Slide 1: 2007 Full Year Results
For personal use only 2007 Full Year Results Iluka Resources Limited David Robb Managing Director 21 February 2008
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: Main Components of Announcements
Main Components of Announcements For personal use only • 2007 earnings of $51.1 million - above guidance • 2008 NPAT guidance – range of $10m to $20m, including $30m profit from Narama • Murray Basin Stage 2 development approval - $209 million ¾ 1st production 1Q 2009 • Substantial progress on Jacin
Slide 4: Health & Safety Performance
For personal use only All Injury Frequency Rate 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 55.0 60.0 65.0 70.0 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Health & Safety Oct-04 Safety Performance Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-
Slide 5: 2007 Financial Overview: Reserves & Resources
2007 Financial Overview Reserves & Resources For personal use only Reserves Total year end reserves × up 6.01 to 9.16Mt HM Reserve cover × up 9 years to 11 years Jacinth-Ambrosia reserves added × 6.42Mt HM Murray Basin reserves added × 3.16Mt HM (all before depletions/adjustments) Net reserve increa
Slide 6: 2007 Financial Overview: Production & Sales
2007 Financial Overview Production & Sales For personal use only Production Sales % of Iluka % of Iluka Volumes Volumes Total Sales Total Sales % % Volumes Revenue Rutile × 25.1 × 29.1 10.6 >10 Synthetic Rutile × 3.9 Ø 3.2 23.0 >25 Ilmenite Ø 2.8 Ø 0.1 44.6 <10 Zircon × 15.3 Ø 6.0 20.0 >45 Total Min
Slide 7: Revenues & Cost Trends 2007 vs 2006
2007 Financial Overview Revenues, & Cost Trends 2007 vs 2006 For personal use only Overall product pricing × moderate increases Currency × spot rates: Average spot rate 2007 83.90 2H07 86.84 1H07 80.90 2006 75.35 Ø $86.3m impact on 2007 revenues Sales Volumes Ø 0.7% Revenue Ø 6.7% Cash Production Co
Slide 8: EBITDA, EBIT & NPAT
2007 Financial Overview EBITDA, EBIT & NPAT For personal use only A$M 2007 2006 EBITDA Ø 10.3% 230.6 257.2 Mineral Sands EBIT Ex sig items Ø 36.9% 86.1 136.5 Incl sig items × 133.3% 86.1 36.9 NPAT Ex sig items Ø 52.7% 51.1 108.1 Incl sig items × 143.3% 51.1 21.0 8
Slide 9: Net Profit After Tax Waterfall 2007 vs 2006
Net Profit After Tax Waterfall 2007 vs 2006 For personal use only A$M 150 2.5 21.1 140 (5.5) 130 4.2 95.9 116.9 120 (18.9) 4.0 110 100 11.5 (16.9) 90 (12.8) 80 (8.9) 70 60 51.1 50 (46.1) 40 30 21.0 20 10 0 2006 Signif 06 2006A Fl/G 07 Price Hedge Sales Costs D&A Stock Interest Tax Other Sales fx NPA
Slide 10: Balance Sheet Focus
2007 Overview Balance Sheet Focus For personal use only Focus on strengthening balance sheet in context of gearing, currency impacts and opportunities requiring capital commitments: Completed • Narama divestment - $54 million in gross proceeds • Currency hedging in place • Capex $112m lower than bud
Slide 11: Capital Expenditure
Capital Expenditure For personal use only $M 2006 2007 % change Western Australia 78.4 67.2 (14.3) Murray Basin 39.9 17.6 (55.9) Murray Basin Stage 2 12.4 7.4 (40.3) Virginia 3.7 6.1 64.9 CRL 16.5 7.0 (57.6) Eucla Basin (Jacinth-Ambrosia) 11.7 9.3 (20.5) Narama Coal 3.5 0.5 (85.7) Other 6.6 3.1 (53.
Slide 12: Summary – Financial Results
For personal use only Summary – Financial Results 12
Slide 13: Group Results
2007 Results Group Results For personal use only $M 2006 2007 % change Sales Revenue (pre hedging) 933.2 863.9 (7.4) EBITDA 280.5 268.2 5.8 Depreciation and Amortisation (120.8) (144.5) 19.6 Significant Items (87.1) - - EBIT 72.6 123.7 70.4 Net Interest and Financing Costs (40.4) (58.7) 45.3 Profit
Slide 14: Group EBIT
2007 Results Group EBIT For personal use only $M 2006 2007 % change Revenue (pre hedging) 933.2 863.9 (7.4) EBIT Mineral Sands 136.5 86.1 (36.9) Hedging 28.9 34.0 17.6 Mining Area C 18.7 19.5 4.3 Other Earnings 1.2 3.6 200.0 Corporate (25.6) (19.5) (23.8) EBIT before significant items 159.7 123.7 (2
Slide 15: Mineral Sands EBIT
2007 Results Mineral Sands EBIT For personal use only $M 2006 2007 % change Revenue (pre hedging) 933.2 863.9 (7.4) EBIT Western Australia* 110.0 43.1 (60.8) Murray Basin 0.0 11.3 Virginia 27.3 13.7 (49.8) Florida/Georgia (25.4) 5.2 120.5 CRL* 31.8 23.1 (27.4) Marketing, Exploration & Technical cost
Slide 16: Cash Flow
2007 Results Cash Flow For personal use only $M 2006 2007 Opening Net Debt (554.2) (596.5) Operating Cash Flow 142.2 95.5 Payments for Property, Plant & Equipment (172.7) (118.2) Proceeds from Disposals 41.9 16.2 Net Dividends Paid (61.2) (10.8) Exchange Revaluation of Net Debt 7.9 16.1 Other (0.4)
Slide 17: 2008 Earnings Outlook
For personal use only 2008 Earnings Outlook 17
Slide 18: Earnings Outlook: 2008 Guidance
Earnings Outlook 2008 Guidance For personal use only 2008 NPAT Guidance – range of $10 million to $20 million - includes NPAT from the Narama sale of $30 million Based on the following: • achieving planned sales (in 2007 approx 13 per cent of annual sales revenue shipments in the last month of the y
Slide 19: Factors Influencing 2008 Results
Factors Influencing 2008 Results For personal use only • Higher average A$/US$ spot exchange rate (6 cent assumed differential) • Lower zircon prices • Higher Ti02 prices • Absence of previous hedge book close benefit ($34 million in 07) • Lower zircon production in Western Australia • Absence of Na
Slide 20: Murray Basin Stage Commitment
For personal use only Murray Basin Stage 2 Commitment 20
Slide 21: Murray Basin Overview
Murray Basin Overview For personal use only 21
Slide 22: Murray Basin Reserves & Resources as at December 2007
Murray Basin Reserves & Resources as at 31 December 2007 For personal use only HM Resources (including Reserves) Rutile Zircon HM Tonnes HM Grade Assemblage Assemblage M % % % Murray Basin Total 48.1 12.5 15 9 Northern Murray Basin 32.1 17.5 16 11 • Tenement holding of >32,000 square kilometers • Mi
Slide 23: Murray Basin Resource Addition Potential
For personal use only HM (KT) 0 2,500 5,000 7,500 10,000 Ku 1996/4 lw R in ai /W nl o ov o er rna N /R c un ow k Ba a g na 1997/4 rb W ck Murray Basin ar es y t/A no m HM KT al Ad y ap B to 1998/4 rd ie /A rc he r C op W i 1999/4 e Bo st B u a M lka lran itt /C a Ja yac yc ld w k lo D s /Sn ps 2000/
Slide 24: Murray Basin Stage Development Context
Murray Basin Stage 2 Development Context For personal use only • Murray Basin province developing in stages as anticipated ¾ Iluka’s largest resource inventory ¾ two thirds of resource in northern deposits ¾ high rutile assemblage deposits ¾ valuable zircon production stream • Stage 1 development de
Slide 25: Murray Basin Stage Main Components
Murray Basin Stage 2 Main Components For personal use only • Capital expenditure of $209 million ¾ Includes $12m for engineering, long lead items within DFS in 2008 • Mining operations at Kulwin ¾ 1st production in 1Q 2009 • Move to Woornack, Rownack & Pirro in late 2009 / 2010 • Mining and processi
Slide 26: Murray Basin Stage Investment Rationale
Murray Basin Stage 2 Investment Rationale For personal use only • Financial ¾ Attractive internal rate of return ¾ Strong cash flow profile • Leverages existing Murray Basin assets ¾ MSP ¾ Port facilities • Operational benefits ¾ Increased HMC blending flexibility ¾ Reduced overall Murray Basin unit
Slide 27: Murray Basin Stage DFS vs PFS Outcomes
Murray Basin Stage 2 DFS vs PFS Outcomes For personal use only • Moderated level of earnings contribution in initial years ¾ significantly higher $A/US$ exchange rate (Stage 1 investment based on 0.62 cents) ¾ moderately higher capex ($209m vs $180m) - normal mining sector cost escalation - specific
Slide 28: Proposed Kulwin Mine Schematic
Murray Basin Stage 2 Proposed Kulwin Mine Schematic For personal use only 28
Slide 29: Murray Basin Stage Project Execution
Murray Basin Stage 2 Project Execution For personal use only Mining • conventional mining processes • temporary dewatering (demonstrated via 2005 test pit) • open cut dry mining methods Mining Unit Plant • track mounted unit • equipment situated in mine pit, following mine face Pre-Concentrator • 40
Slide 30: Murray Basin Stage Risks
Murray Basin Stage 2 Risks For personal use only • Project implementation schedule delays • Capital cost or operating cost overruns • Shortages of or delays in the delivery of equipment and materials • The lack of availability of suitable or sufficient project and construction personnel • Delays in
Slide 31: Murray Basin Stage Risk Mitigation
Murray Basin Stage 2 Risk Mitigation For personal use only • Value engineering process December 07 – February 08 • “Lessons learned” from Stage 1 incorporated into contracting strategy e.g. offsite fabrication approaches • Use of conventional mining techniques • Contract mining operations • Relative
Slide 32: Jacinth-Ambrosia, Eucla Basin
For personal use only Jacinth-Ambrosia, Eucla Basin 32
Slide 33: Eucla Basin - Tenement Location Map
Exploration Eucla Basin - Tenement Location Map For personal use only 33
Slide 34: Jacinth-Ambrosia Resource Characteristics
Eucla Basin Jacinth-Ambrosia Resource Characteristics For personal use only 2007 Reserves & Resources In Situ HM Average HM Grade Average Zircon Tonnes % Assemblage % Reserves 6.42 6.4 50 Resources 9.49 3.8 48 Excludes Tripitaka resource (JV with Adelaide Resources) • Characteristics of Jacinth-Ambr
Slide 35: Jacinth-Ambrosia Project – Investment Rationale
Eucla Basin Jacinth-Ambrosia Project – Investment Rationale For personal use only • Potential to develop a world class mineral sands asset • On Iluka’s assessment, a Zircon:TiO2 ration 10 x industry average • High margin, very attractive/robust project economics on conventional metrics • forecast re
Slide 36: Jacinth-Ambrosia Project - Status
Eucla Basin Jacinth-Ambrosia Project - Status For personal use only • DFS on track for completion by mid 2008 • Some pressure on capex estimate evident • Commitment to specific long lead items expected from March • Native Title Agreement signed December 2007 • Mining Lease Application submitted to S
Slide 37: Jacinth-Ambrosia Project - Scope
Eucla Basin Jacinth-Ambrosia Project - Scope For personal use only • Brownfield development • Processing using existing MSP facilities at Narngulu, Western Australia • Production potential ¾ ~ 300kt per annum of zircon in initial years ¾ ~ 3 million tonnes production over life of project ¾ ~ 30kt pe
Slide 38: Jacinth-Ambrosia Project Development Outline
Eucla Basin Jacinth-Ambrosia Project Development Outline For personal use only Po wer Ro ad Cro s s Po wer Sta ti on Mining Method Po werlin e Proc e s s WaterDam Ro a ds So la r Cl a y Fa c il Ta il in g Pip e Ta il in gs Storag e 80 • Conventional dry mining in large open pit To p s o il s to c k
Slide 39: Mining Method - Near Surface, Shallow
Eucla Basin Mining Method - Near Surface, Shallow For personal use only Example of mining approach planned at Jacinth-Ambrosia. This image shows mining 39 operations at Eneabba, Western Australia
Slide 40: Jacinth-Ambrosia Project – Mine Design
Eucla Basin Jacinth-Ambrosia Project – Mine Design For personal use only 40
Slide 41: Wet Concentrator - MC2 to be relocated from Georgia
Eucla Basin Wet Concentrator - MC2 to be relocated from Georgia For personal use only 41
Slide 42: Ceduna Port Facilities
Eucla Basin Ceduna Port Facilities For personal use only • HMC shipped from Ceduna, SA (~200kms from mine site) 42
Slide 43: Key Project Risks
Eucla Basin Key Project Risks For personal use only • Project implementation schedule delays • Capital cost or operating cost overruns • Shortages of or delays in the delivery of equipment and materials • The lack of availability of suitable or sufficient project and construction personnel • Delays
Slide 44: Risk Mitigation Approaches
Eucla Basin Risk Mitigation Approaches For personal use only • Local labour • Extensive exploration and testwork completed • Key plant already built ¾ Concentrator moving from USA ¾ Product to be processed at the Narngulu MSP • Balance of capex relates to mine and related infrastructure • Export via
Slide 45: Funding
For personal use only Funding 45
Slide 46: Funding Sources
Funding Sources For personal use only • Debt: modernised, single enlarged corporate debt facility matching growth projects/cash flows is well progressed • For financially attractive Jacinth-Ambrosia a range of funding options considered • Given exchange rate movements and capex estimated increase in
Slide 47: Other Areas of Value
For personal use only Other Areas of Value 47
Slide 48: Mining Area C Royalty
Mining Area C Royalty For personal use only Key Statistics 2005 2006 2007 Sales MDMT 20.5 20.3 23.2 Realised Price A$/dmt 53.0 62.2 62.9 Annual Production to 30 June MDMT 19 22 24 Royalty Income $m 11.5 16.1 17.9 Capacity Payments to Iluka $m 12 3 2 • High value asset ¾ Royalty on FOB revenue – 1.25
Slide 49: Land Strategic Approach
Land Strategic Approach For personal use only • Successful sale of Boyanup, South West (140ha) in 2007 - $10M • Master planning activities commenced for high potential land holdings – Waroona and Burekup (South West) • Strategies being pursued: ¾ rehabilitation and outright sale ¾ partnering with pr
Slide 50: Non Mineral Sands Exploration
Exploration Non Mineral Sands Exploration For personal use only Uranium • Location – Iluka Eucla Basin tenements • Known historical U mineralisation (to 3500 ppm U3O8) • 25 exploration targets identified from desktop studies • Staged exploration plan for 2008, A$1.5M Gold • Location – Iluka West Euc
Slide 51: Wrap up
Wrap up For personal use only • Iluka in transition to higher quality, long life assets ¾ WA mine plan changes ¾ Murray Basin Stage 2 commitment ¾ Jacinth-Ambrosia commitment expected by May 2008 • Appropriate capital management actions in train to fund growth projects and provide prudent balance sh
Slide 52: 2007 Full Year Results
For personal use only 2007 Full Year Results Iluka Resources Limited For further information, visit Iluka’s website www.iluka.com