For personal use only Directors’ Report Mineral Resources Limited Annual Report 2014  19 30 June 2014 Directors’ Report Actual commodity sales volumes are as follows: MINING MINING SERVICES Iron ore export tonnes for the year of 10.4 million tonnes were 93% greater than the previous corresponding  period. A significant ramp-up of tonnes from Phil’s Creek and Spinifex Ridge, along with further expansion of  the Carina mine contributed to this record increase. Exports from Poondano have declined in the year as the  mine works were running down. This annual result in iron ore prices was achieved in distinctly different environments during the year. The  achieved iron ore price in the Second Half of the year was 21% less than that achieved in the First Half as a result  of the fall in global iron ore prices and exaggerated by a widening of the discount to the Platts Index being offered  by producers towards the end of FY2014. Mining Services revenues of $951 million for the year ended 30 June 2014 were 43% greater than for the previous  corresponding period. This result was principally achieved from the impact of EPC construction activity and  increased income from the ramp up of the minegate operation at Spinifex Ridge. Earnings before interest, tax, depreciation and amortisation of $366 million were 10% higher than for the previous  corresponding period after taking a conservative accounting for EPC construction work.  The EPC contract for the construction of Nammuldi Below Water Table process plant was awarded on 9 August  2013 and construction activities commenced on 26 August. Progress by 30 June 2014 was on schedule, however  due to the technical nature of the project, the directors have taken a conservative view on the recognition of EPC  profit in the year ended 30 June 2014, recognizing no margin in the period. Construction of the Jerriwah accommodation village was completed in the year ended 30 June 2014 with 414  rooms made available progressively from August 2013 to January 2014 for PMI to manage. The EPC profit on the  project was recognized in the year ended 30 June 2014. Crushing volumes for the year ended 30 June 2014 were marginally higher than those delivered in the previous  corresponding period. The ramp up of volumes on new contracts won in the year ended 30 June 2013 offset  the reduction of FMG crushing volumes. Crushing volumes in the First Half of the year ended 30 June 2014  were higher than in the Second Half principally due to the loss of FMG tonnes. The business is focused on the  acquisition of crushing tonnes over the next 24 months to replace this volume with the potential for new contracts  and improvements in existing activities on-track to achieve this objective. PIHA continues to provide solid contribution to earnings. During the year, PIHA made two small acquisitions  (GFR’s valve business and Steelpile Australia) expanding its offering in the oil and gas infrastructure sectors. The  traditional business areas continue to perform in accordance with targets. PMI Site Services has 1,068 rooms under management at 30 June 2014 (7% greater than the previous period) with  an additional 258 rooms scheduled for opening early in the Second Half of FY2015. The business continues with its  strategy of leveraging accommodation services for our own operations to provide services for external customers. Operations at Poondano were essentially completed in the year ended 30 June 2014. Operations at the contract mining operation at Spinifex Ridge ramped up over the year ended 30 June 2014 and  ended the 12 months with 1.4 million tonnes exported. The Second Half sales level of 0.7 million tonnes will  continue until the resource is exhausted, providing valuable blending material for the Company’s Pilbara blend. ‘000 tonnes First Half 2012-13 Second Half 2012-13 Total 2012-13 First Half 2013-14 Second Half 2013-14 Total 2013-14 Utah Point Iron ore Phil’s Creek - 464 464 1,721 2,289 4,010 Spinifex Ridge - - - 653 737 1,390 Poondano & Other 1,015 386 1,401 319 161 480 Total Iron ore 1,015 850 1,865 2,693 3,187 5,880 Manganese 117 30 147 - - - Total Utah Point 1,132 880 2,012 2,693 3,187 5,880 KBT2 Carina Iron Ore 1,528 2,016 3,544 2,376 2,177 4,553 Total KBT2 1,528 2,016 3,544 2,376 2,177 4,553 Total commodity sales 2,660 2,896 5,556 5,069 5,364 10,433