MGX RESOURCES LIMITED — Interim / Quarterly Report 2012

Feb 13, 2012

1

==> picture [781 x 86] intentionally omitted <==

----- Start of picture text -----

Disclaimer
----- End of picture text -----

This Document is Confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person, or published, in whole or in part, for any purpose without prior written approval from Mount Gibson Iron Limited.

This Document is not a Prospectus nor an Offer to Subscribe for Shares.

Mount Gibson Iron Limited and its subsidiaries (“ MGI ”) makes no representations or warranty (express or implied) as to the accuracy, reliability or completeness of this document. MGI and its respective directors, employees, agents and consultants shall have no liability (including liability to any person by reason of negligence or negligent misstatement) for any statements, opinions, information or matters (expressed or implied) arising out of, or contained in or derived from, or for any omissions from this document, except liability under statute that cannot be excluded.

This document contains reference to certain forecasts, projections, intentions, expectations and plans of MGI, which may or may not be achieved. They are based on certain assumptions which may not be met or on which views may differ.

The performance and operations of MGI may be influenced by a number of factors, uncertainties and contingencies many of which are outside the control of MGI and its directors.

No representation or warranty (expressed or implied) is made by MGI or any of its respective directors, officers, employees, advisers or agents that any forecasts, projections, intentions, expectations or plans set out in this document will be achieved, either totally or partially, or that any particular rate of return will be achieved.

Investments in shares in MGI is considered highly speculative.

2

==> picture [781 x 86] intentionally omitted <==

----- Start of picture text -----

Company overview
----- End of picture text -----

Corporate

• Issued capital

• Market cap[1]

• Cash[2]

• Total debt[2]

• EV

• Index

• Finance facilities

1082.6 million shares, 2 million options

A$1,462 million

A$421 million

nil

A$1,041 million S&P/ASX 200

A$115m (includes A$65m contingent debt)

Financials(year ended 30 June)	Financials(year ended 30 June)		2007	2008	2009	2010	2011	1stH 2012
•	Sales volume	MWMT	2.5	5.5	5.4	6.5	5.2	2.84
•	Sales	A$ m	163	433	425	536	672	377
•	NPAT	A$ m	483	113	43	132	239	121
•	EPS	cps	7.4	14.1	4.6	12.3	22.1	11.4

Shareholders

• APAC Resources 26.58%

Insto’s represent 38% of shareholding

• Shougang Fushan 15.14%

Notes:

• 1 Share price of $1.35 as at 10 February 2012 2 As at 31 December 2011

• 3 Includes $19 million NPAT on sale of magnetite project

==> picture [229 x 151] intentionally omitted <==

3

==> picture [781 x 86] intentionally omitted <==

----- Start of picture text -----

Company overview – What is different?
----- End of picture text -----

Australian based multi-operation quality hematite iron ore producer exporting to China

• …...

• Leadership renewal

Board and Management

• ………………….

• Quality assets

• …….…..

• Financial position

Optimising existing opportunities Strong balance sheet and cash flow generation

• ………………………………..

• Strategy

Positioning for growth

Four key areas driving future corporate value

4

==> picture [781 x 86] intentionally omitted <==

----- Start of picture text -----

Leadership renewal
----- End of picture text -----

Board – Renewal well underway with mining, construction and M&A experience

• Geoffrey Hill - Chairman

• Russell Barwick

• Paul Dougas

• Alan Jones

• Cao Zhong

• Chen Zhouping

• Lee Seng Hui

• At least one new independent director to come – search well advanced

Management – Senior executive skills base being broadened

• Jim Beyer COO and Acting CEO

• • Alan Rule CFO

• David Berg Company Secretary and General Counsel

• Dedicated Business Development, Human Resources managers to be appointed

• • Increasing Exploration experience base

The organisation’s capability continues to be strengthened

5

==> picture [781 x 86] intentionally omitted <==

----- Start of picture text -----

Quality assets – optimising existing opportunities
----- End of picture text -----

==> picture [326 x 455] intentionally omitted <==

Koolan Island – up to 4 Mtpa production

• Current reserves 32.1 Mt at 64% Fe, low contaminant

• Commenced mining premium Main Pit ore in November 2011

• Targeting 3.5 Mt in FY 2013, 4 Mt in FY 2014

• Potential exists west of Mullet and Acacia orebodies

• Transition to owner mining in final stages

Mid West Region Tallering Peak, Extension Hill & Geraldton Port facilities Up to 6 mtpa production region

Tallering Peak

Extension Hill

• Current reserves 5.4 Mt at 61.2% Fe

• Current reserves 14.5 Mt at 59.5% Fe

• • Annual production rate 3 Mt • Road and rail commenced November 2011

• ~2.5 Mtpa until Dec 2013

• Strip ratio reduces significantly after FY2012

• Strong cash generating asset over next 2 years

• First ore sales Dec 2011

• Low strip ratio

• T1 access agreement – potential 3-9 months additional production

• Operationally robust and straightforward

• • Immediate cash generator • Mt Gibson Ranges has strong DSO upside

6

==> picture [781 x 86] intentionally omitted <==

----- Start of picture text -----

Quality assets – Geraldton Port
----- End of picture text -----

• Staged commissioning March / April 2012

• • Rail unloader upgrade at port funded by Mount Gibson

• • Significantly reduces shipping constraints

• • 50 year lease - valuable long term asset

==> picture [568 x 373] intentionally omitted <==

A true strategic asset, essential for getting product to market

7

==> picture [781 x 541] intentionally omitted <==

----- Start of picture text -----

Robust financial position
Profit and Loss (A$m)
450
400 Revenue NPBT 382.1 NPAT 376.9
• 350
Very solid and
294.0 290.0
300
consistent profit 242.3
250
198.0
performance 200 176.0
132.5 140.0 144.9
150 121.2
93.0 99.5
100
55.8
39.4
50
0
31-Dec-09 30-Jun-10 31-Dec-10 30-Jun-11 31-Dec-11
•
Strong margins with Realised price and margin (A$ / wmt sold)
160
capacity to generate 140 Realised price COGS Operating Margin 145.5 132.8
cash in extended 117.8
120
periods of soft prices 100 94.7
77.7
80 71.7
67.8 68.7
64.1
58.659.3
55.9 54.2
60
40.4
40
15.7
20
0
31-Dec-09 30-Jun-10 31-Dec-10 30-Jun-11 31-Dec-11
8
----- End of picture text -----

==> picture [781 x 86] intentionally omitted <==

----- Start of picture text -----

Robust financial position
----- End of picture text -----

• Strong cash position

• • No large project capex requirements

• Normal sustaining capex covered by operating cash flows

• Strong capacity to fund growth options

==> picture [445 x 445] intentionally omitted <==

----- Start of picture text -----

Operating cash flow ($m)
180
159.6
160
140 123.2
112.3
120
100
80 62.8
56.8
60
40
20
0
31-Dec-09 30-Jun-10 31-Dec-10 30-Jun-11 31-Dec-11
450 Cash and deposits ($m) 421.4
409.9
387.0
400
362.5
347.4 341.9
350 329.8
300 272.0
250
213.6
200
150
117.4
100
Cash and deposits Net cash and deposits
50
0
31-Dec-09 30-Jun-10 31-Dec-10 30-Jun-11 31-Dec-11
9
----- End of picture text -----

==> picture [781 x 86] intentionally omitted <==

----- Start of picture text -----

Strategy – Positioning for Growth
----- End of picture text -----

Growth opportunities – M&A and Exploration driven

• Actively pursuing opportunities in carbon steel materials and diversified mineral commodities in Australia and overseas

• Revisiting and reinvigorating the exploration strategy in footprint and farm-in opportunities

• Acquisitions that:

• lift Mount Gibson production to +10 Mtpa

• provide longer life (>15 years) and lower cost

• produce quality sought-after products

• are at pre-feasibility or feasibility stage

• internal strong cash flows can fund the acquisition and project development

10

==> picture [781 x 86] intentionally omitted <==

----- Start of picture text -----

Summary
----- End of picture text -----

Disciplined business strategy

Mount Gibson has…

First mover status & access to  existing infrastructure

 Proven operational performance

 Divested high risk, high cost and capitally intensive assets  Organic growth plan  Demonstrated M&A credentials

 Protected the business in adverse market environment

Strong cash flow generation

 Growing production profile Robust iron ore price outlook   Clean & strong balance sheet  Continued operating and capital cost pressures

Reinvestment of capital for growth — organic (exploration, development) — M&A

Or return to shareholders

11

==> picture [781 x 86] intentionally omitted <==

Appendices

12

==> picture [781 x 86] intentionally omitted <==

----- Start of picture text -----

Half year results overview
----- End of picture text -----

• Sales revenue $376.9 million (down 1.4% on 2010) due to 12.3% lower tonnes sold, offset by 12.5% higher realised price

• Net profit after tax $121.2 million (down 13.4% on 2010)

• Diluted EPS of 11.4 cents

• Operating cash flows $123.2 million (down 22.8% on 2010)

• Cash balance of $421 million

• Interim dividend of 2.0 cents per share fully franked

• Dividend Reinvestment Plan approved

13

==> picture [781 x 86] intentionally omitted <==

----- Start of picture text -----

Summary half year results
----- End of picture text -----

		6 months 6 months % ended ended change 31-Dec-10 31-Dec-11 pcp	6 months 6 months % ended ended change 31-Dec-10 31-Dec-11 pcp	6 months 6 months % ended ended change 31-Dec-10 31-Dec-11 pcp
Tonnes mined	wmt (mill)	3.13	3.55	13.4%
Tonnes sold	wmt (mill)	3.24	2.84	-12.3%
Sales revenue	$ mill	382.1	376.9	-1.4%
Interest income	$ mill	10.5	11.2	6.7%
Cost of goods sold	$ mill	-189.9	-194.9	2.6%
Gross profit	$ mill	202.7	193.2	-4.7%
Admin and other expenses	$ mill	-10.3	-12.9	-25.2%
FX derivatives mark-to-market gain	$ mill	14.1	-	n/a
Operating profit before interest & tax	$ mill	206.5	180.3	-12.7%
Finance costs	$ mill	-8.5	-4.3	49.4%
Net profit before tax	$ mill	198.0	176.0	-11.1%
Tax (expense)	$ mill	-58.0	-54.8	5.5%
Net profit after tax	$ mill	140.0	121.2	-13.4%

14

==> picture [781 x 86] intentionally omitted <==

----- Start of picture text -----

Key financial indicators
----- End of picture text -----

		6 months 6 months % ended ended change 31-Dec-10 31-Dec-11 pcp	6 months 6 months % ended ended change 31-Dec-10 31-Dec-11 pcp	6 months 6 months % ended ended change 31-Dec-10 31-Dec-11 pcp
Realised selling price	A$ / wmt	117.93	132.71	12.5%
Cost of goods sold	A$ / wmt	-58.61	-68.63	-17.1%
Margin	A$ / wmt	59.32	64.08	8.0%
EPS	cps	12.95	11.34	-12.4%
Operating cash flow per share	cps	14.74	11.38	-22.8%
Dividend per share (annualised)	cps	0.00	4.00	n/a

15

==> picture [781 x 86] intentionally omitted <==

----- Start of picture text -----

Profit & Loss 1 [st] half FY 2011 and 1 [st] half
FY2012 (millions)
----- End of picture text -----

150.0 140.0 -47.2 140.0 42.0 -28.4 23.4 0.7 -2.6 -14.1 130.0 3.2 121.2 4.2 120.0 110.0 100.0 90.0 80.0 70.0 60.0 1st half Sales Sales price COGS cost COGS Interest Admin FX Finance Tax 1st half FY2011 volume volume income expenses derivatives costs FY2012

16

Citi peer group comparisons Feb 2012

==> picture [393 x 311] intentionally omitted <==

==> picture [374 x 311] intentionally omitted <==

==> picture [781 x 86] intentionally omitted <==

----- Start of picture text -----

Quality assets – Koolan Island
----- End of picture text -----

==> picture [781 x 32] intentionally omitted <==

==> picture [781 x 135] intentionally omitted <==

==> picture [781 x 136] intentionally omitted <==

==> picture [781 x 135] intentionally omitted <==

18

==> picture [781 x 541] intentionally omitted <==

----- Start of picture text -----

Quality assets – Mid-West
19
----- End of picture text -----

==> picture [781 x 86] intentionally omitted <==

----- Start of picture text -----

Operations Key Statistics
----- End of picture text -----

Key Statistics	Key Statistics	Key Statistics	Key Statistics	Key Statistics
	Tallering Peak	Koolan Island	Extension Hill	Combined
Reserves and Resources1 Reserves (Mt) Proven & Probable Mineral Resources (Mt) Measured, Indicated & Inferred	5.35 8.96	32.1 71.9	14.5 22.5	56.5 103.3
Reserve Specifications	61.2 % 5.30 % 2.69 % 0.04 % 1.77% 62.5 %	64.0 % 6.76% 0.84% 0.01 % 0.46% 63.8 %	59.5% 5.98% 1.65% 0.06 % 6.04% 63.0 %
Fe %
SiO2
Al2O3
P
LOI
Calcined Fe %

Note: 1 As at 30 June 2011 – see ASX announcement of 13 September 2011 and MGI website

20

==> picture [781 x 86] intentionally omitted <==

----- Start of picture text -----

Operations Key Statistics
----- End of picture text -----

Key Statistics	Key Statistics	Key Statistics	Key Statistics	Key Statistics
	Tallering Peak	Koolan Island	Extension Hill
Operations Data Annual production (Mtpa) Expected minimum mine life	~3 2 End of 2013 65% : 35% 65 107 5.5:1 Geraldton	~4 8 Mid 2019 30% : 70% - - 6:1 (est.) Koolan Island	~3 5 Mid 2016 50% : 50% 85 240 1.1:1 Geraldton
End of mine life
Lump : Fines ratio
Truck (km)
Rail (km)
Strip ratio - LOM (t : t)
Port

21

==> picture [781 x 86] intentionally omitted <==

----- Start of picture text -----

Attributions
----- End of picture text -----

The information in this report relating to Mineral Resources is based on information compiled by Rolf Forster, who is a member of the Australasian Institute of Mining and Metallurgy. Rolf Forster is a consultant to Mount Gibson Mining Limited, and has sufficient experience relevant to the styles of mineralisation and type of deposit under consideration and to the activity he is undertaking, to qualify as a Competent Person as defined in the December 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Rolf Forster has consented to the inclusion of the matters in this report based on his information in the form and context in which it appears.

The information in this report relating to Mining Reserves is based on information compiled by Rolf Forster and Weifeng Li, who are both members of the Australasian Institute of Mining and Metallurgy. Rolf Forster and Weifeng Li are consultants to Mount Gibson Mining Limited, and have sufficient experience relevant to the styles of mineralisation and type of deposit under consideration and to the activity which they are undertaking, to each qualify as a Competent Person as defined in the December 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Rolf Forster and Weifeng Li have consented to the inclusion of the matters in this report based on their information in the form and context in which it appears.

22