Slide 1: 2009 Full Year Financial Results
For personal use only 2009 Full Year Financial Results Iluka Resources Limited 25 February 2010
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. These forward-looking statements are subject to a range of risk fac
Slide 3: Main Features of 2009
For personal use only Main Features of 2009 3
Slide 4: 2009 Characteristics
2009 Characteristics For personal use only • $108.6 million reported loss • Includes $158.2 million (pre tax) cash and non cash costs associated with GEC response • Net debt of $382.1 million; 25.9% gearing • Weak demand resulting from global economic crisis (“GEC”) • Partial demand recovery evident
Slide 5: Full Year Results: Comparison with 2008
Full Year Results Comparison with 2008 For personal use only Mineral Sands Sales Volumes* Ð 37% lower - reflecting weak demand, industry destocking & SR idling (Z/R/SR) - 55% reduction in zircon sales USD Product Pricing Ï Higher TiO2 (5-7%) and zircon pricing (10-15%) - zircon price erosion in 2nd
Slide 6: Group Results
Group Results For personal use only $m 2008 1H 2009 2H 2009 2009 YoY % change Revenue (pre hedging) 894.8 194.8 381.2 576.0 (35.6) EBITDA Mineral Sands 186.3 66.3 9.3 75.6 (59.4) Hedging (32.4) (45.9) 3.0 (42.9) N/A Mining Area C 56.4 31.7 18.5 50.2 (11.0) Foreign Exchange Gains/(Losses) 10.6 6.5 (1
Slide 7: Cash Flow and Net Debt
Cash Flow and Net Debt For personal use only 2008 2009 $m 1H08 2H08 1H09 2H09 Opening Net Debt (598.1) (199.6) (215.7) (309.4) Receipts from Customers 510.6 506.8 332.4 412.4 Operating Payments (422.3) (372.1) (426.8) (234.2) MAC and Other 13.6 39.2 28.6 28.7 Exploration (8.7) (12.2) (10.2) (9.8) Ne
Slide 8: 2009 Balance Sheet Factors
2009 Balance Sheet Factors For personal use only • Total 2009 cash capex of $522 million - 89% related to new growth projects • Funding initiatives - $113 million institutional placement - $84 million proceeds from sale of 51% interest in CRL • As at 31 December - net debt of $382.1 million; gearing
Slide 9: Cash & Non Cash Cost Trends
Cash & Non Cash Cost Trends 2008 - 2009 For personal use only $m 2008 1H09 2H09 2009 2009 Comments Cash Costs of Production 564.3 281.3 172.3 453.6 2nd half benefit of cost reduction activities Idling and Restructure Cash Costs 12.6 16.1 34.0 50.1 Asset reconfiguration and retrenchments Other Cash C
Slide 10: Mineral Sands Market Conditions & Iluka's Response
For personal use only Mineral Sands Market Conditions & Iluka’s Response 10
Slide 11: 2009 Indicators of Demand
Mineral Sands Market Conditions 2009 Indicators of Demand For personal use only US and EU Construction Sectors Industrial Production % Annual Growth % 10 Annual Growth 20 0 -10 10 -20 0 -30 -40 -10 US -50 EU Construction Europe US Home Starts China -60 -20 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 J
Slide 12: Global Zircon Demand
Mineral Sands Market Conditions Global Zircon Demand For personal use only • 2009 global demand reduced by an estimated 25% - ~900 kt down from ~1,200 kt in 2008 • Largest annual decline ever recorded • Destocking and draw down of inventory built in late 2008 • China consumption weak in 1st half • C
Slide 13: Zircon in China
Mineral Sands Market Conditions Zircon in China For personal use only 2009 China Monthly Zircon Imports (Cumulative) kt 500 Other 450 Indonesia 400 South Africa • China’s zircon demand Australia 350 2009 recovery evident in 2009 300 2008 2007 250 • Annual import volumes 200 similar to those recorded
Slide 14: Global Zircon Supply
Mineral Sands Market Conditions Global Zircon Supply For personal use only • Iluka led response to reduce supply in line with demand • No evidence of any new supply (ex Iluka) • Announced reductions of supply - Exxaro announced decision not to proceed with Fairbreeze deposit, effectively ending KZN
Slide 15: High Grade Titanium Dioxide Global Demand
Mineral Sands Market Conditions High Grade Titanium Dioxide Global Demand For personal use only • Consumption of high grade titanium feedstocks estimated to have fallen by ~20% in 2009 • Key influences on weaker demand included: - lower construction sector activity in US and Europe - durable goods a
Slide 16: High Grade Titanium Dioxide Global Supply
Mineral Sands Market Conditions High Grade Titanium Dioxide Global Supply For personal use only • Major mineral sands producers reduced production in response to weak demand • Global high grade titanium feedstock production volumes estimated to be down by ~10% • Iluka idled two synthetic rutile kiln
Slide 17: Reconfiguration Activities
Reconfiguration Activities Main features For personal use only • Western Australian production capacity reduced by ~50% - Eneabba mining operations idled - South West ilmenite mining ceased, as planned - South West zircon production transported to Narngulu • Two of four SR kilns idled - 3rd kiln in
Slide 18: Iluka Production and Sales
Iluka Production and Sales Supply Matched to Annual Demand For personal use only Production 1H 2009 2H 2009 2009 Total Variance from 2008 k tonnes Zircon 165 98 263 (122) Rutile 64 63 127 (13) Synthetic Rutile 239 166 405 (62) Total 468 327 795 (197) Sales Volumes 1H 2009 2H 2009 2009 Total Variance
Slide 19: Destination of Iluka Sales - Zircon
Destination of Iluka Sales - Zircon For personal use only kt Zircon Sales 300 200 100 • China increasingly 0 important to zircon sales Asia China Europe Americas Other volumes -100 1H 2008 2H 2008 1H 2009 2H 2009 Change (2H 2008 to 2H 2009) • European market slow to recover over 2009 Change Sales Vo
Slide 20: Destination of Iluka Sales – Rutile and Synthetic Rutile
Destination of Iluka Sales – Rutile and Synthetic Rutile For personal use only kt Rutile and Synthetic Rutile Sales 400 300 200 100 • Small growth in most 0 markets, second half 2009 Asia China Europe Americas Other versus second half 2008 -100 1H 2008 2H 2008 1H 2009 2H 2009 Change (2H 2008 to 2H 2
Slide 21: Destination of Sales: Increasing Importance of China
Destination of Sales Increasing Importance of China For personal use only China’s consumption of zircon and pigment expected to continue to grow based on a combination of rising per capita income and urbanisation • Chinese Government’s stated goal of quadrupling per capita GDP by 2020 (on 2000 level
Slide 22: Iluka 2009 Pricing Trends: Zircon
Iluka 2009 Pricing Trends Zircon For personal use only • Initial 2009 bulk zircon prices above US$900/t (FOB) (2008 average: US$780/t) • Full year 2009 average prices ~US$850/t • Recovery in China demand associated with continued weak demand in Europe led major suppliers to direct volumes to China -
Slide 23: Iluka 2009 Pricing Trends: Rutile and Synthetic Rutile
Iluka 2009 Pricing Trends Rutile and Synthetic Rutile For personal use only • Iluka’s 2009 planned production contracted • 2009 prices increased relative to 2008 • Rutile ~US$550/tonne • Synthetic rutile ~US$450/tonne (depending on specifications) • Iluka ended 2009 with minimal inventories of rutil
Slide 24: Portfolio Transformation
For personal use only Portfolio Transformation 24
Slide 25: Project Execution: Murray Basin Stage 2
Project Execution Murray Basin Stage 2 For personal use only • 1st HMC production October 2009 • Delayed commencement due to regulatory delays, fabrication and wet weather issues • Slower than expected commissioning and ramp up, resulting from: - equipment reliability - water quality impact on wet c
Slide 26: Murray Basin Stage 2 Mining Unit
Murray Basin Stage 2 Mining Unit Plant being fed ore by Dozer For personal use only 26
Slide 27: Murray Basin Stage 2 Processing Facilities
Murray Basin Stage 2 View Processing Facilities For personal use only 27
Slide 28: Project Execution: Jacinth-Ambrosia
Project Execution Jacinth-Ambrosia For personal use only • 1st HMC production achieved in November - 3 months ahead of schedule • Six months ramp up - appropriate given possible commissioning issues associated with new production • Mining and concentrating operations performing well - operated at 90
Slide 29: Jacinth-Ambrosia Mine Pit
Jacinth-Ambrosia Mine Pit For personal use only 29
Slide 30: Jacinth-Ambrosia Process Plant Site Area
Jacinth-Ambrosia Process Plant Site Area For personal use only 30
Slide 31: Key Factors Influencing 2010
For personal use only Key Factors Influencing 2010 31
Slide 32: 2010 Factors
2010 Factors For personal use only • Progressive restoration in product demand expected during 2010 (but further shocks possible) • Mid West mining operations idled - restructuring costs (expected ~$10 - $15 million) • J-A 1st half ramp up - sales contribution in 2nd half • Murray Basin Stage 2 - ra
Slide 33: Favourable Market and Portfolio Characteristics 2011-2013
For personal use only Favourable Market and Portfolio Characteristics 2011-2013 This following contains forward-looking statements that are subject to risk factors associated with exploring for, developing, mining, processing and sale of minerals. These forward-looking statements are subject to a ra
Slide 34: Mineral Sands Supply: Main Characteristics
Mineral Sands Supply Main Characteristics For personal use only Inducement of New Supply • Iluka undertakes inducement analysis of all known Project Ranking – Illustrative Inducement Analysis mineral sands projects • Analysis suggests prices would need to be significantly higher to warrant support f
Slide 35: Zircon Supply
Zircon Supply Supply Peak Near Term Unless Substantial Price Increases For personal use only Zircon Supply • Few material new zircon sources Induced New Projects at 0%, 25% and 50% Zircon - primary contribution from existing suppliers price rises (on 2008 levels) • Even with advent of Jacinth-Ambros
Slide 36: High Grade Titanium Dioxide Supply
High Grade Titanium Dioxide Supply Supply Peak Near Term Unless Substantial Price Increases For personal use only High Grade Titanium Dioxide Supply Induced New Projects at 0%, 25% and 50% Rutile price rises (on 2008 levels) • Significant price increases required to induce ktpa supply 3500 Current P
Slide 37: Capital Expenditure, Cash Flow and Debt Profile
Capital Expenditure, Cash Flow and Debt Profile High Level Summary For personal use only 2006 - 2008 2011 - 2013 $m 2009 2010 (annual average) (annual average) Capital Expenditure 155 522 ~100 ~75 Operating Cash Flow 133 77 Ç Ç Net Debt 471 382 È È Gearing 35.7 25.9 È È (net debt/debt+equity) % Ç =
Slide 38: Competitive Revenue:Cash Cost Position
Competitive Revenue:Cash Cost Position Iluka’s Portfolio Transformed with New Production Base For personal use only Industry Revenue to Cash Cost Ratio* 2011 -2013 First Quartile Second Quartile Third Quartile Fourth Quartile Iluka SA Iluka MB Iluka Other Iluka US Iluka WA Iluka Avg 2011-13 = 1.8 Ra
Slide 39: End Use Demand Trends
End Use Demand Trends Steel Production vs Zircon Demand, China and Rest of World For personal use only Chinese zircon demand impact may be following similar path to steel Steel Produced (Mt) World 1500 1998-07 CAGR = 6.3% Steel Rest of World 1000 1998-07 CAGR = 3.0% 500 China 1998-07 CAGR = 17.5% 0
Slide 40: Portfolio Characteristics
Portfolio Characteristics Improved Margin Structure from Two Main Assets For personal use only • Murray Basin and Jacinth-Ambrosia will contribute most of Iluka’s production from 2011 - 80-90% of zircon and rutile production • Higher EBITDA margin structure than historical assets • Lower company cap
Slide 41: Emerging Characteristics of Iluka
Emerging Characteristics of Iluka For personal use only • Company / asset base transformation largely complete • Shape of 2010 financial year dependent on pace of global / demand recovery • Project execution risk reducing, but commissioning/ramp up phase not yet complete • Further global shocks cann
Slide 42: Supplementary Slides
For personal use only Supplementary Slides
Slide 43: Trends in the Business 2011-2013
For personal use only Trends in the Business 2011-2013 43
Slide 44: Physical Characteristics
Physical Characteristics High Level Summary - Production For personal use only Production 2006 - 2008 2011 - 2013 2009 2010 2011 - 2013 Sales Commentary k tonnes (annual average) (annual average) Zircon 410 263 ~400 ~5001 Sales expected to match production as a minimum but, depending on demand, coul
Slide 45: Cash Costs of Production
Cash Costs of Production High Level Summary – Cash Cost Trends For personal use only Total Cash Trend Relative to Production Costs Commentary 2006 - 2008 $m 2006 - 2008 585 N/A Excludes Consolidated Rutile (average p.a.) Limited cash costs 2009 454 È Higher unit cash costs of production associated w
Slide 46: Other Cash Costs (Non Production Costs)
Other Cash Costs (Non Production Costs) 2006 – 2009 For personal use only 2006 2007 2008* 2009* Average $m (average) (average) (average) p.a. Marketing & Selling 11 10 11 10 11 Government Royalties 17 12 20 13 16 Technical Support & Major Projects 6 10 10 4 8 Exploration & Evaluation (expensed) 13 1
Slide 47: Explanatory Comments - Other Cash Costs
Explanatory Comments - Other Cash Costs Non Production Cash Costs For personal use only Marketing and selling - marketing development costs, wharf and shipping costs etc. Government royalties - Iluka is required to pay government royalties on revenue earned from the sale of mineral product (excludin
Slide 48: Depreciation & Amortisation
Depreciation & Amortisation High Level Summary – D&A Trends For personal use only Split of Group D&A 2011 - 2013 D&A $m Virginia Australia 8% 92% 2006 - 2008 127 (average p.a.) 2009 176 2010 ~220 2011 - 2013 ~175 (average p.a.) Higher 2010 D&A reflects: • commencement of depreciation for Murray Basi
Slide 49: 2009 Financials
For personal use only 2009 Financials 49
Slide 50: Group Results
Group Results For personal use only $m 2008 2009 % change Revenue (pre hedging) 894.8 576.0 (35.6) EBITDA 195.8 61.9 (68.4) Depreciation & Amortisation (145.2) (176.2) (21.3) EBIT 50.6 (114.3) N/A Net Interest & Financing Costs (34.2) (22.7) 33.6 Impairment Charges 5.5 (67.6) N/A Profit (Loss) Befor
Slide 51: Full Year Earnings: 2009 NPAT vs 2008
Full Year Earnings 2009 NPAT vs 2008 For personal use only $m 80 60 77.5 40 14.3 20 (66.2) 0 (9.1) (10.6) -20 16.7 (26.3) (4.3) (3.1) -40 (21.7) (7.9) -60 (108.6) -80 -100 (51.2) (16.7) -120 2008 Sales vol Sales mix Sales price Sales costs Restructure D&A Other MAC Tax & Int FX Signif CRL & 2009 NPA
Slide 52: Mineral Sands Results
Mineral Sands Results For personal use only $m 2008 2009 % change Revenue (pre hedging) 894.8 576.0 (35.6) EBITDA Western Australia 104.5 47.9 (54.2) Murray Basin 63.5 13.2 (79.2) US Operations 35.3 30.7 (13.0) Non Operating Regions (16.9) (16.2) 4.1 Total Mineral Sands EBITDA (Pre hedging) 186.4 75
Slide 53: Calculation of Underlying 2009 Results
Calculation of Underlying 2009 Results For personal use only 1H 2009 2H 2009 2009 Total $m Pre-Tax Tax NPAT / Loss Pre-Tax Tax NPAT / Loss Pre-Tax Tax NPAT / Loss Item Impairment - Ore Bodies (67.6) - (67.6) Mineral Sands Restructuring and Idle Capacity Costs (16.1) (34.0) (50.1) Mineral Sands Idle
Slide 54: Capital Expenditure (Cash)
Capital Expenditure (Cash) For personal use only $m 2008 2009 % change Western Australia 38.1 7.0 (81.6) Murray Basin 21.9 46.0 110.0 US Operations 16.3 16.4 0.6 Murray Basin Stage 2 56.2 177.3 215.5 Eucla Basin (Jacinth-Ambrosia) 56.5 272.1 381.6 Other 9.4 2.8 (70.2) Total 198.4 521.6 162.9 Include
Slide 55: 2009 Physical Information
2009 Physical Information Refer Following Slide for Explanatory Information For personal use only Murray Basin Perth Basin WA Virginia Group Total Overburden Moved kbcm 1,188 3,787 - 4,975 Ore Mined mt 5.4 18.3 3.1 26.8 Ore Grade HM % 14.4 6.8 11.6 8.9 VHM Grade % 3.7 5.2 9.6 5.4 HMC Produced kt 234
Slide 56: Physical Trends – 2009
For personal use only Physical Trends – 2009 Explanatory Terms: Ore Grade % refers to percentage of heavy mineral found in a deposit. In the case of Murray Basin it excludes grade attributable to low quality, unsaleable ilmenite which is returned to the mine. VHM Grade % refers to percentage of valu
Slide 57: Mining Area C Royalty
Mining Area C Royalty For personal use only 2008 2009 % change Annual Production to 30 June MDMT 29.3 37.8 29.0 Sales Volume to 31 December MDMT 36.8 40.3 9.5 Royalty Income $m 50.8 42.6 (16.1) Capacity Payments $m 6.0 8.0 33.3 Iluka EBIT $m 56.4 50.2 (11.0) • Higher one-off capacity payments; $8 mi
Slide 58: Regional Information
Regional Information For personal use only Iluka will not replicate the following form of reporting in future, as the company will move to a single cash generating unit basis of reporting for Western Australia (to be referred to the Perth Basin) and Jacinth-Ambrosia (to be referred to as the Eucla B
Slide 59: Western Australia – Financials
Western Australia – Financials For personal use only $m 2008 2009 % change Sales Revenue (pre-hedging) 587.3 385.6 (34.3) Total Cash Production Costs (399.3) (316.9) 20.6 Depreciation & Amortisation (103.3) (127.2) (23.1) Inventory Movements (45.2) 23.6 N/A Cost of Goods Sold (547.8) (420.5) 23.2 1
Slide 60: Western Australia - Key Operational Parameters
Western Australia - Key Operational Parameters For personal use only 2008 2009 % change Production (kt) Zircon 188.0 145.6 (22.6) Rutile 73.8 60.9 (17.5) Synthetic Rutile 467.3 405.0 (13.3) Ilmenite - saleable 347.1 146.6 (57.8) Ilmenite - upgraded to synthetic rutile 641.0 496.7 (22.5) Hyti 10.6 6.
Slide 61: Murray Basin – Financials
Murray Basin – Financials For personal use only $m 2008 2009 % change Sales Revenue (pre-hedging) 199.9 124.8 (37.6) Total Cash Production Costs (89.9) (87.6) 2.6 Depreciation & Amortisation (28.3) (31.7) (12.0) Inventory Movements (35.4) (5.7) 83.9 Cost of Goods Sold (153.6) (125.0) 18.6 1 Other Co
Slide 62: Murray Basin - Key Operational Parameters
Murray Basin - Key Operational Parameters For personal use only 2008 2009 % change Production (kt) Zircon 112.7 69.9 (38.0) Rutile 66.3 66.2 (0.2) Leucoxene 5.8 8.3 43.1 Ilmenite - 12.5 N/A Cash Production Costs $m 89.9 87.6 2.6 Cash Production Cost Breakdown 2009 Area % of Total Cash Costs Mining 2
Slide 63: US Operations – Financials
US Operations – Financials For personal use only $m 2008 2009 % change Sales Revenue (pre-hedging) 107.6 65.6 (39.0) Total Cash Production Costs (75.1) (49.1) 34.6 Depreciation & Amortisation (13.6) (17.3) (27.2) Inventory Movements 3.4 15.5 (355.9) Cost of Goods Sold (85.3) (50.9) 40.3 1 Other Cost
Slide 64: US Operations - Key Operational Parameters
US Operations - Key Operational Parameters For personal use only 2008 2009 % change Production (kt) Zircon 94.4 47.5 (49.7) Ilmenite 239.1 182.9 (23.5) Cash Production Costs $m 75.1 49.1 (34.6) Cash Production Cost Breakdown 2009 Area % of Total Cash Costs Mining 38 Concentrating 19 Separation 23 Ov
Slide 65: Currency Hedging Arrangements
Currency Hedging Arrangements as at 31 December 2009 For personal use only Face Value Period Instrument Type Average Rate US$m Forward FX Contracts 112.0 0.855 January – June 2010 Purchased Options 85.0 0.900 Forward FX Contracts 41.5 0.874 July – December 2010 Purchased Options 150.0 0.900 65
Slide 66: 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 3 9225 5481 Iluka’s website www.iluka.com