Grange Resources Limited · ASX:GRR
Grange Resources — CRU's 18th World Steel Conference 2012
29 slides from Grange Resources's conference presentation, Feb 24, 2012
Slide 1: Australia's leading magnetite producer
Australia’s leading magnetite producer CRU's 18th World Steel Conference Russell Clark 22-24 February 2012, Managing Director and CEO Grange Tower Bridge Hotel, London, UK
Slide 2: Disclaimer
Disclaimer 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 representation or war
Slide 3: Company Overview
Company Overview Grange remains Australia’s leading magnetite producer. An ASX 300 company, with a large well managed long term cash producing mining operation, a strong balance sheet, no net debt, and paying dividends - and a larger magnetite project at DFS offering even more value in the future. F
Slide 4: The future for iron ore
The future for iron ore Iron ore, coke & limestone in Blast Furnace 101 Hot gasses out Hot gasses out Hot air in Hot air in Molten slag out Molten iron out February 2012 Slide 4
Slide 5: Iron units in = Iron units out
Iron units in = Iron units out Blast Furnace 101 50% - 80% Sinter 20% - 50% Lump and Pellets • Sinter is made from “fines” • Lump 63% Fe, • “Pilbara fines” 62% Fe (reducing) • Pellets up to 67% Fe (low contaminants) • New products from new producers: • Availability of lump is falling • Special fines
Slide 6: Sinter, Lump and Pellet mix over time
Sinter, Lump and Pellet mix over time 23 76 21 75 19 Lump & Pellets % of blast furnace feed Sinter % of blast furnace feed 74 17 15 73 13 72 11 71 9 70 7 5 69 2005 2010 2015 2020 2025 2030 2035 Lump Pellets Sinter Source:CRU February 2012 Slide 6
Slide 7: Iron ore and pellet feed demand
In 18 years iron ore demand doubles and pellet feed demand grows almost four fold Iron ore and Pellet feed demand 3,500 400 3,000 350 300 2,500 Million tonnes pellet feed x2 Million tonnes iron ore 2,000 x4 250 200 1,500 150 1,000 100 500 50 0 0 2005 2010 2015 2020 2025 2030 2035 iron ore demand imp
Slide 8: Magnetite – The premium iron ore
Magnetite – The premium iron ore Iron Ore Pellet ~65.5% Fe Higher ~US$199 FOB Tasmania Magnetite Concentrate QUALITY ~67% Fe Direct Shipping Lump ~63% Fe Direct Shipping Fines Lower ~57% Fe ~US$122 CFR China Note: prices from Dec 11 quarterlies Lower Price Higher February 2012 Slide 8
Slide 9: Company Snapshot
Company Snapshot Current key statistics (A$) Current Ownership Structure Ordinary shares on issue 16 February 2012 1,154m Free float Last share price 16 February 2012 $0.60 33.9% PML 46.78% Market capitalization 16 February 2012 $657m RGL Group Cash & Receivables 31 December 2011 $226.7m 7.83% 11.49
Slide 10: Grange Assets
Grange Assets Australia’s Leading Magnetite Producer Savage River (100%) Southdown Project (70%) Quality assets in Tasmania and Western Australia. February 2012 Slide 10
Slide 11: December 2011 Quarter Highlights
December 2011 Quarter Highlights • Safety • Improved cash and receivables • No net debt • High pellet prices • Direct operating costs reduced by 30% • Inaugural two cent dividend paid. • Savage River production • East wall recovery • Southdown project DFS • Southdown Mineral Resources increased Febr
Slide 12: December 2011 Quarter Summary
December 2011 Quarter Summary Production and Costs Production and Costs December Quarter September Quarter 2011 2011 Total BCM Mined 4,240,390 3,184,680 Total Ore BCM 531,189 402,846 Weight Recovery (% DTR) 41.70 34.5 Concentrate Produced (t) 612,189 556,122 Pellets Produced (t) 632,143 506,143 Dire
Slide 13: East wall failure – June 2010
East wall failure – June 2010 As a result of the wall failure, access to the high grade North Pit was cut off February 2012 Slide 13
Slide 14: East wall failure – January 2012
East wall failure – January 2012 The East Wall has undergone a cut back and access to the North Pit has been re-established February 2012 Slide 14
Slide 15: Savage River Concentrate Production
Savage River Concentrate Production Quarter on Quarter 700,000 650,000 600,000 550,000 Tonnes 500,000 450,000 400,000 350,000 300,000 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 As planned, production has increased as the aast wall remediation has been completed, allowing access b
Slide 16: Savage River C1 Unit costs of pellets
Savage River C1 Unit costs of pellets Quarter on Quarter 180 160 C1 Unit cost per tonne of pellets produced $/t 140 120 100 80 60 40 20 0 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Increased production rates in the December quarter have resulted in a reduction in unit costs to su
Slide 17: The Southdown Project
The Southdown Project 4X bigger than Savage River February 2012 Slide 17
Slide 18: February 2012 Slide 18
February 2012 Slide 18 GRANGE RESOURCES
Slide 19: 12 Kilometre Monster Pit
12 Kilometre Monster Pit 3 Kilometres February 2012 Slide 19
Slide 20: The Resource
The Resource 1.22 billion tonnes @ 34.1%DTR February 2012 Slide 20
Slide 21: Southdown Mineral Resources
Southdown Mineral Resources Quantity and Confidence improved As at December 2011 As at February 2012 Tonnes Grade Tonnes Grade (Mt) wt% DTR (Mt) wt% DTR Measured 407 37.1 423 37.6 Indicated 40.2 40.7 87.4 38.4 Inferred 250.8 32.5 710.6 31.5 Total 698 35.7 1,221 34.1 An $8.3 million drilling program
Slide 22: Power & Pipelines
Power & Pipelines Collie Coal Pipeline Route Fired Power Proposed 330Kv Transmission Line Existing 132Kv Transmission Line 1 South West Interconnected System (Western Australia) February 2012 Slide 22
Slide 23: Water
Water February 2012 Slide 23
Slide 24: Port Infrastructure
Port Infrastructure February 2012 Slide 24
Slide 25: Permitting – well advanced
Permitting – well advanced P Mine environmental permit Granted November 2009, amendment required in 2011 for 10mtpa P Port permits Granted November 2010 Water permit Desalination permit targeted Q1 2012 February 2012 Slide 25
Slide 26: Timetable
Timetable 2011 2012 2013 2014 2015 Pre- feasibility Definitive Feasibility Financing Construction Production February 2012 Slide 26
Slide 27: Why Grange?
Why Grange? Very attractively priced Existing cashflow and great margins Dividend payer, strong yield Strong Balance Sheet, strong cash position, No net debt World class projects Proven performer with 40 years magnetite experience February 2012 Slide 27
Slide 28: Key Contacts
Key Contacts Primary contacts: Russell Clark Managing Director & Chief Executive Officer +61 8 9327 7901 [email protected] Media: Tarryn Truscott Consultant, “LastSay.” Communications 08 6102 7295 or 0438 906 643 [email protected] February 2012 Slide 28
Slide 29: Competent Person Statement
Competent Person Statement Southdown Project The information in this statement which relates to the Mineral Resources is based on information compiled by Michael Everitt who is a full- time employee of Grange Resources Limited and a Member of the Australasian Institute of Mining and Metallurgy. Mich
Grange Resources — CRU's 18th World Steel Conference 2012 on 6ix