Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Investor Presentation (March 2006)
46 slides from Fortescue's investor presentation, Mar 17, 2006
Slide 1: Latest Fortescue Presentation - ASX cover letter
61 8 9266 OLE 1+ 61 8 9266 0186 fe: wwe fnglcom ae Porteseue Metals Group Ltd ACIN: 002 $94 872 Fortescue House 50 Kings Park Ruad West Porth Western Australia GO0% PQ Bos 910, West Berth, Western Australia 6872 @ 16 March 2006 The Companies Officer Australian Stock Exchange Lid. Exchange Plaza 2 Th
Slide 2: Fortescue Metals Group Ltd Progress Update March 2006
Fortescue Metals Group Ltd Progress Update March 2006 The New Force in Iron Ore rt of | orfescue’s Cannot, guarantee included ‘in’ this bsent registration fider’such laws.
Slide 3: Asian growth = steel growth = high iron ore demand
Asian growth = steel growth = high iron ore der - 2 tonnes of iron ore = 1.2 tonne of steel
Slide 4: Overview
Overview Developing world class Chichester Iron Ore and Infrastructure Project + ASX listed -2,400 Mt of Resources (incl. 1,100 Mt of Reserves) ¢ First Major project underway: >AU$1bn EBITDA p.a. *« Dominant landholder of the worlds richest iron ore region — The Pilbara « Highly experienced executiv
Slide 5: Board and management
Board and management Ken Ambrecht Gordon Toll fh Russell Herb Elliott Andrew Forrest Graeme Rowley Non-Executive Deputy Chairman Chairman Chief Executive Executive Director Scrimshaw Director Officer Operations Executive “en non Hannon Jim Williams Bill Ramsey Peter Huston Chris Catlow Peter Thomas
Slide 6: Operational team members
Operational team members yl @ ~— Chairman in May 2005 Alan Watling Over 25 years experience in the operat . . . og . . A heavy haul rail including management | @ Previously held senior executive positions with Chief Operating ° } BHP Billiton Ltd and Rio Tinto ple Officer with Hamersiey ron Rail @ —
Slide 7: Fortescue Ownership
Fortescue Ownership Major Institutions dominate register after management (with 30%) « Global Institution *« 5 major American Institutions ¢ Australian Institution « Asian Institution « 2 Major European Institutions Management with equity commitment « Experienced, committed team « 43% ownership (aft
Slide 8: Significant asset backing
Significant asset backing * Robust iron ore demand « Optimal location « Huge reserves « Simple construction « Lowest cost producer « Powerful economics - rapid payback
Slide 9: FMG resources and reserves compared
FMG res FMG rese: (1.07 Bt Robe reserve 6urqqouesjooy Robe resource Hancock Sulepuina / Uosyoer IW) oopunqeeg €2/SzZdO iscove Portman Hl reserve seuueyd 4 8LdO sobuey usejseq BHPE resource: HI resource: 4] (pM) Jegaiquir BHPE reserve: fr eso 0€/6ZEO |Z UeWUYyOOIg / IPINWWeN BO WOL uo|6a) oopueieyy s
Slide 10: BHP Billiton
BHP Billiton (Pilbara contributes around 25% of BHPB’s market cap) - i} Location ie ¥ are ea Bw, dF i Maripier, wa fea, atl ‘ Karratha Pests / | oeaey: Ses Tom Price, Paraburdoo. Port Hedland uth Hedland jount Goldsworthy, Ay, Varrie LEGEND & Town _—— Hihway Drainage pewter Ril existing oo Rail corr
Slide 11: BHP and Rio Tinto
BHP and Rio Tinto (Pilbara contributes about 50% of Rio’s market cap) —— | LEGEND @ Town Highway Drainage Fort Hedland a Hount Goldsworthy — : peotpe Rall exdsting Ral cotridor - ap outh Hedland Sarria a” propesed EMG Tenements io Tinto Group 43 BHP ailiton t = aoe, a * Iron Ore deposit * tron Ore m
Slide 12: Fortescue, BHP and Rio Tinto
Fortescue, BHP and Rio Tinto Location Iilor ters v4 jount Goldsworthy, ———— --PPERE Wile LEGEND Town Highwey Drainage Rell - existing Rail corridor - proposed FMG Tenements FMG Fits - Mining Stale Agreement Rio Tinto Group BHP Billton, Robe ron Ore deposit Iron Ore mine
Slide 13: Fortescue has largest iron ore holdings in the Pilbara
Fortescue has largest iron ore nowangs in the Pil —=—= LEGEND @ Town Highway Drainage {Mount Goldsworthy Location — Ral - existing Rail corridor - ws oe proposad FMG eee Dampier: Tenements FMG Ba FMG - Mining State Agreement * Iron Ore depost fron Ore mine Narandoo coy Sq kr ro BHP : : Rio - RN : is
Slide 14: Risks managed
Risks managed Risk Mitigant Market v¥Y | 36.4 Mtpa contracts Ore Body v Huge, 2.4 Bt Resource, 1.1 Bt Reserve Approvals ¥Y | Pre-requisites in place Construction v « Infrastructure DFS complete « EPCM underway « Critical contracts ready to be awarded Operations : v Experienced management team establ
Slide 15: Demand will continue to exceed supply
Demand will continue to exceed supply “Wanted: more iron ore” Ivan Fadel, 28 Sept 2005 “Higher long term prices for iron ore” Glyn Lawcock/Fleur Grose, 16 Sept 2005 “Structural change in the iron ore industry to drive higher long tern Andrea Weinberg/Vicky Binns, 21 Sept 2005 “Iron ore market extrem
Slide 16: Strong demand
Strong demand 1,100 1,000 900 Asian “° (Manufacturing Driven) 700 600 500 kg per person 400 Western (Services Driven) 300 200 100 4,500 9,500 14,500 19,500 24,500 29,500 34,500 39,500 44,50 2004 GDP per Capita (PPP) (US$) Source: 2005 IISI report and EIU (Datastream)
Slide 17: Demand outlook
Demand outlook « CRU (Citibank market consultant) forecasts global iron ore demand to r 2 Billion tonnes (Bt) by 2015 and 2.275Bt in 2020 - A new Fortescue Project needs to be added every year * Continuing demand growth out of Asia demonstrates need for a numbe Fortescue’s projects « Timing is right
Slide 18: Australia's Pilbara region is lowest cost for Asia
Australia’s Pilbara region is lowest cost for Asia Australia’s iron ore is cheaper than Brazil’s.
Slide 19: Australian ore is reliable and the most competitive
Australian ore is reliable and the most competiti' Australian Ore $US 54.94 South Africa Ore $US 66.77 Brazilian Ore $US 70.91 indian Ore $US 76.23 “In iron ore, you can’t compete with the Pilbara” - Grant Samuel Source: China Metallurgical News ~ 2005 average landed price
Slide 20: Project overview
Project overview * Abasic project, shallow mine and simple infrastructure « The low cost producer of Fines and one of the lowest of Lump to Asia* + Over 20 years mine life « Resources for 60+% iron ore for well over 10 years at 45 Mtpa * Strong Government support « Construction commenced 8 February
Slide 21: Fortescue — developing Australia's largest iron ore landholding
Fortescue — developing Australia’s largest iron o Landholding Anni Zana st
Slide 22: Geology and mineral resources
Geology and mineral resources « Highly successful drilling program « 2.4 billion tonnes of resources defined in last 18 months « One third (866 Mt) high grade (>60% iron) * Resource specification well within requirements of major steel mills « Initial Reserve Statement 1.1 billion tonnes — target >1
Slide 23: The Chichesters — a massive iron ore region
The Chichesters — a massive iron ore region Resource = 7 =| | 4,415 Mt @ 58. Iminediate project tenements || ” includin ¢ , other Chichester Range tenements : 503 Mt @ 60.3 Resource includin Mt @ 58.7% Fe ny including Vit @ 60.4% Fe including Resource. ri 198 Mt @ 56.5% Fe ae — : including aaa 48 Mt
Slide 24: Marketing
Marketing — 36.4 Mtpa under Contract and >80 Mtpa in LOI ° Focus on Asia High Grade Product 61% Fe lump, 60.2% Fe fines - excellent sintering Highly experienced marketing team 36.4 Mtpa under coniract and a further 80 Mtpa in Letters of Intent In active discussions with 32 steel mills Positive testi
Slide 25: China Central South University Test Results
China Central South University Test Results 1. Sintering Performance Productivity is superior to close competitors due to: + Ultra fines is relatively low * Consistent size distribution ; = Superior throughput « Superior tumble strength « High permeability 2. Blast Furnace Performance Productivity i
Slide 26: Two high grade (HG) product streams
Two high grade (HG) product streams initially * Two High Grade + 60% Fe Producis * Lump and Fines « Greater demand than availability Chemical Analysis dry weight % deLump | 61.1 | 28 | 13 | 0.050] 0.025| 0.04 | 0.04 | 0.23 | 0.07 | 0.017 | 0.044] 76 de Fines 60.2 3.4 1.9 | 0.054 | 0.025 | 0.05 | 0.0
Slide 27: Super Value (SV) Product — 58.7% Fe Product
Super Value (SV) Product — 58.7% Fe Product — Fines only product — Cost effective choice for mills — Convert to a higher grade product as production allows — Direct relationship with supplier _ Chemical Analysis d ary wei At % Le : 7 : ee 7 ao 20 : Po ee K,0 jue Fines 58.7 | 44 2.2 | 0.054 | 0.030 |
Slide 28: 2004 Iron ore comparison
2004 Iron ore comparison — Fe content of Australian shipped ores « Rio and BHP sold 84 Mt of ores with Fe less than Fortescue HG * Rio and BHP sold 62 Mt of ores with Fe less than Fortescue SV * Fortescue’s ore is very attractive to Asian mills with 36.4Mt under contract « Asian steel mills and inte
Slide 29: Fortescue superior grade control techniques
Fortescue superior grade control techniques w advance its competitive position * Selective mining capability * Straight forward grade prediction * Textures clearly visible, following cutting 2 Windrow of ore from 1 run
Slide 30: Surface Miner cutting iron ore and stockpiling
Surface Miner cutting iron ore and stockpiling jas
Slide 31: Mining Definitive Feasibility Study
Mining Definitive Feasibility Study SV HG PLANT HG Stockpile SV Stockpile O O O OVO TRUNK CONVEYOR y2 Cc) Interim Stockpiles C) Truck Cat 777 Feeder Hopper Truck Cat 777 SM SM Mining Panel Minina Panel
Slide 32: Fortescue Trial Pit November 2005
Fortescue Trial Pit 12 November 2005
Slide 33: Fortescue November 2005 — Unparalleled progress
Fortescue 14 November 2005 — Unparalleled progress Iron Ore ready to be shipped - 2
Slide 34: Fortescue Trial Pit - November 2005
Fortescue Trial Pit - 25 November 2005 eady for market Aan
Slide 35: Trial Pit Reconciliation Summary Report
Trial Pit Reconciliation Summary Report 8 The Surface Miner * Increased the Fe grade * Reduced the contaminant grades Tonnes Fe% SiO, % Al,0, % Block Model 58.9 4.6 1.7 Ore on ROM pad 43,966 60.0 3.4 1.4 The New Force in Iron Ore
Slide 36: Open Pit Mining, simple, smart
Open Pit Mining, simple, smart Dump trucks load road trains from windrows Le
Slide 37: Open Pit Mining, simple, smart
Open Pit Mining, simple, smart Road trains for ore, conveyors for waste
Slide 38: Infrastructure
Infrastructure — Large scale open access port at Port Hedland
Slide 39: Infrastructure — at Port Hedland
Infrastructure — at Port Hedland
Slide 40: Government approvals
Government approvals * Mining and Infrastructure State Agreements executed * Project commenced 8 February 2006 * $trong Aboriginal support — Native Title and Heritage surveys completed * Fortescue has strong community, general public and Government support * Western Australian Planning and Infrastru
Slide 41: Project construction
Project construction « Mine is simple - outsourced ¢ Straightforward rail and port — no processing risk + WorleyParsons Infrastructure capital cost estimate of US$1.46 Billion with accuracy of +/- 10% « 22 month construction period with six month “pre-construction” activities should deliver first or
Slide 42: Project underway
Project underway AREA SUPPLIER CURRENT STATUS Dredgi Preferred supplier selected reaging Award contract Q1 06 seopnae Final selection & contract c Nharfs M°CONNE i i Lb I Q1 06 Dre C Detailed design and/or re Wars construction of prototype Engineering capability revic ; completed ocos Contract negot
Slide 43: Project underway
Project underway REA SUPPLIER CURRENT STATUS Competitive tendering completed Selection of preferred supplier & final negotiat ort Bulk Material andling Equipment Competitive tendering ine Material Handling Final negotiations °CM FEED Contract signed arthwork Competitive tendering Final negotiations
Slide 44: To conclude, the risks have been minimised
To conclude, the risks have been minimised Risk Mitigant Market v¥ | 36.4 Mtpa contracts Ore Body v Huge, 2.4 Bt Resource, 1.1 Bt Reserve Approvals ¥Y |All pre-requisites in place Construction v « Infrastructure DFS complete «+ EPCM underway * Critical contracts ready to be awarded Operations v Expe
Slide 45: Summary
Summary * Long Life Ore Reserves — 20++ Year Mine life « Low operating cost / high margin /very high quality earning stream « Ore Quality matches market leaders BHP and Rio Tinto « No Technology Risk — Open Pit Mine, Rail, Port Loading
Slide 46: Location
| Location LEGEND Town Highway Drainage Fal caro Fropoeed He Fue Fu Mine Stale Ayreait iu Wie Grays BHP Eon Robe bencve cepest en Ore mina | +P PBE \i\\> The New Force in Iron Ore Fortescue House 50 Kings Park Road West Perth Western Australia
Fortescue Metals Group — Investor Presentation (March 2006) on 6ix