Gindalbie: Karara and Beyond. March 2010

Transcription

1 Gindalbie: Karara and Beyond March 2010

2 Disclaimer Competent Person Compliance Statement The information in this presentation that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr David Mason who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Mason is a full-time employee of the Gindalbie Metals and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Mason consents to the inclusion in the presentation of the matters based on his information in the form and context in which it appears. JORC - Exploration Targets It is common practice for a company to comment on and discuss its exploration in terms of target size and type. The information relating to exploration targets should not be misunderstood or misconstrued as an estimate of Mineral Resources or Ore Reserves. Hence the terms Resource(s) or Reserve(s) have not been used in this context. The potential quantity and grade is conceptual in nature, since there has been insufficient work completed to define them beyond exploration targets and that it is uncertain if further exploration will result in the determination of a Mineral Resource. General Disclaimer This presentation may include forward-looking statements. These forward-looking statements are based on management s expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of Gindalbie Metals that could cause actual results to differ materially from such statements. Gindalbie Metals makes no undertaking to subsequently update or revise the forward-looking statements made in this release to reflect events or circumstances after the date of this release. There are a number of risks, both specific to Gindalbie Metals and of a general nature which may affect the future operating and financial performance of Gindalbie Metals and the value of an investment in Gindalbie Metals including and not limited to economic conditions, stock market fluctuations, iron ore demand and price movements, timing of access to infrastructure, timing of environmental approvals, regulatory risks, operational risks, reliance on key personnel, reserve and resource estimations, native title and title risks, foreign currency fluctuations, and mining development, construction and commissioning risk. All dollar amounts shown in this presentation are in Australian dollars unless otherwise stated. 2

3 Building an Australian Mining House Karara Iron Ore Project construction underway Hematite production 1H2011, Magnetite production 2H2011 World-class resource underpins substantial production growth Funding, infrastructure and offtake solutions in place Strong partnership with Ansteel Significant Mid West tenement position Framework to pursue new growth opportunities 3

4 Gindalbie Corporate Snap Shot Shares on issue 707.2m Market Capitalisation: ~A$700m (US$630m) Cash Reserves (at 31 Dec 2009): Consolidated Cash - A$164m (US$148m) Independent Cash - A$43m (US$39m) Includes: JP Morgan (UK), State Street Global, Highclere (UK), Congruix, AMP, Kelusa No Corporate Debt Key Contacts Garret Dixon, Managing Director & CEO garret.dixon@gindalbie.com.au David Southam, Chief Financial Officer david.southam@gindalbie.com.au Michael Weir, Investor Relations Manager michael.weir@gindalbie.com.au 4

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6 Western Australia s Emerging Mid West 6

7 Experienced Team Proven Track Record Gindalbie Metals Limited Board Non- Executive Directors Tunku Ya acob Michael O Neill Wang Heng Geoff Wedlock Chairman Garret Dixon Managing Director & CEO George Jones Non-Executive Director Yu Wanyuan Non-Executive Director Chen Ping Non-Executive Director Gindalbie Metals and Karara Senior Management David Southam Chief Financial Officer David Stokes General Counsel & Co Secretary Michael Weir Corp Affairs & Investor Relations Manager Steve Murdoch Chief Operating Officer Karara Mining Ltd Peter McBain GM - Project Development 7

8 Breaking New Ground in the Mid West A$2 billion (US$1.8b) development, construction commenced November 2009, Lochada camp completed, Karara concentrator site cleared and earthworks underway, Karara Village construction started +A$450 million (US$405m) committed to contracts and long-lead items Current workforce ~150, total construction workforce Mtpa Stage One production, with potential for +30Mtpa for 30 years A$1 billion (US$810m) in annual export revenues, rising to A$3 billion (US$2.7b) with expansion, with strong margins 8

9 Gindalbie Strong Growth Potential Gindalbie s own Projects Karara brings rail, power and water infrastructure, enhancing opportunity to develop other projects 1900sq km Mid West tenement holding First mover advantage for Gindalbie, future consolidation opportunities Value-add opportunities at Oakajee Pellet/Steel Plant Capitalising on the Ansteel Partnership Jointly target new resource development opportunities Focus includes iron ore, coal, manganese, chromite, nickel Gindalbie contributes local knowledge, contacts, development expertise Ansteel contributes access to capital, offtake requirement, global network Building an Australian Mining House 9

10 Resource The Foundation of the Project 3km long 800m wide 300m deep World-class Magnetite Orebody: JORC resource 35.9%Fe Inclusive of 36.3%Fe JORC Reserve Equivalent to 68%Fe concentrate Future Growth: Start up production 8Mtpa. Orebody can support production of +30Mtpa for 30 years Low Operating Costs: Low mining strip ratio (waste:ore, 0.34:1), close to existing infrastructure 10

11 AnSteel A Partnership Built on Strength China s second biggest steel maker, located Liaoning province, Northern China 40Mtpa production, moving to 50Mtpa with steel industry rationalisation AnSteel Group companies (after completion of consolidation) AnSteel 16Mtpa Benxi Steel 8Mtpa Panging Steel 8Mtpa DongBei Special Steel 5Mtpa Sanming Steel 3Mtpa China s biggest iron ore miner Project Ownership 50% 50% Gindalbie Metals China JV Karara Mining Pellet Plant Ltd Ansteel 50% 50% Ansteel Operations, Anshan City, China 11

12 The AnSteel Difference Benefits of having Ansteel as Karara s strategic partner include: Ansteel's requirement for a long-term, strategic supply of high quality iron ore ~ includes offtake agreement Project funding support ~ includes both debt and equity 90+ years magnetite mining expertise Seamless vertical integration in steelmaking process ~ 4Mtpa pellet plant, integrated with Bayuquan steel mill Bayuquan Steel Mill, Yingkou Port AnSteel Fully Committed to Karara - $573m (US$516m) Invested 12

13 Offtake Arrangements AnSteel to take ALL Karara iron products, concentrate, pellets and DSO No discounts concentrate pricing structure based on benchmark Hamersley Iron fines price, plus adjustment for Karara s high quality concentrate. AnSteel pays CVRD benchmark pellet price plus shipping price based on Baltic shipping index Brazil to China AnSteel shares in Karara profits delivering long term cost effective ore supply Karara A Premium Product Karara Concentrate Hamersley Pilbara Blend Production Chain Karara Concentrate Fe % (Iron) 68.2% 62.2% SiO2 % (Silica) 4.75% 3.6% 4Mtpa 8Mtpa 4Mtpa Al2O3 % (Alumina) 0.10% 2.1% China JV Pellet Plant Ansteel P % (Phosphorus) 0.01% 0.1% High iron content, super low impurities 4Mtpa 13

14 Project Funding A$1.8b (US$1.62b) Capital Cost BFS Sept 2007, based on 10Mtpa ONLY (Magnetite and Hematite) No provision for expanded infrastructure capacity # US$1.2b Project Debt Provider: China Development Bank and Bank of China Attractive interest rate A$534m (US$481m) Equity AnSteel contribution A$372m (US$335m) paid Gindalbie contribution A$162m (US$146m) paid Supported by AnSteel Operating Cash Cost Estimate A$/Tonne Mining 11 Crushing 1 Concentrating 13 Other 5 Transport (Rail/Port) 12 Concentrate FOB Geraldton Royalties 4 46 (US$35)* * Operating cost in line with BFS. Based on long term AUD:USD ex-rate US75c. # Infrastructure Expansion Power Transmission 36Mtpa Rail Spur 36Mtpa Water Pipeline 16Mtpa Geraldton Port 14Mtpa 14

15 Strong Concentrate Margins Production 8Mtpa 16Mtpa 30Mtpa 2009 Benchmark Price Annual Revenue* US$584m US$1,168m US$2,190m Cash Margin US$304m/US$38/t US$608m US$1,140m % Price Increase Annual Revenue* US$642m US$1,285m US$2,409m Cash Margin US$362m/US$45/t US$725m US$1,359m % Price Increase Annual Revenue* US$701m US$1,402m US$2,628m Cash Margin US$421m/US$53/t US$842m US$1,578m * Reference Price: 2009 Hamersley Iron FOB benchmark fines (US97 /Dtmu). Adjusted for Karara s high iron, low impurities concentrate Based on long term AUD:USD ex-rate US75c 15

16 China Pellet Plant 4Mtpa Pellet Plant, Gindalbie/Ansteel JV Located within Bayuquan steel mill site Construction cost A$200m (US$180m) Robust return US$18/t (A$24/t) cash margin * Targeted completion date mid-2012 * Pellet costs include: concentrate FOB Geraldton (US$73/t), shipping costs (US$15/t), pelletising costs (US$8/t) * Pellet price based on 2009 Tubarao benchmark FOB (US114 /Dmtu) plus freight Brazil to China (US$40/t) * Based on long term AUD:USD ex-rate US75 16

17 Infrastructure Rail & Water Rail Requirements Status Capacity 85km dual-gauge spur line: Karara to Morawa Rail upgrades: Morawa to Geraldton (Westnet) Spur line 36Mtpa Morawa to Geraldton 14Mtpa Construction June Qtr 2010, Commissioning June Qtr 2011 Water Requirements 140km pipeline, Mingenew - Karara Capacity 16Mtpa concentrate production Status Construction March Qtr 2010 Commissioning March Qtr

18 Infrastructure Power Transmission Requirements Status Capacity 180km 330Kv High voltage transmission line Eneabba to Karara Supports 36Mtpa concentrate production Construction Sept Qtr 2010 Commissioning March Qtr 2011 Power Supply Karara connected to existing state grid 15 year State Government supply contract Price fixed, 2007 plus CPI 120Mw/year to support 12Mtpa concentrate production 18

19 Infrastructure Geraldton Port Port Requirements Status Capacity 330,000t storage shed Load out facilities Dual wagon tipper and rail works Berth 7 ship loader Geraldton capacity +20Mtpa Gindalbie entitlement ~14Mtpa Port site works start June Qtr Commissioning June Qtr 2011

20 Oakajee Port Infrastructure for the Future Cape size port 30km north of Geraldton, operational from 2014 State and Federal Governments financially committed to Oakajee (~A$700m) Gindalbie supports Oakajee development and can commit foundation tonnages Ansteel and WA Government to investigate steel mill opportunities at Oakajee Oakajee is the single most important project for WA s economic development over the next 50 years. - WA Premier Colin Barnett. Artist impression of Oakajee. 20

21 Karara Growth Potential World-class resource with potential for +30Mtpa production Mtpa Karara production scaleable with reduced CAPEX Initial construction includes infrastructure capable of 16-36Mtpa Value-add opportunities pellet plant, Oakajee industrial estate 21

22 Karara Iron Ore Risk Summary Issue Iron Ore Resource Offtake Arrangements Project Funding Project Approvals Flow Sheet Technical Project Infrastructure Project Development Budget & Schedule Status/Solution Nil risk Karara contains 2,518Mt JORC Resource including 522Mt JORC Reserve. Minimal risk AnSteel to take all production to feed specially-designed mill. China s second-biggest steel producer, not trader. Concentrate priced on benchmark, plus adjustment for premium quality. Low risk Project equity ($534m) in place. Project debt funding from China Development Bank and Bank of China. Minimal risk State approval received September Commonwealth approval October Strong Government support. Minimal risk Experience from AnSteel (+90yrs magnetite mining), KML, Bateman, Worley Parsons, ProMet. Low-Medium risk Power secured. Building on existing Port and Rail infrastructure. Not dependent on Oakajee Port for start-up. Low-Medium risk Experienced project people in KML. Hands on management approach. Widespread contractor backgrounds. Worley Parsons and AMEC Minproc support 22

23 Strong Growth Potential Karara Springboard for Growth World-class resource Development underway Hematite production 1H2011 Magnetite production 2H2011 Strong margins at 8Mtpa. Project potential for +30Mtpa production Funding, offtake and infrastructure solutions in place Gindalbie Framework for Growth 1900sqkm Mid West holding Ansteel and Gindalbie to jointly target new resource development opportunities Production Next Year 23

24 For more information contact Michael Weir: Corporate Affairs and Investor Relations Manager Level 9, London House, 216 St George's Terrace, Perth WA 6000 E: W: T: F: M: