Slide 1: 2009 1st Half Results
For personal use only 2009 1st Half Results Iluka Resources Limited 19 August 2009
Slide 2: Disclaimer – Forward Looking Statements
Disclaimer – Forward Looking Statements For personal use only This presentation contains forward-looking statements that are subject to risk factors associated with exploring for, developing, mining, processing and sale of minerals. Forward-looking statements include those containing such words as a
Slide 3: 1st Half Overview and Results Summary
For personal use only 1st Half Overview and Results Summary
Slide 4: 1st Half Overview
1st Half Overview For personal use only Main Features of the Half • Mineral sands revenue (post hedging) down 62% pcp • Mineral sands shipments of 450 thousand tonnes, down 51% compared to pcp • Zircon sales appreciably lower than pcp • Higher 2009 YTD pricing on all higher value products • Reported
Slide 5: 1st Half Overview
1st Half Overview For personal use only Progress in Transition to New Assets • Virginia Brink development successfully completed • Murray Basin Stage 2 commissioning • Jacinth-Ambrosia commissioning potentially before year-end – early and below budget Balance Sheet Strengthened • $113 million instit
Slide 6: Main Features of 1st Half Results
Main Features of 1st Half Results Comparison with 1st Half 2008 For personal use only Mineral Sands Sales Volumes Ð 51.7% - weak demand, inventory draw down USD Product Pricing Ï Higher TiO2 and zircon pricing Revenue (pre-hedging) Ð 49.7% to $195 million Currency Hedging Ð $45.9 million loss versus
Slide 7: 1st Half 2009 Group Results
1st Half 2009 Group Results For personal use only $m 1H 2008 1H2009 % change pcp Revenue (pre hedging) 387.4 194.8 (49.7) EBITDA Mineral Sands 43.3 66.3 53.1 Hedging 8.5 (45.9) N/A Mining Area C 27.8 31.9 14.7 Other Earnings 0.1 0.2 100.0 Foreign exchange gains/(losses) (1.4) 6.5 N/A Corporate costs
Slide 8: 1st Half Earnings: EBITDA to Net Loss
1st Half Earnings EBITDA to Net Loss For personal use only A$m 100 80 60 40 66.3 20 0 -20 6.5 (41.6) (83.5) 31.7 (55.8) -40 (78.9) (16.7) 23.1 -60 (45.9) 38.7 -80 -100 -120 (67.6) (8.4) -140 Mineral D&A Currency MAC FX Other EBIT before Significant Interest Tax Loss from Profit from Loss for Sands H
Slide 9: Significant Items
Significant Items Fair Value Write Off – Low Margin Deposits For personal use only Eneabba, Western Australia (IPL South, Allied Tails) • Write-off at $38.5 million fair value, attributed in 1998 as part of RGC acquisition • Small deposits unlikely to be mined • Jacinth-Ambrosia heavy mineral concen
Slide 10: 1st Half 2009 Cash Flow and Net Debt
1st Half 2009 Cash Flow and Net Debt For personal use only $m 1H 2008 1H 2009 % change pcp Opening Net Debt (598.1) (215.7) 63.9 Operating Cash Flow 88.3 (94.4) N/A MAC and Other 13.6 28.6 110.3 Exploration (8.7) (10.2) (17.2) Net Interest (17.0) (6.0) 64.7 Tax (12.1) (6.8) 43.8 Payments for Propert
Slide 11: 2009 Capital Expenditure
2009 Capital Expenditure For personal use only Full Year Estimate ~$500m 36 Other3 14 Virginia-Brink 120 Murray Basin Stage 2 Final expenditure Expenditure 1H09 1,2 $280m Other Virginia-Brink 28 13 Murray Basin Stage 2 97 330 Jacinth-Ambrosia Majority (90% +) of full Jacinth-Ambrosia 142 project exp
Slide 12: Balance Sheet
Balance Sheet For personal use only Net Debt & Equity ($ million) • Gearing (net debt / net debt + equity) of 21.5% 1,175 1,200 • 6.3x Interest cover (EBITDA / net interest expense) • All debt convenants satisfied 1,000 • Majority of debt matures post Murray Basin and 800 Jacinth-Ambrosia cash flows
Slide 13: Mineral Sands Market Conditions
For personal use only Mineral Sands Market Conditions
Slide 14: Titanium Dioxide Market Conditions
Titanium Dioxide Market Conditions For personal use only • Pigment demand (~90% of titanium dioxide feedstock end use) - late 2008 / Q1 2009 demand declined rapidly - reduction in sulphate pigment production in China - significant weakness in construction and housing sectors - higher prices encourag
Slide 15: Pigment Industry Indications of Demand Recovery
Pigment Industry Indications of Demand Recovery For personal use only Quarterly US Pigment Exports (all destinations) Quarterly China Pigment Imports (all sources) kt kt 250 90 2004-08 2004-08 2009 2004-08 2004-08 2009 Annual Averages By Quarter By Month Annual Averages By Quarter By Month 200 60 15
Slide 16: Some Lead Indicators Bottoming?
Some Lead Indicators Bottoming? US and Europe For personal use only US – New Housing Starts Annual Growth Europe – Construction Activity Annual Growth 40 (%) 10 (%) 20 5 0 0 -20 -5 -10 -40 -60 -15 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-90 Jan-92 Jan-94 Jan-96 Jan-9
Slide 17: Market Conditions: Zircon
Market Conditions Zircon For personal use only • Zircon demand declined appreciably in 1H09 influenced by: - lower GDP and weaker construction / housing sector, especially Europe - lower imports of European ceramics into Nth America - higher than usual customer inventory levels influenced by pre-ord
Slide 18: Zircon Demand Recovery Linked to China Restocking
Zircon Demand Recovery Linked to China Restocking For personal use only Cumulative Chinese Zircon Imports kt 500 2008 450 2007 400 2006 350 2009 300 250 200 ? 150 100 50 - Feb-09 Mar-09 Oct-09 Nov-09 Dec-09 Jan-09 Jun-09 May-09 Jul-09 Sep-09 Apr-09 Aug-09 • Significantly lower Chinese zircon imports
Slide 19: Positive Economic Indicators
Positive Economic Indicators China Floor Space For personal use only Floor Space Under Construction Annual Grow th (%) 50 40 30 20 10 0 -10 -20 -30 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 • Chinese government stimulus is producing response in infrastructure and property
Slide 20: Medium Term Ceramic Demand Positive
Medium Term Ceramic Demand Positive China Tile Production Trends For personal use only % Chinese Tile 0.2 Production (RHS) 40% China Tile Production (% of Total) 0.16 35% Zircon kg / Tile sqm 0.12 30% Global Zircon Intensity of Use (LHS) 0.08 25% 0.04 20% 0 15% 1980 1983 1986 1989 1992 1995 1998 200
Slide 21: GEC Response and Asset Reconfiguration
For personal use only GEC Response and Asset Reconfiguration
Slide 22: Overview of Industry Supply Response
Overview of Industry Supply Response Actions to Date For personal use only Main actions: • Iluka - curtailed TiO2 and zircon production - approximately 50% of Western Australian production capacity idled - large scale redundancies - deferred mining of zircon-rich satellite deposit (Echo) - decision
Slide 23: 2007 Asset Configuration
2007 Asset Configuration Largely Old / Short Life Non Integrated Asset Base For personal use only 23 MSP = Mineral Separation Plant HMC = Heavy Mineral Concentrate SR = Synthetic Rutile SSC = South Secondary Concentrator
Slide 24: 2009 Asset Configuration
2009 Asset Configuration Rationalised and Integrated Portfolio Structure For personal use only 24
Slide 25: Implications of Reconfiguration Activities
Implications of Reconfiguration Activities For personal use only • Accelerated transition to new, longer life assets of Murray Basin and Eucla Basin • Reduction in number of assets without reduction in processing capacity • Integrated, larger scale asset model now apparent - Jacinth-Ambrosia HMC to
Slide 26: Characteristics of Iluka's Operations
Characteristics of Iluka’s Operations For personal use only Jacinth-Ambrosia Murray Basin • High quality zircon HMC production source • High quality rutile production source with zircon stream • Minimum 10 years economic life • Current 15 year estimated reserve / resource life • HMC producer – final
Slide 27: Project Status
For personal use only Project Status
Slide 28: Murray Basin Stage 2 Project Update
Murray Basin Stage 2 Project Update For personal use only • Mining commenced mid August with ore stockpiled in front of the Mining Unit Plant • Commissioning commenced • First production of HMC expected end August • All major activities completed: - key infrastructure – roads, communications, accomm
Slide 29: Murray Basin Stage 2 Project Update
Murray Basin Stage 2 Project Update For personal use only 29
Slide 30: Jacinth-Ambrosia Project Update
Jacinth-Ambrosia Project Update For personal use only • Project construction 80% complete • Installation of all structural equipment nearing completion • High voltage power connected; bore water being drawn • Most major contracts, including mining contract, awarded • Improved project economics • Min
Slide 31: Jacinth-Ambrosia Project Update
Jacinth-Ambrosia Project Update For personal use only 31
Slide 32: Priorities
For personal use only Priorities
Slide 33: Iluka Timeframe 2007 - 2009
Iluka Timeframe 2007 - 2009 For personal use only 2007- Alignment • Focus on value drivers - Profitability, Sustainability, Growth (“PSG”) • Increased alignment to shareholder interests (ROC Æ ROE) • Integrated business planning and decision making processes 2008 - Growth Commitments • Balance sheet
Slide 34: Priorities
Priorities For personal use only • Continued focus on prime objective: creation and delivery of shareholder value • Deliver two new long life, high cash margin projects within combined original budgets • Finalise reconfiguration of existing asset base • Deliver costs reductions associated with recon
Slide 35: Iluka Resources Limited
For personal use only Iluka Resources Limited
Slide 36: Supplementary Slides
For personal use only Supplementary Slides
Slide 37: Group Results
Group Results For personal use only $m 1H 2008 1H 2009 % change Revenue (pre hedging) 387.4 194.8 (49.7) EBITDA 65.9 42.1 (36.1) Depreciation and Amortisation (73.2) (83.7) (14.3) EBIT (7.3) (41.6) (469.9) Net Interest and Financing Costs (20.6) (8.4) 59.2 Significant non-cash items - (67.6) N/A Pro
Slide 38: Net Profit After Tax 1st Half 2009 vs 1st Half 2008
Net Profit After Tax 1st Half 2009 vs 1st Half 2008 For personal use only Iluka Group NPAT 1H 2009 vs 1H 2008 A$M 20 15.6 37.5 0 - (30.3) -20 9.2 1.6 -40 (27.9) 2.9 (3.7) 3.2 (47.2) (7.4) (9.3) (55.8) -60 2008 Sales Vol Sales mix Sales Costs Restructure D&A Other MAC Tax & Int FX Signif CRL & 2009 N
Slide 39: Mineral Sands Results
Mineral Sands Results For personal use only $m 1H 2008 1H 2009 % change Revenue (pre hedging) 387.4 194.8 (49.7) EBITDA Western Australia 23.7 44.3 86.9 Murray Basin 13.0 17.7 36.2 US operations 15.9 14.2 (10.7) Non Operating Regions (9.3) (9.9) (6.5) Total Mineral Sands EBITDA (Pre hedging) 43.3 66
Slide 40: Cash Costs of Final Products Produced
Cash Costs of Final Products Produced For personal use only 1H 2008 1H 2009 % change Z/R/SR1 Production tonnes 464,724 467,364 0.6 Saleable Ilmenite tonnes 304,468 162,889 (46.5) Other products 9,954 10,196 2.4 Final Product Produced 779,146 640,449 (17.8) Total Cash Cost (A$m) 267.3 281.3 (5.2) Cas
Slide 41: Capital and Exploration Expenditure
Capital and Exploration Expenditure For personal use only A$m 1H 2008 1H 2009 % change Capital Expenditure Major Projects 1 44.6 251.8 464.6 Sustaining & Other 41.9 28.0 (33.2) Total 86.5 279.8 223.5 Exploration 8.7 10.2 17.2 Total 95.2 290.0 204.6 1 Murray Basin Stage 2; Jacinth-Ambrosia; Brink 41
Slide 42: Capital Expenditure (Cash)
Capital Expenditure (Cash) For personal use only $m 1H 2008 1H 2009 % change Western Australia 25.5 18.6 (27.1) Murray Basin 6.6 9.9 50.0 US Operations 3.6 14.8 311.1 CRL 4.1 2.5 (39.0) Murray Basin Stage 2 24.9 87.3 250.6 Eucla Basin (Jacinth-Ambrosia) 20.8 101.0 385.6 Other 1.0 0.2 (80.0) Total 86
Slide 43: Mining Area C Royalty
Mining Area C Royalty For personal use only 1H 2008 1H 2009 % change Annual Production to 30 June MDMT 29.3 37.8 29.0 Sales volume MDMT 17.8 19.5 9.6 Royalty Income $m 21.8 23.9 9.6 Capacity Payments $m 6.0 8.0 33.3 Iluka EBIT A$m 27.6 31.7 14.9 • Higher one-off capacity payments - $8 million vs $6m
Slide 44: 1st Half 2009 Production
1st Half 2009 Production For personal use only ('000 tonnes) 1H 2008 1H 2009 % change Zircon 191.6 165 (13.9) Rutile 74.7 63.5 (15.0) Synthetic Rutile 198.4 238.8 20.4 Leucoxene/Hyti 9.1 9.6 5.5 Ilmenite 635.3 482.4 (24.1) 44
Slide 45: Western Australia – Financials
Western Australia – Financials For personal use only 1H 2008 1H 2009 % change Sales Revenue (pre-hedging) $m 266.7 140.9 (47.2) Total Cash Production Costs $m (192.9) (202.1) (4.8) Depreciation & Amortisation $m (53.6) (59.2) (10.4) Inventory Movements $m (26.2) 123.0 N/A Cost of Goods Sold $m (272.
Slide 46: Western Australia - Key Operational Parameters
Western Australia - Key Operational Parameters For personal use only 1H 2008 1H 2009 % change Production (kt) Zircon 89.4 98.5 10.2 Rutile 39.6 31.6 (20.2) Synthetic Rutile 198.4 238.8 20.4 Ilmenite - saleable 193.4 73.1 (62.2) Ilmenite - upgraded to synthetic rutile 330.8 319.5 (3.4) Hyti 5.5 5.9 7
Slide 47: Murray Basin – Financials
Murray Basin – Financials For personal use only 1H 2008 1H 2009 % change Sales Revenue $m 70.8 31.0 (56.2) Total Cash Production Costs $m (42.2) (41.4) 1.9 Depreciation & Amortisation $m (13.2) (15.0) (13.6) Inventory Movements $m (11.0) 34.0 N/A Cost of Goods Sold $m (66.4) (22.4) 66.3 1 Other Cost
Slide 48: Murray Basin - Key Operational Parameters
Murray Basin - Key Operational Parameters For personal use only 1H 2008 1H 2009 % change Production (kt) Zircon 61.2 40.3 (34.2) Rutile 35.1 32.0 (8.8) Leucoxene 3.6 3.6 0.0 Ilmenite 0.0 6.9 N/A Cash Production Costs $m 42.2 41.4 1.9 Cash Production Cost Breakdown 1H 2009 Area % of Total Cash Costs
Slide 49: US Operations – Financials
US Operations – Financials For personal use only 1H 2008 1H 2009 % change Sales Revenue $m 49.9 22.9 (54.1) Total Cash Production Costs $m (32.3) (30.2) 6.5 Depreciation & Amortisation $m (6.2) (9.3) (50.0) Inventory Movements $m (1.7) 22.1 N/A 1 Cost of Goods Sold $m (40.2) (17.4) 56.7 2 Other Cost
Slide 50: US Operations - Key Operational Parameters
US Operations - Key Operational Parameters For personal use only 1H 2008 1H 2009 % change Production (kt) Zircon 40.9 26.2 (35.9) Ilmenite 111.0 82.9 (25.3) Cash Production Costs $m 32.3 30.2 6.5 Cash Production Cost Breakdown 1H 2009 Area % of Total Cash Costs Mining 38 Concentrating 16 Separation
Slide 51: Currency Hedging Arrangements
Currency Hedging Arrangements For personal use only Face Value Average Average 2 Period Instrument Type US$m Cap Floor Rate July – December 2009 Collar options1 88.0 0.8500 0.7906 - Forward FX Contracts2 70.0 - - 0.8519 January – December 2010 Forward FX Contracts 153.5 - - 0.8553 1 The effect of th
Slide 52: Positive Demand for TiO2: Rio's Model for Long Term Growth
Positive Demand for Ti02 Rio’s Model for Long Term Growth For personal use only 2007 Population Infrastructure Based distribution in bands of Growth Urbanisation income levels** Average Wealth per capita in PPP terms Inflection Point for growth phase 52 Source Rio Tinto TZMI Conference Singapore
Slide 53: Zircon: Strength in China Property Sector
Zircon Strength in China Property Sector For personal use only UBS China Construction Index UBS China analysis: “…construction and investment in property will continue their path of recovery…” August 2009 53
Slide 54: Main Zircon Feedstock Producers
Main Zircon Feedstock Producers Majority of Production Sourced from 3 Suppliers For personal use only kt 1600 Iluka Rio / BHP Exxaro Bemax Indonesia Other Historical Zircon Projects 1400 • Exxaro’s Namakwa late 1990s 1200 • Iluka’s Adamson/South Tails 2003-04 1000 • Kalimantan, Indonesia 2006 - 07 •
Slide 55: Closing Slide
For personal use only Closing Slide Iluka Resources Limited Closing Statement For further information, contact: Robert Porter, General manager, Investor Relations robert.porter@iluka.com +61 8 93604751 Iluka’s website www.iluka.com