Iluka Resources Limited · ASX:ILU
Iluka Resources — Merger or Acquisition (September 2020)
43 slides from Iluka Resources's merger presentation, Sep 10, 2020
Slide 1: Demerger Briefing
Demerger Briefing 10 September 2020 Cataby, Western Australia
Slide 2: Disclaimer
Disclaimer 2 This presentation has been prepared by Iluka Resources Limited (Iluka). By accessing this presentation you acknowledge that you have read and understood the following statement. This presentation contains summary information about Iluka, Deterra Royalties Limited (Deterra Royalties) and
Slide 3: Demerger overview
01 Demerger overview
Slide 4: Key Management
Key Management 4 Iluka Resources Deterra Royalties Tom O’Leary Adele Stratton Julian Andrews Brendan Ryan Chief Executive Officer Chief Financial Officer Chief Executive Officer Chief Financial Officer
Slide 5: Demerger Overview
Demerger Overview 5 Demerger will result in two separate ASX-listed businesses – Iluka will continue to be a global leader in the mineral sands industry while Deterra Royalties will be the largest ASX-listed resources focused royalty company Overview Post-demerger Structure • The demerger will resul
Slide 6: Demerger Rationale
Demerger Rationale 6 Iluka’s Mineral Sands business and Royalty business are two fundamentally different businesses, consequently a demerger has t he potential to unlock shareholder value over time Mineral Sands Business Royalty Business Business A leading pure play mineral sands company globally Au
Slide 7: Key dates
Key dates 7 Subject to a shareholder vote on 16 October 2020, Deterra Royalties will commence trading on the ASX as a separately listed e ntity on 23 October 2020 on a deferred settlement basis Event Date Last time and date for determining eligibility to vote at the Extraordinary General Meeting 4.0
Slide 8: Iluka Resources post demerger
02 Iluka Resources post demerger
Slide 9: Introducing Iluka post Demerger
Introducing Iluka post Demerger 9 Iluka remains a global leading mineral sands company – with major mining operations and processing operations – the business, which is diversified by product and geography, focusses on high-grade products Underlying mineral sands EBITDA (A$m) Business A leading pure
Slide 10: Framework to Deliver Sustainable Value
Framework to Deliver Sustainable Value 10 Iluka is a leading global mineral sands company with a portfolio of high-quality 1 High value product suite and quality mineral sands assets assets and the world’s largest producer of zircon and natural rutile Mineral sands demand growth linked to urbanisati
Slide 11: Mineral Sands – Part of Everyday Life
Mineral Sands – Part of Everyday Life 11 Iluka’s products have a range of applications from everyday applications, to industrial uses and new renewable energy technologies Global demand Global supply Iluka Investment casting, Chemicals & Others 26% Ceramics speciality products 37% steel industries Z
Slide 12: Positive Market Fundamentals – Supply
Positive Market Fundamentals – Supply 12 Zircon and high-grade titanium feedstocks have attractive long term market fundamentals including demand growth from urbanisation and rising living standards and supply side constraints. 12 Zircon and Rutile new project Global zircon supply outlook (existing
Slide 13: Positive Market Fundamentals – Demand
Positive Market Fundamentals – Demand 13 Zircon and high-grade titanium feedstocks have attractive long term market fundamentals including demand growth from urbanisation and rising living standards and supply side constraints. Demand Fundamentals: China floor space completion and zircon demand Glob
Slide 14: Industry Leading Portfolio of Operations
Industry Leading Portfolio of Operations 14 Iluka focuses on producing high value mineral sands products including zircon, rutile and synthetic rutile, and, in April 202 0, commenced the production of monazite concentrate, marking the first phase of the company’s entry into the rare earth market Glo
Slide 15: Iluka's Marketing Model of Value Creation
Iluka’s Marketing Model of Value Creation 15 Key Features Focus on delivering sustainable prices Hub and spoke distribution model Prices negotiated with customers based on value in Warehouses positioned close to key markets use and other factors Value in use Multilingual / multinational salesforce G
Slide 16: Marketing Model Delivers Sustainable Value
Marketing Model Delivers Sustainable Value 16 Iluka’s value-driven marketing model supports sustainable prices – helping to maintain strong margins through the cycle Historical zircon and rutile prices1 Pricing model features US$/t Rutile • Iluka’s established pricing mechanisms reduces volatility a
Slide 17: Quality Project Pipeline to Sustain and Grow
Quality Project Pipeline to Sustain and Grow 17 Iluka develops and gates projects in a disciplined manner towards execution subject to acceptable progress in the following a reas: (i) confidence in satisfactory project risk-return attributes, (ii) high level of strategic alignment, and (iii) sequenc
Slide 18: Historically a highly cash generative business
Historically a highly cash generative business 18 The mineral sands business has generated over >A$2bn in free cash flow over the last 10 years, with consistent cash returns delivered to shareholders via dividends Historical cash generation Cashflows (A$ million) 1,000 • Mineral sands business has g
Slide 19: Conservative Capital Structure to Support Growth
Conservative Capital Structure to Support Growth 19 The prudent management of Iluka’s financial position continues to be a key element of the company’s overall resilience, inclu ding in the context of the COVID-19 pandemic Balance sheet position Historical net debt and gearing, as reported (A$m; %)
Slide 20: Continued focus on stated objective: to deliver sustainable value
Continued focus on stated objective: to deliver sustainable value 20 Iluka’s stated focus is to deliver sustainable value and it has a track record of delivering above average returns to shareho lders through the cycle compared to alternative resources sector investments in Australia Total sharehold
Slide 21: Pro-forma Financials - Post Demerger
Pro-forma Financials - Post Demerger focus on sustainable delivery of value 21 Iluka will continue to focus on delivering sustainable operations Mineral sands revenue (A$m) Underlying mineral sands EBITDA (A$m) 2,500 800 Legend 2,000 1,851 545 531 CY H1 CY H2 1,500 1,193 1,018 1,244 400 295 298 301
Slide 22: Sustainability is central to Iluka's operations
Sustainability is central to Iluka’s operations 22 Iluka’s sustainability approach spans six pillars: PEOPLE HEALTH AND SAFETY SOCIAL PERFORMANCE We seek to attract and retain the We strive to protect the health and We respect human rights, engage best people while building and safety of our people
Slide 23: Land Rehabilitation and Closure and Tailings Management
Land Rehabilitation and Closure and Tailings Management 23 Iluka has a strong track record over several decades of leading environmental and socially responsible practices. Land management and rehabilitation are a significant part of Iluka operates active Tailings Storage Facilities at Jacinth and C
Slide 24: Experienced Mineral Sands Management Team
Experienced Mineral Sands Management Team 24 Iluka’s management team are committed to delivering sustainable value and disciplined growth from Iluka’s mineral sands asset s Executive management team Matthew Blackwell Daniel McGrath Sue Wilson Head of Major Projects, GM, Cataby & Southwest General Co
Slide 25: Framework to Deliver Sustainable Value
Framework to Deliver Sustainable Value 25 Iluka is a leading global mineral sands company with a portfolio of high-quality 1 High value product suite and quality mineral sands assets assets and the world’s largest producer of zircon and natural rutile Mineral sands demand growth linked to urbanisati
Slide 26: A Appendix: Market update
A APPENDIX Market update
Slide 27: Zircon Market Update
Zircon Market Update 27 Key Features Result H1 2020 Z/R/SR Sales Revenue • H1 2020 sales 78kt (H1 2019: 133kt) ‒ Q2 sales of 53 kt (-21% YoY) after Q1 sales of 25kt (-62% YoY) Zircon 36% • Key markets significantly impacted by COVID-19 shutdowns Pricing • H1 2020 weighted average received zircon (pr
Slide 28: Zircon Market Update
Zircon Market Update 28 Key Features Sales by Region Sales by industry • Chinese lockdowns of industry significantly impacted Q1 sales • Significant decline in sales to ceramics industry due to end demand and impact of lockdowns on manufacturers • Sales to China improved in Q2 as restrictions eased
Slide 29: High-Grade Titanium Feedstock Market Update
High-Grade Titanium Feedstock Market Update 29 Key Features H1 2020 Z/R/SR Sales Revenue Result • H1 2020 sales of 163kt (H1 2019: 169kt) • Demand slowdown occurred in 2Q in all end markets due to COVID-19 Synthetic rutile impacts 34% Pricing • First half rutile price of US$1,246/t, up 7% from H2 20
Slide 30: High-Grade Titanium Feedstock Market Update
High-Grade Titanium Feedstock Market Update 30 Key Features Sales by Region Sales by industry • Iluka sales to Europe and Middle East held steady with H1 • Sales to pigment were down slightly due to a May shipment of SR 2019 as pigment plants were running hard in Q1 before not taken as per take-or-p
Slide 31: High Grade Feedstock Advantage
High Grade Feedstock Advantage Iluka’s Market Position Strongest in Very High Grade Feedstocks Total TiO2 Feedstock Chloride Feedstock High Grade Chloride (80%+ TiO2) Very High Grade Chloride (90%+ TiO2) Chloride & Sulphate (2019 ~3.4 mt) Feedstocks (2019 ~2.7 mt) Feedstocks (2019 ~1.3 mt) (2019 ~7.
Slide 32: B Appendix: Iluka Board and Operations Overview
B APPENDIX Iluka Board and Operations Overview
Slide 33: Iluka Resources Board
Iluka Resources Board 33 Highly experienced Board from a range of backgrounds in the mining and finance industries Tom O’Leary Rob Cole Managing Director, Chief Independent non-executive Director Executive Officer LLB (Hons), BSc LLB, BJuris • Joined Iluka 2018 • Joined Iluka 2016 • Perenti, Synergy
Slide 34: Mineral Sands Operations – Cataby / South West
Mineral Sands Operations – Cataby / South West 34 Full mining rates at Cataby in 1H 2020 and synthetic rutile production at capacity Operations Overview • Large chloride ilmenite rich mine 150km from Perth • Ilmenite to feed synthetic rutile kiln • Synthetic rutile offtake contracts in place H1 2020
Slide 35: Mineral Sands Operations – Jacinth-Ambrosia / Mid West
Mineral Sands Operations – Jacinth-Ambrosia / Mid West 35 Altered mining and processing settings in light of market conditions Operations Overview • World’s largest zircon mine • Iluka’s major source of zircon production • Narngulu mineral separation plant processes Jacinth-Ambrosia material (to pro
Slide 36: Mineral Sands Operations – Sierra Rutile
Mineral Sands Operations – Sierra Rutile 36 Dry mining at Lanti and Gangama operations with processing at the operation’s mineral separation plant Operations Overview • Began operations 1960s • Acquired by Iluka in December 2016 • World’s largest rutile mine H1 2020 Production • Transition to dry mi
Slide 37: Mineral Sands Operations – Inventory Position
Mineral Sands Operations – Inventory Position 37 Inventory increase reflects operational setting changes and market uncertainty due to COVID-19 • Increase in total inventory to $560 million ($425 million at December 2019) • Increase reflects higher work in progress (heavy mineral concentrate), zirco
Slide 38: C Appendix: Growth pipeline
| APPENDIX Growth pipeline ee
Slide 39: Eneabba progresses to Phase 2
Eneabba progresses to Phase 2 39 Eneabba Rare Earths Project Rare Earth Elements Eneabba involves the extraction, processing and marketing of a high Eneabba monazite contains high value elements, including neodymium and praseodymium. grade monazite-rich strategic stockpile. Phase 1 is operational an
Slide 40: Eneabba Phase 2 Project Approval Parameters
Eneabba Phase 2 Project Approval Parameters 40 Eneabba Key Project Parameters Metric (average over project life) Comment Eneabba Mineral Resources and Ore Reserves 5 Life of Mine (Phase 1 and Phase 2) Based on reserve and production rates assumed ~10 years below In situ Mineral Assemblage in HM3 Res
Slide 41: Balranald field trial commenced
Balranald field trial commenced 41 Balranald Project Third Technology Trial (T3) The Balranald project comprises the West Balranald and Nepean • A third technology trial (T3) to determine whether the technology is deposits, two large, deep, high grade rutile, zircon and ilmenite rich economically vi
Slide 42: Exploration
Exploration 42 Exploration is a key component of Iluka's growth strategy 1. Continued commitment to identification and assessment of global mineral sands opportunities 2. Targeting new mine (greenfields) opportunities of sufficient Vior Farm In, Quebec scale to support project development Rutile – H
Slide 43: For more information contact
For more information contact: Melissa Roberts, General Manager Investor Relations investor.relations@iluka.com +61 (0) 450 398 431 Capel, Western Australia
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