integrated – large scale efficiency Over 150mt of product shipped to date For personal use only 3
Slide 4: What does Fortescue offer?
What does Fortescue offer? For personal use only • Pure iron ore leverage in one of the world’s world s richest mineral provinces • A clear strategy for near term delivery of 155 million tonnes per annum • Large scale, modern technology based infrastructure • Competitive geographic advantage for shi
Slide 5: Strong market performance – month profile
Strong market performance – 3 month profile For personal use only Share price growth (%) 15 10 ortescue 5 Fo 0 -5 5 -10 -15 %-20 -25 Mount Atlas Iron Vale BHP Billiton Rio Tinto Ltd Grange S&P/ASX 200 Sundance Fortescue Gibson Iron Resources Resources Metals Group Data date range: 31 January to 30 A
Slide 6: Value creation through early delivery
Value creation through early delivery Multiple mines will deliver accelerated ramp up For personal use only 160 Solomon Brockman 140 Solomon CID BCI JV 120 Christmas Creek onnes 100 Cloudbreak Million To 80 60 40 20 0 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 6
Slide 7: $3bn of EBITDA upside over FY12 – FY14
$3bn of EBITDA upside over FY12 – FY14 It’s all about ramp up volumes For personal use only 10 000 10,000 8,000 $2,270m EBITDA (US$m) 6,000 $650m 4,000 $80m E 2,000 Potential FMG results - EBITDA Broker consensus - EBITDA 0 FY12 FY13 FY14 The above chart uses broker consensus operating costs and con
Slide 8: Core competencies
Core competencies Innovation and rapid execution For personal use only • A new exploration model • Fastest ramp up in the history of the Pilbara • Surface mining technology for o ggrade ade control co t o • Heaviest haul rail system in the world • Highest port out-load rates in Australia • Largest o
Slide 9: Resource portfolio sets expansion platform
Resource portfolio sets expansion platform For personal use only 14,000 Annualised growth of 12 000 12,000 1 5bt 1.5bt 3,236 Resources (Mt) 10,000 per annum p 2 465 2,465 8,000 2,013 1,032 624 624 , 1,230 Mineral R 6 000 6,000 1,230 3,070 3,070 2,860 4,000 1,715 2,224 695 695 695 695 695 2,000 2,266
Slide 10: New development model
New development model Delivering results For personal use only Culture Fortescue’s unique culture is the key Relationships Direct relationships with sub contractors and local suppliers China Leveraging China’s fabrication and delivery capability Speed Speed of delivery – time is money Planning Plann
Slide 11: Financial Highlights
Financial Highlights Record HY12 result and strong March YTD performance For personal use only 2012 Half Year Results: • $3.4 billion record revenues and $1.5 billion underlying y g EBITDA • $801 million net profit of up 155% on the prior period last yyear p 2012 Year to Date Performance (end March)
Slide 12: High margin producer
High margin producer Ch Changed d pricing i i delivers d li strong t returns t For personal use only Benchmark regime - FOB Index p pricing g - CFR $180 Average CFR selling price per dry tonne $159 ne $160 US$ per dry tonn Gross margin Average COGS per $135 $138 $140 $79 dry tonne Gross margin Gross
Slide 13: Debt maturity profile
Debt maturity profile Debt profile extended with $2 billion raising in March 2012 For personal use only As at March 2012 (US$m) $ $3,000 Senior Unsecured Notes Senior Unsecured Notes (Call Option) Revolving Credit Facility (undrawn) $2,500 $2,040 $2,000 Preference shares $1,500 $1,500 Unsecured Loan
Slide 14: The market
For personal use only The market 17
Slide 15: Longer term China – the twelfth five year plan
Longer term China – the twelfth five year plan G Great t news for f Pilbara Pilb iron i ore For personal use only billion people p p 50 000 50,000 skyscrapers by 221 2030 - equal to Chinese cities will will live in China’s have 1m+ people ten NY cities cities by 2030 living in them – Europe has 35 5
Slide 16: Shorter term China – what steel slow down?
Shorter term China – what steel slow down? For personal use only Monthly steel production Forecast annual steel production 70 1000 Winter slow ends in 4.5% YOY growth March record 900 60 800 50 700 bel bel 600 40 Axis lab Axis lab 500 ` 30 400 20 300 200 10 100 0 0 2010 2011 2012 2013 2104 2015 2016
Slide 17: China increasingly looks to imported iron ore
China increasingly looks to imported iron ore For personal use only 1400 Seaborne IO demand Domestic IO demand 1200 Mt) production (M 1000 1027 953 800 879 Iron ore p 600 764 719 400 200 333 357 295 271 236 0 2012 2013 2014 2015 2016 China’s imports of iron ore are forecast by 43% over next 5 years
Slide 18: Chinese cost curve supports iron ore prices
Chinese cost curve supports iron ore prices For personal use only 200 Domestic Chinese Ore Australia Brazil India ne CFR equivalent 150 South Africa Other 100 US$/dry tonn 50 U 0 0 100 200 300 400 500 600 700 800 900 1,000 Cumulative Mt (wet, as delivered) Source: Metalytics prepared March 2012 21
Slide 19: Development
For personal use only Development 22
Slide 20: A clear strategy to 155mtpa
A clear strategy to 155mtpa Near term growth profile set to triple production For personal use only H b Elli Herb Elliott tt P Portt Port Hedland Fortescue Infrastructure Dampier Fortescue Rail Karratha Rio Tinto Rail BHP Rail 60mtpa 95mtpa Solomon Hub Chichester Hub BCI JV Tom Price 23
Slide 21: Expanded operations = risk mitigation
Expanded operations = risk mitigation For personal use only 55mtpa 155mtpa 2 mines in 1 geographic area 4 mines in 2 geographic areas 2 ore processing facilities 4 ore processing facilities 1 train unloader 3 train unloaders 1 reclaimer and 1 shiploader 3 reclaimers and shiploaders Average strip rat
Slide 22: Commitment levels high
Commitment levels high C h spend Cash d advancing d i – the th end d game is i ever closer l For personal use only I f t t Infrastructure Mi i flfleett Mining B l Balance Committed under $6.5Bn 1.4Bn $2.1Bn contract As at end March 12 Cash C h $3.6Bn $0.2Bn $6.2Bn spent $0.00 $2.00 $4.00 $6.00 $8.00
Slide 23: Port access – the key to success in the Pilbara
Port access – the key to success in the Pilbara For personal use only Fortescue 26
Slide 24: Expansion milestones – Mining Hubs
Expansion milestones – Mining Hubs For personal use only ` Chichester Hub Solomon Hub • Current OPF to 25Mtpa by end June 2012 • Sealed airstrip operational April 2012 • 2nd OPF by end Sept Qtr 2012 • Mining contract finalised June Qtr 2012 • Mining g ramp p up p to 50Mtpa p by y end Dec Qtr 2012
Slide 25: Expansion milestones – infrastructure
Expansion milestones – infrastructure For personal use only ` Port Rail • 2nd out-load o t load circ it and 3rd berth circuit commissioning done • • Mainline duplication end Sept Qtr 2012 Spur line to Solomon end Dec Qtr 2012 • 2nd in-load circuit end Sept Qtr 2012 • Additional rolling stock progr
Slide 26: 2012 and beyond – delivering on promises
2012 and beyond – delivering on promises P Pure iron i ore company leveraged l d to t Asia A i For personal use only • Culture is our differentiator • 55mtpa production base sets the platform • Growth to 155mtpa June 2013 • Further development options through aggressive exploration • Nyidinghu + Wes
Slide 27: The equity value proposition awaits
The equity value proposition awaits A PE uplift lift and d re-rating ti expected t d on milestone il t achievements hi t For personal use only FMG P/E vs the Market 14 Calender 2012 2013 2014 Year 12 10 Consensus Fortescue PE 9.9 7.0 5.7 8 6 4 ASX 200 Sample 12.9 11.4 10.5 2 ASX 200 0 Materials 11 9
Slide 28: Forging Ahead
For personal use only Forging F i Ah d Ahead Sign up to alerts online www.fmgl.com.au
Fortescue Metals Group — Macquarie Bank Conference 2012 on 6ix