Iluka Resources Limited · ASX:ILU
Iluka Resources — Bank of America Merrill Lynch Global Mining Conference 2017, Barcelona
20 slides from Iluka Resources's conference presentation, May 17, 2017
Slide 1: Bank of America Merrill Lynch Conference, Barcelona
20 17 Bank of America Merrill Lynch Conference, Barcelona www.iluka.com l ASX: ILU Tom O’Leary, Managing Director, Iluka Resources 17 May 2017
Slide 2: Disclaimer, Forward Looking Statements
Disclaimer, Forward Looking Statements Forward Looking Statements This presentation contains certain statements which constitute “forward-looking statements”. These statements include, without limitation, estimates of future production and production potential; estimates of future capital expenditur
Slide 3: Iluka's Mineral Sands Portfolio
Iluka’s Mineral Sands Portfolio PERTH BASIN EUCLA BASIN MURRAY BASIN SIERRA RUTILE VIRGINIA SRI LANKA Western Australia South Australia Victoria / New South Sierra Leone USA Wales Tutunup South mine Jacinth-Ambrosia mine Concentrate processing Gangama dry mine Rehabilitation Puttulam deposit Cataby
Slide 4: Zircon Applications
Zircon Applications Ceramics Refractory and Foundry Zirconia, Zirconium Chemicals ~50% of demand ~30% of demand and Metal ~20% of demand Zircon is opaque, water, chemical and abrasion Zircon is heat resistant and non-reactive Zircon has many unique properties. Uses resistant. Uses include steel and
Slide 5: Titanium Applications
Titanium Applications Pigment Titanium Metal Welding (flux) ~90% of demand ~6% of demand ~4% of demand Nanomaterials Growing market Titanium dioxide pigment is opaque (white), Titanium metal has high strength to weight ratio Uses include solar cells, water purification, UV resistant and inert. and i
Slide 6: Iluka's Approach
Iluka’s Approach CREATE AND DELIVER VALUE FOR SHAREHOLDERS Commenced as Managing Director in September 2016 Key aspects of business approach remain unchanged • flex asset operation in line with market demand • preserve and advance growth opportunities • act counter cyclically where appropriate Focus
Slide 7: Mineral Sands Industry Dynamics
Mineral Sands Industry Dynamics Short term Medium and longer term • The most positive market conditions in • Robust demand fundamentals five years • Titanium and zircon strongly linked to – 131% increase in Z/R/SR sales improving living standards in developing volumes in Q1 2017, period on economies
Slide 8: 2017 Zircon Market
2017 Zircon Market • Iluka estimates supply and demand now broadly balanced • Strong initial 2017 volumes • Evidence of downstream restocking from depleted levels • Minimal inventories held by competitors • Implemented a US$50/tonne price increase from 15 February – further price appreciation in spo
Slide 9: 2017 Titanium Feedstock Market
2017 Titanium Feedstock Market • Pigment market enters 2017 with favourable conditions – historically low pigment inventories; – industry wide pigment plant utilisation rates increasing; and – multiple pigment price increases. • External events compounding inventory tightness • Iluka rutile price ri
Slide 10: High Grade Titanium Feedstock Advantage
High Grade Titanium Feedstock Advantage • Natural and synthetic rutile have a higher titanium grade than other feedstocks • Advantages in pigment production: – lower ore tonnes required; – lower chlorine input cost; and – lower waste generation (environmental and cost benefits) • High ‘value in use’
Slide 11: Robust Demand Fundamentals
Robust Demand Fundamentals Array of applications Consumption based growth Unique properties used in: Urbanisation Rising income and living standards linked to • Solar cells higher per capita demand of zircon and • Mid to late cycle demand characteristics • Air and water purification titanium bearing
Slide 12: Urbanisation and Tile Use
Urbanisation and Tile Use Increasing floor space in China and Tile use highest in China and other other developing regions. developing regions. China Floor Space Completed Global Tile Consumption, 2015 Million sqm 1,200 1,000 China 800 40% Other 600 47% 400 200 India Brazil - 6% 7% 2006 2007 2008 20
Slide 13: Business Review
Business Review Comprehensive review of business and improvements implemented • 2017 non-production costs down $70 million from 2016: − reduced exploration activity and research and development; and − lower corporate overheads • Detailed review of existing production portfolio and projects • Ore res
Slide 14: Sierra Rutile
Sierra Rutile Transaction Summary Operations • Iluka acquired Sierra Rutile Limited in • High quality producer December 2016 • Large, long life asset - 20 year mine life modelled • Transaction cost of $389 million plus assumed $80 million of net debt • Operational improvements and expansion options
Slide 15: Sierra Rutile Projects
Sierra Rutile Projects Operational improvement and expansion projects expected to: • increase production; • materially improve unit costs; and • ensure a robust margin through the cycle. Operational improvements: Expansion options: • Revised mining method to increase throughput • Gangama and Lanti d
Slide 16: Australian Mineral Sands Projects
Australian Mineral Sands Projects CATABY, PERTH BASIN, WESTERN AUSTRALIA BALRANALD, MURRAY BASIN, VICTORIA • High quality chloride ilmenite deposit • High grade deposit / rich assemblage ‒ material zircon / rutile co-product credits • Material source of global rutile and zircon supply • Supports ong
Slide 17: Mining Area C Royalty Asset
Mining Area C Royalty Asset • Mining Area C is a large iron ore mining area in Pilbara region, Western Australia • High quality, low risk asset, operated by BHP Billiton • Iluka royalty stream paid as: − 1.232% of Australian denominated revenue from royalty area; and − one-off payment of A$1 million
Slide 18: Mining Area C – South Flank
Mining Area C – South Flank Mining Area C and South Flank, Western Australia • Preliminary assessment indicates BHP South Flank contained in Mining Area C royalty area • BHP expects Yandi deposits to be depleted in 5 to10 years • South Flank is BHP’s preferred replacement for Yandi production • Yand
Slide 19: 2017 Areas of Focus
2017 Areas of Focus • Operate safely and in a sustainable manner • Sierra Rutile integration & expansion projects • Sustainable Business Review – focus on cost reduction and productivity • Strong free cash flows applied to debt reduction post Sierra Rutile acquisition • Marketing contracts to underp
Slide 20: Bank of America Merrill Lynch Conference, Barcelona
20 17 Bank of America Merrill Lynch Conference, Barcelona www.iluka.com l ASX: ILU For more information contact: Adele Stratton General Manager, Finance, Investor Relations & Corporate Affairs adele.stratton@iluka.com +61 (0) 415 999 005 www.iluka.com
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