Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — BAML Conference 2015
25 slides from Fortescue's conference presentation, May 13, 2015
Slide 1: BAML Conference
BAML Conference For personal use only Nev Power, May 2015
Slide 2: Disclaimer
Disclaimer For personal use only Important Notice The purpose of this presentation is to provide general information about Fortescue Metals Group Limited ("Fortescue"). It is not recommended that any person makes any investment decision in relation to Fortescue based on this presentation. This prese
Slide 3: Building a world class company
Building a world class company Reliable and competitive supplier to Asia For personal use only • Founded in 2003 • First ore 2008 • Low cost producer • Over 500mt shipped • 165mt production rate • Unique culture 3
Slide 4: For personal use only
For personal use only
Slide 5: The safest, lowest cost, most profitable iron ore producer
at O J R V/ I S I @ The safest, lowest cost, Fortescue most profitable iron ore producer Our Values | Safety Family oxAVIOy, . ty Frugality Empowerment A x ¢ 3 an 9 . oo Integrity Dy) Fortescue © Enthusiasm Generating ideas Determination Set yourself stretch targets
Slide 6: Safety is at the heart of Fortescue's family values
Safety is at the heart of Fortescue’s family values “My brothers’ / sisters’ keeper” For personal use only • Safety Priorities 1 Look after yourself 2 Look after your mates • Engagement active participation • Empowerment to make decisions • Encouragement to speak up • Leadership strong and visible 6
Slide 7: Operating performance – March Quarterly
Operating performance – March Quarterly Cost and efficiency focus For personal use only 40.4mt C1 $25.90/t Shipped 9% improvement 160-165 mtpa US$1.8bn cash on hand Annualised run rate C1 $18/t US$39/dmt FY16 Guidance Breakeven price 7
Slide 8: Underlying C1 costs – net of inventory cost averaging
Underlying C1 costs – net of inventory cost averaging Post ramp up cost optimisation continuing For personal use only 30 • Christmas Ck mining contract 25 • Roster and organisation changes 20 • Procurement initiatives • Mining productivity and efficiency 15 10 • Reduced Surface Mining 5 • OPF upgrad
Slide 9: Costs reduction journey
Costs reduction journey Delivering reduction in the total cost of operations For personal use only 90 8 9 6 60 9 7 18 5 6 6 18 4 20 16 2 All in cost per wmt, inc 4 interest + sustaining capex 13 2 30 10 4 50 2 Delivered cost 39 7 33 34 30 25 C1 – mining processing rail 18 and port - 1HY13 2HY13 1HY1
Slide 10: Break-even Price
Break-even Price Continuing to reduce breakeven price on 62% Platts equivalent basis For personal use only US$ 50 USD:AUD of 0.77 5 39 40 3 2 31 30 4 2 0.5 25 5 20 18 10 - C1 Shipping Royalty Admin Delivered cost Interest Sustaining Total wmt cost Moisture Price Breakeven to China capex adjustments
Slide 11: Balance Sheet
For personal use only Balance Sheet
Slide 12: Completion of US$2.3bn refinancing
Completion of US$2.3bn refinancing No repayments until June 2019 with flexibility for early repayments For personal use only 5,000 4,500 4,876 4,000 3,500 3,000 US$m 2,500 2,000 Extended runway to first maturity 1,500 2,300 1,000 1,050 1,000 500 0 CY2015 CY2016 0 CY2017 CY2018 CY2019 CY2020 CY2021 C
Slide 13: Capital expenditure
Capital expenditure Ex growth capex, current with US$2/wmt guidance sustainable For personal use only Capital profile FY15 Capital – US$650m US$bn mt shipped 7.5 175 Exploration 40 6.0 140 250 Operational capital 4.5 105 3.0 70 360 Development and optimisation 1.5 35 projects 0.0 0 FY10 FY11 FY12 FY
Slide 14: Market
For personal use only Market
Slide 15: Core supplier to China
Core supplier to China Well established 16% market share of imported iron ore For personal use only • Optimised product range • Low impurity 58% Fe average product • High value in use • Large diverse customer base • Reliable consistent delivery 19
Slide 16: China's growth remains strong
China’s growth remains strong Long term fundamentals remain positive For personal use only • RMB 10 trillion in projects approved • One Belt One Road US$1.6 trillion • 300 million people to urbanize • Pro-business structural reform • GDP growth ~7% in 2015 20
Slide 17: Iron ore supply in balance…sentiment driving price
For personal use only 21 Days Coverage 10 20 30 40 50 0 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Source: Bloomberg and Umetal Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-1
Slide 18: Price Realisation
For personal use only 22 US$/DMT CFR Qingdao 20 40 60 80 0 100 1/07/2014 15/07/2014 29/07/2014 12/08/2014 Price Realisation 26/08/2014 9/09/2014 Platts 62 CFR 23/09/2014 7/10/2014 21/10/2014 4/11/2014 18/11/2014 MBIO58 [P] CFR 2/12/2014 16/12/2014 Realising consistently at 85-90% of Platts 62% 30/12
Slide 19: Supporting our local community
Supporting our local community For personal use only
Slide 20: Ending Aboriginal disparity in the Pilbara
Ending Aboriginal disparity in the Pilbara Creating opportunities through training, employment and business opportunity For personal use only 1,100 Aboriginal employees Aboriginal people in 12% Fortescue workforce Contracts to Aboriginal A$1.8 bncompanies and JV’s VTEC Roebourne, Training Centres So
Slide 21: Clear strategy
For personal use only Clear strategy
Slide 22: Moving down the global cost curve
Moving down the global cost curve China's 2015 Iron Ore Supply CFR Costs (including royalties & ocean freight) For personal use only 150 China Domestic concentrate Australia Brazil India South Africa Other 100 US$/dry tonne Brazil Pellets *China Domestic 66% Fe *Pellet 65% Fe 50 *Fines 65% Fe *Fines
Slide 23: Moving down the global cost curve
Moving down the global cost curve Targeting bottom quartile For personal use only 250 2017 200 150 100 China SOE 82nd percentile cost: US$56/t 50 BHP RIO Fortescue Vale 0 0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 27 Source: JP Morgan
Slide 24: The New Force in Iron Ore
The New Force in Iron Ore For personal use only • Low cost producer 165mtpa • Reliable efficient delivery • World class hardware + software • Unique culture drives performance 28
Slide 25: For personal use only
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