Grange Resources Limited · ASX:GRR
Grange Resources — UBS Iron Ore and Coal Seminar 2010
42 slides from Grange Resources's conference presentation, Nov 18, 2010
Slide 1: Australia's leading magnetite producer
GRANGE RESOURCES Australia’s leading magnetite producer For personal use only UBS Iron Ore and Grange Resources Limited (GRR) Level 11, 200 St Georges Terrace Coal Seminar 2010 Perth, WA 6000, Australia Phone + 61 8 9327 7901 18th November 2010 Fax + 61 8 9327 7932 www.grangeresources.com.au Russell
Slide 2: Disclaimer
Disclaimer For personal use only The material in this presentation (“material”) is not and does not constitute an offer, invitation or recommendation to subscribe for, or purchase, any security in Grange Resources Limited (“GRR”) nor does it form the basis of any contract or commitment. GRR makes no
Slide 3: Snapshot 2009
Snapshot 2009 For personal use only • High Debt • Unhelpful banks • Major pre-existing • Share register issues liabilities • Market Cap ~$200m • Prices below costs • Cash constrained NOT FOR DISTRIBUTION IN THE US 3
Slide 4: Snapshot 2010
Snapshot 2010 For personal use only • No net debt, no hedging • Institutional investment • $97m cash at bank • Greater liquidity • $49m leasing and State • Investors tripled, ASX 300 liabilities • Market cap ~$800m • Market pricing for all • Southdown development product • Strong margins NOT FOR DIS
Slide 5: Magnetite – the premium iron ore
Magnetite – the premium iron ore For personal use only ~US$150 • Iron Ore Pellet ~65-69% Fe VALUE & PRICE QUALITY • Direct Shipping Lump ~63% Fe • Magnetite Concentrate ~67% Fe • Direct Shipping Fines ~58% Fe ~US$100 NOT FOR DISTRIBUTION IN THE US 5
Slide 6: Company Snapshot
Company Snapshot For personal use only Current Ownership Structure Board of Directors Mr Xi Zhiqiang Chairman Free float Mr Neil Chatfield Deputy Chairman Mr Russell Clark Managing Director, CEO 32.70 PML Mr Zhao Honglin Non Executive Director 46.90 Mr Clement Ko Non Executive Director RGL Group Mr
Slide 7: Grange Board
Grange Board For personal use only Grange has a board with a diverse range of relevant experience. Xi Zhiqiang: Chairman Neil Chatfield: Deputy Chairman (Independent) • Extensive experience in the Chinese steel industry • Recently Executive Director and CFO of Toll Holdings, a position held for over
Slide 8: Jiangsu Shagang - Cornerstone Shareholder
Jiangsu Shagang - Cornerstone Shareholder A strong partnership For personal use only Grange’s largest shareholder Demonstrated continuing support for Grange with an attractive LOM offtake agreement at Savage River at market prices. Agreement to negotiate at fair market price for Grange’s share
Slide 9: Best performing ASX stock, Q1 2010
Best performing ASX stock, Q1 2010 For personal use only Number of Grange Shareholders 4500 4000 3500 3000 2500 2000 1500 NOT FOR DISTRIBUTION IN THE US 9
Slide 10: Best performing ASX stock, Q1 2010
Best performing ASX stock, Q1 2010 For personal use only 1000 Market Capitalisation $Am 900 800 700 ASX 300 600 September 500 2010 400 300 200 100 0 NOT FOR DISTRIBUTION IN THE US 10
Slide 11: Grange Resources – Australia's Leading Magnetite Producer
Grange Resources – Australia’s Leading Magnetite Producer For personal use only Grange’s position is supported by quality assets in Tasmania and Western Australia. Southdown Project (70%) Savage River (100%) 90km northeast of the Port Northwest Tasmania of Albany Annualised production rate 6
Slide 12: Grange Highlights
Grange Highlights For personal use only Modern mining facility with $100m invested in new equipment in CY2008 Completed capital restructure in November 2009, raising $153m Legacy contracts and financial liabilities restructured/removed A$97m cash September 30, 2010 & no net debt ASX 300 li
Slide 13: Savage River Overview
Savage River Overview For personal use only Ownership • Grange 100% • Mineral Resource of 306Mt magnetite at 52.3% Resources and DTR Reserves • Ore Reserve of 119Mt magnetite at 51.2% DTR • 2.3Mtpa blast furnace pellets and concentrate Production (annualised basis) • Potential to expand to 2.9Mtpa L
Slide 14: Key Information
Key Information September Quarter, FY 2010/11 For personal use only Production Production and Costs and Costs Sept Qtr 2010 Sept Qtr 2009 Total Mined („000 BCM) 4,055 4,350 Total Ore („000 BCM) 217 516 Pellets Produced („000 t) 558 515 Direct Operating Costs 78.80 80.26 A$/tonne Pellet Produced Note
Slide 15: Revenue surge
Revenue surge For personal use only July- January- April-June September March 2010 2010 2010 Pellets Sold ‘000t 588 581 582 Average Price US$/t 55 118 150 Average Price A$/t 61 134 167 Revenue A$35.7m A$77.6m A$97.0m Since July 2010, all product has been sold at index based market prices, rather tha
Slide 16: Large Scale Operations
Large Scale Operations For personal use only NOT FOR DISTRIBUTION IN THE US 16
Slide 17: Own Downstream Infrastructure
Own Downstream Infrastructure For personal use only NOT FOR DISTRIBUTION IN THE US 17
Slide 18: Own Port & Shiploading Infrastructure
Own Port & Shiploading Infrastructure For personal use only NOT FOR DISTRIBUTION IN THE US 18
Slide 19: Solid Customer Base
Solid Customer Base Long term offtake agreements – providing revenue stability For personal use only Agreements are in place for both Savage River and Southdown production at index based market prices. (Current interim price – US$150/t) Shagang • China’s largest private steel mill, producing 22 Mtpa
Slide 20: Savage River - Leveraged to price
Savage River - Leveraged to price use only Margin leverage to price @2.3Mtpa 500 450 Revenue 400 Costs For personal 350 A$ million MARGIN 300 250 200 150 100 77 90 100 110 120 130 140 150 160 170 180 190 NOT FOR DISTRIBUTION IN THE US 20
Slide 21: Southdown Project
Southdown Project High grade magnetite project with advanced infrastructure For personal use only Ownership • Grange 70%, Sojitz Corporation 30% Resources and • Mineral Resource of 654Mt magnetite at 36.5% DTR1,2 Reserves1 • Ore Reserve of 388Mt magnetite at 35.5% DTR1,3 Production1 • Targeting 10Mt
Slide 22: Growth - The Southdown Magnetite Project
Growth - The Southdown Magnetite Project For personal use only 4. Pellet Plant 3. Concentrate shipped 2. 100km slurry pipeline to Albany Port 1. Targeting 10Mtpa mining and concentrating operations for over 25 years NOT FOR DISTRIBUTION IN THE US 22
Slide 23: Southdown Resource
Southdown Resource For personal use only 654 MT at 36.5% magnetite NOT FOR DISTRIBUTION IN THE US 23
Slide 24: Southdown Super Pit
Southdown Super Pit Superimposed on Savage River photography For personal use only 3 Kilometres NOT FOR DISTRIBUTION IN THE US 24
Slide 25: Southdown Project
Southdown Project For personal use only NOT FOR DISTRIBUTION IN THE US 25
Slide 26: Southdown Project
Southdown Project For personal use only NOT FOR DISTRIBUTION IN THE US 26
Slide 27: Southdown Project
Southdown Project For personal use only NOT FOR DISTRIBUTION IN THE US 27
Slide 28: Project Infrastructure
Project Infrastructure Power & Pipelines For personal use only Power Western Power Networks 220kv line from Muja (150MW capacity). EPA Assessed Interconnected to SWIS1 Transmission line easement established Slurry Pipeline Optimal transport method Finalising easements with landowners 1 S
Slide 29: Southdown Magnetite Project Schedule
Southdown Magnetite Project Project Schedule For personal use only 2010 2011 2012 2013 2014 Prefeasibility DFS and Detailed Design Power Dredge Port Albany Sourcing Funding Commitment Long lead Items (Mill, Transformer) Business Readiness & Project Execution Pre-Strip and Mine Establishment (Tails e
Slide 30: Southdown Infrastructure
Southdown Infrastructure Port of Albany For personal use only New Berth Location NOT FOR DISTRIBUTION IN THE US 30
Slide 31: Project Infrastructure
Project Infrastructure Southdown & Albany For personal use only All key infrastructure in place or well advanced Water Recycling Albany town waste water supplemented by pit dewatering & site rainwater harvesting. Power Base load power supply available Power 220kV transmission line Transmission
Slide 32: Project Permits – well advanced
Project Permits – well advanced For personal use only Mine Environmental Granted November 2009 permit Commonwealth Port permit Granted June 2010 State Port Permit EPA recommendation January 2010 Conditions finalised August 2010 NOT FOR DISTRIBUTION IN THE US 32
Slide 33: Resources and Reserves 2010
Resources and Reserves 2010 Supporting Long Mine Lives For personal use only Grange has 764Mt of attributable Mineral Resources and 391Mt of attributable Ore Reserves. Mineral Resources (inclusive of reserves) Ore Reserves Tonnes Grade Tonnes Grade (Mt) (%DTR) (Mt) (%DTR) Savage River 4 Savage River
Slide 34: Production growth prospects
Production growth prospects For personal use only kt 10000 9000 8000 7000 6000 Southdown 5000 4000 3000 2000 Savage River 1000 0 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 (Production shown is attributable to Grange) NOT FOR DISTRIBUTION IN THE US 34
Slide 35: Grange – Historically complicated, Now very simple
Grange – Historically complicated Now….very simple For personal use only 2008, 2009 snapshot 2010 snapshot • Junior development company • Producing company • Large, unknown, Chinese ownership • Profitable with positive cash flow • Low free float (~20%) • Major development project • Low trading volum
Slide 36: The largest Producing Magnetite Company
The largest Producing Magnetite Company For personal use only Out of the numerous junior companies with magnetite assets, Grange is the only one in production. 2,000 1,800 2.13b As at 15th November 2010 1,600 2.78b Marrket Capitalisation A$M 1,400 18.76b 1,200 1,000 800 600 400 200 - NOT FOR DISTRIB
Slide 37: Current Focus and Future Milestones
Current Focus and Future Milestones For personal use only Operational improvements at Savage River being implemented – Management Operating System continues to be installed – New equipment replacing old less productive units – Inventory and cost reductions Generation of cash at Savage for Southd
Slide 38: Summary
Summary For personal use only Australia's leading magnetite & iron ore pellet producer Solid investor, customer and revenue base Extensive magnetite technical and operational expertise Strengthened balance sheet with strong cashflow forecasts Mix of Cornerstone, Institutional and Retail in
Slide 39: Key Contacts
Key Contacts For personal use only Primary contacts: Russell Clark Managing Director & Chief Executive Officer +61 8 9327 7901 managingdirector@grangeresources.com.au NOT FOR DISTRIBUTION IN THE US 39
Slide 40: Competent Person Statement
Competent Person Statement For personal use only Southdown Project The information in this presentation which relates to the Mineral Resources of the Southdown Project is based on information compiled by James Farrell who is a full-time employee of Golder Associates Pty Ltd and a Member of the Austr
Slide 41: Appendix A – Southdown Project
Appendix A – Southdown Project For personal use only Mineral Resource Estimate Classification Measured Resources Indicated Resources Inferred Resources Total Resources Tonnes (Mt) 219.7 210.3 224.4 654.4 DTC wt% 37.4 38.9 33.4 36.5 DTC Fe% 69.2 69.3 69.1 69.2 DTC SiO2% 1.72 1.94 2.07 1.91 DTC Al2O3%
Slide 42: Appendix B – Savage River
Appendix B – Savage River For personal use only Mineral Resource and Ore Reserve Estimates Grade Grade Mineral Resource Tonnes (Mt) Ore Reserve Tonnes (Mt) (%DTR) (%DTR) Savage-River Total Measured 86.4 54 Savage-River Total Indicated 131.9 53 Proved 50.6 51 Inferred 87.8 49 Probable 67.9 51 Total 3
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