Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Investor Presentation (November 2004)
42 slides from Fortescue's investor presentation, Nov 25, 2004
Slide 1: FMG Investor Presentation cover letter
> 5 61 8 9266 GLET Porteseue Metals Group Ltd R ACIN: O02 594 872 :wiwetinglcom.ae Western Australia GO0% PO Box 910, West Perth, Westarn Australia 6872 24 November 2004 The Companies Officer Australian Stock Exchange Ltd. Exchange Plaza, 2 The Esplanade Perth, Western Australia 6000 Dear Sir FMG In
Slide 2: Fortescue Metals Group Ltd
w Fortescue Metals Group Ltd Fortescue Metals Group Ltd ».Fortescue House 50.Kings Park Road West Perth Western Australia 6005 PO Box 910 West Perth Western Australia 6827 Telephone: +618 9266 0111 Facsimile: +-61 8 9266 0188 Website: www.fmgl.com.au Email: jmorrin@fmgl.com.au Microplaty Hematite (M
Slide 3: China's Iron Ore import future - a calculation
China’s Iron Ore import future - a calculation Population Assume - 1,500m people; only if population control policy holds Steel intensity Assume - 450kg/capita; Korea [750] Japan [590] USA [400] Recycling scrap metal Assume - 20%; currently 16%, growth will exceed scrap potential Fe content of impor
Slide 4: And then there is India...
And then there is India... - Population > 1 billion - May exceed China by 2040 - GDP doubling every 10-12 yrs - Steel intensity currently - 26 kg/capita If India matched only current Chinese levels of steel use (per capita) its steel use would be up by 150Mtpa = 250Mtpa extra iron ore demand on its
Slide 5: The Pilbara, the lowest supply costs
The Pilbara, the lowest supply costs CIS 15k Australia rdainsa oourapae ies advankageinio sia - bul must. make hay while tha aun shines. io — Sune AME, JP Koren Australia is the closest to China, able to serve it the most competitively ,
Slide 6: Pilbara Tenement Holdings
Pilbara Tenement Holdings Fortescue’s 17,000 sq km tenement reach dominates the Pilbara
Slide 7: Fortescue, Rio Tinto and BHPB
Fortescue*, Rio Tinto and BHPB : LEGEND Port Hedland Kiount Goldsworthy, ~ & Town —_— wey —— _ crainage South Hedland | ail - existing Rall corriclor - proposed FM: FMG Rio Tinto. BHP Robe River lron Ore cepost fron Ore mine tf Se MS ey Hammer
Slide 8: Meeting the demand for major independent supply
Meeting the demand for major independent supply Wholly owned Iron Ore Regions q Oo kilometers: 101 i Port Hedland soutn Heatana ‘om Price 4 Pilbara a Cle caeEB Fount Goldsworthy Te e on * * LEGEND Town Highway Drainage Rail - existing Rail corridor - proposed FMG FING tenements iron Ore deposit Wron
Slide 9: Iron ore region
° ron ore region ° tl iC em) == 1 w mult a he S ° ters 1
Slide 10: Chichesters - targeted mineralisation > 2 billion tonnes
Chichesters ~ targeted mineralisation > 2 billion tonnes Target ane ; Target . Ore Body Million %¥Fe LOI Estimation Grade Tonnes Christmas Creek 900 - 1,200 55-58 5-8 >60% JORC resource & mapping Mt Lewin/The Hammer 300-400 55-58 4-8 >60% JORC resource & mapping Mt Nicholas 391 49.5 8 58-60% JORC re
Slide 11: The Chichesters actual mineralisation JORC standard
The Chichesters actual mineralisation JORC standard (Snowdens) to date 1.135 billion tonnes & growing JORC Ore Body %Fe LOI Shipping Grade Estimation Million Tonnes Christmas Creek (33% Area drilled JORC & 653 56.8 7.5 >60% to JORC Standard) metallurgical results Mt Lewin/The Hammer (50% Area drille
Slide 12: Slide 12
Slide 13: Chichester Cross Section - why mining costs are low
Chichester Cross Section - why mining costs are low Ss 2-3hen Width 40000 Dui Hele ON a 2 beefy yess = eee Ae Reference FORTESCVE METALS GROUP EZ vommacier GENERAL CHICHESTER RANGES IRON ORE DEPOSIT Bees DIAGRAMATIC CROSS SECTION LOOKING WEST Not to Scale, Vertically Exaggerated Footwall Jeernah z U
Slide 14: Ore quality is highly competitive with known products
Ore quality is highly competitive with known products “The identification of microplaty hematite at such shallow depth and across such large strike length is one of the most significant exploration discoveries in the Pilbara in the past 15 years” Dr John Clout - FMG Head of Resources Strategy (previ
Slide 15: FMG has two basic >60% Fe ore types
EMG has two basic > 60% Fe ore types do 6) ¢ Direct ship (or high grade) - requires little or no beneficiation, is already > 60% Fe with low impurities ¢ Beneficiated ore - is processed (in common Pilbara practice) through a beneficiation plant to achieve > 60% Fe ¢ High moisture content is removed
Slide 16: Christmas Creek Calcined Ore Types - Iron
Christmas Creek Calcined Ore Types Buc Competitive Iron (Fe) against known products " 69.00 5 68.00 | 67.00 + 66.00 + % Fe 65.00 + 64.00 + 63.00 + HI - MM Y BHPB -MM HI - Premium HI - 62.00 | BHPB - Y Me J (RR) BHPB - Premium 61.00 +
Slide 17: Christmas Creek Calcined Ore Types - Phosphorous
Christmas Creek Calcined Ore Types Sd Competitive Phosphorous (P) against known products 0.09 0.08 4 0.07 4 0.06 4 0.05 4 , 0.04 : : e ae: 0.03 4 . g I sa Z 3 o : = ey ca a ma 0.02 | ES 5 =) na = 0.01 4 6.00 J
Slide 18: Christmas Creek Calcined Ore Types - Aluminium
Christmas Creek Calcined Ore Types Suc Competitive Aluminium (Al) against known products 3.60 5 3.00 + 2.50 5 2.00 + % Al203 1.50 4 1.00 4 HI-Y BHPB-Y BHPB - MM HI-MM HI - Premium BHPB - Premium Mesa J (RR) 0.50 | 0.00 +
Slide 19: Christmas Creek Calcined Ore Types - Silica
Christmas Creek Calcined Ore Types Competitive Silica (Si) against known products 7.00 5 6.00 4 5.00 4 4.00 + % SI02 £ 3.00 | 4 7 E Bl te | | so | 2|| = lle fe & = or Ei] z BHPB - MM 1.00 5 0.00 + Mesa J (RR) 18
Slide 20: Marketing
Marketing Buc Q) C) O Of v All of production covered by non-binding MOU’S prior to the release of technical specifications Enthusiastic response by the steel industry to technical specs Two major binding contracts signed with prepayments: ° Hebei Wenfeng * Jiangsu Fengli Each contract for 20 years E
Slide 21: New Contract Signed
New Contract Signed Ping Xiang Iron & Steel Co. Ltd U] U] 2 million tonnes iron ore per annum Life of contract 22 years Prepayment of US$20million ¢ US$10million prior to financial close ne'wio0d [SW MMM ¢ US$10million during construction Piang Xiang — a large mill - 4 million tonnes per annum, 13,0
Slide 22: Financial Structure
Financial Structure Performance & Strategy www.fmegl.com.au 21
Slide 23: International Corporate Support
International Corporate Support Binding Contracts Signed & First Subcontractors Appointed [Bac | Balance of Project : Discussions advancing MULTIPLEX ARE The New Force in lron Ore
Slide 24: Design, Construct & Finance Contracts
Design, Construct & Finance Contracts ) Total project solution - only excludes locomotives & mining pre-production costs CREC, CHEC & MCC to assume 100% completion risk O oO Settlement commences once performance criteria are met i.e. at practical completion Q) Deferred payment schedule - most of set
Slide 25: China Railway Engineering Corporation Contract
China Railway Engineering Corporation Contract A Mr Andrew Forrest, Chairman of FMG and Mr Qin Jiaming Chairman of CREC sign with support of NDRC, SASAC & Ministry of Commerce
Slide 26: China Harbour & China Metallurgical Contracts
China Harbour & China Metallurgical Contracts Sela ee Ty v Dr Alan Thomas, Australian Ambassador to China; Mr Chen Yongkuan Vice President of China Harbour; Mr Yang Changheng Chairman of China Metallurgical; Mr Andrew Forrest, Chairman of FMG
Slide 27: FMG Funding
a v FMG Funding Forecast Sources and Uses SOURCES A$m | USES ASm China Metallurgical 306 * | Pre-production 70 Tron Ore Customers 104** | Beneficiation Plant 340 Total 410 Total 410 * Under Agreement ** Forecast Virtual Equity from Steel Mills The New Force in lron Ore 26
Slide 28: The Pilbara Infrastructure (TPI) Funding
The Pilbara Infrastructure (TPI) Funding Forecast Sources and Uses SOURCES A$m_ | USES ASm China Rail 630* | Train Sets 290 China Harbour 571* | Below Track 515 Iron Ore Customers 139** | Train Loading 165 Locomotive leases 100 Stock Yard Equipment 238 Wharf 232 Total 1,440 | Total 1,440 * Under Agr
Slide 29: China's largest construction group
China’s largest construction group » US$13 billion work in hand » 40,000 kms of rail >» 1,800 kms of bridges and tunnels » Aims to become Asia’s largest construction group » Fortune 500 company in 2005 BY“. earcitay mowLem » Part of Mowlem ple - GBP | billion turnover group » Rail, civil, marine, po
Slide 30: Built most of Shanghai's massive ports
Built most of Shanghai’s massive ports & Manufactures 60% of world’s large cranes » > 800 specialist harbour construction vessels » US$3.2 billion assets, US$2.3 billion turnover » Dredging & Port development » Worked extensively with ThyssenKrupp ThyssenKrupp - Material Handling Experts Euro 36.1 b
Slide 31: China's leading metallurgical experts
C China’s leading metallurgical experts (] Experts in steel mill & beneficiation plant construction C] Extensive international experience Ll > 60 overseas branches Cl US2.4 billion total assets LI US$3 billion turnover Large Australian construction group Cl Turnkey supply and construction solutions
Slide 32: Definitive Feasibility Study Manager
Definitive Feasibility Study Manager QO) Largest Engineering Service provider to Infrastructure Resource and Process Industries in Australia QO) Well known to International Credit Rating Agencies QO) 4,500 Project Services Personnel in 41 global offices John Grill, Worley CEO: “Worley’s size and rep
Slide 33: Revenue E.B.I.T.D.A
25 _ Revenue E.B.LT.D.A $25.28 ( ) of Aggregated FMG & TPI 20 4 = $14.53/t saat Total Cost > Logistics 45Mt 4 (6278) sen $14 53/t A$ 10 | el = A$ 654m pa 5 4 Mining & ‘ Processing ($8.00) FMG TPI The New Force in Iron Ore nrc)
Slide 34: Earnings Sensitivities
Earnings Sensitivities FMG . Model Pri AtC Current Price t t Iron Ore Selling Price per ones k ee Plus 20% tonne FOB Port Hedland Includes 20- | Market Price Increase #1 25% discount A$30.72/Tn AS36.87/T A$25.28/Tn jenn Margin per tonne (A$) 14.53 19.97 26.12 EBITDA (A$m) 654 899 1,175 EBITDA per sh
Slide 35: Fortescue Corporate Summary
Fortescue Corporate Summary Ticker: FMG.AX 218m Shares & Options @ $3.00 ~ A654m Market Cap Recent Liquidity ~ 2-3m shares/day Shareholder Fully Diluted Fully Diluted Percentage Shares (m) Directors and Management 118.2 54.3% Steel Mills & Institutions: 39.7 18.2% MLC JF Capital Partners JP Morgan J
Slide 36: The Lifeline
The Lifeline \The New Force in Iron Ore nrc)
Slide 37: i
i
Slide 38: Fortescue Development Timeline
Fortescue Development Timeline
Slide 39: Rail Construction Months Fast Track
Rail Construction 18 Months Fast Track OoOco oOo O CREC Build, Transfer, and Finance binding contract Computer aided designed rail corridor and alignment Engineering design ““Worlds Best Practice” Order locomotives and sleepers prior to financial close FMG understands that all stake-holders need a l
Slide 40: Port construction months
Port construction 20 months (while the Rail is built to the Chichesters in 18 months) C)} Rail dumping 8,000 t/h *Twin cell car dumper *Lump/fines screening *Two stackers Rail and Port built for all Pilbara Rolling Stock specifications (can take all players ore) C} Ship loading 10,000 th *Single rec
Slide 41: FMG: Iron Ore
FMG: The New Force in [ron Ore Port Hedland jount Goldsworthy, k. . . : : arene [ ene 7 g x : ; . South Hedland Se erie oO 50 fers ; LEGEND Town Highway Drainage ~ Rell - existing Reail conridlor - proposed FMG Robe River Iron Ore deposit Iron Gre: mine: Distance equivalent: Los Angeles to San Franc
Slide 42: Fortescue House Kings Park Road
Fortescue House 50 Kings Park Road West Perth Western Australia www.fmegl.com.au FMG Sydney/Melbourne Nov 2004
Fortescue Metals Group — Investor Presentation (November 2004) on 6ix