Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — AJM Iron Ore & Steel Forecast Conference 2005
42 slides from Fortescue's conference presentation, Mar 1, 2005
Slide 1: AJM Iron Ore & Steel Forecast Conference 2005
AJM Iron Ore & Steel Forecast Conference 2005 w Fortescue Metals Group Ltd 66 A B f R N il 99 Fortescue Metals Grow s p Ltd ag O us ty al S : Fortescue. House 50.Kings Park Road. West Perth Western Australia 6005 PO Box 910 West Perth Western Australia 6827 Telephone: + 61.8 9266 0111 ° Facsimile: +
Slide 2: World Economy 2004
World Economy 2004 US$1,000 billion GDP
Slide 3: World Economy 2024
World Economy 2024 Europe Russia US$1,000 billion GDP
Slide 4: Iron Ore Outlook
Iron Ore Outlook Citigroup citigroup! “A long term super cycle combined with an extended current cycle is driven by materials intensive growth in China. The most important implication of the super cycle is higher long-term prices”. “Iron ore - a paradigm shift whatever the size of increase is agreed
Slide 5: The Pilbara, the lowest supply costs
The Pilbara, the lowest supply costs ‘Other N. Amerion — 492 aa Australia’s iron ore is cheaper than Brazil’s a — SEL foun AME, JP Horgan Australia’s current freight advantage over Brazil exceeds US$20
Slide 6: Pilbara Tenement Holdings
Pilbara Tenement Holdings Fortescue’s 17,100 sq km tenement reach dominates the Pilbara
Slide 7: Fortescue, Rio Tinto and BHPB
Fortescue*, Rio Tinto and BHPB ST kilometers Mount Goldsworthy | LEGEND Town Hahwey Creinage ail - existing all corricior - proposed FMG FMG Rio Tinto. BHP Robe River ron Ore depost fron Ore mine
Slide 8: Meeting the demand for major independent supply
Meeting the demand for major independent supply Wholly owned Iron Ore Regions Port Hedland a . . poe] f ey me outh Hedland pee Dathpier: 3 Sy " ty Karratha: Bs 2 a Tie ae cies N ODUM pando ‘om Price a 50 100~ 7 kilometers mr LEGEND Riount Goldsworthy @ Town — Hiahwaw ve ——_ Drainage rari. where Rail
Slide 9: The Chichesters actual mineralisation JORC standard
The Chichesters actual mineralisation JORC standard (Snowden) to date 1.242 billion tonnes & growing JORC Ore Body Miltion Tonnes Ke Lo! Shipping Grade Estimation Christmas Creek (50% Area drilled JORC & 653 56.8 75 >60% . to JORC Standard) metallurgical results Mt Lewin/The Hammer 50% Area drilled
Slide 10: Cloud Break
Cloud Break om New 30 km strike length discovery ’ * Drilling commenced mid-November 2004 * 6 separate mineralised zones established, each | to 2 kms across & open down plunge ¢ Typical thickness 5 to 12 m, up to 20 m * Shallow, low phosphorous deposits, highly attractive miming environment The New
Slide 11: The Chichesters are a new multi-project iron ore region
The Chichesters are a new multi-project iron ore region The New Force in lron Ore
Slide 12: Chichester Project Size Relative to Sydney
Chichester Project Size Relative to Sydney The New Force in Iron Ore
Slide 13: Commercialisation: Ore quality is highly competitive
Commercialisation: Ore quality is highly competitive “The identification of microplaty hematite at such shallow depth and across such large strike length is one of the most significant exploration discoveries in the Pilbara in the past 15 years” Dr John Clout - FMG Head of Resources Strategy (previo
Slide 14: Exploration, Bulk Sampling & Commercialisation
2 e) s iS a a iS) 8 is) am 3 © Zz. ® a) aa Exploration, Bulk Sampling & Commercialisation 14
Slide 15: Exploration & Bulk Sampling
Exploration & Bulk Sampling * 3,700 reverse circulation and diamond holes drilled * 87,000 metallurgical assays taken * Bucket augur drill (used for pilings in bridges and buildings) ¢ 15 major bulk sample holes drilled - 900mm diameter ¢ 800t of sample produced ~ 500t of ore material * bulk sample
Slide 16: Spudding in
Spudding in Bulk Sample: Li Ge aie °
Slide 17: FMG has two basic >60% Fe ore types
FMG has two basic > 60% Fe ore types do 6) ¢ Direct ship (or high grade) - requires no beneficiation and is already >60% Fe with low impurities ¢ Beneficiated ore - is processed (in common Pilbara practice) through a beneficiation plant to achieve > 60% Fe « High moisture content is removed in the s
Slide 18: Iron Ore: Calcined Fine Iron Ores, Iron Content
The New Force in Iron Ore uc Calcined Fine Iron Ores Tron Content 69.00 5 67.00 5 65.00 - 63.00 - % Fe 61.00 5 59.00 - BHPB - Premium Hi ~ Yandi HI - Marra Mamba HI - Premium BUPB - Marra Mambe Mesa J (Robe River) BHPB - Yandi 57.00 - 55.00 - Data Sources: Robe Ri from C HI — Industry Sources, FMG ~
Slide 19: Iron Ore: Calcined Fine Iron Ores, Phosphorus Content
The New Force in Iron Ore uc Calcined Fine Iron Ores Phosphorus Content 0.080 5 0.070 4 0.060 4 0.050 4 te a S 0.040 | g E : 4 z a a $ = 0.030 4 8 E . i 5 g 2 5 3 Z * i E 0.020 4 3 rs ” ES eB 5 * = 3 & z a = = 0.010 4 0.000 Data Source: Robe : irect fr : y, HI ~ Industry Sources, FMG - Own Tests
Slide 20: Iron Ore: Calcined Fine Iron Ores, Alumina Content
The New Force in Iron Ore uc Calcined Fine Iron Ores Alumina Content 3.50 5 3.00 | 2.50 | = 2.00 | t Sse z g z ; 2 2 H 5 Fe e 1.00 5 E E é 3 - 3 5 = : E = ; z E a = on 0.50 = = : = | < g 58 5 -_ = = z = = cy il 0.00 / Data Source: Robe River — Website, BHPB — Direct from Company, HI — Industry Sourc
Slide 21: Iron Ore: Calcined Fine Iron Ores, Silica Content
The New Force in Iron Ore uc Calcined Fine Iron Ores Silica Content 7.00 5 6.00 5 5.00 | 4.00 + 8 x g “30 [x Z F z : i Pa g E 3 3 & 2.00 = £ a z ; c é E € : > F 3 3 « 5 eG EI Z 1.00 - E = 5 ® * Et 0.00 - Data Source: Robe BHPB — Direct from Cor , HI ~ Industry Sources, FMG - Own Tests
Slide 22: Iron Ore
The New Force in Iron Ore & 3 3 > Oo > g iss 3 c & tot) 5 is E 3 oO 4) 2. CHAO - seferep| 8 | 8 o ae ~ ¢ 2) 3 O ja 2 | 2 2/2 2 6 omy ony - pueal = | & ata a ir |g 3 Sn f © OUI OlY- sejabuy |seyA & 5 e ° CHAO- Bulge} € co = 5 = 3B o eco 9 89 89 fF fF 8 o /BE FE lgeeseaeee 8 © [35 On 5 Buisseg % =
Slide 23: Chichester Cross Section - why mining costs are low
Chichester Cross Section - why mining costs are low 2-3km Width «x thickness 2 100m Drill Hole Spacing es ces es =o LAGS ; : Reference FORTESCVE METALS GROUP ZEEE GENERAL CHICHESTER RANGES IRON ORE DEPOSIT EZ) Nomen DIAGRAMATIC CROSS SECTION EEEIGE, roctea seer LOOKING WEST [| uamineraices Mammut No
Slide 24: Marketing
2 © s 2 el ce in The New For Marketing 24
Slide 25: Marketing Success
2 e) s iS a a iS) 8 is) am 3 © Zz. ® a) aa Marketing Suc ¥ C) All of production covered by non-binding MOU’S prior to the release of technical specifications (} Enthusiastic response by the steel industry to technical specs €} Four major long term off-take contracts signed covering 10 mtpa with prep
Slide 26: Typical Contract
2 e) s 2 a = iS) 8 is) am 3 © Zz. ® a) aa Typical Contract Ping Xiang Iron & Steel Co. Ltd _] 2m tonnes iron ore per annum LJ Life of contract 22 years J Prepayment of US$20m ¢ US$10m prior to financial close e US$10m during construction LI Ping Xiang — a large mill - 4 m tonnes p.a., 13,000 employe
Slide 27: Project Implementation Partners
2 © s 2 el ce in The New For Project Implementation Partners 27
Slide 28: Build Transfer Contractors
Build Transfer Contractors BA™. sarcitay mowLem Other Major Roles Under Negotiation MULTIPLEX ADD The New Force in lron Ore
Slide 29: China Rail Engineering Corporation and other contractors
>» China Rail Engineering Corporation >» USS$13 billion work in hand > 40,000 kms of rail > China Harbour Engineering Company Produces 60% of worid’s large cranes » US$3.2 billion assets >» US$2.3 billion turnover > China Metallurgical Construction (Group) Corporation > US$2.4 billion total assets >
Slide 30: Build Transfer Agreements
Build Transfer Agreements L) Total Project Solution - only excludes locomotives & mining pre-production costs L) CREC, CHEC & MCC to assume 100% completion risk 0 Deferred Payment Schedule - most of settlement consideration due well after practical completion L) Payment commences only once practical
Slide 31: Definitive Feasibility Study Manager WorleyParsons
Definitive Feasibility Study Manager WorleyParsons QC) Largest Engineering Service provider to Infrastructure Resource and Process Industries in Australia LL) Well known to International Credit Rating Agencies L) 9,500 Project Services Personnel in 59 global offices John Grill, WorleyParsons CEO: “W
Slide 32: FMG Funding
FMG Funding Forecast Sources and Uses , SOURCES A$m | USES A$m China Metallurgical * 306 | Pre-production 70 Iron Ore Customers **104 | Beneficiation Plant 340 Total $410 | Total $410 * Under Agreement ** Forecast Virtual Equity from Steel Mills The New Force in lron Ore
Slide 33: The Pilbara Infrastructure (TPI) Funding
The Pilbara Infrastructure (TPI) Funding Forecast Sources and Uses SOURCES A$m | USES A$m China Rail * 630 | Train Sets 290 China Harbour *571 | Below Track S15 Iron Ore Customers **139 | Train Loading 165 Locomotive leases 100 | Stock Yard Equipment 238 Wharf 232 Total $1,440 | Total $1,440 * Under
Slide 34: Logistics
60 50 40 30 AS 20 10 Logistics ($2.75) Mining & Processing ($8.00) \ Revenue ($51.43) Total Cost ($10.75) > E.B.1L.T.D.A of Aggregated > FMG & TPI 45Mt x $40.68/ = A$1,831m pa N FMG TPI The New Force in Iron Ore dnc) = = o Z re) = es o jen oO a _ 5 x ° 5 o) = a
Slide 35: Valuation Sensitivities 45Mt/a
Valuation Sensitivities 45Mt/a exc Tron Ore Selling Price per 71.5% Price CitiGroup Macquarie tonne FOB Port Hedland Increase 2007 Price 2007 Price Price (A$/t) $51.43 $44.18 $38.84 Margin per tonne (A$/t) $40.68 $33.43 $28.09 EBITDA (A$m) 1,831 1,504 1,264 EBITDA per share (A$) 7.04 5.79 4.86 (260m
Slide 36: Fortescue Corporate Summary
Fortescue Corporate Summary Ticker: FMG.AX 239m Shares, Con. Notes & Options @ current share price $4.50 ~ A$1,076m Market Cap Share/Noteholder Shares (m) Percentage Directors and Management 112.2 46.9% Steel Mills and Institutions: ATA 19.8% MLC JF Capital Partners JP Morgan Jiangsu Fengli Ospraie
Slide 37: Port & Rail Development Schedules
Port & Rail Development Schedules a = o Z re = ips o jen oO 6 = 5 z g 5 o = a
Slide 38: The Pilbara Infrastructure Port & Rail
The Pilbara Infrastructure (PPI) Port & Rail
Slide 39: Fortescue Development Timeline
Fortescue Development Timeline
Slide 40: Rail Construction Months Fast Track
Rail Construction 18 Months Fast Track C) Computer aided designed rail corridor and alignment CQ) Engineering design ‘Worlds Best Practice” (2 Order locomotives and sleepers prior to financial close Q Rolling stock compatibility on key features Port Construction 20 months (Paralleled with Rail Const
Slide 41: FMG: Iron Ore
FMG: The New Force in [ron Ore Port'itedland! ‘J va rs ; jount Goldsworthy, LEGEND Town Highway Drainage ~ Rell - existing, Reail corridor - proposed FMI Tenements FG Rio Tinto Robe Fiver ron Ore deposit Iron Gre: mine: HE —F-3] ow cea Ad * & Distance equivalent: Los Angeles to San Francisco Al
Slide 42: Fortescue House Kings Park Road
Fortescue House 50 Kings Park Road West Perth Western Australia www.fmegl.com.au FMG AJM Iron Ore & Steel Forecast Conference 28 Feb 05
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