Portman - Open Briefing mit CEO Geoff Wedlock - 500 Beiträge pro Seite

[SelMckenzie]

Open Briefing- Portman CEO Wedlock on Iron Ore Expansion


Document date: Thu 21 Sep 2000 Released time: Thu 21 Sep 2000 16:58:58
Document No: 184285 Document part: A
Market Flag: Y
Classification:
PORTMAN LIMITED 2000-09-21 ASX-SIGNAL-G

HOMEX - Perth

+++++++++++++++++++++++++
corporatefile.com
Portman Limited recently announced a $0.7 million net profit for the
half to June 30, 2000. The iron ore division is poised to lift
production significantly to around 8mtpa from only 0.8mtpa tonnes in
the latest half. What are the growth stages for that expansion?

CEO Geoff Wedlock
At this stage we are planning for 3.2mt in 2001, 4mt in 2002,
assuming we have started the first of our northern deposits and 6mt
or higher in 2003. At that stage we could produce more than 6mt but
it will depend on demand at the time.

corporatefile.com
Does the RIO takeover of North have implications for Portman?

CEO Geoff Wedlock
I think that the RIO takeover of North will influence the whole iron
ore industry. It`s not the only corporate activity that is taking
place. In Brazil the major producer CVRD has acquired a number of
other iron ore producers. The iron ore supply base has narrowed
significantly in the last twelve months.

We were reasonably well advanced with our expansion plans before this
industry rationalisation occurred. While we will watch developments
with interest we believe our iron ore assets are of sufficient
quality to develop into the scale of business I`ve outlined.

corporatefile.com
What level of iron ore production do you require to generate a
positive iron ore EBIT and when is this likely?

CEO Geoff Wedlock
Iron ore is forecast to make a positive contribution to EBIT from the
first half of next year.

corporatefile.com
What capital will be spent by Portman on the iron ore expansion?

CEO Geoff Wedlock
The main items of capital expenditure, on the rail and port upgrade,
will be met by third parties such as the Esperance Port Authority
(EPA). This will save some capital expenditure but add to operating
costs.

The new mines will be developed by the contractor and a new ship
loader and another shed at Esperance will also be funded by the EPA.

At this stage, Portman`s total capital will be about $100 million
over 2 to 5 years. This year we bought additional ore wagons and we
have built a second storage shed at Esperance of 150kt capacity. Our
major items are mainly from 2002. We will spend at least $8 million
on rolling stock between now and the middle of next year.

In the future, our capital contribution will be the rail extension to
the northern deposits and additional ore wagons. At this stage the
timing of the rail to the northern deposits is dependent on a number
of approvals including native title and environment but we`ve assumed
that we would be building it towards the end of next year. We will
also spend some money to establish a camp and other infrastructure at
Mount Jackson.

We have received several expressions of interest from external
parties to provide funding packages for the Koolyanobbing rail
infrastructure. The total cost is well within our own capacity to
finance and we will assess the options prior to commitment.

corporatefile.com
What cost savings do you envisage from this expansion?

CEO Geoff Wedlock
The cost savings will come from economies of scale in two main areas.
Firstly the upgrade of the Esperance Port will allow us to load the
same size of ship that all the other world iron ore exporters use. We
will no longer have a major freight disadvantage which is represented
by a price discount.

We will also achieve significant economies of scale from the upgraded
railway.

corporatefile.com
Can you put numbers on the savings?

CEO Geoff Wedlock
We are currently negotiating volume-based freight rates with the rail
operator which would reduce our rail costs by 30-35 percent over the
expansion period.

We`ve also negotiated 10-15 percent reductions in port charges over
the near term.

corporatefile.com
What is your cash balance?

CEO Geoff Wedlock
Our cash balance at the end of June was $117 million or 66 cents per
share. After paying last year`s 5.0 cps dividend, we expect to have
in excess of $100 million at the end of the year.

corporatefile.com
The expansion is dependent on proving up additional reserves at the
recently acquired Mount Jackson and Windarling deposits to the north
of Koolyanobbing. What size reserves are you hoping to add and by
when?

CEO Geoff Wedlock
We currently have a mixture of reserves and resources at
Koolyanobbing of about 60mt. We`ll be looking to prove up similar
levels at each of the two northern deposits. Mount Jackson may be a
little less.

This will allow an 18-20 year mine life for our iron ore operations.

corporatefile.com
What is the cost of the exploration program at the new tenements?

CEO Geoff Wedlock
Currently we have a program of about $7.8 million over a number of
years. If we are successful in finding unexpected good quality ore we
may increase that expenditure.

corporatefile.com
Is the port expansion on track to enable you to load Panamax vessels
(70k dwt) by later this year and Capesize (150k dwt) by late 2001?

CEO Geoff Wedlock
Yes. Last Monday the EPA advertised the Public Environmental Review
for Esperance. Part of that process is that the EPA allow for an
objection period of two weeks and after that any objections are
evaluated. We don`t see any reason why approval won`t be forthcoming
some time this month.

corporatefile.com
At current prices, what margin do you expect to make from iron ore
when the division will be producing at 6-8mtpa?

CEO Geoff Wedlock
Our target is for an EBITDA margin of 30-40 percent. This is before
depreciation but that won`t be high because of the relatively low
capital commitments I described above and the third party component
of capital costs.

corporatefile.com
From January 1, 2001 Portman moves from 60 percent ownership of
Koolyanobbing to 100 percent. What are the terms of this deal?

CEO Geoff Wedlock
From the start of the project our joint venture partner, Angang,
didn`t contribute to the capital expenditure. This was part of the
joint venture agreement. That debt to Portman built up to a sum equal
in value to their equity in the project. That debt will be cancelled
in return for their 40 percent equity.

corporatefile.com
What market conditions exist currently for lump iron ore?

CEO Geoff Wedlock
Iron ore prices increased by 4-6 percent from April 1, 2000.

The market is very strong for the quality lump iron ore we produce.
In fact over the last few years, the quantity of lump being produced
in Western Australia, the largest producer of quality lump, has
declined. The lump ore mined at the various ore bodies in WA is
slowly being depleted. This has created a shortage of lump which is
being reflected in very strong demand. Iron ore prices increased this
year by approximately 5 percent reflecting this demand.

Because of this emerging shortage we expect the strong demand for
quality lump to remain, regardless of whether demand slackens for
other types of iron ore.

corporatefile.com
Who are the likely new customers for Koolyanobbing iron ore?

CEO Geoff Wedlock
In the last year we`ve substantially expanded our customer base in
China. Most of our output goes there and we now service a whole range
of mills in that country from the largest to some of the smallest.

More recently, we`ve undertaken a couple of trial shipments to Japan.
Once we can fully load capesize vessels we expect to be able to sell
to all the regular iron ore markets in Asia and maybe even some in
Europe.

We think the quality of our product will be attractive to the market
in general.

corporatefile.com
Production concluded during the half at your other iron ore
operation, Cockatoo Island. When do you expect the new remnant ore
project to commence, at what rate and for how long?

CEO Geoff Wedlock
We load our first ship on the 10th September and are planning to
operate at about 800,000 tpa but we expect that will be accelerated.

At this stage, the project has a 2 year life but we are looking for
additional reserves to extend this.

corporatefile.com
Can you talk about the potential EBIT contribution?

CEO Geoff Wedlock
It has an EBIT margin of about 45 percent.

corporatefile.com
What hurdles still exist for your $120 million, 32,000 tpa Lithgow
silicon metal project?

CEO Geoff Wedlock
We expect our approvals for the mine and the smelter any day.

At this stage we are still finalising the source of the timber and we
expect to get further advice this week on the alternatives. We`ve had
a range of alternatives put to us. Some of the timber is too far away
to transport and some is not the right quality.

Our first choice for charcoal supply was rejected by the NSW
government. We intend to use an alternative which is as cheap as our
original choice. It has taken us a bit of time to work out how we can
do that.

corporatefile.com
What are the first steps in establishing the Managed Investment
Scheme forestry business?

CEO Geoff Wedlock
At this stage we are looking at a number of options. We believe the
best route is to start from scratch in view of the strong synergistic
value in conjunction with the silicon project.

corporatefile.com
When do you expect a positive EBIT contribution from this division?

CEO Geoff Wedlock
Probably next year.

CEO Geoff Wedlock
As at June 30, 2000 you had a US$92m currency hedging in place at
rates well above current spot prices. Are you seeking to increase
this cover?

CEO Geoff Wedlock
Our only hedging activities at this time are for the Cockatoo Island
project. As we sign new sales contracts we are locking in half the
anticipated revenue at today`s forward rates.

There is an overhang from a 4 year hedging program we had on
Koolyanobbing. This will continue to reduce and will be finished next
year.

corporatefile.com
Thank you Geoff. We look forward to the next Open Briefing with
Portman.

@Copyright [2000], Corporate File Pty Ltd. All rights reserved

--------------------------------------------------------------------------------

[spekulativ]

Bitte um Übersetzung.
Danke schon mal im vorraus
Gruß spekulativ

[SelMckenzie]

@spekulativ:

Sorry, aber mir fehlt dafür einfach die Zeit.
Vielleicht könnte ja jemand anderer....?
Oder hat jemand ein Übersetzungsprogramm, das sinnvollen Output erzeugt?

[spekulativ]

Hallo SelMckenzie !
Einige inhalte kann ich ja selbst übersetzen,so gut es eben geht.
Habe eben das problem die zusamenhänge zu verstehen.
Vielleicht kannst du ja mit deinen worten eben ausdrücken,was du davon hältst.
Mfg spekulativ

[Zaratustra]

Ist keiner mehr in Portman?

Gruß,

Z.

[gholzbauer]

Ei freilich. Alles läuft wie geplant.
Versteh nicht, was manche an den letzten Zahlen auszusetzen hatten.
Bei 0,75A$ werde ich nachkaufen, wenn ich dann grad Kohle über hab.