Grange Resources Limited · ASX:GRR
Grange Resources — Macquarie Conference, Perth 2011
45 slides from Grange Resources's conference presentation, Nov 8, 2011
Slide 1: Australia's leading magnetite producer
For personal use only Australia’s leading magnetite producer Ross Carpenter Macquarie Conference, Perth, WA 8th November 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 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 no
Slide 3: Company Overview
Company Overview For personal use only Grange remains Australia’s leading magnetite producer. An ASX 300 index, dividend paying company, with a strong balance sheet, no net debt , a large producing mine and a larger magnetite project. November 2011 Slide 3
Slide 4: Magnetite – The premium iron ore
Magnetite – The premium iron ore For personal use only Iron Ore Pellet ~65-69% Fe Higher ~US$200 FOB Tasmania Magnetite Concentrate QUALITY ~67% Fe Direct Shipping Lump ~63% Fe Direct Shipping Fines Lower ~62% Fe ~US$150 CFR China Lower Price Higher November 2011 Slide 4
Slide 5: Company Snapshot
Company Snapshot For personal use only Current key statistics (A$) Current Ownership Structure Ordinary shares on issue 31 October 2011 1,153m Free float Last share price 31 October 2011 $0.46 33.83% PML 46.83% Market capitalization 31 October 2011 $530m RGL Group Cash & Receivables 30 September 201
Slide 6: 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 Baosteel emp
Slide 7: Jiangsu Shagang – Cornerstone Shareholder
Jiangsu Shagang – Cornerstone Shareholder For personal use only A strong partnership Grange’s largest shareholder 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 Assets • In excess of A$19 bi
Slide 8: Grange Resources: Australia's Leading Magnetite Producer
Grange Resources For personal use only Australia’s Leading Magnetite Producer Grange’s position is supported by quality assets In Tasmania and Western Australia. Southdown Project (70%) Savage River (100%) 90km northeast of the Northwest Tasmania Port of Albany Annualised production rate 650 million
Slide 9: Savage River Overview
Savage River Overview For personal use only Ownership Grange 100% Mineral Resource of 306Mt magnetite at 52.3% Resources DTR and Reserves 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$127/t pellets (Se
Slide 10: Savage River Large Scale Operations
Savage River Large Scale Operations For personal use only November 2011 Slide 10
Slide 11: Savage River Downstream Infrastructure
Savage River Downstream Infrastructure For personal use only November 2011 Slide 11
Slide 12: Savage River Port & Shiploading Infrastructure
Savage River Port & Shiploading Infrastructure For personal use only November 2011 Slide 12
Slide 13: Savage River Solid Customer Base
Savage River Solid Customer Base For personal use only Long term offtake agreements – providing revenue stability Agreements are in place for both Savage River and Southdown production at index based market prices. Shagang China’s largest private steel mill, producing 29Mtpa of pig iron Grange’s lar
Slide 14: Savage River - Leveraged to price
Savage River - Leveraged to price For personal use only Margin leverage to price @2.0Mtpa 500 September 2011 450 400 350 MARGIN A$ million 300 250 200 Revenue 150 Costs 100 120 130 140 150 160 170 180 190 200 210 220 230 Price US$/t November 2011 Slide 14
Slide 15: September Quarter Summary
September Quarter Summary For personal use only Production and Production and Production and Costs Costs Costs September Quarter June Quarter September Quarter 2011 2011 2010 Total BCM Mined 3,184,680 4,103,863 4,055,157 Total Ore BCM 402,846 510,546 217,167 Weight Recovery (% DTR) 34.5 32.3 39.6 Co
Slide 16: Southdown Key Facts
Southdown Magnetite Project Key Facts 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 concentrate for premium Production1 blast fur
Slide 17: PFS Highlights
Southdown Magnetite Project PFS Highlights For personal use only • Mine Capex, including infrastructure A$2.57 billion; • Operating costs per tonne of concentrate produced < A$60 per tonne; • Positive NPV with favourable IRR; • Mine life of 19-40 years @10mtpa of concentrate; • Definitive Feasibilit
Slide 18: Location Plan
Southdown Magnetite Project Location Plan For personal use only November 2011 Slide 18
Slide 19: Orebody
Southdown Magnetite Project Orebody For personal use only 654 Mt at 36.5% magnetite November 2011 Slide 19
Slide 20: Resources and Reserves
Southdown Magnetite Project Resources and Reserves For personal use only Mineral Resources Classification Measured Indicated Inferred 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 Al2O3% 1.43 1.27 1.29 1.
Slide 21: Orebody Potential
Southdown Magnetite Project Orebody Potential For personal use only Short Term PFS Case Long Term Potential Details Potential Western Resource Western/Eastern Resource Full Western Resource Mine Life 19 years 21 years 40 years Ore (million tonnes) 430 ~575 ~1,200 Ore Grade %DTR 37.7% 36.8% 36.5% Con
Slide 22: Mining
Southdown Magnetite Project Mining For personal use only Open pit mining Conventional bulk mining methods utilising Mining Method hydraulic face shovels, dump trucks and drill and blast coupled to a Run of Mine (ROM) stockpile Material ~110 Mtpa for first six years Movement Shovel size – 650 tonnes
Slide 23: Monster Pit
Southdown Magnetite Project 12 kilometre Monster Pit For personal use only Southdown Open Pit Savage outline River Open Pit 3 Kilometres November 2011 Slide 23
Slide 24: Concentrator Flow Sheet
Southdown Magnetite Project Concentrator Flow Sheet For personal use only November 2011 Slide 24
Slide 25: Product Quality
Southdown Magnetite Project Product Quality For personal use only Southdown Magnetite Southdown Iron % % Concentrate Ore Pellets Total Fe 68.9 Total Fe 67 SiO2 1.56 B2 0.54 Al2O3 1.45 SiO2+Al2O3+TiO2 3.31 CaO 0.11 P <0.01 MgO 0.16 S 0.01 TiO2 0.38 P 0.04 S 0.08 LOI (Loss of ignition) -3.18 November
Slide 26: Power and Pipelines
Southdown Magnetite Project Power and Pipelines For personal use only Key Facts - Power: Estimated Length 288km Capital Cost A$272 million 330kV transmission line Ongoing discussions with Capacity Status Western Power Key Facts – Pipeline: Estimated Length 100km (1.5 metres deep) Capacity Line Volum
Slide 27: Water Supply
Southdown Magnetite Project Water Supply For personal use only Seawater reverse Source osmosis desalination plant Capacity 10GL/a Capital cost A$170 million Coastal location 25km from mine and pumped Location to the mine site after treatment November 2011 Slide 27
Slide 28: Albany Port Infrastructure
Southdown Magnetite Project Albany Port Infrastructure For personal use only Vessels Cape size (18m draft) Deepen; widen and extend existing shipping channel Activities New wharf Filtration plant and storage shed 9ha Increases port Area Reclaimed capacity from 2.5Mt to 14Mt New Berth Location New Be
Slide 29: Environmental Permits
Southdown Magnetite Project Environmental Permits For personal use only 3 Mine Environmental permit Granted November 2009, amendment required in 2011 for 10mtpa 3 Port permits Granted November 2010 Water permit Desalination permit expected Q1, 2012 November 2011 Slide 29
Slide 30: PFS Capital Expenditure
Southdown Magnetite Project PFS Capital Expenditure For personal use only SOUTHDOWN CAPITAL EXPENDITURE A$m Mine (1) 560 Concentrator 850 Slurry Pipeline 200 Transmission Line 320 Desalination and Water Supply 200 Albany Concentrate Filtration and Storage 20 Port of Albany 400 Allowances for Provisi
Slide 31: Project Australia - Malaysia
Southdown Project Australia - Malaysia For personal use only 4. Pellet Plant (7Mtpa) 3. Concentrate shipped (10Mtpa) 2. 100km slurry pipeline to Albany Port 1. Mine and concentrator targeting 10Mtpa of concentrate production for over 25 years November 2011 Slide 31
Slide 32: The Kemaman Pellet Plant Location Plan
The Kemaman Pellet Plant Location Plan For personal use only November 2011 Slide 32
Slide 33: Kemaman Project PFS Capital Expenditure
Kemaman Project PFS Capital Expenditure For personal use only KEMAMAN A$m Pellet Plant 640 Kemaman Port Facilities and Materials Handling 300 Allowances for Provisional Sums 1 Total Costs (2) – Malaysian Operations 941 (2) Includes EPCM, Owners Costs, Estimate Accuracy and Project Contingency Novemb
Slide 34: Project PFS Operating Cost Summary
Southdown Project PFS Operating Cost Summary For personal use only Unit Rates Cost per tonne of concentrate produced <A$60 Cost per tonne of pellets produced <A$75 (1) Excludes WA Mineral Royalty November 2011 Slide 34
Slide 35: Forecast Project Schedule
Forecast Project Schedule For personal use only 2011 2012 2013 2014 Definitive Feasibility Financing Construction Commissioning & Production November 2011 Slide 35
Slide 36: PFS Highlights
Southdown Magnetite Project PFS Highlights For personal use only Why is this project different to other magnetite projects being built? • Grange’s cashflow, extensive operating experience and existing IP dramatically reduces execution risk, • The project is well advanced: Major permits for the mine
Slide 37: Resources and Reserves 2011
Resources and Reserves 2011 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 81 54.2 Proved 48 51.6 Indicated 132 53.5 Probable 66 51.4 Inferred 87 48.8 Total
Slide 38: Production growth prospects
Production growth prospects only 14000 12000 use 10000 Million tonnes For personal 8000 Southdown 6000 4000 2000 Savage River 0 2006 2008 2010 2012 2014 2016 2018 2020 (Southdown production includes Sojitz 30% share)) November 2011 Slide 38
Slide 39: Grange - The largest Producing Magnetite Company
Grange - The largest Producing Magnetite Company For personal use only 2.78b Out of the numerous junior companies with magnetite assets, Grange is the only one in production. November 2011 Slide 39
Slide 40: Current Focus and Future Milestones
Current Focus and Future Milestones For personal use only Position Savage River for long term sustainable production: – Replacement ball mill installed February 2011 2012 – Replacement AG mill purchased – Trucking fleet re-built – Reviewing options for Port Latta emissions reduction – Completing eas
Slide 41: Summary
Summary For personal use only Australia's leading magnetite & iron ore pellet producer Solid investor, customer and revenue base Extensive magnetite technical and operational expertise Strong balance sheet and strong cashflow forecasts Healthy mix of Cornerstone, Institutional and Retail investors I
Slide 42: 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 November 2011 Slide 42
Slide 43: 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 Austr
Slide 44: Appendix A – Southdown Project
Appendix A – Southdown Project 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 Al2O3%
Slide 45: Appendix B – Savage River
Appendix B – Savage 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 Savage-River Total Indicated 131.9 53 Proved 50.6 51 Inferred 87.8 49 Probable 67.9 51 Total 3