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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 - PowerPoint PPT Presentation
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HANCOCK PROSPECTING
Hope Downs Iron Ore ProjectHope Downs Iron Ore Project
The Current StatusThe Current Status
77thth Annual Global Iron Ore & Steel Forecast Conference Annual Global Iron Ore & Steel Forecast Conference
Perth, 2004Perth, 2004
Russell Tipper – Project Director, HDMS
Presentation OutlinePresentation Outline
Project backgroundProject background
Project milestones in 2003Project milestones in 2003
Iron ore supply and demandIron ore supply and demand
Project equity participationProject equity participation
The way forwardThe way forward
ConclusionsConclusions
Project backgroundProject background
Development based Development based on 450 Mt of Ore on 450 Mt of Ore Reserves at Hope 1Reserves at Hope 1
Ore production ramp-Ore production ramp-up to at least 25 Mt/a up to at least 25 Mt/a within 5 yearswithin 5 years
New facilitiesNew facilities Mine and ore processing Mine and ore processing
plant at Hope 1plant at Hope 1 360 km railway to connect 360 km railway to connect
the mine to Port Hedlandthe mine to Port Hedland Stockpiling, wharf and Stockpiling, wharf and
ship loading facilities at ship loading facilities at Port HedlandPort Hedland
LocationLocation
Project milestones in 2003 Project milestones in 2003 (i)(i)
Increased Resources and ReservesIncreased Resources and Reserves
Feasibility StudyFeasibility Study Value Engineering StudyValue Engineering Study
Ore Reserve tonnageOre Reserve tonnage 400 Mt400 Mt 450 Mt450 Mt
Ore miningOre mining 100% from 10 m benches100% from 10 m benches 60% from 10 m benches60% from 10 m benches40% from 5 m benches40% from 5 m benches
Waste : Ore ratioWaste : Ore ratio 1.4 : 1.01.4 : 1.0 1.2 : 1.01.2 : 1.0
Hope 1 South pit mining Hope 1 South pit mining startsstarts Year 4Year 4 Year 7Year 7
Mine lifeMine life 18 years18 years 20 years20 years
Project milestones in 2003 Project milestones in 2003 (ii)(ii)
Rail route shortened by 13 km with a reduced ruling Rail route shortened by 13 km with a reduced ruling gradegrade
Passingloop #3
Passingloop #2
Passingloop #1
Hope 1Port Hedland
TrainLoadout
Weeli WolliCreek
FortescueRiver
BHPBIOYandi line
HancockRange
ChichesterRange
YuleRiver
TurnerRiver
0
100
200
300
400
500
600
700
800
0 50 100 150 200 250 300 350 400 450
Distance, km
Ele
va
tio
n, m
AH
D
Project milestones in 2003 Project milestones in 2003 (iii)(iii)
Rail sharing opportunity emergedRail sharing opportunity emerged– The Supreme Court has clarified the standing of the Hope The Supreme Court has clarified the standing of the Hope
Downs Project under the 1987 Rail Transport Agreement Downs Project under the 1987 Rail Transport Agreement between the Mt Newman JV and the State between the Mt Newman JV and the State
– Use of the Mt Newman JV railway will depend on the Use of the Mt Newman JV railway will depend on the outcome of commercial discussions with the Mt Newman outcome of commercial discussions with the Mt Newman JV participants adding value to the ProjectJV participants adding value to the Project
Project base case remains the construction of a Project base case remains the construction of a new stand-alone railway from Hope 1 to Port new stand-alone railway from Hope 1 to Port HedlandHedland
Project milestones in 2003 Project milestones in 2003 (iv)(iv)
Reduced dredged volume required for berthReduced dredged volume required for berth
Fig 8:12 Schematic elevation of wharf and dredged pocketlooking North
Project milestones in 2003 Project milestones in 2003 (v)(v)
Progress with all regulatory issues:Progress with all regulatory issues:
– EnvironmentEnvironment
– Land TitlesLand Titles
– State AgreementState Agreement
– Native TitleNative Title
Project milestones in 2003 Project milestones in 2003 (vi)(vi)
Secured further Letters of Intent from major steelmakers in Asia, Secured further Letters of Intent from major steelmakers in Asia, including NSC, JFE, SMI, Nisshin and Posco, for greater than 100% of including NSC, JFE, SMI, Nisshin and Posco, for greater than 100% of the first five years’ production ramp-upthe first five years’ production ramp-up
90% of tonnage at full production has now been secured90% of tonnage at full production has now been secured
RegionRegionLetters of Intent Letters of Intent
signedsigned(% of Sales Target)(% of Sales Target)
ChinaChina 95%95%
JapanJapan 70%70%
Korea/TaiwanKorea/Taiwan 70%70%
EuropeEurope 80%80%
TOTALTOTAL 90%90%
All indications are that current iron ore shortages will continue and that All indications are that current iron ore shortages will continue and that real term prices will continue to increase in the medium termreal term prices will continue to increase in the medium term
Iron ore supply and demandIron ore supply and demand
400
450
500
550
600
650
700
750
2000 2002 2004 2006 2008 2010
SeaborneDemand
SeaborneSupply
Project equity participationProject equity participation
High level of interest in participation in the Project High level of interest in participation in the Project from potential investorsfrom potential investors
Chinese and Japanese steelmakers interested in Chinese and Japanese steelmakers interested in securing long term supply through equity securing long term supply through equity participationparticipation
Kumba and Hancock currently finalising shortlist Kumba and Hancock currently finalising shortlist of potential Hope Downs equity candidatesof potential Hope Downs equity candidates
Information memorandum will be distributed when Information memorandum will be distributed when Kumba and Hancock have agreed the Project’s Kumba and Hancock have agreed the Project’s contractual framework, having regard for the contractual framework, having regard for the requirements of the State Agreementrequirements of the State Agreement
The way forwardThe way forward
Kumba and Hancock remain committed to the development Kumba and Hancock remain committed to the development of the Hope Downs Projectof the Hope Downs Project
The next steps are:The next steps are:
– Assessment of the rail sharing opportunityAssessment of the rail sharing opportunity
– Shareholders to finalise equity participationShareholders to finalise equity participation
– Shareholders to arrange debt funding for Project developmentShareholders to arrange debt funding for Project development
– Shareholders to secure final Project approval from the State Shareholders to secure final Project approval from the State
Government and FIRBGovernment and FIRB
ConclusionsConclusions
The Hope Downs Iron Ore Project: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
HANCOCK PROSPECTING
Hope Downs Iron Ore ProjectHope Downs Iron Ore Project
The Current StatusThe Current Status
77thth Annual Global Iron Ore & Steel Forecast Conference Annual Global Iron Ore & Steel Forecast Conference
Perth, 2004Perth, 2004
Russell Tipper – Project Director, HDMS