CHICHESTER RANGE (CLOUDBREAK, CHRISTMAS)

Significant turnaround in the mining results for the June quarter 2009 was experienced with a 36 per cent increase in ore mining volumes over the March quarter. There are a number of key factors that have contributed to the improved mining rates: 1) the continued improvement in the surface miner production rates; 2) the optimisation of pit design and scale to enhance surface miner “in pit” working time; and 3) the restructure of the mining team for clearer KPI setting and accountability. The improvement in the surface mining rates is a continuation of the March quarter trend that was adversely impacted by heavy rain. The ramp up program is on target to deliver the volume increases with Fortescue’s operators benefiting from the operational knowledge gained and a greater understanding of the ore body. Christmas Creek Mining of the ore body at Christmas Creek commenced during the June quarter and material is being trucked approximately 50 kilometres to the ore processing facility (OPF) at Cloudbreak. One pit has been opened and during the period approximately 265.7 thousand tonnes (Kt) of ore was excavated. The ore is being blended with ore from Cloudbreak and the volume will be progressively increased.

During the quater, the quantity of ore mined during the quarter was lower than forecast due to two main factors: 1) a deliberate strategy to reduce the volume of drill and blast material with a much greater focus on surface miners; and 2) the detrimental impact of excessive rain on mining output. Improved surface miner production rates were being achieved in January and February, however, the positive trend was adversely impacted by the severe rain events across the Pilbara in late February and March.

Advised that mining has commenced at its Christmas Creek deposit. The first overburden blast on 21 February signals the commencement of mining and the start of Fortescue’s integrated mine operations where ore from the new operation at Christmas Creek will be blended with product from the established Cloudbreak mine. Initially the Christmas Creek mined ore will be transported by road train to the Cloudbreak OPF. Longer term it is planned that a rail spur line will be completed from Cloudbreak to Christmas Creek and the mine will become part of the integrated port, rail, mine system.