Iluka Resources Limited · ASX:ILU
Iluka Resources — H1 2006 Earnings Presentation
29 slides from Iluka Resources's earnings presentation, Aug 24, 2006
Slide 1: 2006 Half Year Results
2006 Half Year Results Iluka Resources Limited 24 August 2006 David Grant, Chief Financial Officer Victor Hugo, Executive General Manager, Sales & Marketing Bill Bisset, Executive General Manager, re Operations Wy ILUKA
Slide 2: Half Year Highlights
Half Year Highlights Financial Results Results at upper end of guidance range - NPAT of $49.5 million for continuing business (excluding Florida/Georgia) Florida/Georgia operating loss lower than advised — US$15.8m vis a vis advice of US$17.0 million (A$21.2 million before tax) Significant selling p
Slide 3: Summary Financial Results — 1st Half
Summary Financial Results — 15t Half Sales Revenue $m 473.9 446.6 6.1 Continuing Business Profit After Tax 49.5 88.1 (43.8) (excluding Florida/Georgia) $m Florida/Georgia Loss (after tax) $m (17.3) (8.8) (96.6) (inclusive of Flonda /Georgia) 32.2 79.3 (59.4) Operating Cash Flow $m 75.7 121.9 (37.9)
Slide 4: Sales Volumes & Prices
Sales Volumes & Prices 208.2 Zircon 215.1 730 — 745 Rutile 75.1 89.1 485 - 500 Synthetic Rutile 239.1 240.5 410 - 425 Iimenite 358.7 408.2 75-125 Other (Leucoxene/Hyti) 24.2 33.9 Total Mineral Sands 912.2 979.9 Coal 657.4 564.7 © ILUKA
Slide 5: Profit & Loss Summary — Continuing Business
Profit & Loss Summary — Continuing Business (excluding Florida/Georgia operations) Revenue ! 454.2 419.6 8.2 EBIT (excludes Florida/Georgia) » Mineral Sands 66.3 84.3 (21.4) « Hedging 12.4 30.4 (59.2) = Narama Coal 7.1 7.9 (10.1) » Mining Area C 10.2 16.0 (36.2) » Asset Sales 0.3 5.8 (94.8) « Other
Slide 6: Segment Financial Information — Western Australia
Segment Financial Information — Western Australia Total Sales Voiumes kt Rutile 33.8 36.2 (6.6) Ilmenite 134.2 166.7 (19.5) Synthetic Rutile 239.1 240.5 (0.6) Zircon 147.8 135.0 9.5 Other — Hyti 10.0 16.6 (39.8) Sales Revenue (pre-hedging) $m 310.3 275.7 12.6 Total Production Costs 274.8 249.1 (10.3
Slide 7: Operational Segment Information - CRL
Operational Segment Information - CRL Total Sales Volumes kt Rutile 33.3 37.8 (11.9) Ilmenite 79.2 84.5 (6.3) Zircon 24.8 25.5 (2.7) Sales Revenue (pre-hedging) $m 55.4 50.5 9.7 Cost of Production 46.6 40.0 (16.5) Stock Movements (2.1) 0.2 na. Cost of Goods Sold 44.5 40.2 (10.7) EBIT (pre-hedging &
Slide 8: Operational Segment Information - Virginia
Operational Segment Information - Virginia Total Sales Volumes kt Ilmenite 132.7 137.8 (3.7) Zircon 32.6 31.8 2.5 Sales Revenue A$m 54.6 44.3 23.3 Cost of Production 44.5 32.7 (36.1) Stock Movements (6.8) (3.4) 100.0 Cost of Goods Sold 37.7 29.3 (28.7) EBIT A$m 16.9 15.0 12.7 Depreciation & Amortisa
Slide 9: Operational Segment Information — Florida/Georgia
Operational Segment Information — Fiorida/Georgia Total Sales Volumes kt Rutile 8.0 15.1 (47.0) Ilmenite 12.6 19.2 (34.4) Zircon 9.9 15.9 (37.7) Other — Leucoxene 14.2 17.3 (17.9) Sales Revenue A$m 19.7 27.0 (27.0) Cost of Production 41.6 36.9 (12.7) Stock Movements (0.7) 1.2 158.3 Cost of Goods Sol
Slide 10: Net Profit After Tax — Reported Earnings
Net Profit After Tax — Reported Earnings Half Year-on-Half Year Earnings Variance -— 15* Half 2006 vs 15* Half 2005 140 — Gx) =| = Q0@ 100 — (22)() P| 80 60 40 20 | ° \ | fb kb dk kk S 2 < re 2 % G < 2 G $ N e Rod oe & & Sd oe RS & s 3 es SS er FC SK SF FF KS S aS Siar » S ey & > & Co Lv & s (en ¢ r
Slide 11: Operating Cash Flow
Operating Cash Flow Opening Net Debt (554.2) (404.4) Operating Cash Flow 75.7 121.9 Capital Expenditure (98.3) (172.8) Proceeds from disposals 0.5 2.9 Dividends Paid (34.3) (30.6) Borrowings non of Foreign Denominated 0.3 (3.6) Debt Securitisation & Other (0.2) (5.9) Increase in Net Debt (56.3) (88.
Slide 12: Capital Expenditure & Investments
Capital Expenditure & Investments Western Australia 48.4 48.3 Murray Basin Stage 1 25.4 105.8 Northern Murray Basin 3.5 3.4 USA 1.8 8.3 CRL 6.4 5.2 Eucla Basin 6.2 - Coal 2.3 0.9 Other 4.3 0.9 Total 98.3 172.8
Slide 13: TiO2 Market Overview
TiO. Market Overview « Feedstock market remains competitive with supply outstripping demand « TiO, pigment demand has increased during 2006 but prices have remained flat « Outlook for high Ti0, feedstock in 2006 remains steady « Additional supply from new projects (SRL, Kenmare, UGS expansion) shoul
Slide 14: Iluka Sales Volumes
Iluka Sales Volumes « SR sales remain at production capacity — circa 500K tonnes « Rutile sales to increase in line with Murray Basin production in 2007 Synthetic Rutile Sales Volumes 500 400 200 100 0 2002 2003 2004 2005 2006 Rutile Sales Volumes Est: 160 , 140 een E 2 100 3 80 60 40 20 2003 2004 2
Slide 15: Iluka Sales Volumes
Iluka Sales Volumes « Chloride ilmenite production (Virginia and Mid West) fully sold « Sulphate ilmenite sales from SW and CRL to remain at current levels in 2007 IImenite Sales Volumes Est. 700 600 400 300 200 100 0 T T T T 2002 2003 2004 2005 2006 ‘000 tonnes a 3 8 © ILUKA
Slide 16: Zircon Market Overview
Zircon Market Overview Demand growth expected to continue in 2007 Continued strong demand from China Some areas of consumption showing signs of slowing - zirconia - Asian CRT glass - Ceramics in Europe and Asia Increasing signs of thrifting New supply onto the market in the form of concentrates Indi
Slide 17: Status of Growth Projects
Status of Growth Projects Douglas - Murray Basin, Victoria 4 quarter 2006 practical completion & commissioning advised by contractor 57,000 tonnes of heavy mineral concentrate produced as at end of June Minimal sales volumes expected to be shipped in 2006 Iluka’s capital expenditure tracking within
Slide 18: Roche Dispute
Roche Dispute » Claims in excess of $100 million lodged by Roche in December 2005/January 2006 * Claims reviewed and rejected by Iluka - without factual or contractual merit - time-barred - not supported by proper documentation * Tluka immediately released to ASX — 30" & 315t January - also rejected
Slide 19: Status of New Growth Projects
Status of New Growth Projects Eucla Basin, South Australia « Pre-feasibility study for Jacinth/Ambrosia deposits continuing — completion 15t Half 2007 « Focus of project activities: « Metallurgical testwork of bulk samples « Mining method optimisation « Infrastructure arrangements « Continued indige
Slide 20: Outlook — 2006 Full Year
Outlook — 2006 Full Year 2"¢ Half 2006 « Full year earnings guidance retained $115.0 million - $125.0 million NPAT continuing business Assumes 0.76 cents A$/US$ in 2"4 Half Full year tax rate of ~23% Excludes Florida/Georgia estimated loss of US$20.0 million (~US$4 million in 2nd Half 2006) Assumes
Slide 21: Back-up Slides
Back-up Slides © ILUKA
Slide 22: Corporate Priorities & Milestones
Corporate Priorities & Milestones « Commissioning of the Douglas mineral separation plant in the fourth quarter with full production achieved in 2007 « Pre-feasibility study for first of Northern Murray Basin developments «= Completion of the pre-feasibility study for the potential development of th
Slide 23: Corporate Priorities Milestones
Corporate Priorities Milestones « Progress on further resource delineation through comprehensive exploration program in Eucla Basin « Tripitaka (JV Adelaide Resources) resource booking « Year end net debt levels expected to be broadly consistent with half year « Initiation of efforts to capture pote
Slide 24: Profit & Loss Summary — Reported Basis
Profit & Loss Summary — Reported Basis (inclusive of Florida/Georgia) Revenue * 473.9 446.6 6.1 EBIT (includes Florida/Georgia) « Mineral Sands (ex Florida/Georgia) 66.3 84.3 (21.4) - Florida/Georgia (21.2) (11.1) (91.0) « Hedging 12.4 30.4 (59.2) = Narama Coal 71 7.9 (10.1) » Mining Area C 10.2 16.
Slide 25: Production & Sales 1st Half 2006 vs 1st Half 2005
Production & Sales 15* Half 2006 vs 1°* Half 2005 Rutile production 83.8 86.9 Rutile sales 75.1 89.1 SR production 230.7 269.6 SR sales 239.1 240.5 Ilmenite production 830.5 806.1 Ilmenite sales 358.7 408.2 Zircon production 219.8 209.5 Zircon sales 215.1 208.2 Leucoxene/Hyti production 25.6 32.0 Le
Slide 26: Profit & Loss — Financing Costs Reconciliation
Profit & Loss — Financing Costs Reconciliation Gross interest expense on debt 20.2 15.0 « Amortisation of deferred borrowing costs 0.2 0.3 « Less capitalisation of interest (7.3) (4.6) Net interest expense 13.1 10.7 Rehabilitation Costs & other borrowing 6.9 6.7 costs unwind 4 . ‘ Total Financing Co
Slide 27: Exploration Expenditure
Exploration Expenditure Gross Expenditure 9.6 9.2 Previously Capitalised Exploration Expenditure 0.4 0.3 Written-off Capitalised (4.0) (6.7) Reclassified to cost of goods sold (0.2) (0.1) Expensed Expenditure 5.8 2.7 © ILUKA
Slide 28: Hedging Profile — as at June 2006
Hedging Profile — as at 30 June 2006 Iluka Hedged $USm 39.0 71.0 Average Cash Rate 0.5903 0.5804 CRL Hedged $USm 22.5 26.5 8.5 Average Cash Rate 0.7004 0.7086 0.6652 Total Hedged Group US$m 61.5 97.5 8.5 Group Average Cash Rate 0.6263 0.6104 0.6652 2006 sensitivity to +1 cent movement in $ vs US$ =
Slide 29: Lending Facilities as at June 2006
Lending Facilities as at 30 June 2006 Iluka US$m 1996 Private Placement 105.0 105.0 7.5 2003 Private Placement 100.0 100.0 5.1 Multilateral Bank Facility 130.0 101.0 6.2 Bilateral Bank Facilities 80.0 69.5 6.3 Receivables Acquisition Facility 60.0 35.5 5.5 Iluka A$m Trade Finance Facility 85.0 59.0