IOH – The Find, Derisk and Monetise Model
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IOH – The Find, Derisk and Monetise Model

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Brett Hazelden, General Manager Project Development, from Iron Ore Holdings Limited has presented at the Global Iron Ore & Steel Forecast Conference. If you would like more information about the ...

Brett Hazelden, General Manager Project Development, from Iron Ore Holdings Limited has presented at the Global Iron Ore & Steel Forecast Conference. If you would like more information about the conference, please visit the website: http://bit.ly/13MkVsy

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IOH – The Find, Derisk and Monetise Model Presentation Transcript

  • 1. Global Iron Ore & Steel Forecast ConferenceMarch 2013Iron Ore Holdings LtdBrett Hazelden (General Manager – Project Development)
  • 2. A stable corporate structure with a proven track record of completing transactionsCorporate Overview2• ASX listed in 2005 (ASX:IOH)• Three projects in the Pilbara region of Western Australia• 1.6 billion tonnes1 JORC Mineral Resources• Four successful project transactions in two yearsBackground1: Hematite : Indicated 411Mt; Inferred 148Mt. Magnetite: Inferred 1,106Mt.Capital StructureCash(as at 31 December 2012)~A$91 millionShares On Issue52 Week RangeMarket Cap(as at 8 March 2013)161 million~A$0.75 - A$1.73~A$190 million• Hon. Richard Court AC (Non-Executive Chairman)• Alwyn Vorster (Managing Director)• Ryan Stokes (Non-Executive Director)• Malcolm Randall (Non-Executive Director)• Brian O’Donnell (Non-Executive Director)Board MembersShare Price(from 1 January 2013)1 January 1 February 1 March
  • 3. Major Assets and MilestonesCompany Highlights3• IOH completed four successful transactions within 18 months:1: Koodaideri South Divestment: Rio Tinto  $32 million cash + 2% FOB Royalty2: Central Satellite Package: MIN  $42 million cash3: Iron Valley 11-month Option: FMG  ~$20 million net cash4: Iron Valley Mine Gate Sale: MIN  low risk earnings by early 2014• Key Assets:1. Iron Valley Project - production target and earnings potential from early 20142. Buckland Project – independent Mine, Road & Port solution with FID targeted by Q420133. Maitland River – early stage magnetite project 10km from coast• Corporate:• $90 million cash in bank and zero debt• Key focus on commercialisation of the Buckland Project and Maitland River Project
  • 4. 3 key projects in the Pilbara4Location of Key IOH ProjectsCentral Hub - Hematite: Indicated 232Mt; Inferred 43Mt. Western Hub - Hematite: Indicated 179Mt Inferred 104Mt. Coastal Hub - Magnetite: Inferred 1,106Mt.
  • 5. 5Iron Valley Project
  • 6. Iron Valley• Mineral Resource of 259Mt1 @ 58.3% Fe(Bedded Hematite)• Ore Reserve of 134Mt2 @ 58.5% Fe• Native Title, Mining Lease and Environmentalapprovals secured• Mine Gate Sale Agreement with Mineral ResourcesLimited (MIN) - 28 Feb 2013• Mine Gate Sale – Key Terms:• IOH remains owner of Iron Valley Tenement• MIN to develop and operate mine at MIN cost• MIN to purchase a guaranteed minimum tonnage from IOH• Mining to commence by early 2014• Potential for significant IOH Revenue and EBITDA61. Indicated 216Mt; Inferred 43Mt.2. Probable 134Mt.Milestone Transaction Secured
  • 7. Iron Valley Project7• Mine gate price payable to IOH is linked to the FOB market price• Higher FOB market price will result in significant IOH earnings* upside• Low risk annual earnings* potential from early 2014Significant Potential Earnings for IOHA$20M p.a.A$75M p.a.4MtpaA$100/t FOB IV Price6MtpaA$120/t FOB IV PriceA$180MA$500M4MtpaA$100/t FOB IV Price6MtpaA$120/t FOB IV Price* Forecast earnings for the transaction are particularly sensitive to key variables such as future iron ore price, foreign exchange rates and the production tonnagesachieved from the Iron Valley mine, and as such there is upside potential but also risk to the downside.IOH EBITDA Potential* IOH NPV10 Potential*(Real Pre-tax)
  • 8. 8Maitland River Project
  • 9. Located 20km from planned IOH portMaitland River Magnetite Project• JORC Inferred Resource of 1.1Bt @ 31% Fe• Concept Study completed in Q4 2012• Potential for 10Mtpa magnetite mine with20km slurry pipe to the planned IOH port• Commercialisation process commenced9Key parameters to determine development potential:1. Resource Size (1.1Bt)2. Proximity to coast (10km)3. Proximity to process water (10km)4. Proximity to electricity (5km)5. Processing and cost (PFS required)?
  • 10. 10Buckland Project
  • 11. Bungaroo South Mine + Haul Roads + Cape Preston East PortBuckland Project11Western Pit Area• Positive PFS completed in Nov 2012• DFS underway with target completion date bySep 2013• First ore on ship possible in Q1 2015• Low operating risk and low capital cost solution• IOH controls mine, road and port facilities• Commenced discussion with potential projectpartners
  • 12. Pisolitic Channel Iron Deposit with minor Bedded Iron DepositsBungaroo South Mine12• JORC Mineral Resource of269Mt1 @ 57.2% Fe• Initial JORC Ore Reserve of92Mt2 @ 57.6% Fe• Additional reserves targeted inQ2 CY13 infill drilling campaign• 0.8:1 Waste to Ore Strip Ratio• Conventional truck and shoveloperation plannedProcessingWestern Pit1. Indicated 179.7Mt; Inferred 68.6Mt.2. Probable 92.4Mt.
  • 13. ProcessingBungaroo South Mine• Direct Shipping Ore (DSO)• Conventional crushing andscreening methods• Dry processing Years 1-3 &Wet processing from Year 3onwards• Product: Fines (~9.5mm)13Projected Product SpecificationsFe%CalcinedFe%SiO2%Al2O3%P%LOI%Dry Processing 57.8 62.1 6.0 3.03 0.14 7.58Wet Processing 58.1 63.1 5.7 2.22 0.14 8.21Digital Artist’s ImpressionStockyardScreeningCrushing
  • 14. Road construction to match production ramp upRoad Transportation• 4 Mtpa• 190km haul route• 60% private & 40% public roads• 115 tonne quad wagon trucks14• 8 Mtpa• 195km haul route• 100% private roads• 200 tonne triple wagon trucks
  • 15. Low capital cost transhipment facility at Cape Preston East PortYear 1-3: Port - Onshore Operations• A scalable, new port development• Landside operations similar to the operating KMG facility in Wyndham, WA.• Offshore operations similar to the Arrium operations at Whyalla in South Australia.• MOU in place with the Dampier Port Authority• Port Lease being negotiated 15Stage 1 (4 Mtpa)4-8 Mtpa Stockyard DesignDigital Artist’s ImpressionRoad TrainStockyardJettyCape Preston(CITIC Pacific)
  • 16. Low capital cost transhipment facility at Cape Preston East PortYear 3+: Port - Onshore Operations• Scalable to +20 Mtpa• Similar concept to the Utah Point multi user facility in Port Hedland, WA16Stage 2 (8 Mtpa)20 Mtpa Stockyard DesignDigital Artist’s Impression
  • 17. Low capital cost barge loading facilityJetty and Berth Facilities• Slewing, telescoping and luffing shiploader• Provision made for second shiploader onJetty17JettyShiploader• 1.4 km piled A-Frame type jetty construction• No dredging required - this allowsstreamlined environmental assessment andapprovalsOnslow Salt (Mitsui JV)Planned Cape Preston East JettyDigital Artist’s Impression
  • 18. Efficient self propelled and self unloading transhipment vesselTranshipment Vessel18• ~20k tonne capacity• 5.5m loaded draft• Self propelled - 7 knot speed• Self discharging up to10,000tph• Able to load a 180kt Cape Sizevessel in four days• Operated by CSL for Arrium inWhyalla (South Australia)Cape Size VesselTranshipment VesselDigital Artist’s ImpressionProposed Cape Preston East Transhipping
  • 19. Approvals are well advanced with no major impedimentsApprovals and Permitting• Mining Lease secured• Two Native Title Agreementssigned with traditional ownersto cover the entire supply chain• Port Construction andOperating Leases beingnegotiated with StateGovernment• Remainder of Approvalsscheduled for completion bySeptember 201319
  • 20. Capital intensity of $100/annual tonne at 8MtpaIndicative CAPEX and OPEX Estimates20Projected Capital Costs1CAPEX Estimate4MtpaCAPEX Estimate8Mtpa (expansion cost)Total Direct Capital Cost $400 M $175 MTotal Indirect Capital Cost(Contingency, EPC/M, Owners)$175 M $60 MTotal Project Capital Cost $575 M $235 MProjected Operating Costs2 20 Year Average Cost ($/t)Total C1 Direct Operating Cash Cost (FOB)3 $48.311: Excluding primary mining equipment, haulage fleet and transhipment vessel2: Including contractor costs for primary mining equipment, haulage fleet and transhipment vessel3: Including contingencies
  • 21. Projected Financial Parameters21Item UnitIOHBase CaseUpsideCaseLong term iron ore price (62%Fe) FOB US$/t 90 110Long Term Exchange Rate A$:US$ 0.80 0.90Average Annual EBITDA $m 240 280Project NPV10 (Pre-tax) $m 725 1,000
  • 22. Summary23• IOH completed four successful transactions within 18 monthsdelivering ~$100m cash plus royalty upside into the business• Three key projects:1. Iron Valley -- earnings from early 20142. Buckland – FID targeted by Q4 20133. Maitland River – commercialisation commenced• Corporate - $90 million cash in bank and zero debt
  • 23. DisclaimerThis document or presentation may include forward-looking statements. Forward-looking statements include, but are notlimited to, statements concerning Iron Ore Holdings‟ planned exploration program, commencement of exporting of iron ore,industry outlook and other statements that are not historical facts. When used in this document, the words such as “could,”“target,” “plan,” “estimate,” “intend,” “may,” “potential,” “should,” and similar expressions reflected in these forward-lookingstatements are reasonable, such as statements involving risks and uncertainties and no assurance can be given that actualresults be consistent with these forward-looking statements.Disclaimer:24The information in this report that relates to exploration, exploration targets and drilling results is based on informationcompiled by Mr Manohar Ghorpade, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Ghorpade isa full time employee of Iron Ore Holdings Ltd and has sufficient experience which is relevant to the style of mineralisationand type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person asdefined in the 2004 Edition of the „Australasian Code for Reporting of Exploration Results, Mineral Resources and OreReserves‟. Mr Ghorpade consents to the inclusion in the report of the matters based on his information in the form andcontext in which it appears.The information in this report that relates to Mineral Resources estimates has been compiled by Mr Lynn Widenbar, who is aMember of the Australasian Institute of Mining and Metallurgy. Mr Widenbar is a full time employee of Widenbar andAssociates and produced the Mineral Resource Estimates based on data and geological information supplied by IOH. MrWidenbar has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration andto the activity that he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the „AustralasianCode for Reporting of Exploration Results, Minerals Resources and Ore Reserves‟. Mr Widenbar consents to the inclusion inthis report of the matters based on his information in the form and context that the information appears.The information in this report that relates to Ore Reserve estimations for Bungaroo South Deposit is based on informationcompiled by Mr Alan G. Cooper, who is a member of the Australasian Institute of Mining and Metallurgy. Mr Cooper is a fulltime employee of Snowden Mining Industry Consultants Pty Ltd. Mr Cooper has sufficient experience which is relevant to thestyle of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as aCompetent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, MineralResources and Ore Reserves‟. Mr Cooper consents to the inclusion in the report of the matters based on his information inthe form and context in which it appears.Competent Persons Statement:
  • 24. Thank YouBungaroo South- East Deposit 25