Grange Resources Limited · ASX:GRR
Grange Resources — Diggers and Dealers 2010
42 slides from Grange Resources's conference presentation, Aug 2, 2010
Slide 1: Grange Resources – Australia's leading magnetite producer
Grange Resources Australia’s leading magnetite producer For personal use only Grange Resources Limited (GRR) Level 11, 200 St Georges Terrace Diggers and Dealers Perth, WA 6000, Australia Phone + 61 8 9321 1118 Kalgoorlie Fax + 61 8 9321 1523 www.grangeresources.com.au 2nd August 2010 Russell Clark
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
Slide 3: Projects - Savage River: Snapshot 2009
Projects - Savage River For personal use only Snapshot 2009 • High Debt • Unhelpful banks • Major pre-existing • Share register issues liabilities • Market Cap ~$200m • Prices below costs • Cash constrained 3 NOT FOR DISTRIBUTION IN THE US 3
Slide 4: Projects - Savage River: Snapshot 2010
Projects - Savage River For personal use only Snapshot 2010 • No net debt, no hedging • Institutional investment • $70m cash at bank • Greater Liquidity • $56m leasing and state • Investors tripled liabilities • Market cap ~$645m • Market pricing for all • Southdown development product • Great margi
Slide 5: Iron Ore Value
Iron Ore Value For personal use only • Iron Ore Pellet ~65-69% Fe ~US$150 Value & price • Direct Shipping Lump ~63% Fe Quality • Magnetite Concentrate ~67% Fe • Direct Shipping Fines ~58% Fe ~US$100 NOT FOR DISTRIBUTION IN THE US 5
Slide 6: Company snapshot
Company snapshot For personal use only Current ownership Structure Board of Directors Mr Xi Zhiqiang Chairman Free float Mr Neil Chatfield Deputy Chairman 31.70 PML Mr Russell Clark Managing Director, CEO 46.90 Mr Zhao Honglin Non Executive Director Mr Clement Ko Non Executive Director RGL Group Mr
Slide 7: Grange Board
Grange Board For personal use only Grange has a board with a diverse range of relevant experience. Xi Zhiqiang: Chairman Neil Chatfield: Deputy Chairman (Independent) • Extensive experience in the Chinese steel industry • Recently Executive Director and CFO of Toll Holdings, a position held for over
Slide 8: Jiangsu Shagang – Cornerstone Shareholder
Jiangsu Shagang – Cornerstone Shareholder A strong partnership For personal use only Grange’s largest shareholder Demonstrated continuing support for Grange with an attractive LOM offtake agreement at Savage River at market prices. Agreement to negotiate at fair market price for Grange’s share
Slide 9: Best performing ASX stock, Q1 2010
Best performing ASX stock, Q1 2010 For personal use only Number of Grange Shareholders 4500 4000 3500 3000 2500 2000 1500 NOT FOR DISTRIBUTION IN THE US 9
Slide 10: Best performing ASX stock, Q1 2010
Best performing ASX stock, Q1 2010 For personal use only Market Capitalisation (A$m) 800 700 600 500 400 300 200 100 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 of
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 A$70m cash June 30, 2010 & no net debt Legacy contracts and financial liabilities restructured/removed Cost and produc
Slide 13: Savage River Overview
Savage River Overview For personal use only Ownership • Grange 100% • Mineral Resource of 306Mt magnetite at Resources and 52.3% DTR Reserves • Ore Reserve of 119Mt magnetite at 51.2% DTR • 2.3Mtpa blast furnace pellets and Production concentrate (annualised basis) • Potential to expand to 2.9Mtpa L
Slide 14: Key Information June Quarter, FY 2009/10
Key Information June Quarter, FY 2009/10 For personal use only Production Production Production and and Costs and Costs Costs June Quarter June Quarter FY 2009/10 2010 2009 Total Mined (‘000 BCM) 3,850 4,490 18,890 Total Ore (‘000 BCM) 313 465 1,613 Pellets Produced (‘000 t) 639 557 2,360 Direct Ope
Slide 15: Large Scale Operations
Large Scale Operations For personal use only NOT FOR DISTRIBUTION IN THE US 15
Slide 16: Own Downstream Infrastructure
Own Downstream Infrastructure For personal use only NOT FOR DISTRIBUTION IN THE US 16
Slide 17: Own Port and Shiploading Infrastructure
Own Port and Shiploading Infrastructure For personal use only NOT FOR DISTRIBUTION IN THE US 17
Slide 18: 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. • China’s largest private steel mill, producing 22 Mtpa of pig iron • Grange’s largest shareholder
Slide 19: 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 • Targeting 10Mtpa magnetite
Slide 20: 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 20 NOT FOR DISTRIBUTION IN THE US 20
Slide 21: Southdown Resource
Southdown Resource For personal use only 654 MT at 36.5% magnetite NOT FOR DISTRIBUTION IN THE US 21
Slide 22: For personal use only
For personal use only 22 NOT FOR DISTRIBUTION IN THE US 22
Slide 23: Southdown Power & Pipeline
Southdown Power & Pipeline For personal use only NOT FOR DISTRIBUTION IN THE US 23
Slide 24: Southdown Infrastructure – Port of Albany
Southdown Infrastructure – Port of Albany For personal use only 24 NOT FOR DISTRIBUTION IN THE US 24
Slide 25: Project Schedule
Project Schedule SOUTHDOWN MAGNETITE PROJECT 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 26: Southdown Resource
Southdown Resource For personal use only 654 MT at 36.5% magnetite NOT FOR DISTRIBUTION IN THE US 26
Slide 27: For personal use only
For personal use only NOT FOR DISTRIBUTION IN THE US 27
Slide 28: Project Infrastructure – Power & Pipelines
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 progressing Slurry Pipeline Optimal transport method Finalising easements with landowners 1
Slide 29: Southdown Infrastructure – Port of Albany
Southdown Infrastructure – Port of Albany For personal use only 29 NOT FOR DISTRIBUTION IN THE US 29
Slide 30: Project Infrastructure – Southdown & Albany
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 Transmissi
Slide 31: Project Permits – well advanced
Project Permits – well advanced For personal use only Mine Environmental permit Granted November 2009 Commonwealth Port permit Granted June 2010 State Port Permit EPA Bulletin and Recommendation January 2010 Concentrate Transport Workforce Deep Water Port 31
Slide 32: 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 33: Production growth prospects
Grange Resources– Production growth prospects For personal use only kt 10000 9000 Upside 8000 7000 6000 5000 4000 Southdown 3000 2000 1000 Savage River 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 33
Slide 34: Leveraged to price
Leveraged to price use only Margin leverage to price @2.3Mtpa 450 400 350 M For personal a A$ million 300 r g Revenue 250 i Costs n 200 150 100 34 77 90 100 110 120 130 140 150 160 170 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. NOT FOR DISTRIBUTION IN THE US 36
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: Grange Resources – Summary
Grange Resources – Summary For personal use only Australia's leading magnetite producer Australia’s largest iron ore pellet producer High grade quality products Solid customer and revenue base Strong cashflow forecasts $70m cash (June 2010), no net debt Long life assets Major, advanc
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 A
Slide 41: Appendix A – Southdown Project
Appendix A – Southdown Project For personal use only In situ 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 DT
Slide 42: Appendix B – Savage River
Appendix B – Savage River For personal use only Mineral Resource and Ore Reserve Estimates Tonnes Grade Tonnes Grade Mineral Resource Ore Reserve (Mt) (%DTR) (Mt) (%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