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Hope Downs Iron Ore Project The Current Status

Hope Downs Iron Ore Project The Current Status. 7 th Annual Global Iron Ore & Steel Forecast Conference Perth, 2004. Russell Tipper – Project Director, HDMS. Presentation Outline. Project background Project milestones in 2003 Iron ore supply and demand Project equity participation

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Hope Downs Iron Ore Project The Current Status

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  1. Hope Downs Iron Ore ProjectThe Current Status 7th Annual Global Iron Ore & Steel Forecast Conference Perth, 2004 Russell Tipper – Project Director, HDMS

  2. Presentation Outline • Project background • Project milestones in 2003 • Iron ore supply and demand • Project equity participation • The way forward • Conclusions

  3. Project background Location • Development based on 450 Mt of Ore Reserves at Hope 1 • Ore production ramp-up to at least 25 Mt/a within 5 years • New facilities • Mine and ore processing plant at Hope 1 • 360 km railway to connect the mine to Port Hedland • Stockpiling, wharf and ship loading facilities at Port Hedland

  4. Project milestones in 2003 (i) • Increased Resources and Reserves

  5. Project milestones in 2003 (ii) • Rail route shortened by 13 km with a reduced ruling grade

  6. Project milestones in 2003 (iii) • Rail sharing opportunity emerged • The Supreme Court has clarified the standing of the Hope Downs Project under the 1987 Rail Transport Agreement between the Mt Newman JV and the State • Use of the Mt Newman JV railway will depend on the outcome of commercial discussions with the Mt Newman JV participants adding value to the Project • Project base case remains the construction of a new stand-alone railway from Hope 1 to Port Hedland

  7. Fig 8:12 Schematic elevation of wharf and dredged pocket looking North Project milestones in 2003 (iv) • Reduced dredged volume required for berth

  8. Project milestones in 2003 (v) • Progress with all regulatory issues: • Environment • Land Titles • State Agreement • Native Title

  9. Project milestones in 2003 (vi) • Secured further Letters of Intent from major steelmakers in Asia, including NSC, JFE, SMI, Nisshin and Posco, for greater than 100% of the first five years’ production ramp-up • 90% of tonnage at full production has now been secured • All indications are that current iron ore shortages will continue and that real term prices will continue to increase in the medium term

  10. Iron ore supply and demand

  11. Project equity participation • High level of interest in participation in the Project from potential investors • Chinese and Japanese steelmakers interested in securing long term supply through equity participation • Kumba and Hancock currently finalising shortlist of potential Hope Downs equity candidates • Information memorandum will be distributed when Kumba and Hancock have agreed the Project’s contractual framework, having regard for the requirements of the State Agreement

  12. The way forward • Kumba and Hancock remain committed to the development of the Hope Downs Project • The next steps are: • Assessment of the rail sharing opportunity • Shareholders to finalise equity participation • Shareholders to arrange debt funding for Project development • Shareholders to secure final Project approval from the State Government and FIRB

  13. Conclusions • The Hope Downs Iron Ore Project: • is based on a large high-grade Marra Mamba ore reserve • has secured support from steel industry participants in Europe and Asia • is technically, environmentally and economically viable • will deliver significant benefits to the WA economy and has the full support of the State Government • is necessary to help satisfy the growth in iron ore demand

  14. Hope Downs Iron Ore ProjectThe Current Status 7th Annual Global Iron Ore & Steel Forecast Conference Perth, 2004 Russell Tipper – Project Director, HDMS

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