Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Diggers & Dealers Forum 2005
37 slides from Fortescue's conference presentation, Aug 11, 2005
Slide 1: Fortescue Metals Group Ltd – Diggers & Dealers Forum
Fortescue Metals Group Ltd “Diggers & Dealers Forum” 10 August, 2005 The New Force in Iron Ore DISCLAIMER Data and amounts shown in this presentation relating to capital costs, operating costs and project timelines are internally generated best estimates only. All such information and data is curren
Slide 2: The Chichesters: part of Fortescue's 17,700 sq km Pilbara holdings
The Chichesters: part of Fortescue’s 17,700 sq km Pilbara holdings — 1.5 years 2 billion tonnes TEGENU propacea Fhe | RR ewe { € [Ee town pools on KA at Se Location Map _ * KALGDORLIE) iS \ é SS oS een Ter ca, paar Ny \ oe a A i! anal 5 ima a \ J 8? tem LO Distance equivalent: Los Angeles to San Fra
Slide 3: The Pilbara Iron Ore and Infrastructure Project
The Pilbara Iron Ore and Infrastructure Project The New Force in Iron Ore Overview « 45mtpa iron ore exports commencing 2007 * Top 200 S&P ASX Company * $70 million invested to date * $80 million in cash, plus receivables at 30 June 2005
Slide 4: Pilbara project areas map
-AWhite Knight Ilokid Break | mh, Christmas Creek Ny, Mount Lewin: Sand nox Mt Nicholas ‘Area C. Mindy! indy. Hope Downs : meWhalshagk !REWMAN dimblebar
Slide 5: Infrastructure — Port at Port Hedland
Infrastructure — Port at Port Hedland ee a yy Le 0 ie AMM oe ue oe ae
Slide 6: Port Material Handling Layout
Port Material Handling Layout _Talesecpic Shiploadar Stockpilee 300,000; Bulk Stockpiles
Slide 7: Australia's iron ore is cheaper than Brazil's.
Australia’s iron ore is cheaper than Brazil’s.
Slide 8: Australian ore is competitive
Australian ore is competitive Australia is a reliable long term Steel partner * Freight is fluctuating and exposes buyers to long term freight risk in the case of the long distance suppliers *« 2004 Average iron ore delivered price per tonne into China Australian Ore $US 42.85 South Africa Ore $US 6
Slide 9: But, the Oligopoly Continues
But, the Oligopoly Continues e Rio’s move on Hope Downs has three outcomes: * The oligopoly continues — Another independent removed * The Asian steel industry is facing a restricted Pilbara — FMG areal solution « Repeats history — Norths Ltd The New Force in Iron Ore
Slide 10: FMG — A Real Solution
FMG — A Real Solution * Open infrastructure access to third parties ¢« Huge Iron Ore resources and 45mtpa (Stage 1) Project ¢ Infrastructure State Agreement in place * Steel industry user friendly - public company allows transparency and investment - all Pilbara advantages of scale and location FMG
Slide 11: Drilling statistics to July 2005
Drilling - Almost 6,000 holes for 261kms of metallurgical samples Project area Christmas Creek Cloud Break Mt Lewin Other areas Totals Drilling statistics to July 2005 Holes 3,291 1,817 381 615 5,960 RC Metres drilled 133,288 85,958 15,624 28,135 263,004 Holes 118 18 13 40 189 Diamond Metres drilled
Slide 12: The Largest Bedrock Hosted Iron Ore Discovery in Australia
The Largest Bedrock Hosted iron Ore Discovery in Australia Mines and Committed Projects 2500 Hireserve, Robe resouros: 2000 ; Robe reserve rf & 1500 = g FNG s resource = 1000 4 4 e 5004 = E be E be be ee Ea Ee o4 eal . Ee Ea ui ae a“ 2 5 nN Z 4 & oO es = & s @ 8 « $2232 88 8 2 z xz 6 os § 3 = ® ® S$
Slide 13: Actual Resource Summary
Actual Resource Summary: July 2005 achieved all targets (Summary) 2005 May Target 1,588mt 2005 Sept DFS Target 2,118mt 2005 July Actual 2,118mt High grade component 740mt
Slide 14: Actual Resource Summary: Breakdown
Actual Resource Summary: duly 2005 achieved all targets (Breakdown) OFS Target - May Jal Ta a Christmas Creek _ [High Grade : _ [High Grade Measured - - - : 100 200 Indicated 600 248 41 180 320 Inferred 400 150 381 148 272 [ Total 4,000 398 802 398 792 ] Cloud Break Measured - - . 50 100 Indicated -
Slide 15: Iron Ore Comparison
iron Ore Comparison — Fe content of Australian shipping grade 62.01 Weighted Average Fine lron Ores - Fe Grade 61.5 61.0 60.51 59.5 Rio 59.0 58.5 58.01 Data Sources: Robe River - Website, BHPB — Direct from Company, HI - Industry Sources, FMG - Own Tests, AME
Slide 16: Two product streams
Two product streams High Grade + 60% Fe Product — 100% covered by LOI’s — Lump and Fines — Greater demand than availability — Opportunity to participate at a later date as production increases ; High Grade in 61.00) 2.80} 1.45 , Lump 0.052 | 0.025; 0.04} 0.04 0.31} 0.07 | 0.017; 0.044; 7.10 | High G
Slide 17: The Steel Industry
The Steel Industry Shift from Productivity to Cost Focus * The steel industry is being forced to focus on cost and profitability * “Value in Use” ores and competitive landed costs far more attractive « Unprecedented growth in Goethitic (Marra Mamba) ores in recent years
Slide 18: Mine Production Targets Evolve with Successful Exploration
Mine Production Targets Evolve with Successful Exploration* Mine - Mt Yt 2 3 4 5 6 7 10 11 12 Cloud Break 20 30 | 25 ; 20 15 15 15 6 0 0 High Grade Christmas Break - - 20) 25 30 30 30 39 0 0 Cloud Break - - - - - - - - 15: 15 Beneficiated Christmas Break - - - - - - - - 30 30 30 45 450 45 | 45 | 45
Slide 19: Chichester Cross Section
Chichester Cross Section 2-3kmn width, Wom Drill Hole Spach FORTESCUE METALS GROUP GENERAL CHIGHESTER RANGES IRON ORE DEPOSIT DIAGRAMATIC CROSS SECTION LOOKING WEST Notto Seale, Vertically Exaggerated eraeep Naru a FEE overnuen Diagramatic Section of Christmas Creek No Vertical Exaggeration
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Slide 21: Fortescue's SM2600 Surface Miner
Fortescue’s SM2600 Surface Miner ONG, oo
Slide 22: SM2600 Roll with Picks
Slide 23: Fortescue Cut Material from Surface Miner
Slide 24: i,
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Slide 25: Fortescue's Drop Tower preparing bulk samples
-4.|7%, Fortescue’s Drop Tower preparing bulk samples | onsite CB -— August 05 eee 1 & ee a oe / ye 7 ee a ee eecrras 7 =
Slide 26: We
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Slide 27: WorleyParsons Definitive Feasibility Study
WorleyParsons Definitive Feasibility Study « Infrastructure capital cost estimate of A$1.95bn * High level accuracy +/-10% and contingency of A$192m * High level technical confidence — WorleyParsons is a top 5 global engineering house * High level financial confidence — capital cost number well with
Slide 28: Definitive Feasibility Study has prompted several initiatives
Definitive Feasibility Study has prompted several initiatives « Immediate adoption of the study by the Fortescue Board * Major long lead time item procurement underway * Strong interest in equity of infrastructure * Strong interest in iron ore joint venture
Slide 29: Strong Interest from Suppliers to Deliver Project
Strong Interest from Suppliers to Deliver Project Area Major component Probable supplier Jans de Nul, Boskalis, Dredco, Van Ord Port Dredging Marine Structures Clough, McConnell Dowell Ore handling Thyssenkrupp, ZPMC, Metso Electrics Siemens, ABB, GE Rail Earthworks BGC, Simto, Leighton, Barclay Mow
Slide 30: Low Capital Cost — Infrastructure Feasibility Study Complete
Low Capital Cost — Infrastructure Feasibility Study Complete Production Rate | 45 Million tonnes per annum Capital Cost Capital cost of A$1.95 bn comprising e A$800 m for the port e A$560 m for the rail e A$120 m for the mine handling facility e A$470 m for indirect costs (EPCM, contingency, etc) Ra
Slide 31: Government
Government ¢ Act of Parliament passed for “Infrastructure State Agreement” in November 2004 * Mining State Agreement for first 45 mtpa expected to receive Government approval shortly ¢ Infrastructure expansion over 45 mtpa allowed in the Infrastructure Agreement * BHPB declaration offers the Mindy M
Slide 32: Aboriginal Heritage and Native Title
Slide 33: Environment
Environment * Stage A ( Rail and Port) ¥ Appeal period is over ¥ Expect approval in August ° Stage B (Mines and East & West Rail) ¥ Finished public review period Y Questions answered and waiting on EPA approval ¥ Currently expect Ministerial approval end 3Q /early 4Q
Slide 34: Project Management
Project Management ¢ Several international construction and project management companies are in discussions with FMG for the major Project roles * These include - Leighton Holdings WorleyParsons [Fa WorleyParsons Barclay Mowlemyen, sanciay wowsem The New Force in Iron Ore
Slide 35: Project Finance
Project Finance citigrougl” World’s largest bank GRANT SAMUEL Leading Australian Corporate Adviser . ' . MILLER MATHIS Leading U.S. Steel Industry Investment Bank WORLD STEEL World’s Leading Steel Information Service DYNAMICS
Slide 36: Timeline to Production 2007
Timeline to Production 2007 % of Capex 100 | % | 73% | 50% | Pumutative Cash Flaw 25% | 2003 2004 2005 2006 2007
Slide 37: Fortescue Metals Group Ltd
Fortescue Metals Group Ltd LEGEND 50 Kings Park Road West Perth Western Australia www.fmgl.com.au Diggers and Dealers Forum 10 August 2005
Fortescue Metals Group — Diggers & Dealers Forum 2005 on 6ix