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 and objectives of the management of Arrium. Forward-looking statements can generally be identified by the use of 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 TITLE TEXT 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. 2

Arrium business structure TITLE TEXT 3

Map of operations TITLE TEXT SOUTHERN IRON EXPLORATION LEASES SOUTHERN IRON REGION MIDDLEBACK RANGES REGION CURRENT IRON ORE OPERATIONS HIGHWAY RAILWAY 4

Growth – Mining 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 TITLE TEXT  Aim to maintain 12Mtpa for at least 10 years Peculiar Knob Mine Site 5

Mining business doubled Key Milestones Iron Ore Sales Southern Iron acquisition and Port development 14000  Southern Iron assets acquired – Oct 2011 12000  Cutback commenced – Dec 2011  First ore haulage to Wirrida – Aug 2012 10000 mt) (dmt  Crushing and screening commissioned – Sept 2012 8000 s k (d  First sales – Oct 2012 TITLE TEXT Sales 6000  First ores through expanded Whyalla Port – Dec 2012 4000  2 nd shed completed – April 2013 2000  Blending commenced – May 2013 0  New higher capacity ship loader arrived June 2013 (commissioned July 2013) Middleback Southern Iron 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 6

Growth - Mining 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 stocks 1 10 High grade generated through mining of beneficiation of low grade 7 – 10 TITLE TEXT reserves to be mined from current pits 1 Conversion of inferred resource inside current pit shells to reserve 10 94 – 97 Additional excluded resource from current exploration program 30 – 40 (Buzzard, Chieftain, Princess, Peculiar Knob) – high confidence 2 124 – 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 7

Southern Iron Asset Locality TITLE TEXT 8

Southern Iron - leveraging infrastructure Accommodation Village - Camp site TITLE TEXT Rail Loop - Wirrida Peculiar Knob Mine Site Heavy Maintenance Facilities – PK Mine site Wirrida Crushing & Train Loading Crushing & Screening Plant - Wirrida 9

Middleback Ranges operations N IRON KNOB Port Augusta Iron Knob Iron Baron WHYALLA Iron Duke QUARTZ QUARRY Ardrossan Katunga Hills Coffin Bay ADELAIDE Cooyerdoo TITLE TEXT Kangaroo Island South Australia Camel Hills IRON BARON North Middleback Range WHYALLA IRON CHIEFTAIN IRON KNIGHT South Middleback IRON DUCHESS Range IRON DUKE Spencer Gulf 10

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 TITLE TEXT Iron Knob area  Pits: Monarch, Princess East, Princess West* Iron Baron area 50km  Pits: Prince Nth, Prince, Little Baron, Baron East, range 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 *New Developments 11

Growth – Mining 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 TITLE TEXT • 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) 12

Growth – Mining 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 TITLE TEXT  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. 13

Export ore supply chain – logistics capability TITLE TEXT 14

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): • Standard gauge rail successfully transitioned to TITLE TEXT the 9 path model in late April, with the additional wagons in service from mid May (12 th ), is now also demonstrating capability to support the required rate 15

Whyalla Port - aerial view 2011 Outer Harbour with Iron Ore Jetty Expansion site at Inner harbour TITLE TEXT Existing Ore Storage Shed Inner Harbour with Blast Furnace Wharf Narrow Gauge rail line to outer harbour 16

Whyalla Port history - Outer Harbour TITLE TEXT Outer Harbour No 2 Jetty 17

Whyalla Port – Inner Harbour The Inner Harbour Port in Operation: 18