Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — BAML Conference 2019
26 slides from Fortescue's conference presentation, May 15, 2019
Slide 1: BAML Conference
For personal use only BAML Conference 14 May 2019 Together we are Fortescue
Slide 2: Forward looking statements
Forward looking statements For personal use only Disclaimer Important Notice Additional Information The purpose of this presentation is to provide general information about Fortescue This presentation should be read in conjunction with the Annual Report at Metals Group Limited ("Fortescue"). It is n
Slide 3: A world class company
A world class company For personal use only >1.1 billion ~170mtpa tonnes shipped Production rate Core supplier Low cost to China producer 3
Slide 4: Fortescue's Values
Fortescue’s Values For personal use only Our Vision: The safest, lowest cost, most profitable mining company. 5
Slide 5: HY19 highlights
HY19 highlights For personal use only US$1.6bn A$0.30/share NPAT Underlying US$644m dividends EBITDA US$13.11/wmt West Pilbara 82.7mt Fines shipped C1 cost Shipments commenced 6
Slide 6: March quarter highlights
March quarter highlights For personal use only TRIFR 3.6 US$71/dmt 38.3mt shipped 10% improvement average price received including 3.8mt of West over the prior quarter 47% Pilbara Fines Iron Bridge C1 cost Cash on hand US$13.51/wmt Magnetite Project US$1.1bn US$2.6bn Stage 2 approved 7
Slide 7: Fortescue delivering growth and income for shareholders
Fortescue delivering growth and income for shareholders For personal use only Fully franked A$0.60/share dividend declared* FY19 dividends total A$0.90/share Total A$ dividend payments • A$0.19/share fully franked interim dividend 90 • A$0.11/ share fully franked special dividend 45 • A$0.60/share f
Slide 8: Integrated operations and marketing
For personal use only Integrated operations and marketing 9
Slide 9: Strong demand for Fortescue products in China and other regions
Strong demand for Fortescue products in China and other regions For personal use only March Quarter China steel production increased by 9.9% yoy* • Proximity to high growth region • Responsive to market needs • Diverse customer base • Half year sales outside China 10 per cent • Maiden shipments to n
Slide 10: Chinese steel mill profits driving iron ore price spreads
Chinese steel mill profits driving iron ore price spreads For personal use only 250 90 225 82 85 200 China steel Steel Product Margin (US$/t) 80 175 % of profitable mills margins moderating 75 150 125 70 86 Focus moved to 100 75 65 input costs 50 68 60 55 25 Increasing demand 0 50 for lower Fe produ
Slide 11: Iron Ore price
Iron Ore price Average price increased to US$71/dmt driven by higher realisation For personal use only and iron ore supply USD/dmt $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Platts 62% IODEX 65% CFR Platts FB - Mysteel (Port) SS - Mysteel
Slide 12: Optimise product mix
Optimise product mix For personal use only Product mix optimisation delivers real value: Tonnes shipped Q3 Product Q2 Product Q1 Product Q3 average realised price millions, (wmt) FY19 mix % FY19 mix % FY19 mix % increased 47% v Q2FY19: West Pilbara Fines 3.8 10% 0.4 1% - - Kings Fines 3.4 9% 3.2 8%
Slide 13: Growth and Development
For personal use only Growth and Development 14
Slide 14: Significant Pilbara footprint for long life production
Significant Pilbara footprint for long life production For personal use only 15
Slide 15: Eliwana mine and rail project
Eliwana mine and rail project For personal use only On target for delivery on time and budget Majority of major equipment tendered US$1.275bn and in line with budget capital investment Detailed design well progressed using 30mtpa dry OPF in-house integrated team 143km rail 200 person fly camp mobili
Slide 16: Iron Bridge Magnetite Project
Iron Bridge Magnetite Project For personal use only US$2.6bn investment in Stage 2 underpinned by Fortescue’s track record in development and operations 22 mtpa* Globally competitive Growth in earnings 67% Fe, low impurity low capital intensity delivers enhanced premium product and operating cost re
Slide 17: Ability to deliver majority of product over 60% Fe
Ability to deliver majority of product over 60% Fe For personal use only Continues to increase Fortescue’s average grade • Competitively positioned across all product segments • Flexibility to optimise margins through iron ore market cycles • Highest grade Australian product with global scale in mag
Slide 18: Innovation
For personal use only Innovation 19
Slide 19: Track record of embracing innovation
Track record of embracing innovation For personal use only World first AHS on Remote commercial scale Operations Centre 26 million km safely Port, Rail travelled by AHS Mine Control Ore Carriers Future of Mobility Centre, Karratha Eight vessels 14% annual shipping vol Explore autonomous mobility tec
Slide 20: Innovation in every aspect of our business
Innovation in every aspect of our business For personal use only Beyond technology and equipment Safety culture Communities Empowering people benefit from our to take control growth and development Aboriginal Diversity Engagement Practical initiatives Jobs, employment and business development 21
Slide 21: Sustainable cost improvements
Sustainable cost improvements For personal use only C1 US$/wmt 48 44 Structural improvements Solomon + blending + processing 34 27 Productivity and efficiency Utilisation, recoveries, maintenance 15 13 12 13 Innovation and technology Autonomy, conveyor, ore carriers, data analysis FY12 FY13 FY14 FY1
Slide 22: Looking to the future
Looking to the future For personal use only Product Eliwana and strategy Iron Bridge Integrated operations Latest technology and marketing strategy including autonomy New energy Exploration Renewable energy, Global opportunities reduced emissions and to support demand increased connectivity 23
Slide 23: World class exploration
World class exploration For personal use only Opportunities that will be driven by market demand Paterson NSW Portugal and Rudall ~2,000km2 tenure 21 tenement applications projects, WA South Australia ~6,000 km2 Early stage target Prospective lithium generation copper-gold ~10,000km2 tenure Ecuador
Slide 24: FY19 Guidance
FY19 Guidance For personal use only Shipments C1 cost US$13-13.50/wmt 165-170mt Including 8-10mt WPF Capital spend Dividend policy US$1.2bn 50-80% pay-out of NPAT 25
Slide 25: Key strategic focus
Key strategic focus For personal use only Balance sheet Long term strength sustainability Growth and Returns to development shareholders options 26
Slide 26: Fortescue The New Force in Iron Ore
For personal use only @: Fortescue The New Force in Iron Ore www.fmgl.com.au Ww FortescueNews