Globally Significant Orebody Existing Infrastructure Innovative Technology 18 March 2020 Global Iron Ore & Steel Forecast Conference Investor Presentation November 2019
Disclaimer Important Notice The purpose of this presentation is to provide general information about Magnetite Mines Limited ("MGT"). It is not recommended that any person makes any investment decision in relation to MGT based on this presentation. This presentation contains certain statements which may constitute "forward-looking statements". Such statements are only predictions and are subject to inherent risks and uncertainties which could cause actual values, results, performance or achievements to differ materially from those expressed, implied or projected in any forward-looking statements. No representation or warranty, express or implied, is made by MGT that the material contained in this presentation will be achieved or prove to be correct. Except for statutory liability which cannot be excluded, each of MGT, its officers, employees and advisers expressly disclaims any responsibility for the accuracy or completeness of the material contained in this presentation and excludes all liability whatsoever (including in negligence) for any loss or damage which may be suffered by any person as a consequence of any information in this presentation or any error or omission therefrom. MGT accepts no responsibility to update any person regarding any inaccuracy, omission or change in information in this presentation or any other information made available to a person nor any obligation to furnish the person with any further information. Additional Information This presentation should be read in conjunction with the Annual Report at 30 June 2019 together with any announcements made by MGT in accordance with its continuous disclosure obligations arising under the Corporations Act 2001. Any references to resources estimations should be read in conjunction with MGT’s Mineral Resources statement for its Magnetite projects at 30 June 2019 as released to the Australian Securities Exchange on 12 and 20 November 2018. MGT confirms in the subsequent public report that it is not aware of any new information or data that materially affects the information included in the relevant market announcement and, in the case of estimates of mineral resources, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. All amounts within this presentation are stated in Australian Dollars consistent with the functional currency of MGT, unless otherwise stated. Tables contained within this presentation may contain immaterial rounding differences. 2
Forecasting demand with steel intensity models Steel usage versus per capita GDP …and premature “peak steel” estimates • Conventional analysis suggests steel intensity increases as countries develop, peaking then plateauing (‘peak steel’) • Other factors raised, such as technology, ‘de - intensification’, recycling, environment • But China’s pathway has not proved amenable to traditional intensity or econometric tools Crowson, P. Intensity of use reexamined. Miner Econ 31, 61 – 70 (2018); Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0 International License 3
Is China a riddle, wrapped in a mystery, inside an enigma? …and premature “peak steel” estimates Underestimates during the rise of China… "Humans make mistakes, Chinese demand is going south.“ (Kirill • Chuyko, BCS, AFR Nov 24 2014) “China’s steel sector has already entered a period of peaking and • flattening out.” (CISA Chairman Wall Street Daily, February 2015) “The increasing market consensus is that China is at, or close to, • reaching the maximum level of steel output and demand slipping back to just under [800Mt] from 2017 to 2020”. (Morgan Stanley Reuters February 2015) “POSCO Research Institute predicts that China’s crude steel • demand will continue to decline gradually from the peak of 766Mt in 2013 to 670Mt in 2020” (Asian Steel Watch January 2016) “Rio Tinto … is sticking by its widely ridiculed prediction that • Research on China's Steel Demand Using Combined Forecast- International Journal of u- and Chinese steel production will peak around 1Bt by 2030” (SMH Sep e- Service, Science and Technology Vol.8, No.1 (2015), pp.189-200 3 2015) 4
58% of people make up 17% of global steel demand – but that is changing Long Term Crude Steel Production History • In UK and US, peak steel was almost a (LHS except China RHS) century after industrialisation 200,000 1200000 180,000 • Japan flattened after 1974, 14 years after 1000000 160,000 industrialisation, actual peak in 2007 Crude steel production '000t (excl China) Crude steel production China '000t 140,000 • Four regions on a rapid growth path: 800000 120,000 – China – 5y growth 21%, 1.4Bn pop 100,000 600000 – Other Asia - 5y growth 3%, 1.8Bn pop 80,000 – India - 5y growth 27%, 1.4Bn pop 400000 60,000 – Africa - 5y growth 13%, 1.8Bn pop 40,000 200000 20,000 - 0 1850 1856 1862 1868 1874 1880 1886 1892 1898 1904 1910 1916 1922 1928 1934 1940 1946 1952 1958 1964 1970 1976 1982 1988 1994 2000 2006 2012 2018 US UK Japan India Other Asia Africa/ME China 5
Crude steel production increasing, as well as iron ore trade… Regional Crude Steel Production China quarterly iron ore imports and crude steel production (annualised) 2,000 1,200 1,800 1,600 1,100 1,400 1,000 1,200 1,000 900 800 800 600 400 700 200 600 - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 Traditional steel Africa/Middle East India Other Asia China China Crude Steel Production (annualised) China Iron Ore Imports (annualised) Traditional includes Europe/CIS/Americas/Oceania/Japan 6
…but supply response muted • China is confounding predictions with strong growth • Rapid growth in developing regions • Limited supply response • Expect long term price trends to continue • Grade spreads generally increased – an opportunity for high grade products 7
Razorback is a 3.9Bt resource close to existing infrastructure Location • ~ 240km NE of Adelaide within the Braemar Iron Formation • ~ 99km to NEM transmission lines and substation • ~ 40km from mine site to rail • ~ 375km rail haul from siding to port Scoping Study focused on low capital startup • Low strip ratio • Long mine life • Local water and power • Conventional HPGR/LIMS magnetite flowsheet 8
Razorback Iron Project Key Advantages Key advantages Providing ✓ Existing Rail, Port and Power Infrastructure Low capital cost Premium product (68.5% Fe with ~3.3% SiO 2 ) ✓ Soft magnetite ore with simple flowsheet potential for high and competitive margins ✓ Located in a mining-friendly jurisdiction Low sovereign risk 9
Simple, shallow and low strip ratio pit shell Razorback Ridge is the largest outcropping of magnetite Proposed pit shells for the Razorback Iron Project mineralisation in the Braemar Iron Formation 10
Focussed on high-grade low impurity products Indicative Razorback Iron Project – Fe Concentrate Specs 1 Typical Brand Quality Comparison 55.0% 57.0% 59.0% 61.0% 63.0% 65.0% 67.0% 69.0% Fe % 68.5 RAZORBACK Carajas Fines (Vale) Silica % 3.3 Newman Fines (BHP) Vale SSF Vale BBF Alumina % 0.4 PB Fines (RioTinto) MAC fines (BHP Phosphorus % 0.01 RTX Fines (Rio Tinto) Roy Hill 1. Results based as per metallurgical test work announced to the market 13 September 2016, see ASX W Pilbara Fines Announcement – 13/09/16 – Metallurgical Update – Positive Results SIMEC Fines On the supply side, global iron ore production totals 1.5 billion tonnes annually of JMB fines (BHP) which approximately 60 million tonnes [4%] is high-grade [67%+ preferred for pellet FMG Blended production]. 2 Yandi (BHP&Rio) Erik Hedborg, senior iron ore analyst at CRU in London, expects Chinese pellet Atlas Fines demand to grow more than 40% by 2023 to roughly 190 million tonnes, from 140 FMG SSF million tonnes in 2018, and keep rising. 3 Robe (Rio Tinto) Data MMI daily iron ore report 1. Values quoted are targets, subject to change pending further testwork and analysis during potential Pre-feasibility testwork 2. Source: Research Report by Toronto based research firm Tormont50 (May 2019) 11 3. Source: Reuters, 20 August 2019
Ore sorting - technology advantage Ore MR Diverter Sensor • Executed an exclusivity agreement with NextOre • Opportunity to apply Magnetic Resonance sensing and ore sorting technology developed by CSIRO to increase plant feed grade and yields MRA output controls the Sensor continuously detects iron grade of feed and diverts low grade • ore diverter material to avoid processing of lower grade ore • Increases average grade of plant feed by up to 50% 1 • Currently at commercial scale for Cu and pilot scale for Fe • Results in lower OPEX and improved capital efficiency Waste Upgraded Ore • Desktop evaluation underway with test work and bulk sampling to follow during PFS 12 1. Values quoted are targets, subject to change pending further testwork and analysis during potential Pre-feasibility testwork
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