Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Diggers & Dealers 2018
30 slides from Fortescue's conference presentation, Aug 7, 2018
Slide 1: Diggers & Dealers 2018: The New Force in Iron Ore
Fortescue ‘The New Force in Iron Ore
Slide 2: Forward looking statements
Forward looking statements Disclaimer 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 Fortescue Metals Group Limited ("Fortescue"). It is not recommended that 30
Slide 3: Building a world class company
Building a world class company Safety focus: engagement, empowerment, leadership Core supplier 1 billion tonnes Shipped to China Low cost 170mt producer Production rate 3
Slide 4: Generating shareholder value
Generating shareholder value Focus on safety, productivity and efficiency Market strategy Operational performance Long life resources Capital discipline Shareholder returns 4
Slide 5: FY18 June quarter results
FY18 June quarter results Sustainable cost reduction and consistent production performance TRIFR 3.6 C1 cost US$0.5bn Committed to safety US$12.17/wmt Debt reduced in FY18 46.5mt US$12.36/wmt Net debt Record 170mt for FY Estimated FY C1 cost US$3.1bn 6
Slide 6: Sustainable cost improvements
Sustainable cost improvements Initiatives delivering long term low cost outcomes – US$12.17 June quarter C1 US$/wmt Structural improvements 48 44 Solomon + Blending + Processing 34 Productivity and Efficiency 27 Utilisation, Recoveries, Maintenance 15 13 12 Innovation and Technology Autonomy, Gas, O
Slide 7: Maintaining position on the cost curve
Maintaining position on the cost curve China's Iron Ore Supply CFR Costs (including royalties & ocean freight) 2012 2018 (projected) Source: Metalytics – October 2017 8
Slide 8: Financial performance
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Slide 9: Price and margins
Price and margins Managing operations to maximise margins US$/dmt 90 80 70 60 50 40 30 20 10 20 15 17 24 33 27 24 - 1HY15 2HY15 1HY16 2HY16 1HY17 2HY17 1HY18 Underlying EBITDA per dmt 62 Platts CFR Index Fortescue realised price Avg Underlying EBITDA per dmt 10
Slide 10: Debt repayments
Debt repayments Lowering gross debt to US$4bn and net debt to US$3.1bn at 30 June 2018 US$m % 16,000 80 12,000 12,691 60 10,533 9,557 9,569 8,000 40 7,159 7,188 6,771 4,000 5,188 20 4,471 4,181 3,289 2,633 - - FY13 FY14 FY15 FY16 FY17 1HY18 Debt Net debt Gross gearing (RHS) Net gearing (RHS) Refer t
Slide 11: Proforma debt maturity
Proforma debt maturity Lowering borrowing costs and improving flexibility of capital management 2,500 2,000 Volume (US$m) 1,500 1,000 1,400 500 750 750 500 0 2018 2019 2020 2021 2022 2023 2024 Senior Unsecured Notes Syndicated Term Loan 2022 Senior Secured Note repayment and refinancing complete in
Slide 12: Market
The New Force in Iron Ore Fortescue
Slide 13: Core supplier to Asia
Core supplier to Asia Well established market share of imported iron ore to China 2017 global steel production 1,691mt Low impurity products Competitive Diverse 572 value in use customer base 832 82 Responsive Proximity 101 to market needs to high growth region 105 China Japan India United States Re
Slide 14: Developing and emerging Asia
Developing and emerging Asia Asian economies generating two thirds of global growth Source: IMF Source: IMFWorld WorldEconomic EconomicDatabase DatabaseOctApril 20162018 15
Slide 15: Iron ore price
50% 60% 70% 80% 90% 100% 110% 120% 130% 140% 150% 4/01/2016 4/02/2016 4/03/2016 Iron ore price 4/04/2016 4/05/2016 4/06/2016 Platts 62 4/07/2016 4/08/2016 4/09/2016 4/10/2016 4/11/2016 Platts 65 4/12/2016 4/01/2017 4/02/2017 4/03/2017 4/04/2017 4/05/2017 4/06/2017 MBIOI 58 Premium 4/07/2017 4/08/201
Slide 16: Focus on core iron ore business
Focus on core iron ore business Large tenement footprint 17 16
Slide 17: Eliwana Project
Eliwana Project Underpins 60% product, financed from operating cash flows US$1.275bn capital investment 143kms rail; 30mtpa dry OPF Strip Ratio 1.1 average LOM Production start Dec 2020 Capital intensity US$42/t 17
Slide 18: Product strategy – maximise margins
Product strategy – maximise margins Pathway to developing >60% iron content product Eliwana Blending Key to 60% Fe Chichester + product Solomon + Eliwana Greater Optimise margins operational Product spec flexibility Cost Mine lives 18
Slide 19: Innovation and Growth
Innovation and Growth
Slide 20: Innovation projects
Innovation projects Delivering future operational and cost improvements AHS* >500mt 10 autonomous material moved drills in operation at Solomon Chichester Relocatable 100 AHS* trucks conveyor >3 years at Cloudbreak *AHS - Autonomous Haulage System 20
Slide 21: Active exploration
Active exploration Developing low cost growth options across Iron Ore, Lithium, Copper and Gold Pilbara New South Wales ~2,000km2 tenure South Australia ~6,000km2 tenure South America Ecuador, Colombia, Argentina 21
Slide 22: Our people are at the heart of innovation
Our people are at the heart of innovation Innovative training and career development pathways 814 103 Trade Up, Apprentices VTEC graduates commenced and Graduates 98% Apprentice completion rate Successful redeployments 79% Aboriginal people 22
Slide 23: Building strong communities
Building strong communities
Slide 24: Creating positive social change
Creating positive social change Empowering Aboriginal people and embracing diversity 14.6% $2billion Aboriginal Contracts with employment Aboriginal businesses 17.4% 24% Female employment Female management 24
Slide 25: Focussed strategy
ait Fortescue The New Force in Iron Ore = —<_ Focussed strategy f pe i
Slide 26: FY19 guidance
FY19 guidance Sustainable performance driven by innovation 165-173mt US$12-13/wmt Shipments C1 cost US$1.2bn Dividend Total Capital payout ratio Expenditure 50 – 80% NPAT 26
Slide 27: Key strategic focus
Key strategic focus Disciplined capital management Balance sheet strength and flexibility Long term sustainability Low cost growth options Returns to shareholders 27
Slide 28: Celebrating 15 years of milestones
Celebrating 15 years of milestones Together we are Fortescue
Slide 29: Sustainable, World class, Customer focus
Sustainable World class Low cost producer Assets and people Customer focus Unique culture Reliable and competitive Drives performance 29
Slide 30: www.fmgl.com.au
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