Hope Downs Iron Ore Project The Current Status

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

• 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

Location
4
Project milestones in 2003 (i)

• Increased Resources and Reserves

Feasibility Study Value Engineering Study
Ore Reserve tonnage 400 Mt 450 Mt
Ore mining 100 from 10 m benches 60 from 10 m benches40 from 5 m benches
Waste Ore ratio 1.4 1.0 1.2 1.0
Hope 1 South pit mining starts Year 4 Year 7
Mine life 18 years 20 years
5
Project milestones in 2003 (ii)

• Rail route shortened by 13 km with a reduced
  ruling grade

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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

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Project milestones in 2003 (iv)

• Reduced dredged volume required for berth

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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

Region Letters of Intent signed ( of Sales Target)
China 95
Japan 70
Korea/Taiwan 70
Europe 80
TOTAL 90

• 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
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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 Projects
  contractual framework, having regard for the
  requirements of the State Agreement

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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