WPG Resources Ltd WPG Resources Ltd High Grade DSO Iron Ore High Grade DSO Iron Ore at Peculiar Knob is Just at Peculiar Knob is Just the Start……. the Start……. Investor Presentation Investor Presentation Investor Presentation Investor Presentation October 2010 October 2010
Key Corporate Information Directors: – Bob Duffin (executive chairman) – Heath Roberts (executive) – Gary Jones (executive) – Bob Richardson (independent non executive) – Len Dean (independent non executive) – Lim See Yong (non executive ) – Dennis Mutton (independent non executive) ( p ) Executives – Martin Jacobsen (COO) – Greg Harding (CFO) – Myles Fang (Iron Ore Marketing) – Larissa Brown (Company Secretary) Issued shares 121.7m – Adrian Horne (PK Mine Manager) Cash: $13.6 m (30 September 2010) Cash: $13 6 m (30 September 2010) Unlisted options 5.8m Directors control 23m voting shares (19%) Share rights 2.1m Institutions 12.2% Good core group of top 50 shareholders both Fully diluted Fully diluted 129.6m 129 6m retail and professional t il d f i l TSR (pa): 202% 1 year, 35% 5years Market $117m (Bloomberg) capitalisation capitalisation ( t $0 90/ h (at $0.90/share) ) Investor Presentation October 2010 2
Our Key Project Assets IRON ORE • DSO: Peculiar Knob, Buzzard and Tui Buzzard and Tui deposits • Magnetite BIF: Kestrel and Goshawk, Harrier, d G h k H i Eagle, Kite and Falcon at Hawks Nest • H Haematite BIF: Buzzard tit BIF B d and Tui footwall COAL • Penrhyn, Perfection Well, Pidinga, Lochiel EXPLORATION O O • Mt Brady, Windy Valley Investor Presentation October 2010 3
Our Vision • Bring Peculiar Knob into production at 3.3 mtpa late 2011 • Bring Buzzard into production later so DSO sales are 3-4 mtpa for minimum 10 year Bring Buzzard into production later so DSO sales are 3 4 mtpa for minimum 10 year DSO project life • Continue exploration at Hawks Nest to discover more DSO deposits to extend life beyond 10 years beyond 10 years – great exploration prospectivity for DSO great exploration prospectivity for DSO • Commence BFS on Hawks Nest magnetite in 2011 and commit to project development in 2015 so that magnetite sales are 6-10 mtpa for 30 years from 2016-7 • More testwork on Hawks Nest haematite BIF to supplement magnetite concentrates with haematite concentrates and add value • Define measured/indicated/inferred coal resource at Penrhyn of not less than 200 mt by 2013 • • Commit to clean coal technology project at Penrhyn producing ~10 mtpa by 2016 Commit to clean coal technology project at Penrhyn producing ~10 mtpa by 2016 • Divert part of magnetite/haematite concentrates and Penrhyn coal to production of 1-2 mtpa seaborne-traded pig iron by 2017 Investor Presentation October 2010 4
Peculiar Knob DSO • BFS updated Sep-Oct 2010 • Specular haematite deposit with Specular haematite deposit with silica gangue; high grade Fe with virtually no impurities • Very sharp break between ore and wall rocks • Lies beneath 15 to 30 m cover • Effectively all measured and indicated resource reports to reserves • LOM W:O strip ratio 4.75:1 LOM W O t i ti 4 75 1 • Will market all-fines product at reserve grade reserve grade Investor Presentation October 2010 5
Development Plan – Peculiar Knob • 3 3 mtpa to start late 3.3 mtpa to start late 2011; maximise use of contractors • We will build haul road to Wirrida Siding • • Accommodation village Accommodation village for 190 • Crushing plant at siding • Rail haulage 11,200 tonnes per train 6 days per week to Port Pirie p • Transhipment to Capesize ships in deep water in Upper Spencer water in Upper Spencer Gulf • One ship every 3 weeks Investor Presentation October 2010 6
Mineral Resource Estimates Peculiar Knob Peculiar Knob Category Million Fe P SiO 2 Al 2 O 3 LOl Tonnes % % % % % Measured resource 13.6 64.0 0.01 7.11 0.27 0.4 Indicated resource 4.1 63.8 0.02 7.69 0.20 0.4 Inferred resource Inferred resource 1 5 1.5 64 6 64.6 0 03 0.03 6 15 6.15 0.20 0 20 0.2 0 2 Total resource 19.2 64.0 0.01 7.16 0.25 0.4 Sulphur: 0.009%; Cu, Pb, Zn, Ni, Cr; V, Cl, Ba, As, Zr, Sr, etc: at or BLD To WPG’s knowledge Peculiar Knob is Australia’s highest grade undeveloped Fe deposit To WPG s knowledge, Peculiar Knob is Australia s highest grade undeveloped Fe deposit Investor Presentation October 2010 7
Ore Reserve Estimates Peculiar Knob Peculiar Knob Category Million Fe P SiO 2 Al 2 O 3 LOl Tonnes % % % % % Proved reserve 13.5 63.2 0.01 8.2 0.35 0.45 Probable reserve 3.2 63.2 0.02 8.6 0.28 0.40 Total reserve Total reserve 16 7 16.7 63.2 63 2 0 01 0.01 8 3 8.3 0.34 0 34 0 44 0.44 Investor Presentation October 2010 8
Permitting and Approvals FINALISED • Mining lease • Native title mining agreement g g • Department of Defence: mining access agreement for mine development, haul road, accommodation village, rail loader and crusher • Access and compensation agreements with pastoralists • Authorities to build infrastructure on all third party exploration licences • MPLs and EMLs for haul road, infrastructure and borrow pits (tenements offered by PIRSA; now finalising documentation) • Stafford borefield – licensed by SA DWLBC (subject to agreeing final documentation with Defence) • Train paths • 10 10 – 30 year port access agreement for iron ore and coal 30 t t f i d l • Purchase of Port Pirie land (subject to final documentation) STILL OUTSTANDING STILL OUTSTANDING • MARP (fully drafted; EPBC referral to Commonwealth for thick billed grass wren) • Port Pirie Development Application (scheduled to be lodged 5 November) Investor Presentation October 2010 9
The Importance of Grade Iron Ore Prices CNF Tianjin Iron Ore Prices CNF Tianjin Source: The Steel Index 200.0 180.0 180.0 160.0 140.0 120.0 tonne 100.0 80.0 80 0 US$/t 60.0 40.0 62% Fe 20.0 58% Fe 0.0 Nov-08 May-09 y Nov-09 May-10 y Nov-10 Current price: 62% Fe: US$152/tonne; 58% Fe US$121/t Premium is US$7.75/t per 1% change in Fe content Also potential for premium for low phos, low alumina over and above high Fe Al t ti l f i f l h l l i d b hi h F Investor Presentation October 2010 10
PK – Australia’s Best Quality Fines The combination of: Peculiar Knob Total Fines Sample Wet size distribution - % wt passing 100.0 • high Fe grade 90 0 90.0 WPR Hyundai Sinter Sample WPR H d i Si t S l 80.0 Pilbara Blend Fines • low P 70.0 wt passing 60.0 • low Al 2 O 3 low Al 2 O 3 50.0 % w 40.0 • low %age of ultrafines 30.0 20.0 10.0 makes PK the best quality fines makes PK the best quality fines 0.0 0.01 0.10 1.00 10.00 Size (mm) produced in Australia Assay (%) y ( ) Fines Product Fe SiO 2 Al 2 O 3 P LOI 1000% WPG has 7 sales MOUs Robe River CID 56.30 5.96 2.87 0.041 9.11 in place for 3.9 – 4.5 Yandi CID 59.22 5.26 1.09 0.044 8.73 mtpa which is much Pilbara Blend BID 62.20 4.26 2.07 0.075 4.14 more than we will Cliffs BID 62.10 3.96 1.96 0.079 4.26 WPG Fines 63.21 8.28 0.34 0.012 0.44 produce Investor Presentation October 2010 11
BFS – Key Metrics CAPEX: OPEX: • Site $85m • Average cash opex over LOM: $66/t to FOB • Port Pirie $54m • • Royalties add another $6/t Royalties add another $6/t • Total capex: $139m T t l $139 • Total cash opex: $72/t to FOB • Sea freight $17/t to north Asia WORKING CAPITAL: • Cash opex to delivery in China: $89/t • Pre-strip, mine, process and transport first p, , p p 160,000 t: $29m TOTALS REVENUE • • Total initial capital: $168m Total initial capital: $168m • • Spot price CNF: US$152/t Spot price CNF: US$152/t • In A$: $152/t (at parity) UPSIDE MARGIN • Imported steel price has fallen in A$ terms • Cash operating margin: $63/t at spot as A$ rises • Margin on 3.3 mtpa: $208m pa at spot • Diesel price falls as A$ rises and opex would now be $2/t cheaper Peculiar Knob’s Cash Generation Capacity is Very Strong and it is WPG’s Intention to Monetise the Deposit ASAP!! and it is WPG s Intention to Monetise the Deposit ASAP!! Investor Presentation October 2010 12
Debt Funding Package Deutsche Bank AG has been mandated to Conditions include: provide US$120 million debt funding package • Credit approval • Due diligence Due diligence Package consists of: Package consists of: • Approval of MARP • US$70m senior secured notes • Approval of DA for Port Pirie infrastructure • US$50m iron ore pre-pay • Other CPs Other CPs Notes carry 8% coupon and are repayable in 3.5 years Notes also have detachable warrants totalling 6% of WPG’s capital exercisable at 30% premium to VWAP Iron ore facility is to be satisfied by delivery of 526,000t iron ore fines over 18 months Deutsche Bank will also purchase as an arms Deutsche Bank will also purchase as an arms- length customer a further 1.1mt of iron ore fines at market price Investor Presentation October 2010 13
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