Grange Resources Limited · ASX:GRR
Grange Resources — Investor Presentation (October 2006)
24 slides from Grange Resources's investor presentation, Oct 2, 2006
Slide 1: Investor Update October 2006
<5 GRANGE RESOURCES LIMITED INVESTOR UPDATE OCTOBER 2006 Grange Resources Limited (GRR} Level 11; 200 St Georges Terrace Perth, WA 6000, Australia Phone + 6189321 1118 Fax + 618 9321 1523 www. grangeresources.com.au
Slide 2: Investment Highlights
Investment Highlights GRANGE OWNS 100% OF THE SOUTHDOWN MAGNETITE AND KEMAMAN PELLET PROJECT PROJECT IS SIGNIFICANTLY ADVANCED WITH NO INFRASTRUCTURE ISSUES AND BFS NEARING COMPLETION (ADVANTAGE OVER OTHER WESTERN AUSTRALIAN IRON ORE PROJECTS) FULLY INTEGRATED PROJECT WITH ABILITY TO PRODUCE HIGH QU
Slide 3: Dual Location Project
ALLL onan 10SKM SLURRY PIPELINE DELIVERING CONCENTRATE TO. CAPESIZE VESSELS | Al BANY PORT FOR SHIPPING 10 KEMAMAN, MALAYSIA. DUAL LOCATION . * SOUTHDOWN MAGNETITE DEPOSIT IN SW WESTERN AUSTRALIA * KEMAMAN PELLET PROJECT ON EAST COAST OF MALAYSIA <s DD So Sass — INCENTRATE AT 69% Or, GRANGE S AESRUR
Slide 4: Dual Location Strategy
Duel Location Strategy Sa * Existing port and * Proximity to DR Grade Pellet. <a infrastructure consumers L * Short / low cost transfer from * Freight advantages (cost & L mine to port delivery quantities) * Low cost / high availability of * Investment incentives power * Existing port and infrastruc
Slide 5: Project Location
Project Location alll Southdown : i : ‘ SOUTHDOWN MAGNETITE DEPOSIT 2 | \ ke 7. ee ep ee B00 “Albany, es : . libidil C . = _ Chappe tee cape here ann Southern \ Ocean | ee L Southdown Magnetite deposit is 13km in length \ Grange is seeking to purchase Rio Tinto Exploration Licence z ON, GRANGE RF7*
Slide 6: Rio Tinto Aeromagnetic Survey 2005
Mildiiditahitai és DALLA iii pu ee alll RIO TINTO AEROMAGNETIC SURVEY — 2005 « Rio Tinto’s aeromagnetic survey indicates that the Southdown deposit is closest to the surface within Grange’s mining leases se oe. &
Slide 7: Southdown Resource
OMT indicated Gking Since acquisition in 2003, Grange has significantly increased the Southdown resource Upgraded resource statement issued in September 2006 Further upside — Grange now controls 6km of total deposit length of 13km Annual production of 6.6Mtpa magnetite concentrate (37%DTC) = 22+ yea
Slide 8: Pelletising Testwork
Pelletising Testwork * DR and BF Grade pellets from Kobelco and Lurgi Pilot Plant treated 20 tonnes of core to produce Concentrate * 1.5 tonnes of concentrate for Outokumpu (Lurgi), Grade 68.6% * 2.0 tonnes of concentrate for Kobelco, Grade 69.9%Fe * Balance of Concentrate for Testwork/Plant design
Slide 9: Slurry Pipeline and Power Supply
wii [MUJA POWER | ccnenenven Slurry Pipeline ; STATION | Transmission Line + 42cm in diameter — optimal Le transportation method for Southdown concentrate to Albany port facility Supportive community, nonintrusive (pipeline buried) Lower capital and operating costs Suitable terrain Access to require
Slide 10: Albany Port Development
my if i i incite See ss <i ss = Work advancing on port design and pre-development engineering Heads of Agreement signed with Port Authority for Port development in
Slide 11: Malaysian Project Location - Kemaman
Malaysian Project Locati on - Kemaman Le Gua a 7 DAES WHARE [emer tz0m co illllilill SUTURE WHARE y ie KEMAMAN PORT i Existing infrastructure already in place Availability of power/gas/water/labour Malaysian investment incentives FN %, GRANGE 7S AESRURCES LWeEED
Slide 12: Kemaman Location
Kemaman Location Kemaman port has distinct freight advantages over other pellet producers Panamax size vessels can deliver smaller quantities requested by consumers, economically The close proximity to key consumers reduces working capital costs K> GRAN biel Gg B
Slide 13: Target Steel Customers
Maddie LLL LUAU LALLA = <= @ = ~~ oD Fa a ST ) Perwaja Steel Malaysia LU |1@ Amsteel Malaysia a @ Krakatau Steel Indonesia L A F (4) Megasteel Malaysia LE = ® Qasco Qatar | =~ | @ Hadeed Saudi Arabia a Various India SERRE os Ss Hi China Steel Corp. Taiwan Hi Bluescope Steel Ltd Australia ] CC | Posc
Slide 14: DR Pellet Indicative Demand
DR Pellet Indicative Demand SE Asia — *Perwaja Steel *Mega Steel *Krakatau Steel Gulf Region - BSE Asia “Hadeed *Qasco aGulf *Shadeed Steel *Rajhi Steel *Al-Tuwairgi *General Holding Corp *Al-Nassar *Qasco-Essar JV 2005 2008 2012 *Arpco ‘Insig DR PELLET DEMAND IS LIKELY TO INCREASE SIGNIFICANTLY: CA
Slide 15: DR Grade and Lower P
DR Grade « Lower P Very low P levels * Significantly less degradation to Low freight costs fines Small quantities can be shipped * Higher Fe units economically Less working capital expense ag sited Low pelletising costs at Kemaman due to low cost power, labour and the exothermic properties of magnet
Slide 16: Pricing
Pricing | Grange’s pricing Assumption is based on a discount to the delivered cost of pellets from Brazil (i.e. Grange recoups a portion of the freight advantage ~ US$16) HG Fines Price (FOB Brazil) 2010 USc/DMTU BF Pellet Premium 2010 USc/DMTU Pellet Price FOB Brazil 2010 USc/DMTU Pellet Grade % Fe
Slide 17: Financial Overview
pias Financial Overview Initial Capex Operating Cost per Tonne US$1,175m US$39.43 Tonnes Mined Stripping Ratio 2.54 Annual Concentrate Production Average Concentrate Grade Annual Pellet Production Average Pellet Grade 6.6Mt 69.9%Fe 6.8Mt 66.1%Fe Average Post-tax Operating Cash Flow pa |US250m (50% D
Slide 18: Operating Costs
Southdown Mining * Southdown 8 Crushing 0.90 Kemaman Concentrator 8.76 Total Capital Costs _ Pipeline 0.30 Proportion of Total Albany Port Facilities 173 Capital Costs Perth Administration 0.42] WA State Royalties — 280 Very low compared to Brazil due TotalSouthdown | 26. 05 to geography. - : Ocean
Slide 19: NPV & IRR
NPV & IRR NPV at 8% “AS¥cTox | Nota | | 6 YrTax ‘Holiday | Holiday | = | Holiday — 1,270 996 19.6% 1,445 1,125 20.9% Assumes: * 19% Decline in 2006 High Grade Fines Price by 2010 * Pellet Premium of USc 40/DMTU from 2010 * Forex US$:A$ of 0.70:1.00 in
Slide 20: Cost Comparison: Freight and FOB Cost
@ Freight US$/tonne @ FOB Cost US$/tonne CVRD Tubarao Samarco Essar (India) Kemaman (Brazil) (Brazil) (Malaysia)* *CIF Cash Costs *Excludes any credit for potential Malaysian investment 728 GRANGE incentives TS Taguacts wate ‘Includes US$6.2/WMT Albany — Kemaman freight 2
Slide 21: Funding Plan
Funding Plan ¢ Grange is currently running a tender process to secure funding and development partners for the project ¢ EOI’s received by range of international parties — currently undertaking due diligence ¢ In return for a portion of ownership, Grange is seeking: - Upfront payment (minimum recove
Slide 22: Milestones and Timeline
+ Capital and Operating Costs * Complete Final Feasibility Work Q4 2006 Estimated Feb 2006 + Finalise Ownership and Funding Q4 2006 + Launch of JV Tender Process Mar 2006 * Malaysian DEIA Published for + EOl's Received from a Range of Public Review, Approval Q4 2006 International Parties and Due * —
Slide 23: Key Projects, Board and Shareholders
iia Key Project . 100% interest in the Southdown Magnetite and Kemaman Pellet Plant Projects Other Projects: + Red Hill Mine (WA) — Gold royalties Freshwater Project (WA) — Gold Royalties Interests in various exploration tenements across Australia. Malaysian iron Ore Mining ~ Bukit bam Mining Certif
Slide 24: Key Contacts
Key Contacts Geoff Wedlock: Managing Director, Grange Resources Tel +61 (8) 9321 1118 gwediock@grangeresources.com.au Simon Price: Director, Azure Capital Tel +61 (8) 6263 0811 scp@azurecapital.com.au in
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