Grange Resources Limited · ASX:GRR
Grange Resources — Deutsche Coal and Iron Ore Conference 2011
38 slides from Grange Resources's conference presentation, Apr 7, 2011
Slide 1: Australia's leading magnetite producer
For personal use only Australia s leading Australia’s magnetite producer Russell Clark Managing Director & CEO April 2011
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 d ti tto subscribe b ib ffor, or purchase, h any security it iin G Grange R Resources Li Limited it d (“GRR”) nor does it form the basis of any contra
Slide 3: Overview
Overview For personal use only Australia’s A t li ’ lleading di magnetite tit producer d ASX 300 index company Strong St balance b l sheet, h t no nett ddebtbt Proven operational performance – tonnes and cashflow Quality Q lit product, d t hi highh margins i – iron i ore pelletsll t Larg
Slide 4: Magnetite – The premium iron ore
Magnetite g – The p premium iron ore For personal use only Higher Iron Ore Pellet ~65-69% Fe Magnetite Concentrate ALITY ~67% Fe QUA Direct Shipping Lump ~63% Fe LLower Direct Shipping Fines ~58% Fe Lower Price Higher April 2011 Slide 4
Slide 5: Company Snapshot
Company p y Snapshot p For personal use only Current key statistics (A$) Current Ownership Structure Ordinary shares on Free float 1 April 2011 1,153m issue 33.70% PML Last share price 1 April 2011 $0.655 46.90% Market capitalization 1 April 2011 $750m RGL Group 7.90% Cash 31 December 10 $92m 11.5%
Slide 6: Grange Board
Grange g Board For personal use only Grange has a board with a diverse range of relevant experience. Zhiqiang Xi: Chairman Neil Chatfield: Deputy Chairman (Independent) Extensive experience in the Chinese steel industry Recently Executive Director and CFO of Toll Holdings, a position held Baos
Slide 7: Jiangsu Shagang – Cornerstone Shareholder
Jiangsu g g – Cornerstone Shareholder g Shagang For personal use only A strong partnership Grange’s G ’ llargestt shareholder h h ld Major customer with a LOM offtake agreement at Savage River at market prices. Agreement to negotiate at fair market price for Grange’s share of offtake from Asse
Slide 8: Market Capitalisation – Growth year on year
Market Capitalisation p – Growth yyear on yyear For personal use only 1000 900 800 2009 2010 700 600 197% Increase A$ Milliion 500 280% Increase 400 300 200 100 0 April 2011 Slide 8
Slide 9: Key Information – End of year
Keyy Information – End of year For personal use only 6 months to 31 12 months to 30 Note: a 6 month year D December b 2010 J June 2010 Pellets sold (million t) 1.2 2.4 Average Sales Price (US$/t) 148.47 80.37 Direct Operating Costs A$/tonne Pellet 84.36 65.81 Produced Revenue A$m 193 229 Profit afte
Slide 10: Key Information December Quarter, 2010 vs 2009
Keyy Information December Quarter,, 2010 vs 2009 For personal use only Production P d ti Production P d ti and Costs and Costs Dec Qtr 2010 Dec Qtr 2009 Total Mined (‘000 BCM) 3,972 5,414 Total Ore ((‘000 000 BCM) 362 461 Pellets Produced (‘000 t) 442 640 Direct Operating Costs A$/tonne 91.37 63.83
Slide 11: Grange Resources – Australia's Leading Magnetite Producer
Grange g Resources For personal use only Australia’s Leading Magnetite Producer Grange’ss position is supported by quality assets In Tasmania and Western Australia. Grange Australia Southdown Project (70%) Savage River (100%) 90km northeast of the Northwest Tasmania Port of Albany Annualised p
Slide 12: Savage River Overview
Savage g River Overview For personal use only Ownership Grange 100% Mineral Resource of 306Mt magnetite at 52.3% Resources DTR and Reserves g Ore Reserve of 119Mt magnetite at 51.2% DTR 2.0 Mtpa blast furnace pellets (2011 guidance) Production Potential to expand to 2.6Mtpa Operating A$9
Slide 13: Large Scale Operations
Large g Scale Operations p For personal use only April 2011 Slide 13
Slide 14: Grange Downstream Infrastructure
Grange g Downstream Infrastructure For personal use only April 2011 Slide 14
Slide 15: Grange Port & Shiploading Infrastructure
Grange g Port & Shiploading p g Infrastructure For personal use only April 2011 Slide 15
Slide 16: Solid Customer Base
Solid Customer Base For personal use only Long term offtake agreements – providing revenue stability Agreements are in place for both Savage River and Southdown production at index based market prices. prices Shagang China’s largest private steel mill, producing p of p 29Mtpa pig g iron Grange’s
Slide 17: Savage River – Leveraged to price
Savage g River - Leveraged g to p price For personal use only Margin leverage to price @2.0Mtpa 500 450 400 350 MARGIN on A$ millio 300 250 200 Revenue 150 Costs 100 120 130 140 150 160 170 180 190 200 210 220 April 2011 Slide 17
Slide 18: Savage River – Q1 2011, not a normal quarter
Savage g River – Q1, 2011, not a “normal q quarter” For personal use only Jan - March 2011: • Mine volumes increased as east wall cut back undertaken 9 East wall cutback on track 9 Alternative ore sources now producing • Major j scheduled shut in Concentrator and Pellet pplant 9 Ball mill replaced 9
Slide 19: Price Settlement
Price Settlement For personal use only To end March 2011: Pricing mechanism agreed with major customers, BlueScope Steel and Shagang 1.7 million tonnes has been ppriced pprovisionally, y since April p 2010, at US$120- US$150 per tonne Payment for retrospective pricing = US$70m S$ , receivable in Apr
Slide 20: Southdown Project
Southdown Project j For personal use only High grade magnetite project with advanced infrastructure Ownership Grange 70%, 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 T ti 10Mt
Slide 21: Growth - The Southdown Magnetite Project
Growth - The Southdown Magnetite g Project j For personal use only Pellet Plant Concentrate shipped 100km slurry pipeline to Albany Port Targeting 10Mtpa mining and concentrating operations for over 25 years y April 2011 Slide 21
Slide 22: Southdown - Resource
Southdown -Resource For personal use only 654 MT at 36.5% magnetite April 2011 Slide 22
Slide 23: Mile Monster Pit
7 Mile Monster Pit For personal use only 3 Kilometres April 2011 Slide 23
Slide 24: Southdown - Power & Pipelines
Southdown - Power & Pipelines p For personal use only Collie Coal Pipeline Route Fired Power P Proposed d 330Kv 330K Transmission T i i Line Li Power Existing 132Kv Transmission Line Western Power Networks 330kv line from o Muja uja EPA Assessed Transmission line easement established Slurry Pi
Slide 25: Southdown - Water
Southdown - Water For personal use only April 2011 Slide 25
Slide 26: Southdown - Port of Albany
Southdown - Port of Albanyy For personal use only New Berth Location April 2011 Slide 26
Slide 27: Project Permits – well advanced
Project j Permits – well advanced For personal use only 3 Mine Environmental permit Granted November 2009, amendment required in 2011 for 10mtpa 3 Port permits Granted November 2010 Water permit Desalination application in 2011 April 2011 Slide 27
Slide 28: Southdown – Forecast Project Schedule
Southdown – Forecast Project j Schedule For personal use only 2011 2011 2012 2012 2013 2013 2014 2014 Pre- Pre P Pre- Feasibility Feasibility Definitive D fi iti Definitive Feasibility Feasibility Construction Construction Production Production April 2011 Slide 28
Slide 29: Resources and Reserves 2010
Resources and Reserves 2010 For personal use only Supporting Long Mine Lives Mineral Resources (inclusive of reserves) Ore Reserves Tonnes Grade Tonnes Grade ((Mt)) ((%DTR)) ((Mt)) ((%DTR)) Savage River 4 Savage River Measured 86 53.8 Proved 51 51.1 Indicated 132 53.5 Probable 68 51.3 Inferred 88 48
Slide 30: Production growth prospects
Production g growth p prospects p For personal use only 10 9 8 7 on tonness 6 5 Southdown Millio 4 3 2 1 Savage River 0 2006 2008 2010 2012 2014 2016 2018 2020 (Production shown is attributable to Grange) April 2011 Slide 30
Slide 31: The Largest Producing Magnetite Company
Grange g - The largest g Producing g Magnetite g Company p y For personal use only 2,000 1,800 Out of the numerous junior companies with magnetite assets, Grange 2 13b 2.13b is the only one in production. production 1,600 2.78b Marrkeet Capitalisatioon A$M 1,400 18.76b 1,200 1,000 800 600 400 200 ‐
Slide 32: Current Focus and Future Milestones
Current Focus and Future Milestones For personal use only Position Savage g River for longg term sustainable production: p – Replacement ball mill installed February 2011 2012 – Replacement AG mill purchased – Trucking T ki fleet fl t re-build b ild underway d – Reviewing options for Port Latta em
Slide 33: Summary
Summaryy For personal use only Australia s leading magnetite & iron ore pellet producer Australia's Solid investor, customer and revenue base Extensive E t i magnetite tit ttechnical h i l andd operational ti l expertise ti Strong balance sheet and strong cashflow forecasts Healthy mix of
Slide 34: Grange - Points of difference
Grange - Points of difference For personal use only Grange is an existing magnetite producer Grange has the necessary expertise in place Grange has operating cashflow ¾ These minimise the execution risk of Southdown April 2011 Slide 34
Slide 35: Key Contacts
Keyy Contacts For personal use only Primary contacts: Russell Clark Managing Director & Chief Executive Officer +61 8 9327 7901 managingdirector@grangeresources.com.au April 2011 Slide 35
Slide 36: Competent Person Statement
Competent p Person Statement For personal use only Southdown Project j 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 37: Appendix A – Southdown Project
Appendix pp A – Southdown Project j 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 A
Slide 38: Appendix B – Savage River
Appendix pp B – Savage g River For personal use only Mineral Resource and Ore Reserve Estimates Mineral Resource Tonnes (Mt) Grade (%DTR) Grade Ore Reserve Tonnes (Mt) (%DTR) Savage-River Total Measured 86.4 54 S Savage-River Ri Total T t l Indicated 131.9 53 Proved 50.6 51 Inferred 87.8 49 Probable
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