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Down, but not out! Yilgarn Iron Province WDT Kalgoorlie October 23, 2014 David Utting YIPA CEO www.yipa.com.au.

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Presentation on theme: "Down, but not out! Yilgarn Iron Province WDT Kalgoorlie October 23, 2014 David Utting YIPA CEO www.yipa.com.au."— Presentation transcript:

1 Down, but not out! Yilgarn Iron Province WDT Kalgoorlie October 23, 2014 David Utting YIPA CEO

2 Challenging Iron Markets Slide 2 Market flooded by BHP/Rio Inventories at all time high Driving ore price down Forcing higher cost competitors out China growth still 7.5% Coming off very large base National holiday end, sees a ­seasonal improvement in steel production Steel production still growing China a command economy & slowdown is policy driven State Govt ‘Your landlord’ Market at bottom and on way up? China growth still 7.5% Coming off very large base National holiday end, sees a ­seasonal improvement in steel production Steel production still growing China a command economy & slowdown is policy driven State Govt ‘Your landlord’ Market at bottom and on way up?

3 Adapt or else China steel growth at 2% pa continues Challenge for juniors and mid tiers is to cut, cut and cut costs Slide 3

4 1.Cliffs Natural Resources Pty Ltd 2.Mineral Resources Pty Ltd 3.Mindax Ltd 4.GWR Ltd 5.Cazaly Resources 6.Radar Iron Ltd 1.Cliffs Natural Resources Pty Ltd 2.Mineral Resources Pty Ltd 3.Mindax Ltd 4.GWR Ltd 5.Cazaly Resources 6.Radar Iron Ltd YIPA Membership Key members representing the serious mining players Members represent all stages through exploration to production (inc 16+ Mtpa production) Energetic and smart, near term miners eg MDX, GWR, CAZ, MIN Slide 4

5 YIPA - A Track Record of Achievement Slide 5 Fifth year of constructive engagement with government and industry Strong links with Government and Agencies Engaging with EPSL Engaging and giving input to port proponent, rail & infrastructure providers Links with local communities and shires Relationships with regional and other industry bodies Strong links with Government and Agencies Engaging with EPSL Engaging and giving input to port proponent, rail & infrastructure providers Links with local communities and shires Relationships with regional and other industry bodies

6 Substantial Iron Endowment DSO Inventory CETJORC New Near Term ~2015 Production 1.1 B tonnes785 M tonnes10+ Mtpa PBM InventoryCETJORC Longer Term Production 2011 Data 14.5 B tonnes4.7 B tonnes20+ Mtpa Cliffs export approaching 11.5 Mtpa Mineral Resources 5 Mtpa CET/JORC increasing with on-going exploration FMG active in Yilgarn Slide6

7 Yilgarn Iron Province (YIP) Key attributes are: Abundant iron ore deposits Proximity to existing infrastructure - rail, gas and road Ports – Esperance, Kwinana, Albany, Bunbury, Geraldton, Oakajee Proximity to a mature mining culture/logistics in the Goldfields Concentration of iron resources geographically Companies willing to work together through common interest Slide 7

8 Why the Yilgarn Iron Province? Infrastructure Advantages Open access to road, rail and port facilities Infrastructure Govt owned, Independent operators Cheap, brownfields incremental infrastructure upgrades Spare rail & port upgrade capacity – successful MUIOF proponent YES Consortium (Asciano) Major issues for juniors in Pilbara & Mid West Slide 8 DSO + MagnetiteGrowth potential RAIL access PORT access Pilbara Access issues Mid-West Difficult/ not constructedGel’ton full / Oakajee cold Yilgarn Spare capacity - Indep controlled X X X X X X X X

9 Mindax – Recent, $52m JV with Hong Kong PMHL to take Mt Forrest to mining at 2 Mtpa Cazaly - completed a DFS, set to mine 4 Mtpa from Parker 55.9% Fe Radar - Johnston Range pits up to 1 Mtpa - Yerecoin Mineral Resources – current 5 Mtpa and set to grow – new trains rolling Mindax – Recent, $52m JV with Hong Kong PMHL to take Mt Forrest to mining at 2 Mtpa Cazaly - completed a DFS, set to mine 4 Mtpa from Parker 55.9% Fe Radar - Johnston Range pits up to 1 Mtpa - Yerecoin Mineral Resources – current 5 Mtpa and set to grow – new trains rolling Junior miners active 1.1Mindax Ltd 2.3Cazaly Resources 3.4Radar Iron Ltd 4.5Mineral Resources Slide 9

10 Building the case for mining, transport & export Key Studies Undertaken Slide 10 YIPA Studies carried out by AECOM: 1 Supply Chain Study (completed October 2012) 2Esperance Port Financial Modeling Study (completed December 2012) 3Economic Impact Study (completed January 2013) 4Advanced HL Rail Study (completion May 2013) YIPA Studies carried out by AECOM: 1 Supply Chain Study (completed October 2012) 2Esperance Port Financial Modeling Study (completed December 2012) 3Economic Impact Study (completed January 2013) 4Advanced HL Rail Study (completion May 2013)

11 Supply Chain Study (completed October 2012) Slide 11 Examined implications if 10 Mtpa increase: 1Port infrastructure R 2Rail north/south: Leonora, Kalgoorlie, Esperance 3Rail east/west: Koolyanobbing, West Kalgoorlie, Esperance Concludes modest rail upgrades progressively required as tonnages increase Incremental in nature Modest number of additional passing loops Re-sleepering, ballast in places New signaling in places Concludes modest rail upgrades progressively required as tonnages increase Incremental in nature Modest number of additional passing loops Re-sleepering, ballast in places New signaling in places

12 Economic Impact Study Big benefits to WA (Completed January 2013) Slide Mtpa of iron ore production and logistics (not port) State Government royalty receipts of $71 m per annum (assume US $90 per tonne) Construction stage - full-time equivalent (FTE) jobs Direct employment for up to 1,000 workers Indirect 3,227 workers throughout the economy Operational stage - full-time equivalent (FTE) jobs Direct employment for up to 360 people during mine operation 1,170 jobs elsewhere in the economy 10 Mtpa of iron ore production and logistics (not port) State Government royalty receipts of $71 m per annum (assume US $90 per tonne) Construction stage - full-time equivalent (FTE) jobs Direct employment for up to 1,000 workers Indirect 3,227 workers throughout the economy Operational stage - full-time equivalent (FTE) jobs Direct employment for up to 360 people during mine operation 1,170 jobs elsewhere in the economy

13 Esperance Port Financial Study (completed December 2012) Slide 13 Upgrade is Commercially Viable Modelled key parameters including: capital intensity, return on investment, period of investment, tonnage and tariff structure and rates Suggests ‘sweet spot’ where tariffs, fees & cost structure are acceptable for miners, proponent & EPSL Suggests low capital ($150m) and incremental upgrade for the stage one export of ~10 Mtpa DSO Echoes findings of YIPA’s October Supply Chain Study Upgrade is Commercially Viable Modelled key parameters including: capital intensity, return on investment, period of investment, tonnage and tariff structure and rates Suggests ‘sweet spot’ where tariffs, fees & cost structure are acceptable for miners, proponent & EPSL Suggests low capital ($150m) and incremental upgrade for the stage one export of ~10 Mtpa DSO Echoes findings of YIPA’s October Supply Chain Study

14 Down, but not out Yilgarn Iron Province: Success from a prudent approach: Close co-operation between miners Modest capital investment Incremental approach to rail, port Quality stakeholder engagement with local communities, infrastructure providers, port proponents, EPSL and Government Thank you! Slide 14


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