Mining Consumables Kansas City - site tour 13 September 2013

Transcription

1 Mining Consumables Kansas City - site tour 13 September 2013

2 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 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, 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. All balance sheet items are based on statutory financial information. Except as otherwise expressed, references in this document to net profit/loss after tax refer to net profit/loss attributable to equity holders of the parent. Segment results referred to throughout this presentation are those reported in the 2013 Full Financial Report. They are equivalent to segment underlying results. 2

3 Contents Page Mining Consumables Overview 4 Key Market Drivers 21 Moly-Cop Overview 28 Moly-Cop South America 35 Moly-Cop North America 39 Moly-Cop Australasia 43 Strategic Focus & Outlook 45 Summary 49 Appendix 50 3

4 Mining Consumables John Barbagallo, Chief Executive Mining Consumables

5 Arrium business segments Middleback Ranges Moly-Cop Steel Southern Iron AltaSteel Recycling Port 5

6 Mining Consumables overview A business of scale with a strong growth profile Strong earnings growth since Moly-Cop acquisition EBITDA ~$200m (FY13) Global leader in grinding media Leading market positions in South America, North America and Australasia: Sales of ~1.0Mtpa Capacity of ~1.3Mtpa (excluding current expansions) Ideally positioned to capitalise on mining growth, particularly copper, gold and iron ore Good visibility of new projects and mine expansions Estimated grinding media demand growth in North America and South America ~8% CAGR FY13-17 Relatively stable margins Sustainable competitive advantage 1 1 FY11 includes annualised EBITDA of the Moly-Cop Group 6

7 Mining Consumables overview A comprehensive footprint for further geographic growth in grinding media and mining consumables Investing in new grinding media capacity ahead of the market and close to customers A strong cash generator after funding own growth High quality customer base established longterm relationships with major mining houses Over 80 years of history with grinding media, rail wheels and ropes Global leader in dragline ropes #1 in rail wheels/axles in Australia and New Zealand 7

8 Mining Consumables businesses Grinding Media Rail Products Ropes 8

9 Grinding Media A key mining consumable Grinding media is used in the process of extracting minerals from ore, particularly in the fast growing copper and gold industries Ore particles must be ground down to sufficiently small sizes so the contained metal species become liberated ; i.e. free from gangue materials, prior to subsequent concentration processes Grinding is carried out in large horizontal tumbling mills, partially filled with steel balls or rods (grinding media) Mills require continuous refilling with new grinding media as they get consumed Consumption of grinding media is related primarily to the volume of ore processed and ore characteristics (abrasiveness, particle size and specific energy input) 9

10 Grinding media fundamentals Moly-Cop provides full range of sizes from 1 6 balls Ball Mills 1-4 balls 3-4 grinding rods No balls No balls SAG Mills single stage Rod Mills 4-6 balls SAG Mills multi stage HPGRs Crushers 4-6 balls Tower Mills balls IsaMills <0.1 balls Small balls Large balls ,000 10, ,000 1,000,000 Particle size, μm Source: Moly-Cop 10

11 Moly-Cop grinding media Largest producer of grinding media globally with facilities in Chile, Peru, Mexico, USA, Canada, Indonesia and Australia Grinding media facilities Capacity* (~ktpa) Products size range Newcastle, Australia Cilegon, Indonesia Kansas City, USA Talcahuano & Mejillones, Chile Lima & Arequipa, Peru El Salto, Mexico Kamloops, Canada Total 1,330 *Excludes Board approved expansions in Cilegon, Indonesia and Kamloops, Canada totalling ~170ktpa 11

12 Rail products Focus on premium quality forged rail wheels for heavy haul markets High quality manufacturing Value in use focus Maintenance market growing with larger coal and iron ore fleets in Australia Strong export sales into South Africa Secured long term contracts with major mining companies Secured long term contracts with major freight companies FY13 record sales of ~77k wheels Facilities Capacity Australia Steelmaking Ingots Rail Products ~105,000 wheels ~10,000 axles Employees Rail 220 Market Position Market leader (1 st ) Major Suppliers Major Customers Waratah Steelmaking External axle supply Rio Tinto Aurizon Pacific National Downer United Group Limited (Rail) Bradken Transnet (South Africa) BHP Iron Ore Pilbara Iron FMG Competitors Imports China Imports Europe 12

13 Moly-Cop Ropes Strong presence in mining segments (Mining ropes ~70% sales) Draglines and electric shovels Pendants for draglines, shovels Cable hauled conveyors Underground mining applications Market ropes segments (~30% sales) Electrical industries Agriculture Construction Highway infrastructure High quality manufacturing Value in use focus cradle to grave Sole rope manufacturing plant in Australia Facility Capacity Australia Employees 110 Mayfield, Newcastle ~20ktpa Market Position Market leader (1 st ) Major Supplier OneSteel Wire Major Customers BMA Xstrata Rio Tinto Wesfarmers Anglo American Competition Haggie Rand Bridon Wire Co 13

14 FY13 Mining Consumables results FY13 $m FY12 $m % change Total revenue/income 1,567 1,541 2 EBITDA EBIT Sales margin 9.7% 8.8% 0.9 pp Assets 2,460 2,310 6 Funds employed 2,072 1,948 6 Return on funds employed 7.6% 6.9% 0.7 pp Employees (number) 2,031 1,973 3 External tonnes despatched (Mt) Excludes scrap sales 14

15 FY13 Mining Consumables results EBITDA $197 million vs $172 million pcp Substantial contributor to group earnings and growth Sales volumes up 8% pcp Maintained stable margins Moly-Cop businesses continued to perform well and in line with expectations Strong grinding media volumes driven by copper and gold in North and South America Australasian grinding media, rail wheels and ropes businesses performed well EBITDA up pcp for all businesses Strong cash generator Capacity expansions tracking to plan 15

16 Historical performance FY13 FY12 FY11 2 FY10 1 FY09 1 FY08 1 $m $m $m $m $m $m Total revenue/income 1, , , EBITDA EBIT Sales Margin 9.7% 8.8% 6.1% 9.2% 3.5% 12.9% Assets 2, , , , , ,104.3 Funds Employed 2, , , , , ,015.0 Return on funds employed 7.6% 6.9% 4.4% 6.0% 2.2% 6.5% Employees (number) 2,031 1,973 1, External tonnes despatched (Mt) Internal tonnes despatched (Mt) Steel tonnes produced (Mt) The December 2010 results for the Manufacturing and Mining Consumables segments have been restated to reflect changes in organisation structure following the formation of the new Mining Consumables segment as a result of the acquisition of the Moly-Cop Group on 31 December Arrium's existing Waratah, Newcastle facilities, which include the grinding media and rail wheel businesses, Arrium's grinding media businesses in the United States and Indonesia, and the Wire Ropes business at Newcastle previously reported as part of the Steel segment now form part of the Mining Consumables segment. 2 These statistics include the results of the Moly-Cop Group from 31 December Assets and liabilities have been restated to reflect the final fair value adjustments arising on acquisition of the Moly-Cop Group in December Excludes scrap sales. 16

17 Operational highlights FY13 Continued strong grinding media volume growth (up 7% pcp) Grinding media capacity expansions Completed commissioning of new 40ktpa SAG line in Lima, Peru Cilegon, Indonesia expansion (50ktpa) tracking to plan and budget for commissioning Q3 FY14 Commenced construction of new 120ktpa SAG line in Kamloops, Canada Successful launch of Raptek dragline dump ropes Increased plasticated rope sales into Australia and commenced trials in Chile Commenced trialling of new plasticated dump rope in Australian coal mines Record wheel sales in Australasia New plasticated dump rope product Plasticated mining rope product 17

18 Lima, Peru New SAG Line 40ktpa new capacity Commissioned August

19 Cilegon, Indonesia tracking to plan 50ktpa new capacity - To be commissioned Q3 FY14 Main Building under construction Reclamation workshop substantially complete Process line under construction 19

20 Moly-Cop Ropes Patented Raptek dump rope Rope trials in Chile New rope replacement approach New rope being fitted Previous work arrangement New rope on mining shovel bucket 20

21 Key market drivers John Barbagallo, Chief Executive Mining Consumables

22 Key market drivers Grinding media consumption driven by: Copper, gold and iron ore processing rates Demand for grinding media in North and South America expected to grow strongly at 8% CAGR (FY13-17) Declining mineral head grades Railway products consumption driven by iron ore and coal mining Strong forecast growth in key mining segments in Australia Mining rope products largely driven by Australian open-cut coal mines Stable mining operations with forecast long-term growth 22

23 Ore Milled Million Tonnes For personal use only Key market drivers Copper Ore milled Growing demand for copper and declining ore head grades driving expected increase in ore milled Global copper ore milled expected to increase 56% from 2013 to 2017 (CAGR of 12%) Most significant growth is in North and South America from 2013 to 2017 (14% CAGR) where Moly-Cop has strong positions Ore milled has a direct relationship to grinding media demand World Copper Ore Milled (Million Tonnes) By Region ,500 3,000 2,500 2,000 1,500 1, Sth America Nth America Australasia Africa Europe ROW Source: Wood Mackenzie June

24 The expected increase in ore milled is driven by a strong outlook for new mines, expected expansions and restarts, on top of a base case production levels Growth: A large number of projects are expected to drive an increase in ore milled. High confidence level (with 51% of highly probable or probable projects) Mine installed base: Stable outlook for existing mines with low closures expected Ore Milled Million Tonnes For personal use only Key market drivers Copper projects 3,500 3,000 2,500 2,000 1,500 World Copper Ore Milled (Million Tonnes) By Status , Base Case Project - Highly Probable Project - Probable Project - Tentative Project - Possible Source: Wood Mackenzie June

25 Key market drivers Gold ore milled Growing demand for gold and declining ore head grades expected to drive increase in ore milled from 2013 to 2017 Forecast global gold ore milled to increase 38% from 2013 to 2017 (CAGR 8%) Most significant growth occurs in South America (12% CAGR) and North America (14% CAGR) from 2013 to 2017 North America, South America and Australasia amongst top gold producing regions in the world Ore Milled Million Tonnes World Gold Ore Milled (Million Tonnes) By Region ,200 1, Sth America Nth America Australasia Africa Europe ROW Source: Wood Mackenzie June

26 Key market drivers Gold projects Increase in ore milled driven by strong base and expected expansions and restarts Growth: A large number of projects expected to drive increase in ore milled. High confidence level (with 55% of highly probable or probable projects) Mine installed base: Gradual decline in base more than offset by growth in projects Ore Milled Million Tonnes World Gold Ore Milled (Million Tonnes) By Status ,100 1, Base / Operating Probable Tentative Highly Probable Possible Source: Wood Mackenzie June

27 Market growth 8%* CAGR for grinding media demand in North and South America Top-down approach Wood Mackenzie (June 2013) Publicly available information on mine developments Bottom-up approach Direct customer contacts Budgetary quotes (engineering firms & major equipment suppliers) Industry intelligence Project visibility Line of sight on project developments and time frame Customer discussions on grinding media requirements First hand information from technical support to project owners Provides greater certainty of future volumes *Moly-Cop management estimate 27

28 Moly-Cop grinding media overview Jaime Sepulveda, Global Leader Grinding Media & President Moly-Cop South America

29 Moly-Cop grinding media operations 9 state of the art grinding media facilities across the Americas and Australasia close to local markets and customers with currently installed capacity of ~1.3Mtpa* Moly-Cop USA Kansas City Grinding Media Moly-Cop Canada* Kamloops Grinding Media Moly-Cop Mexico El-Salto Grinding Media Moly-Cop Peru Lima Grinding Media Moly-Cop Indonesia* Cilegon, Indonesia Grinding Media Moly-Cop Australia Newcastle, Australia Grinding Media Moly-Cop Peru Arequipa Grinding Media *Excludes Board approved expansions in Cilegon, Indonesia and Kamloops, Canada totalling ~170ktpa Source: Moly-Cop Moly-Cop Chile Mejillones Grinding Media Moly-Cop Chile Talcahuano Grinding Media 29

30 Key strengths Leading global player in attractive industry with strong demand growth Uniquely positioned to benefit from projected strong demand growth, leveraged by broad footprint of strategically located grinding media manufacturing facilities Facilities close to key growth regions Differentiated capabilities recognised relative to competitors: superior quality and product performance, supply assurance and highly valued technical support Long term strategic alliances with key integrated and local steel bar suppliers Installed capacity ~3.5 times greater than next largest international competitor History of expanding capacity ahead of market demand to capture market growth Proprietary metallurgical and engineering know-how delivers value in use outcomes for customers Strong and highly experienced in-market management teams based close to customers 30

31 Pricing structure grinding media Scrap price, CRUspi and FX influence selling prices Customer pricing directly linked with raw material price movements which provide margin stability Majority of bar is sourced from local manufacturers to reduce price & working capital Price premium driven by value in use and service levels Purchased Bar Price Freight Steel to Bar Conversion Costs Steel Making Costs Ball Conversion Costs Margin Price linkage to Scrap or CRUspi Freight Final Sale Price linked to Scrap or CRUspi raw material prices Linked to Scrap or CRUspi mechanism Raw Material Prices Note: Image not to scale 31

32 Business model Buy side Integrated internal and external bar suppliers Long standing in-region supply relationships Bar price managed to reduce cost volatility for ball manufacturers and customers Security of bar supply is important Bar quality is important Sell side Selling prices managed through linkage to raw material costs (bar price) Customer contracts generally up to 5 years with large customers Global customer relationships in place, with multi-locations/countries Longevity of supply relationships, up to 30 years Sell on basis of value in use outcomes Security of supply is critical and technical support important Freight generally managed by Moly-Cop (so proximity to customer is key) 32

33 High quality customer base Key global copper, gold and iron ore mining companies Top 20 Grinding Media customers account for ~80% of sales Large contracts (typically 10 50ktpa) Customer contracts and supply agreements generally 2 to 5 years in duration Top Copper Companies by Ore Milled (kt) Rank Company Moly-Cop Customer 1 F-McM Copper & Gold Yes 2 Codelco Yes 3 Southern Copper (ex SPCC) Yes 4 Rio Tinto Yes 5 BHP Billiton Yes Top Gold Companies by Ore Milled (kt) Rank Company Moly-Cop Customer 1 Kinross Gold Yes 2 Goldcorp Yes 3 Barrick Gold Corp Yes 4 Anglogold Ashanti Yes 5 Newmont Mining Yes Source: Wood Mackenzie June 2013 (Ore milled with equity) 33

34 Competitive advantage Quality of product: Moly-Cop is recognised for its superior product performance Improved wear performance reduces effective cost of application: [$/ton ground] = [$/ton balls] x [ton balls/ton ground] Certainty of supply: Moly-Cop is located close to its customers, assuring timely and flexible delivery of products In grinding media, only supplier able to offer global customers the benefit of its global network Minimises risk of interruption to operations Technical support: To help customers maximise throughput and yield Moly-Cop is recognised for its unparalleled technical expertise and capability to provide tailored customer support Quality For personal use onlymoly-cop delivers value in use for its customers: Key Purchasing Criteria Technical support Supply assurance 3 34

35 Moly-Cop South America Jaime Sepulveda, Global Leader Grinding Media & President Moly-Cop South America

36 Ore Milled For personal use only Moly-Cop South America demand Drivers of Demand Grinding media demand is driven by ore milled predominantly in the production of copper, gold and iron ore Mine expansions and greenfield mining projects have resulted in significant growth in ore milled forecast to double by 2017 (Source: Wood Mackenzie) Wood Mackenzie has forecast copper ore milled to grow 14% CAGR from and gold ore milled to grow 11% CAGR for the South American regions Market Conditions Moly-Cop South America comprises the markets of Chile, Peru, Brazil and Argentina Market conditions remain buoyant despite recent fall in commodity prices and significant growth is forecasted Market Position Moly-Cop has leading market positions and is well placed to service the forecast growth 2,000 1,500 1, % Sth America Ore Milled (000 Tonnes) Copper Moly-Cop Sth America Grinding Media Sales volume 15% 4% Gold Source: Wood Mackenzie June % Argentina Chile Peru Brazil Source: Moly-Cop 36

37 Moly-Cop South America growth Projected major expansions / new mining projects Chile CODELCO MMH Caserones Sierra Gorda Pascua Lama Brazil (Minas Rio/MMX) Peru Cerro Verde expansion Toromocho Constancia Las Bambas Cuajone/Toquepala expansion Antapaccay Indicative additional grinding media demand growth by FY2017 ~300ktpa Source: Moly-Cop 37

38 Moly-Cop South America capacity Installed grinding balls capacity (ktpa) Moly-Cop South America capacity expansions Moly-Cop South America All others - South America Source: Moly-Cop * FY14 based on forecast estimates and includes current planned expansions 38

39 Moly-Cop North America Steve Ornduff, President Moly-Cop USA

40 Moly-Cop North America demand Drivers of Demand Grinding media demand is driven by ore milled, predominantly in the production of copper and gold Mine expansions and greenfield mining projects have resulted in significant growth in ore milled Wood Mackenzie has forecast copper and gold ore milled to grow 14% CAGR from for the North American regions Market Conditions Moly-Cop North America comprises the markets of Canada, USA and Mexico/Central America Strong growth expected through brownfield and greenfield expansions Market Position Moly-Cop has leading market positions in North America and is well placed to service the growth in these markets with existing and new planned capacity Focus to maintain share in growing market Ore Milled 1,500 1, Nth America Ore Milled (000 Tonnes) Copper Gold Source: Wood Mackenzie June 2013 Moly-Cop Nth America Grinding Media Sales volume 3% 20% 33% Canada USA Mexico Other 44% Source: Moly-Cop 40

41 Moly-Cop North America growth Projected major expansion / new mining projects Canada/Alaska Detour Lake Thompson Creek - Mt Milligan Taseko Gibraltar Expansion KGHM Ajax Yellowhead Harper Creek USA BHPB Pinto Valley (Re-start) Allied Gold Hycroft General Moly Mt Hope Augusta Rosemont Freeport Morenci Expansion Mexico/Central America Grupo Mexico New Cananea Minera Frisco Expansions First Quantum Cobre Panama Indicative additional grinding media demand growth by FY2017 ~ 195ktpa Source: Moly-Cop 41

42 Moly-Cop North America capacity 500 Moly-Cop North America capacity expansions Installed grinding balls capacity (ktpa) Moly-Cop North America All others - North America * FY14 based on forecast estimates Source: Moly-Cop 42

43 Moly-Cop Australasia John Barbagallo, Chief Executive Mining Consumables

44 Moly-Cop Australasia demand Drivers of Demand Grinding media demand is primarily driven by copper and gold production Wood Mackenzie has forecast copper ore milled to increase by 2% CAGR from and gold ore milled to increase by 1% CAGR Rail wheel demand driven by maintenance requirements within coal, iron ore, general freight and passenger in Australia Ropes demand largely premised on open-cut coal demand with dragline and shovel fleets Market Conditions Moly-Cop Australasia comprises the markets of Australia, Indonesia, New Zealand, Philippines and PNG Market conditions remain solid, though no new large copper or gold mines planned. Coal and iron ore volumes to drive wheel and ropes sales Market Position Moly-Cop has leading market positions in Australasia and is well positioned to service the growth in these markets Ore Milled Australasia Ore Milled (000 Tonnes) Copper 40% Source: Wood Mackenzie June 2013 Moly-Cop Australasia Grinding Media Sales volume 12% Gold 48% Australia Indonesia Other Source: Moly-Cop 44

45 Strategic Focus & Outlook John Barbagallo, Chief Executive Mining Consumables

46 Strategic focus Short to medium term Deliver value by capturing the expected market growth for grinding media in the current regions of North & South America and maintain our strong position in Australasia Deliver current capacity expansions in Indonesia and Canada, totalling ~170ktpa Cilegon commissioning planned for Q3 FY14 with 50ktpa capacity Kamloops commissioning planned for Q4 FY15 with 120ktpa capacity Ongoing review of capacity expansions to ensure capacity is ahead of market growth Increase long-term contracts with strategic customers Continue to sell on value in use basis Maintain strong cash generation Capturing expected market growth for mining rope and rail wheels in Australia Medium to longer term Expanding geographically with current products New products in mineral processing and mineral extraction 46

47 Outlook Demand for grinding media expected to remain strong High levels of copper and gold production, particularly North and South America, despite commodity prices coming off recent highs Expected CAGR 8% (FY13-FY17) North and South America Well placed to capture at least our high market share of the expected growth in demand Ball quality, supply chain, technical support, expanding capacity ahead of the market Demand for mining ropes and rail wheels in 1H FY14 expected to be impacted by some miners in Australia (coal, iron ore) reducing inventory 47

48 Summary A business of scale with relatively stable margins and a strong growth profile Strong earnings growth since Moly-Cop acquisition Grinding media sales ~1Mtpa, capacity ~1.3Mtpa Strong growth forecasts for copper, gold and iron ore Good visibility of new projects and mine expansions (copper, gold, iron ore) Estimated 8% CAGR volume growth of grinding media markets in North and South America Deteriorating mineral head grades Moly-Cop is the largest global grinding media manufacturer with leading market positions in key growth regions, and is well positioned to capture at least its high market share of the expected growth Sustainable competitive advantage Maximise value from wheels and ropes within Australasia region 48

49 Questions

50 Appendix

51 Moly-Cop history In the 1930s, Armco s Sheffield Steel of Kansas City produced the first heat-treated grinding ball alloyed with molybdenum and copper. The new ball significantly improved wear performance versus the quality levels of that time, and was patented and appropriately trademarked as Moly-Cop In 1961, Armco built its first grinding ball forging operation outside the USA - now known as Moly-Cop Chile. This began several decades of growth to build the international Moly-Cop business with grinding ball plants located strategically around the world to include Chile, Peru, Mexico, and Canada In 2001, then owner GS Industries went into bankruptcy and sold the international Moly-Cop businesses to Anglo s Scaw Metals in The original Kansas City ball plant restarted as an independent company in 2003 and became part of Arrium in 2007 With Arrium s acquisition of Moly-Cop, Kansas City has been reunited with the businesses it helped build, further enhancing the strength and depth of the new Moly-Cop organisation 51

52 Copper forecast head grades Industry Head Grade Trends (Weighted by Paid Copper) Copper Grade Cu % Source: Wood Mackenzie Primary - Mill Primary - SxEw (All) All Primary Mines All Operations Co-By - Mill (RH axis)

53 CRUspi Longs index CRU is an independent, privately owned, business analysis and consultancy group focused on the mining, metals, power, cables, fertilizer and chemical sectors Of particular interest to Moly-Cop s business, CRU publishes a series of Steel Price Indices (CRUspi) intended to monitor the evolution of selected groups of steel product prices in various international markets CRUspi Indices are constructed from actual information of numerous commercial transactions worldwide, following standardized surveying methodologies CRUspi indices are published on a regular basis; the first Wednesday of every month Since 2004, Moly-Cop has been using the CRUspi Longs Index as a reference for periodic price updating of both steel purchasing and grinding media sale contracts The consistent application of the CRUspi Longs Index has allowed Moly-Cop to engage in long-term, variable pricing purchase/sale agreements The CRUspi Longs Index will be representative for Moly-Cop as long as such reference is accepted by its main bar suppliers. 53

54 Competition and Capacity Moly-Cop has ~3.5 times the installed capacity of the next largest competitor. All of this capacity is strategically located in key mining regions Sigdo Koppers Magotteaux provides predominantly highchrome cast balls There is limited overlap between Hi-Cr and forged media applications Proacer and SABO (55%) and both local competitors to Moly-Cop Chile ME Elecmetal Part of the Chilean Elecmetal Group A distributor of forged grinding media from China (Long Teng) to compliment their mill liners product offering Source: Moly-Cop June 2013 (estimates) 54

55 Top 20 Customers Top 20 Grinding Media Customers represents ~80% of Moly-Cop sales Anglo American Antofagasto PLC Barrick Gold Corporation BHP Billiton Codelco Detour Gold Corporation Freeport McMoran Glencore Xstrata PLC Goldcorp Grupo Mexico S.A.B. de C.V. Kinross Corporation Newmont Mining Corporation Pan Pacific Copper Rio Tinto Southern Copper Taseko Mines Teck Resources Thompson Creek Metals Company VALE Yamana Gold Inc 55

56 Wheel life performance 2nd Life - Tread Area loss Comsteel 99,060 km wear (taken at 403,520 km) Comparative94,580 km wear (taken at 435,240 km) Tread Wear Flange Wear 2nd Life - Flange Area loss Comsteel 99,060 km wear (taken at 403,520 km) Comparative94,580km wear(taken at435,240km) mm mm Comparativ e Manufacturer Comsteel 4.0 Comparative Manufacturer Comsteel Source: FMG Source: FMG Lower wear results in lower operating costs (cents/km) Lower wear reduces change-out frequency (labour and maintenance) Lower wear rates increases equipment uptime and utilisation Value In Use 56

57 Value In Use - Superior Performance P&H4100 XPB machine using a 73mm Redbak Plasticated rope A trial of ropes was conducted at mines in the Bowen basin in Queensland In a trial Moly-Cop Ropes Redbak ropes outperformed these benchmarks by setting a new site record of 3.6 million BCM s BE2570 machine using a 43/8 TUFF 6 rope A trial of ropes was conducted at mines in the Bowen Basin in Queensland and a coalmine in Texas Moly-Cop Ropes TUFF 6 ropes outperformed these benchmarks by setting an average rope life of 3.8 million BCY s 57