GMUSG Gavin Hobart, General Manager Development 21 August 2013 - - PowerPoint PPT Presentation

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GMUSG Gavin Hobart, General Manager Development 21 August 2013 - - PowerPoint PPT Presentation

Arrium Mining GMUSG Gavin Hobart, General Manager Development 21 August 2013 This presentation contains certain forward-looking statements with respect to the financial condition, results of operations and business of Arrium and certain plans


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Arrium Mining GMUSG

Gavin Hobart, General Manager Development

21 August 2013

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This presentation contains certain forward-looking statements with respect to the financial condition, results of operations and business of Arrium and certain plans and objectives of the management of Arrium. Forward-looking statements can generally be identified by the use

  • f words such as ‘project’, ‘foresee’, ‘plan’, ‘expect’, ‘aim’, ‘intend’, ‘anticipate’, ‘believe’, ‘estimate’, ‘may’, ‘should’, ‘will’ or similar
  • expressions. All such forward looking statements involve known and unknown risks, significant uncertainties, assumptions, contingencies

and other factors, many of which are outside the control of Arrium, which may cause the actual results or performance of Arrium to be materially different from any future results or performance expressed or implied by such forward looking statements. Such forward-looking statements speak only as of the date of this presentation. Factors that could cause actual results or performance to differ materially include without limitation the following: risks and uncertainties associated with the Australian and global economic environment and capital market conditions, the cyclical nature of the steel industry, the level of activity in the construction, manufacturing, mining, agricultural and automotive industries in Australia and North and South America and, to a lesser extent, the same industries in Asia and New Zealand, mining activity in the Americas, commodity price fluctuations, fluctuations in foreign currency exchange and interest rates, competition, Arrium's relationships with, and the financial condition of, its suppliers and customers, legislative changes, regulatory changes or other changes in the laws which affect Arrium's business, including environmental laws, a carbon tax, proposed mining tax and operational risk. The foregoing list of important factors is not exhaustive. There can be no assurance that actual outcomes will not differ materially from these statements. The information in this presentation that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Paul Leevers, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Leevers is a full-time employee of OneSteel Manufacturing Pty Ltd. Mr Leevers 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 Leevers consents to the inclusion in this presentation of the matters based on his information in the form and context in which it appears.

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Arrium business structure

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Map of operations

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SOUTHERN IRON EXPLORATION LEASES SOUTHERN IRON REGION MIDDLEBACK RANGES REGION CURRENT IRON ORE OPERATIONS HIGHWAY RAILWAY

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Growth – Mining

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Southern Iron and Whyalla Port expansion projects

  • Completed expansion to double iron ore sales and capacity of Whyalla Port
  • Delivered on time and budget
  • New blended product offers
  • Continuing to progress ferrous and non ferrous exploration program
  • Aim to maintain 12Mtpa for at least 10 years

Peculiar Knob Mine Site

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Mining business doubled

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Key Milestones

Southern Iron acquisition and Port development

  • Southern Iron assets acquired – Oct 2011
  • Cutback commenced – Dec 2011
  • First ore haulage to Wirrida – Aug 2012
  • Crushing and screening commissioned – Sept 2012
  • First sales – Oct 2012
  • First ores through expanded Whyalla Port – Dec 2012
  • 2nd shed completed – April 2013
  • Blending commenced – May 2013
  • New higher capacity ship loader arrived June 2013

(commissioned July 2013)

MBR upgrades

  • Iron Baron OBP commissioned and mining recommencement – Jan 2012
  • Iron Duke OBP upgrade commissioned – Mar 2012
  • New locomotives and wagons commissioned – May 2013

Business doubled on time and budget

2000 4000 6000 8000 10000 12000 14000

Sales s k (d (dmt mt) Middleback Southern Iron

Iron Ore Sales

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Growth - Mining

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Reasonable aspirations for 12Mtpa for at least 10 years

Mt

Current reserves as per FY13 JORC 67 High grade generated through beneficiation of existing low grade stocks1 10 High grade generated through mining of beneficiation of low grade reserves to be mined from current pits1 7–10 Conversion of inferred resource inside current pit shells to reserve 10 94 – 97 Additional excluded resource from current exploration program (Buzzard, Chieftain, Princess, Peculiar Knob) – high confidence2 30 – 40 124 – 137

Other opportunities

  • Further brownfield targets within balance of excluded resources
  • Continued hematite exploration in current leases
  • Magnetite concentrate for blending with direct shipped ores (DSO)

1 History of converting ~2Mt of LGO to ~1Mt of HGO through beneficiation. Increased beneficiation capacity enables ~4Mt of LGO to be converted to ~2Mt of HGO pa 2 Targeted as potential new resource - high level of confidence of bringing on at least 30-40Mt of 93Mt excluded resource currently declared

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Southern Iron Asset Locality

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Southern Iron - leveraging infrastructure

Accommodation Village - Camp site Crushing & Screening Plant - Wirrida Rail Loop - Wirrida Heavy Maintenance Facilities – PK Mine site Wirrida Crushing & Train Loading Peculiar Knob Mine Site

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Middleback Ranges operations

South Australia

ADELAIDE

Port Augusta

WHYALLA

Iron Knob Iron Baron Iron Duke Kangaroo Island

Ardrossan Coffin Bay

IRON KNOB IRON BARON

WHYALLA

IRON KNIGHT IRON DUCHESS

IRON DUKE

Camel Hills Cooyerdoo Katunga Hills

Spencer Gulf

N

North Middleback Range South Middleback Range QUARTZ QUARRY

IRON CHIEFTAIN

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Middleback Ranges – mine areas

Middleback Region

  • Range consists of 15 Mine Pits
  • Mines are linked by an Arrium owned narrow gauge

rail network, with G&W operating rolling stock to move ore from mines to Port

  • Dedicated Power and Water services are provided

across the Middleback Range of mines

Iron Knob area

  • Pits: Monarch, Princess East, Princess West*

Iron Baron area

  • Pits: Prince Nth, Prince, Little Baron, Baron East,

Queen*, Cavalier*

  • Includes an Ore Beneficiation Plant, and crushing &

screening for both DSO and Beneficiation feed

North SMR area

  • Pits: Knight Nth, Knight Sth, Chieftain

South SMR area

  • Pits: Duke, Magnet, Duchess North*
  • Includes an Ore Beneficiation Plant, and fixed plant

crusher and magnetite concentrator

50km range

*New Developments

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Growth – Mining

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Iron Knob mining area development

  • Next development in MBR (aligned with aspiration of 12Mtpa x 10years)
  • Includes: 3 open cut mine pits (Monarch, Princess East, Princess West)
  • Fe and silica support blending outcomes (average Fe ~60%)
  • Cost/t expected to be similar to existing MBR costs
  • Investment front-end loaded due to stripping and mine re-design
  • LOM strip ratio 3.5:1
  • First ores expected 1H FY15
  • FY14 investment ~$75 million

1 Excludes impact of IFRIC 20 Deferred Stripping (change in accounting standard effective 1 July 2013)

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Growth – Mining

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Magnetite optimisation project

  • New project - installation of a tertiary grinder and modifications to grinding

circuit

  • Leverages magnetite reserves by enabling concentrator to treat a wider range of ores
  • Maximises product recovery through fine grinding technology and improved final

concentrate washing

  • Benefits include:

– ~400kt of additional ore product (pellets, lump or concentrate) total pellets ~2Mt – Reduction in mining activity, reducing cash outlays – Consumption of stockpiled magnetite ore – Steelmaking operating efficiencies through higher Fe and less silica

1 Project commenced 2H13. FY13 cash spend $34 million.

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Export ore supply chain – logistics capability

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  • Standard gauge rail successfully transitioned to

the 9 path model in late April, with the additional wagons in service from mid May (12th), is now also demonstrating capability to support the required rate

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Narrow and Standard Gauge Rail

Narrow Gauge (MBR):

  • Narrow gauge has demonstrated through June

the capability to support the required 9.5Mtpa Rate

Standard Gauge (SI):

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Whyalla Port - aerial view 2011

Outer Harbour with Iron Ore Jetty Inner Harbour with Blast Furnace Wharf

Existing Ore Storage Shed Narrow Gauge rail line to outer harbour

Expansion site at Inner harbour

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Whyalla Port history - Outer Harbour

Outer Harbour No 2 Jetty

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Whyalla Port – Inner Harbour

The Inner Harbour Port in Operation:

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Whyalla Port – post expansion

An outer harbour capable of >6 mtpa servicing Arrium Mining

  • Iron ore loading jetty of 2,000 tph capacity, and a 10.7m berth depth
  • Iron ore storage shed connected to NG rail line

An inner harbour capable of >6mtpa servicing Mining and the Steelworks

  • 650m wharf, of 10.7m draft, with berths for 1.3mtpa steelworks products
  • 2 iron ore storage sheds connected to both NG and SG rail lines (250kt

capacity each)

  • Permanent iron ore loading berth capable of 4,200tph

13mtpa Transhipment fleet with 3 transhipment points

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Explora Exploration tion

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Exploration Aims

  • Investigate further ferrous opportunities
  • Support aspiration of 12Mtpa x 10 years
  • Lifting sales to meet capacity of the Port
  • Investigate non ferrous opportunities
  • MBR
  • Southern Iron
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Exploration summary

  • Arrium Mining has infrastructure that provides a route to market from the heart of the highly

prospective Gawler Craton

  • Our tenements reside in highly prospective geologically defined zones of the Gawler Craton
  • Our forward exploration program has a good balance of Brownfield and Greenfield activity
  • Targets for drilling are being further refined based on recent aeromagnetic surveys undertaken
  • n all our new tenements from Southern Iron (Mt Brady, Windy Valley and Hawks Nest)

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Summary Summary

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Summary

  • Mining expansion to double sales completed on time and budget

– Reached 12Mtpa sales run rate June – Port on track for 13Mtpa July (commissioning of high capacity ship loader)

  • Reasonable aspirations for 12Mtpa for 10 years
  • New blended product offers
  • Average sales Fe expected to be ~60%
  • Opportunity to utilise spare capacity of Port

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