Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Securities & Derivatives Industry Association 2009 SDIA Conference
29 slides from Fortescue's conference presentation, May 28, 2009
Slide 1: 2009 SDIA Conference - Fortescue Metals Group
5/28/2009 For personal use only Securities & Derivatives Industry Association 2009 SDIA Conference Sydney - 28 May 2009 1 Fortescue Metals Group DISCLAIMER - Important Notice The purpose of this presentation is to provide general information about Fortescue Metals Group Ltd ("Fortescue"). It is not
Slide 2: Executive Summary
5/28/2009 Executive Summary For personal use only • Fortescue is one of the world’s Big 4 iron ore companies • World class low cost asset base, from mine to port, built in record time • Strong ramp up achieved and production growing • Processing rates increasing and costs decreasing • Strong St prod
Slide 3: Immediate focus and Recent Developments
5/28/2009 Immediate focus For personal use only • Cost control • Continuing strong ramp up focus • Shipping settlements • Not losing sight of expansion program 5 Recent Developments • Hunan Valin A$644m placement • Solomon resource increased by 332mt to 2.2bt • Desand plant commissioned • Increased
Slide 4: Quarterly Iron Ore Production
5/28/2009 Production For personal use only Quarterly Iron Ore Production – top 4 since we joined them 90 80 70 60 50 FMG Million 40 Tonnes BHP 30 20 RIO 10 VALE 0 4
Slide 5: Free Moisture on Ship and Average Daily Production
5/28/2009 Free Moisture on Ship – falling For personal use only 10.6 10.4 10.2 10.0 9.8 Percentage Moisture (%) 9.6 9.4 9.2 9.0 8.8 Q4 FY08 Q1 FY09 Q2 FY09 Actuals Q3 FY09 Q4 FY9 Estimate based on April actual OPF Average Daily Production – rising 100,000 90,000 90 000 80,000 70,000 60,000 Tonnes 50
Slide 6: Cash Operating Cost Per Tonne
5/28/2009 Cash Operating Cost Per Tonne – falling For personal use only 35 30 25 20 US$ per tonne 15 10 5 0 Q1 FY09 Q2 FY09 Actuals Q3 FY09 Q4 FY09 Estimate based on April actual Cloudbreak Several Surface Miners at Brampton Pit 6
Slide 7: State of the art mining operations
5/28/2009 State of the art mining operations For personal use only Target: The lowest cost, highest efficiency iron ore producer in the Pilbara • 6 mining pits in operation at Cloudbreak • New production being established at Christmas Creek • 17 x 2500 surface miners • 4 x 4200 surface miners • 4 ex
Slide 8: An innovative machine converted to major mining equipment
5/28/2009 An innovative machine converted to major mining equipment For personal use only FMG’s pioneer machines New 4200 Surface Miner Ore processing plant at Cloudbreak • Largest processing plant in the Pilbara • Dual fines and lump operation modes to suit market requirements • 11 screens • 8 crus
Slide 9: Desand plant at Cloudbreak
5/28/2009 Desand plant at Cloudbreak For personal use only • Innovative design proven in operations • Improves product in Fe and Al203 • Fed with <1mm natural fines fraction • Extends life of mine • 3 modules with option for 4th • Quick expansion potential Christmas Creek – our second major mine 9
Slide 10: State of the art rail operations
5/28/2009 First ore trucked from Christmas For personal use only Creek – 18 May 2009 State of the art rail operations Target: The lowest cost transport in the Pilbara • Clean sheet design captures best of existing i ti ttechnology h l • Bigger carrying capacity, electronic braking system, aerodynami
Slide 11: Train Cycles - faster
5/28/2009 First Ore on Train 15 May 2008 1000th Train 8 May 2009 For personal use only 1000 21 21 Train Cycles - faster DFS based on 20 hour cycle time 20.5 20 5 20.0 19.5 Hours 19.0 18.5 18.0 17.5 Q1 FY09 Q2 FY09 Q3 FY09 Q4 FY09 Actuals Estimate based on April & May actuals 11
Slide 12: Train Loading Speed - accelerating
5/28/2009 Train Loading Speed - accelerating For personal use only 180 160 140 120 100 Seconds per dual wagon 80 pair 60 40 20 0 Q2 FY09 Actuals Q3 FY09 Q4 FY09 Estimate based on April & May actuals State of the art train unloader • 3.6 3 6 mtt stock t k yard d (12 x 300kt) • 2 stackers • 1 bucket w
Slide 13: Train Unloading Speeds and Stock Pile Capacity
5/28/2009 Train Unloading Speeds – accelerating For personal use only 180 160 140 120 100 Seconds per dual wagon 80 pair 60 40 20 0 Q2 FY09 Actuals Q3 FY09 Q4 FY09 Estimate based on April & May actuals Massive Stock Pile Capacity • 3.6 3 6 mtt stock t k yard d (12 x 300kt) • 2 stackers • 1 bucket wh
Slide 14: State of the art port operations
5/28/2009 State of the art port operations For personal use only • Highly automated port operations • Two ship loading berths catering for cape size vessels • Ship loader – highest capacity in Australia • Significant expansion potential • Third wharf dredged and ready for construction Shiploading Ra
Slide 15: Third Party Access / Summit 300
5/28/2009 Third Party Access For personal use only Fortescue is delivering Summit 300 Fortescue’s AEC Initiative • Summit 300 is Fortescue’s commitment to the Australian Employment Covenant. • Progression from Fortescue’s original VTEC program • Approximately 200 Aboriginal people have been trained
Slide 16: VTEC and Environment
5/28/2009 VTEC Fortescue’s Vocational Training and Education Centre For personal use only • Take people at any employment and educational level as long as they are willing to give it a go. • Offer a broad range of employment and training opportunities not only in the mining sector, but also within b
Slide 17: Marketing, Shipping and Finance: Current Market Status
5/28/2009 Marketing, Shipping and Finance For personal use only Current Market Status • Steel production in Europe, Japan, Korea and Taiwan is down 40% to 60%. As a result, their imported iron ore volumes have greatly reduced. • BHPB, Rio Tinto and Vale are promoting to mid tier mills in China to mo
Slide 18: China Iron Ore Imports remain very strong
5/28/2009 China Iron Ore Imports remain very strong For personal use only 180 160 140 120 100 80 Million 60 Tonnes 40 20 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 2008 Actuals per UMETALS 2009 Estimate based on April actual Fortescue Market Status • FMG has small product stockpiles at Po
Slide 19: Benchmark Settlement
5/28/2009 Benchmark Settlement For personal use only • Rio have settled with Nippon at 33% reduction on fines and 44% on lump. • This translates to a price for FMG of around FOB US$57.25/dmt for Rocket fines. • CISA wants less – but also wants a benchmark system • As a reminder, FMG was financed in
Slide 20: Financing Initiatives
5/28/2009 Financing Initiatives For personal use only • Hunan Valin and Fortescue are working together to ensure that when the company decides to expand it has the necessary competitive financial capital • China intends that Shanghai becomes an international finance hub • Fortescue aims to be one of
Slide 21: Cooperation with Hunan Valin and Shanghai listing
5/28/2009 For personal use only Overall cooperation reached, reached including sponsorship for Shanghai Stock Exchange listing Baltic Capesize Index (C5) WA to China 60 50 40 US$ Per 30 Tonne 20 10 0 1/03/1999 1/03/2000 1/03/2001 1/03/2002 1/03/2003 1/03/2004 1/03/2005 1/03/2006 1/03/2007 1/03/2008
Slide 22: FMG Shipping
5/28/2009 FMG Shipping For personal use only • In late 2008 FMG suspended 9 Contracts of Affreightment (COA) with Ship owner/operators. • We have since reached a settlement with 5 of these COAs – 2 with Bocimar and 3 with Classic. • Of the remaining 4 COAs, one has gone into scheme of arrangement pr
Slide 23: Dominant Pilbara land position
5/28/2009 Fortescue has a dominant Pilbara land position For personal use only FMG: 71,400 km2 Rio: 11,000 km2 (Robe 4,200 km2) BHP: 6,500 km2 45 Project pipeline is underpinned by geology Robe resource Robe reserve HI reserve 3000 FMG resource HI resource 2500 2000 million tonnes FMG reserve BHPB r
Slide 24: Ore Reserve and Resource Inventory
5/28/2009 Ore Reserve and Resource Inventory For personal use only 5 billion tonnes in 4 years • Christmas Creek drilling g commenced May y 2004; Cloudbreak commenced November 2004; Solomon drilling commenced June 2007 • Reserves now 1.6 billion tonnes, resources 3.4 billion tonnes • Discovery cost
Slide 25: Chichester Reserves
5/28/2009 Chichester Reserves For personal use only • Total of 1.6 bt reserves • Majority of the reserve will be beneficiated into rocket fines (59% Fe &1.9% Al2O3) • Remainder of reserve will be crushed and screened into lump (61% Fe & 1.3 AI2O3) and rocket fines • Unlike many other projects, quali
Slide 26: Heng Shan additional infrastructure requirements
5/28/2009 Heng Shan additional infrastructure requirements For personal use only PORT 95 mtpa 155 mtpa 55-155 mtpa Train unloaders 1 1 2 Stackers 1 2 3 Reclaimers 1 1 2 Shiploaders 1 1 2 Dredging (million m3) - 3.5 3.5 Stockyard earthwork (million m3) 1.1 0.4 1.5 Berths 1 2 3 RAIL 95 mtpa 155 mtpa 5
Slide 27: Port infrastructure layouts for 95 and 155 mtpa
5/28/2009 Simple easy to operate and expand layout 3 Berths 2 Shiploaders For personal use only 3 Stackers 2 Reclaimers 2 Train Unloaders 95 Port infrastructure Easy to operate layout 5 Berths 3 Shiploaders 5 Stackers 3 Reclaimers 3 Train Unloaders 155 Port infrastructure 27
Slide 28: Heng Shan proposed development
5/28/2009 Heng Shan proposed development For personal use only KEY Ore Processing 155 mpta Facility D Deposit it Camp 60 mpta Firetail 95 mpta Serenity Investigator Chichester Range Solomon East Cloudbreak Christmas Creek Proven project management From concept To reality Herb Elliott Port Port 2006
Slide 29: Heng Shan potential timeframe
5/28/2009 Heng Shan potential timeframe For personal use only 180 160 155 140 Firetail Investigator 120 Solmon East 100 95 Tonnes per 80 75 annum 55 60 Chichester Range 40 20 0 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 Months www.fmgl.com.au 58 29
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