MGX RESOURCES LIMITED — Investor Presentation 2012

Nov 26, 2012

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Mount Gibson Iron
Jim Beyer - CEO
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Disclaimer
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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.

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A leading WA mid-tier iron ore exporter
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Established multi-operation exporter of quality Australian hematite ores to China

• Financial strength Strong balance sheet/earnings provide flexibility and security in volatile conditions

• Leadership renewal Rebuilt Board and Management

• Governance regime recognised by FIRB

• Quality assets

• Established DSO operations with existing infrastructure

• Disciplined strategy Focused on costs

• Optimising existing assets Capitalise on existing business/balance sheet to grow

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Four key areas driving future corporate value

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A leading WA mid-tier iron ore exporter
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Koolan Island

• High quality DSO lump and fines (high grade, low contaminants)

• Commenced mining premium Main Pit ore in November 2011

• Operation restructured to reduce cash expenditure

• Planning underway to define optimum production profile for maximum value

Mid West Region Tallering Peak, Extension Hill & Geraldton Port facilities

Tallering Peak

Extension Hill

• Mining scheduled for • New DSO operation completion in mid 2013. • First ore sales Dec 2011

• • Targeting ~2.5 Mt production • Nameplate capacity of 3Mtpa in FY2013 • Low strip ratio ~ 1:1

• • Strong cash generating asset • Robust low cost operation in FY2013 • Strong cash generator

• • Sales from low grade • FY2013 focus on maximising

• stockpiles to continue into sales from stockpiles

• FY2014 • Diversified customer base

• • T1 prospect – potential for • Mt Gibson Range DSO upside

• limited additional production

• Mining scheduled for completion in mid 2013.

Upgrades to Geraldton port and rail infrastructure have doubled MGI’s export capacity from the Mid West to 6Mtpa

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Company snapshot – strong fundamentals
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A leading mid-tier iron ore exporter targeting sales of 8 – 8.5Mt in FY2013

• Issued capital

• Index

• Market cap[1]

• Cash @ 30 June 2012

• • Bank borrowings[2]

• • Finance facilities

1085.7 million shares S&P/ASX 200

A$750 million

A$293 million nil

A$65m environmental bonds facility[3] , A$47m equipment leases

Financials(year ended 30 June)	Financials(year ended 30 June)		2007	2008	2009	2010	2011	2012
•	Sales volume	MWMT	2.5	5.5	5.4	6.5	5.2	5.2
•	Sales	A$ m	163	433	425	536	672	648
•	NPAT	A$ m	484	113	43	132	239	172.5
•	EPS	cps	7.4	14.1	4.6	12.3	22.1	15.9
•	DPS	cps	0.0	0.0	0.0	0.0	4.0	4.0

Shareholders

• APAC Resources ~26%

• • Shougang Fushan ~15%

• • Institutional investors ~34%

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Notes:

• 1 Share price of $0.685 as at 14 November 2012 2 At 30 June 2012

• 3 At 30 June 2012, environmental bond facility was drawn to $57.7m 4 Includes $19 million NPAT on sale of magnetite project

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Business Highlights FY2012
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• Improved Safety with LTIFR dropping 11% to 2.62 (Metalliferous industry open/cut average 3.1)

• Strong net profit of $172.5 million – 2[nd] highest on record

• Maintained solid sales volumes and margins in year of operational challenges

• Maintained full year dividend distribution of 4.0cps

• Balance sheet strength maintained

• Cash balance of $293m @ 30 June

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800.0
Revenue NPBT NPAT
700.0 672.1 648.5
(A$m)
600.0 536.3
500.0
425.5
400.0 342.9
300.0 239.5 239.6
188.3 172.5
200.0 132.4
100.0 61.7 42.6
0.0
30-Jun-09 30-Jun-10 30-Jun-11 30-Jun-12
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160.0
Realised price (A$ / WMT sold )
140.0 COGS 128.4
124.5
Operating margin
120.0
100.0
82.7
78.8
80.0 71.7
66.3
62.1
60.0 54.4 55.1 52.8
40.0
27.5
24.4
20.0
0.0
30-Jun-09 30-Jun-10 30-Jun-11 30-Jun-12
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What has been achieved in the last year?
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Substantial progress has been attained across the business in challenging circumstances

• Appointed 3 new independent directors

• Implemented new independent corporate governance mechanisms

• Board independence/corporate governance formally recognised by the FIRB

• Completely rebuilt and expanded executive capability:

• new CEO appointed May

• new CFO commenced September

• new COO commenced September

• new Company Secretary/General Counsel commenced April

• Marketing, HR, HSE, IR roles filled

• Improved reliability of production and sales

• Commenced exports from 3[rd] mine at Extension Hill

• Doubled MGI export capacity at Geraldton Port

• Implemented company wide program to reduce costs and maximise cash flow in volatile conditions

• Achieved 2[nd] highest profit and maintained dividend in highly volatile market

• Established new customers

• Completed first sales of low grade product from Tallering Peak

• Completed first mineralised waste sales from Koolan Island

• Stepped up exploration program: T1, Extension Hill, Koolan mainland

• Progressed comprehensive review of Mid West growth opportunities

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Market Outlook
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The long term outlook remains strong – Chinese steel consumption has a long way to run

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Urbanisation remains a key driver of
Chinese steel consumption, with
regeneration of existing urban centres
also becoming important to underlying
demand.
Source: NBS, World Bank, Macquarie Research Nov 2012
Chinese steel intensity remains well
down the curve compared with other
developed economies.
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Moving in the right direction
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Operational performance has improved significantly in FY2013

• Sales outlook of 8 - 8.5 Mt in FY2013

• Sept Q shipments increased to 1.76 Mt – up 52% on prior quarter

• Quarterly Koolan Island shipments increased 53% to 786Kt

• Quarterly Mid West shipments increased 51% to 976Kt

• Upward trend continuing in Q3

• Business-wide review to reduce costs and maximise cash flow in volatile conditions:

• $120m - $150m capital & operating expenditure eliminated or deferred from prior budget

• One third expected to be permanent savings

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• Reduced workforce

• Mining activity realigned with stocks drawdown to achieve sales target

• Maintains capacity to invest in growth

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Koolan Island – optimising existing operation
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• Premium products – 63.5%Fe

• Simple logistics – no rail, standalone ship-loader

• Current production rate ~3Mtpa, +9 year life

• Low grade sales commenced

• Study to define optimum production profile to be complete early 2013

• Operational changes to deliver major savings while optimisation completed •

• Searching for long term opportunities to utilise existing ship-loading capacity: o Mainland tenement granted October 2012

E04/1407

• Main Deeps and other underground potential

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Geraldton Port – increased export capacity
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• Infrastructure access a strategic asset - key barrier to entry for new producers

• MGI Mid West export capacity doubled to ~6Mtpa

• 240,000t MGI Berth 5 shed commissioned April 2012

• Total MGI port storage capacity trebled to 360,000t

• 50 year leases over port land (Berth 4 shed from 2002, Berth 5 shed from 2008)

• New rail unloader fully commissioned and ramp-up completed September 2012

• Regional rail upgrade completed October 2012

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MGI
Berth 4
MGI
Shed
Berth 5
Shed
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A strategic asset, essential to get product to market

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Extension Hill – exploration upside
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• Simple, low cost operation, life of mine strip ratio ~1:1

• • Nameplate capacity of 3Mtpa

• • Diversified customer base

• • Uncommitted volumes under discussion with prospective new customers

• • First spot cargo sold November 2012

• Growth Potential: 4

• Significant additional DSO potential in Mount Gibson Range

• • DSO opportunities at Iron Hill and Gibson Hill

• Exploration access subject to regulatory approvals

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Tallering Peak – fine tuning for its final year
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• Mining scheduled for completion in mid 2013

• • Targeting ~2.5 Mt standard product in FY2013

• Completed first sales of low grade product

• • Sales from low-grade stockpiles (~1.1 Mt) to continue into FY2014

• T1 drilling in phase 2

• Evaluation of T1 expected to be complete early 2013

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Strategy – pursuing growth
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Optimising existing business, now pursuing M&A and exploration-driven growth

PRIORITIES

• Bed down recent initiatives to cut costs and maximise cash flow

• Target further cost control and elimination of waste/inefficiencies

• Evaluate early adoption of new deferred waste mining accounting standard

• Further broaden customer base

• Complete optimisation of Koolan mine plan

• Complete T1 assessment

• Continue to reinvigorate exploration strategy and expand footprint, particularly to capitalise on strategic export capacity in Mid West

• Continue to target opportunities in carbon steel materials in Australia and overseas that:

• complement existing business

• extend production profile and lower cost

• produce quality sought-after products

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Summary
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Disciplined business strategy

Mount Gibson has…

 Access to existing export infrastructure

Strong and profitable operating business

 Strengthening operational performance

 Focused growth plan

 Acted to protect the business in volatile market environment

 Established DSO products

 Growing FY2013 production profile Strong balance sheet, cost focused Provides flexibility and buffer against market volatility History of paying dividends

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Thank You
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For more information visit: www.mtgibsoniron.com.au

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Additional information
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Total Group Mineral Resources and Reserves at 30 June 2012	Total Group Mineral Resources and Reserves at 30 June 2012	Total Group Mineral Resources and Reserves at 30 June 2012	Total Group Mineral Resources and Reserves at 30 June 2012	Total Group Mineral Resources and Reserves at 30 June 2012	Total Group Mineral Resources and Reserves at 30 June 2012
	Tonnes millions	Fe %	SiO2 ~~%~~	Al2O3 ~~%~~	P %
Mineral Resources	95.2	61.6	8.29	1.19	0.03
Mineral Reserves	44.3	62.6	6.40	1.16	0.03
NOTE: All estimates quoted to three significant figures. Rounding errors may occur.

Attributions

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.

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Koolan Island	Koolan Island	Koolan Island	Koolan Island	Koolan Island	Koolan Island
Mineral Resources above 50% Fe
,	Tonnes millions	Fe %	SiO2 %	Al2O3 %	P %
Measured	10.8	59.6	13.0	1.04	0.02
Indicated	44.3	64.1	6.70	0.77	0.01
Inferred	13.7	60.6	12.1	0.63	0.01
Total	68.9	62.7	8.77	0.78	0.01
Ore Reserves
Proved	5.46	60.0	13.2	0.50	0.01
Probable	23.8	65.0	5.26	0.87	0.01
Total	29.3	64.1	6.73	0.80	0.01
Extension Hill
Mineral Resources, above 50% Fe
Measured	12.0	58.0	6.69	2.16	0.06
Indicated	5.14	58.0	8.91	1.67	0.06
Inferred	2.26	62.6	5.13	1.25	0.05
Total	19.4	58.6	7.10	1.93	0.06
Ore Reserves
Proved	8.97	59.3	5.30	1.84	0.06
Probable	3.26	59.9	7.12	1.25	0.06
Total	12.2	59.5	5.78	1.68	0.06
Tallering Peak
Mineral Resources, above 50% Fe
Measured	3.48	61.5	4.76	2.65	0.04
Indicated	2.84	57.4	8.21	3.74	0.07
Inferred	0.61	55.8	12.8	2.90	0.06
Total	6.93	59.3	6.88	3.12	0.05
Ore Reserves
Proved	1.77	63.0	4.14	1.97	0.03
Probable	1.02	57.5	8.11	3.86	0.05
Total	2.80	61.0	5.59	2.66	0.04
NOTE: All estimates quoted to three significant figures. Rounding errors may occur.

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