Investor Presentaiton
OPERATING COST REDUCTION & CAPITAL DISCIPLINE
Unit costs are strongly linked to production volumes and the
Company expects unit cost reduction in line with increased
production. In July 2013 Sydvaranger produced 201kt of
concentrate at a C1 Cost of USD 70 / dry metric tonnes.
In response to the decline in iron ore prices in 2H2012, the
Company took steps to reduce costs, including reducing
budgeted headcount by 5% and exercising restraint on capital
expenditure.
The Company remains focused on improving production costs
and maintaining capital expenditure discipline.
90
85
80
75
70
65
60
$USD/t
How Can Costs Reduce ?
$USD/t C1 Cash Cost - Impact of higher
Operating Rates
US $83/t
C1 $USD/t 2.0 Mt
p.a. production
rate
A -$16 /t
Production -
Volume var
A $5 /t
Variable C1 Cost-
Volume var
A-$2/t
Cost Reduction
Initiatives, FX &
Other
personal use only
180
160
140
120
100
C1 and C2 Costs by Quarter 2011-2012
US$/dmt
Kt
US$m
600
10
9
500
8
7
400
6
300
5
80
60
40
20
0
4
200
3
100
2
1
0
Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2011 2011 2011 2011 2012 2012 2012 2012 2013 2013
C1 Net Direct Cash Cost
C2 Production Cost
Production (kt)
Cash Capital Expenditure by Quarter
(source: Appendix 5B reports)
US $70/t
C1 $USD/t 2.5 Mt
p.a. production
rate
..الاس
Qtr1 Qtr2 Qtr3 Qtr4
Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2011 2011 2011 2011 2012 2012 2012 2012 2013 2013
■CAPEX
6
NORTHERN IRONView entire presentation