Iluka Resources Limited · ASX:ILU
Iluka Resources — Investor Presentation (December 2009)
22 slides from Iluka Resources's investor presentation, December 2009
Slide 1: Mineral Sands Sector Overview
Iluka Resources Limited Mineral Sands Sector Overview December 2009 1
Slide 2: Disclaimer – Forward Looking Statements
Disclaimer – Forward Looking Statements 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 anticipate, estimates,
Slide 3: Overview & Investment Proposition
Iluka Resources Overview & Investment Proposition Market capitalisation ~A$1.4 billion (418 million shares on issue) Industry Sector Materials (minerals sands exploration, project development, operations and marketing; iron ore royalty deriving from BHP Billiton’s Mining Area C, Western Australia) S
Slide 4: Industry Context
Mineral Sands Industry Context Minerals Uses Industry Supply and Demand Key Themes Ilmenite • 90% of all mined ilmenite, rutile • 53% of world’s titanium is supplied by Iluka • Positive demand and leucoxene used as Resources, Rio Tinto/BHPB, Exxaro Sands fundamentals, influenced feedstocks of titani
Slide 5: Titanium Minerals Summary Characteristics
Mineral Sands Titanium Minerals Summary Characteristics 90% of all titanium End Uses Key Pricing Components minerals are used as • TiO2 Pigment is used in • US$ based price feedstocks in the - Paints, coatings, inks • Typically multi-year volume, annual manufacture of - Plastics pricing, contractual
Slide 6: Zircon Summary Characteristics
Mineral Sands Zircon Summary Characteristics Zircon is used End Uses Key Pricing Components predominantly in • Ceramics (53%) • Historically similar to titanium minerals ceramics manufacture - Wall and floor tiles • Moving to shorter dated contractual pricing and 45% of all zircon - Sanitary ware ar
Slide 7: Price Relativities
Mineral Sands Price Relativities Historical Iluka Prices to 2007 (TZMI – 2008) Historical Pricing US$/tonne FOB 900 800 700 600 500 400 300 200 100 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20081 Iluka Average Prices TZMI Chloride Ilmenite Sulphate Ilmenite Rutile SR Premium
Slide 8: Key Participants
Mineral Sands Key Participants Main Operations by Three Major Raw Material Suppliers 2008 Market Share* Annual Mine Company TiO2 Zircon Operation Location Production Comments Rio Tinto 29% 19% • RBM Sth Africa Ilmenite 1000kt • Large scale/low ore grade mining - mainly ilmenite / BHPB Zircon 250kt w
Slide 9: Industry Financial Drivers
Mineral Sands Industry Financial Drivers Cash cost of production is not the only differentiator for mineral sands producers. Revenue per tonne is a key driver of value - influenced by assemblage Prices of minerals in ore relative Ilmenite Upgrading Technology Cash Cost Drivers to ilmenite (2001 - 20
Slide 10: Price Relativity
Mineral Sands Price Relativity Historical Pricing of Various Commodities Mineral sands has not seen comparable price appreciation compared with infrastructure stage commodities. Similar factors are at work – resource scarcity, strong demand from developing economies and, in the case of high quality
Slide 11: Pigment Demand
Pigment Demand Pigment GDP-linked Demand Growth with Developing Economy China’s pigment consumption CAGR China Pigment Intensity of Use (per capita cf USA) since 1990 is 18.9% compared to the rest China’s pigment use per person is 20% of US pigment use of world of 1.8% 100% Rest of World vs China Pi
Slide 12: Pigment Demand Recovery from Historic Lows
Pigment Demand Recovery from Historic Lows Monthly US Pigment Exports (all destinations) Monthly China Pigment Imports and Exports Imports Exports kt kt Imports 3mth avg Exports 3mth avg 80 35 Averages Averages 2004-08 2004-08 Monthly Monthly 70 30 60 25 50 20 40 15 30 10 20 10 5 - - Apr-07 Apr-08 A
Slide 13: Titanium Dioxide Demand
Titanium Dioxide Demand Rio’s Mid Cycle View – Similar Characteristics Apply to Zircon Demand 2007 Population Infrastructure distribution in bands of Urbanisation income levels** Based Growth Average Wealth per capita in PPP terms Inflection Point for growth phase Typically mid to late cycle demand
Slide 14: Zircon Demand
Zircon Demand Demand Influenced Predominantly by Developing/Urbanising Economies China’s Urban Residential Floorspace Global Zircon Consumption CAGR since 1990 is • China used 2.8 bn sqm of tiles in 2008 3.4% while China’s CAGR is 17.2% • Future growth in China’s urban floorspace will influence incr
Slide 15: Evidence of Zircon Demand Recovery
Evidence of Zircon Demand Recovery Most Notably in China China Zircon Imports - Monthly China Zircon Imports - Cumulative YTD kt kt 80 500 A ustralia South A f rica Others 70 Indonesia Other 450 3 Month A vg RSA 400 60 Indonesia 350 Australia 50 300 2009 40 250 2008 2007 30 200 2006 150 20 100 10 50
Slide 16: A China Perspective on Zircon
A China Perspective on Zircon TZMI Singapore Conference October 2009 China Zirconium Advisor (Jian Dongmin) Director of China Zirconium and Hafnium Committee Source: TZMI Conference October 2009 • Zirconium industry is an important part of China’s national economy • Zircon is an important strategic
Slide 17: China Titanium Dioxide Demand Outlook
China Titanium Dioxide Demand Outlook Pigment Market China consumed approximately • Domestic production of chloride pigment 850kt of titanium-based pigment in Pigment Imports restricted due to closely held 2008, having grown by an average of • In China, chloride pigment is predominantly manufacturin
Slide 18: Supply
Mineral Sands Supply Main Characteristics • Limited new, high quality supply (ex Iluka’s projects) Inducement of New Supply Project Ranking by NPV – Illustrative Inducement Analysis • Resources projects frequently late/take time to meet production expectations • Funding and/or country risk beset a n
Slide 19: Industry Zircon:TiO2 Ratio
Industry Zircon:TiO2 Ratio Despite Advent of Jacinth-Ambrosia, Industry Z:TiO2 Ratio Remains Stable mt of TiO2 or Zircon Ratio t Zircon/t TiO2 7.0 0.35 TiO2 Historical Supply Zircon Historical Supply 6.0 0.3 Zircon/TiO2 Ratio All 5.0 Feedstock Producers 0.25 (including J-A) 4.0 0.2 3.0 0.15 Zircon/T
Slide 20: Iluka Capital Expenditure, Cash Flow and Debt Profile
Iluka Capital Expenditure, Cash Flow and Debt Profile 2011-2013 2006 2007 2008 2009 2010 (average) Capital Expenditure $m 156 111 198 ~500 È È Operating Cash Flow1 110 59 230 È Ç Ç Net Debt 594 602 216 500-600 È È Gearing 45.3 44.5 17.4 ~30-352 È È (net debt/debt+equity) % Ç Increase versus 2006 - 2
Slide 21: Other Iluka Revenue/EBIT Streams
Other Iluka Revenue/EBIT Streams Mining Area C Iron Ore Royalty • Royalty on iron ore produced from specific parts of BHP Billiton’s Mining Area C (MAC) province in Western Australia • The royalty results from a 1994 restructure of deferred payments owed by Consolidated Goldfields Australia • The ag
Slide 22: For further information, contact: Dr Robert Porter
For further information, contact: Dr Robert Porter General Manager, Investor Relations + 61 8 93604751; + 61 (0) 407391829 robert.porter@iluka.com www.iluka.com 22
Iluka Resources — Investor Presentation (December 2009) on 6ix