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Why Invest in Australian Iron Ore Exploration? Hope Downs and Beyond

Why Invest in Australian Iron Ore Exploration? Hope Downs and Beyond. Presentation to Australian Iron Ore and Steel Summit 2002 Parkroyal Darling Harbour, Sydney 30 - 31 October 2002 by Tad Watroba - Director, Hancock Prospecting Pty Ltd. Hancock Prospecting Pty Ltd.

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Why Invest in Australian Iron Ore Exploration? Hope Downs and Beyond

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  1. Why Invest in Australian Iron Ore Exploration?Hope Downs and Beyond Presentation to Australian Iron Ore and Steel Summit 2002 Parkroyal Darling Harbour, Sydney 30 - 31 October 2002 by Tad Watroba - Director, Hancock Prospecting Pty Ltd Hancock Prospecting Pty Ltd

  2. Why Investing in Iron Ore Exploration? Why not?• Success of Rio Tinto, BHPB, Robe River and others• Benefits to Western Australia and to the nation• How has it happened• Hard road to Hope Downs Hancock Prospecting Pty Ltd

  3. Benefits to Western Australia and to the nation Development of towns, ports, railways, roads etc• Royalties and taxes • Australian Balance of Payment • Jobs, jobs, jobs Hancock Prospecting Pty Ltd

  4. Hancock Group - Summary Pioneering Family of the North West: Pastoralists since 1860’s Mineral exploration since early 1930’s Lang Hancock ‘father’ of the Pilbara discovers vast quantities of iron ore in 1950’s, 1960’s & 1970’s Hancock Prospecting earns mining royalties Continued exploration for iron ore and Hancock is the only other holder of significant iron ore reserves in the Central Pilbara outside Rio Tinto and BHPB Hancock Prospecting Pty Ltd

  5. Hancock Group - History June 10 1909 Langley George Hancock born in Perth to George and Lillian Hancock August 4 1947 Langley George Hancock and Hope Margaret Nicholas married November 22 1952Discovery flight with wife, Hope Hancock, whilst flying from their Nunyerry mine to Perth 1953 Returning to discovery area, landing in spinifex and collecting samples for more than 50 miles and sending to Perth for analysis. After analysis, realisation he had found an iron ore zone of possible world significance Hancock Prospecting Pty Ltd

  6. Flying Prospector Hancock Prospecting Pty Ltd

  7. Hancock Group - History 1955 Established family company, Hancock Prospecting Pty Ltd (HPPL), now run by his daughter Gina Rinehart 1953 – 1960 Lobbied for lifting of Iron Ore export embargo by Federal Government. Continued exploration Established committee for North West development with pastoralist friends Frank Thompson and Bill Leslie and proposed and lobbied for tax incentives, with the provision that monies be reinvested in the North West 1960 Export embargo on Iron Ore lifted Hancock Prospecting Pty Ltd

  8. Hancock Group - History 1960 – 1961 Lobbied for lifting of State embargo on pegging for Iron Ore.Together with partner E.A Wright of WPPL, endeavoured to interest Steel Mills and mining houses to invest in Hancock’s Pilbara discoveries 1961 State embargo on pegging of Iron Ore lifted 1961 Pegging of Iron Ore areas discovered by Lang Hancock with team on ground headed by cousin Bill Newman Hosted the visit of Val Duncan, Chairman of Rio Tinto, London, and other Senior Executives Hancock Prospecting Pty Ltd

  9. Hancock Group - History 1961 – 1962 Together with E.A Wright, negotiated agreements with Rio Tinto for the purpose of furthering development of Hancock’s discoveries Hosted the visit of Tom Price of Kaiser Steel, USA, which brought in the involvement of Kaiser Steel into what became the new company, “Hamersley Iron” Increased exploration efforts with Dr Bruno Campana of Rio Tinto Australia, and mapping of the entire Hamersley Iron Province Identified and named “Campana’s Horizon” (also known as “Bruno’s Band”) Hancock Prospecting Pty Ltd

  10. Bruno’s Band Hancock Prospecting Pty Ltd

  11. Hancock Group - History 1962Hosted the visit of Dr Muraoka and staff from Marubeni, Japan, utilising Hancock’s “Hamersley Station” as headquarters for Marubeni’s, and Hancock’s continuing exploration efforts The exploration report of Dr Muraoka brought the Japanese Steel industry’s interest into the Pilbara Hancock Prospecting Pty Ltd

  12. Dr Muraoka and Lang Hancock Hancock Prospecting Pty Ltd

  13. Hancock Group - History 1963 – 1964 Arranged and hosted the visit of the world’s then richest man, Daniel K Ludwig, and interested him in presenting a cost saving proposal to the West Australian government for the building of a large central port and unified railway system to service the entire Pilbara Iron Ore region, to enhance the region’s competitiveness. 1966 Tom Price commissioned, and Port and town of Dampier established Hancock Prospecting Pty Ltd

  14. Hancock Group - History 1966 – 1971 Brought Hamersley Iron Executives to Paraburdoo and interested them in developing Paraburdoo Sought to interest Texasgulf of USA, CSR, MIM, Utah, and Consolidated Goldfields into participation in Hancock’s and Hanwright’s exploration teams 1969 Established with WPPL the Sunday newspaper “The Sunday Independent” Hancock Prospecting Pty Ltd

  15. Hancock Group - History 1970 - 1971 Hanwright explored with the co-operation of Mr Hancock’s brothers’ in law Jim and Bill Nicholas, and friend Don Rhodes, the West Angelas, which Mr Hancock named after E.A. Wright’s daughter, but these areas were then confiscated by the West Australian government, and later given to a competing company 1972 HPPL and WPPL established with Texas Gulf the Iron Ore (Rhodes Ridge) Agreement with the West Australian government Hancock Prospecting Pty Ltd

  16. Rhodes Ridge JV with Texas Golf

  17. Hancock Group - History 1972 HPPL and WPPL established with the Iron Ore (Wittenoom) Agreement with the West Australian government HPPL and WPPL established with MIM, Utah and Consolidated Goldfields the Iron Ore (McCameys) Agreement with the West Australian government 1973 Paraburdoo Commenced production Hancock Prospecting Pty Ltd

  18. Hancock Group - History 1974 Established the nationwide “National Miner” newspaper Gained jet pilots license at age 65, and acquired first Lear Jet and utilised for overseas visits to promote Australian mineral developments, and to show executives, politicians and others the Pilbara’s potential Hancock Prospecting Pty Ltd

  19. Hancock Group - History 1975 Arranged and hosted the visit of close friend, and Premier Joh Bjelke-Petersen and party to the Pilbara, and promoted the establishment of a railway line across Australia linking the Pilbara’s Iron to Queensland’s coking coal After years of worldwide effort with Marandoo, and completing the feasibility study, received “Letter of Interest” from Nippon Steel, allowing Nippon Steel to participate up to 1/3 in the Marandoo project. Hancock Prospecting Pty Ltd

  20. Premier Joh Bjelke-Petersen Visit Hancock Prospecting Pty Ltd

  21. Hancock Group - History 1979 Wrote and released first book “Wake Up Australia” (launched on June 10 by Premier Joh Bjelke-Petersen and his daughter Gina, in his absence due to ill health) on “Wake Up Australia” jumbo jet tour of Australia’s mineral assets and potential Hancock Prospecting Pty Ltd

  22. Wake-up Australia Flight

  23. Wake up Australia Flight

  24. Hancock Group - History 1987 Achieved government support for infrastructure sharing for the McCamey’s project by way of a State Agreement with BHP to allow third parties to access their railway 1989 - 1991 Achieved first tonnage to be mined at McCamey’s Monster, first Hancock’s own iron ore mine in production 1992 March 27th, passed away unexpectedly, despite strong will to live, his daughter Gina Rinehart takes over HPPL Hancock Prospecting Pty Ltd

  25. The Man of Iron Hancock Prospecting Pty Ltd

  26. Hancock Group - History 1992 December - HPPL achieved the Iron Ore (Hope Downs) Agreement with the state Government 1993 Mrs Rinehart hosted visit by Premier Mr Richard Court, and party to Pilbara 1993 June 10th, a new planet, discovered by Dr Candy, named in permanent honour of Lang Hancock 1994 Marandoo commenced production 1997 Pre-feasibility study for Hope Downs finalised and bankable feasibility study commenced Hancock Prospecting Pty Ltd

  27. Hancock Group - History 1998 29th January announcement of participation of Iscor Limited to develop the Hope Downs Iron Ore Project with Hancock Prospecting Pty Ltd 1999 June 10th Naming of Hancock Range in the Pilbara in honour of Lang Hancock and the Hancock family, and their pioneering history in the North West region 2000Established program with the Notre Dame University to commence the Hancock Free enterprise lectures Hancock Prospecting Pty Ltd

  28. Hancock Group - Position Today Mining Hope Downs Joint Venture Partner in Rhodes Ridge (25%) with Rio Tinto Objective:- to be Australia’s 3rd iron ore producer Other Iron Ore Tenements (East Angelas, Roy Hill, Mulga Downs and others) Coal Ferruginous Manganese Other Interests Pastoral Property Hancock Prospecting Pty Ltd

  29. Location Map Hancock Prospecting Pty Ltd

  30. Hope Downs Project 1971 Pacminex exploration (19 holes) 1985 Geological Mapping 1987 RC drilling programme 1988 Low level aeromagnetic survey 1991 100m decline Diamond drilling Preliminary metallurgy Hancock Prospecting Pty Ltd

  31. Hope Downs Project 1992 Initiated environmental studies 30,000m of RC drilling 730m diamond drilling Hope South discovery Hope Downs Iron Ore Agreement Act 1993 60,000m RC drilling programme 5 winzes sunk in Hope North & South 2400m diamond drill core Permanent camp established Hancock Prospecting Pty Ltd

  32. Hope Downs Project 1994 7 winzes sunk in Hope North & South Metallurgical testwork commenced at Ammtec Geotechnical studies Hope North & South 3D interpretation & Orebody Modelling of Hope North 1995 Mine Planning for Hope North 3D interpretation & Orebody Modelling of Hope South Further metallurgical testwork CISIRI, British Steel Hancock Prospecting Pty Ltd

  33. Hope Downs Project 1996 Mine Planning for Hope South CSIRO and MPL metallurgical testwork Marketing Documentation 1997 Marketing Exploration of Hope 2 and 3 Continuation of Pre-feasibility Study Discussions with Potential Partners Hancock Prospecting Pty Ltd

  34. Hancock and Iscor Agreement for Hope Downs Hancock Prospecting Pty Ltd

  35. Hope Downs Project Status after Signing with Iscor Tenements 100% owned by Hancock Group Total Delineated resource for Hope Downs 1, 2, 3 and East Angelas (Not part of the agreement with Kumba) exceed 1,200 Mt Extensive pre-feasibility work by Hancock had proceeded for over 6 years (total spent exceeds $25 M) Drilling, geology, mine planning, metallurgy, engineering, environmental, native title and heritage studies Hope Downs 1 comprises two deposits - North & South with scheduled recoverable reserves over 400 Mt Hancock Prospecting Pty Ltd

  36. Hope Downs Feasibility Study Period • In 1998, the Hancock Group and the Iscor Group began a bankable feasibility study of the potential development of the Hope 1 iron ore deposit • Hope Downs Management Services (HDMS) was formed to manage the bankable feasibility study (BFS) • The original Project concept was to: • Produce 15 Mt/a of discrete Marra Mamba lump and fines from Hope 1, and • Deliver the ore “on ship” using shared rail and port infrastructure • In late 2000, the Project concept was revised to: • Produce 25 Mt/a of discrete Marra Mamba lump and fines from Hope 1, and • Deliver the ore “on ship” using independent rail and port infrastructure • The FS technical report was completed in July 2002 Hancock Prospecting Pty Ltd

  37. Geological Program • 100,000 metres drilling during pre-feasibility • 32,000 metres drilled in feasibility study • 13 exploration shafts sunk (1000 m) • Representative samples - 1997 and 1999 • Revised Resource model - September 1999 Hancock Prospecting Pty Ltd

  38. Hope North Hope South detritus detritus ore ore Marra Mamba Iron Formation W Wittenoom Dolomite E Figure 3.5 Diagrammatic cross section of Hope 1 Geology • Most iron ore deposits of economic value in the Pilbara were derived by enrichment of either the Brockman Iron Formation or the Marra Mamba Iron Formation • Iron ore from the Marra Mamba Iron Formation will be mined at Hope 1 • Hope 1 is made up of 2 orebodies • Hope North • Hope South Hancock Prospecting Pty Ltd

  39. Hydrated ore-type • Bedded ore-types, ~80%, mainly HG Bedded ore-types • Hydrated ore-type, <10%, generally LG Detrital ore-type • Detrital ore-type, <10%, generally LG Figure 3.9 Schematic diagram showing the location of different ore-types at Hope 1 Geology At Hope 1, the mineralised zone contains three ore-types: • Main minerals are goethite and hematite • Ore-type characteristics are the same at Hope North and Hope South Hancock Prospecting Pty Ltd

  40. Drill rigs operating at Hope 1 Geology • Initially, most of Hope 1 had been drilled on a 200 m  50 m grid • Infill drilling (on a 100 m  50 m grid) was carried out during the BFS to: • Confirm the structural interpretation • Confirm the accuracy of drilling data • Increase confidence in the Mineral Resource • Drilling summary (total) • 1552 holes • 134 172 m (16% diamond drilling) Hancock Prospecting Pty Ltd

  41. Mineral Resource 490 Mt, in situ# % dry basis Measured; 195 Mt Fe 61.8 SiO2 3.0 Indicated; 270 Mt Al2O3 1.6 Increasing level of geological knowledge and confidence P 0.06 Inferred; 25 Mt Mn 0.1 LOI 6.7 # dry, to the nearest 5 Mt Geology Mineral Resource estimate - Hope 1 • Derived from geological cross sections based on drilling • Consistent with the Australian Code for Reporting Mineral Resources and Ore Reserves (Mineral Resource tonnage estimate is inclusive of Ore Reserve tonnage estimate) • Cut-off grade = 58%Fe ; Average in-situ density = 2.8 t/m³ Hancock Prospecting Pty Ltd

  42. Winze and decline locations at Hope 1 Sample evaluation Bulk sampling (drum sample) programs: • A decline (mainly hydrated ore-type) • 12 winzes (vertical shafts), maximum depth 81 m • 8 winzes in Hope North • 4 winzes in Hope South • A bulk marketing sample was prepared from winze material in 1999 • Represented the first ~110 Mt of ore to be mined • Lump ore was conditioned • Material recovered from the winzes was also used for evaluation of ore processing characteristics Hancock Prospecting Pty Ltd

  43. Mineral Resource 490 Mt, in situ# Ore Reserve 400 Mt, saleable# % dry basis Measured; 195 Mt Apply mining recovery factors, schedules & blending ratios Proved; 175 Mt Fe 61.6 SiO2 3.09 Indicated; 270 Mt Probable; 225 Mt Al2O3 1.59 LOI 6.7 Inferred; 25 Mt # dry, to the nearest 5 Mt Mining Ore Reserve estimate - Hope 1 • Derived from the Mineral Resource estimate (Measured and Indicated categories only) • Consistent with the Australian Code for Reporting Mineral Resources and Ore Reserves (Ore Reserve tonnage estimate is within the Mineral Resource tonnage estimate) • Tonnage and grade estimates include dilution (<5%) Hancock Prospecting Pty Ltd

  44. Definition of pit areas for mine planning Mining Mine planning – pit design and operations • Hope North is: • divided into 4 pits for scheduling • ~6000 m long and 500 m wide • Hope South is: • divided into 3 pits for scheduling • ~5000 m long and up to 750 m wide • Conventional open pit mining operation • Horizontal 10 m benches Hancock Prospecting Pty Ltd

  45. Table 5-11 Major mining fleet at 25 Mt/a production Komatsu 830E haul truck Mining Mining operations – quality control concept • Target product quality will be achieved by: • Grade control drilling • Maintaining adequate drilled and broken stocks • Mining from pits with complementary blending grades • Using run of mine stockpiles (before primary crusher) Mine operations – equipment • Equipment selections were made to: • Ensure the required mining selectivity • Take advantage of the latest developments in mining technology • Standardise the mining fleet Hancock Prospecting Pty Ltd

  46. Hope North primary crushing module secondary crushing modules ¤ ¤ ¤ Phase 1; +15 Mt/a 25 Mt/a Phase 2; +10 Mt/a scalping modules product screening modules overland conveyor " Hope South lump fines Schematic outline of ore processing plant Plant Flowsheet and facilities • Plant design by Fluor Daniel • Final design production rate = 25 Mt/a (dry) • Two stage crushing and screening plant to produce separate lump (-31.5+6.3 mm) and fines (-6.3 mm) products at Hope 1 • Construction will proceed in 2 phases: Phase 1: initial design production rate of 15 Mt/a Phase 2: additional production capacity of 10 Mt/a Hancock Prospecting Pty Ltd

  47. Mine stockyard The mine stockyard will be located inside the rail loop Stockyard capacity will be 600 000 t (live) Each live stockpile has sufficient ore to fill 2 trains, each of 224 ore cars Train loading and infrastructure Train loading Proposed system used successfully at other Pilbara operations Designed to load 224 ore cars with up to 125 t per ore car in a total time of 3 hours Infrastructure Stand-alone services Appropriate to a fly-in / fly out operation Overland conveyor (from Hope South) Ore processing plant Rail loop " Train loadout Schematic outline of mine stockpiles and train loadout Plant Hancock Prospecting Pty Ltd

  48. Feasibility Study Results – Mining and Ore Processing Mineral Resources . . . . 490 Mt at 61.8%Fe Ore Reserves . . . . . . . . 400 Mt at 61.6%Fe Waste : Ore ratio . . . . . 1.4 : 1.0 Mining method . . . . . . . Open-cut; drill, blast, load & haul Production ramp-up . . 5 Mt/a steps to 25 Mt/a by Year 5 Ore processing plant . . Dry, 2 stage crushing and screening Products . . . . . . . . . . . . 47% lump, 53% fines at mine Approvals . . . . . . . . . . . Secured Hancock Prospecting Pty Ltd

  49. Table 9-5 Projected physical properties (at port) Product quality projections Projections of physical properties have been made based on: • Results from testwork carried out on the composite lump and fines prepared during the BFS • Simulation of the mine to port handling and transportation process Hancock Prospecting Pty Ltd

  50. Iron Making Slag Rate Index comparison • The slag rate index of Hope 1 lump is: * ~5% lower than Brockman lump • The slag rate index of Hope 1 fines is: * ~15% lower than Hamersley and Yandi fines * ~25% lower than Mt Newman fines * ~55% lower than Mesa J fines Hancock Prospecting Pty Ltd

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