Iluka Resources Limited · ASX:ILU
Iluka Resources — Macquarie WA Forum (December 2019)
26 slides from Iluka Resources's conference presentation, Dec 3, 2019
Slide 1: Iluka Resources Limited – Macquarie WA Forum
1 Iluka Resources Limited Macquarie WA Forum Adele Stratton, Chief Financial Officer 3 December 2019
Slide 2: Disclaimer and Compliance Statement
Disclaimer and Compliance Statement 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 document provides an indicative outlook for the Iluka business in the 2019 fina
Slide 3: Sustainability is central to everything we do
Sustainability is central to everything we do 3 Key Pillars • Health and Safety • People 3.7 TRIFR $980K • Social Performance No fatalities or permanent Social investment 2018 • Environmental Stewardship disabling injuries • Economic Responsibility and Governance Approach • Continued progression tow
Slide 4: Deliver Sustainable Value: Key Features
Deliver Sustainable Value 4 Key Features Strong Market Quality Mineral Sands Project Pipeline Fundamentals Assets Mineral sands demand linked to Australia and Sierra Leone operations Sustaining and growth projects in urbanisation, rising living standards, Product mix weighted to premium Australia an
Slide 5: Global Assets and Portfolio
Global Assets and Portfolio 5 60 years’ experience in mineral sands exploration, project development, mining, processing and marketing LONDON AMSTERDAM ANTWERP NEWCASTLE CINCINNATI VIRGINIA NULES QINGDAO RALEIGH ZHENJIANG SHANGHAI XIAMEN GUJARAT SIERRA LEONE PUTTALAM PORT KLANG SINGAPORE OPERATIONS
Slide 6: Mineral Sands Industry and Market Outlook
Mineral Sands Industry and Market Outlook Geraldton, Western Australia
Slide 7: Zircon Applications
Zircon Applications 7 Zircon is opaque (white) and water, chemical, heat and abrasion resistant Ceramics Chemicals, Fused Zirconia Refractory and Foundry and Specialty Uses 2018 global demand 20% Key drivers of demand 50% Short term • Construction industry 30% • Industrial activity Tiles, sanitary w
Slide 8: Titanium Dioxide Applications
Titanium Dioxide Applications 8 Titanium pigment is opaque (white), UV resistant and inert. Titanium metal has high strength to weight ratio and is corrosion resistant. Titanium Pigment Titanium Metal Welding (flux) 2018 global demand Key drivers of demand 5% Short Term • Construction industry 90% 5
Slide 9: Sustainable Zircon Pricing Model
Sustainable Zircon Pricing Model 9 Iluka’s Zircon Reference Price and Received Price Zircon Reference Price Reference price of US$1,580/t US$/t extended to March 2020 Iluka introduced Zircon Reference Price in 2015 1800 • Zircon Reference Price is based on a 2 tonne bag of Zircon 1600 Premium, DAT,
Slide 10: Zircon Market Outlook
Zircon Market Outlook 10 Key Features Global Zircon Supply and Demand Outlook – Existing Operations1 kt Illustrative Short term demand softness … 1500 Demand CAGRs 2019-23 Demand CAGR TZMI 2.7% • Business confidence affected by trade tensions and 2013-19 ~1.6% @ 1.5% CAGR global economic uncertainty
Slide 11: High Grade Titanium Market Outlook
High Grade Titanium Market Outlook 11 Key Features Positive dynamics in high grade Global Rutile Supply Outlook titanium market kt TiO2 Supply tipping • Long term demand underpinned by pigment market 800 point from 2017 growth and rising living standards • Rutile and other very high grade feedstocks
Slide 12: Mineral Sands Operations and Project Pipeline
Mineral Sands Operations and Project Pipeline Cataby, Western Australia
Slide 13: Operating Configuration
Operating Configuration 13 JACINTH AMBROSIA 1 mining unit Major zircon mine 1,300tph ore mining unit capacity NARNGULU Mineral separation plant Processes Jacinth-Ambrosia and Cataby material SIERRA LEONE Acquired in 2016 Major rutile mine 4 mining units Mineral separation plant capacity ~175ktpa rut
Slide 14: Cataby
Cataby 14 Operations Summary • Large chloride ilmenite rich deposit, 150km north of Perth • Ilmenite feeds synthetic rutile kiln at Capel, Western Australia • Synthetic rutile offtake contracts underpin financial returns Cataby Ore Reserves, as at December 2018 • Significant zircon and rutile produc
Slide 15: Jacinth - Ambrosia
Jacinth - Ambrosia 15 Operations Summary • Discovered in 2004, mining commenced 2010 • Iluka’s major source of zircon production Eucla Basin Ore Reserves, as at December 2018 • 1,300tph ore mobile mining unit HM Assemblage • 1,000tph rougher head feed concentrator Ore In situ HM • Heavy mineral conc
Slide 16: Sierra Rutile
Sierra Rutile 16 Operations 16 • Began operations 1967 and acquired by Iluka December 2016 • World’s largest rutile mine Employs ~2,600 people • Large, long life operations (up to 5 years remaining at current mining area, 15-20 years at Sembehun) 98% of whom are Sierra Leonean • Two dry mining opera
Slide 17: Operational Configuration to Deliver Sustainable Value
Operational Configuration to Deliver Sustainable Value 17 Key Features Projects Executed in 2019 to Sustain Value Total Capital Expenditure in 2019 of ~$215 million Cataby, SR2 Kiln Major Ambrosia Mine Gangama Lanti Western Maintenance Move, South Expansion, Expansion, Australia Outage, Australia Si
Slide 18: Pipeline of Growth Projects
Pipeline of Growth Projects 18 Key Features Atacama, Wimmera, Eneabba Mineral Sands South Australia Victoria Recovery, Western Australia Satellite deposit to existing J-A operation Zircon and rare earth project Other Zr Pre-feasibility study progressing Potential to add material zircon Pre-feasibili
Slide 19: Pipeline of Growth Projects
Pipeline of Growth Projects 19 2019 Historic Global Zircon and Rutile Supply Projects 2020-2022* 2022-2024* 2025+* Producing Cataby Ambrosia Sembehun Eneabba Australian near- Gangama Atacama mine deposits Lanti SR1 restart Balranald Sierra Rutile Wimmera exploration Zircon kt, Rutile kt TiO2 potenti
Slide 20: Corporate and Capital Structure Review
Corporate and Capital Structure Review
Slide 21: Corporate and Capital Structure Review
Corporate and Capital Structure Review 21 • Formal review commenced to determine most appropriate corporate and capital structure of two principal businesses – Mineral Sands and Mining Area C royalty • Work commenced in September 2019 • Review to consider: ‒ Iluka’s corporate and capital structure ‒
Slide 22: Mining Area C Royalty
Mining Area C Royalty 22 The Royalty Terms The MAC Royalty provides an uncapped option on future • Royalty over “all ore mined from discoveries and developments made within the MAC area time to time from M(ining) A(rea) C” • Royalty terms: ‒ 1.232% of Australian denominated revenue from MAC Royalty
Slide 23: MAC Royalty Area – Current Operations
MAC Royalty Area – Current Operations 23 ~$850m H1 2019 H1 2018 % change EBITDA Sales volumes MDMT 27.8 27.3 1.8 Since North Flank commenced Implied price A$/t 120.2 83.9 43.2 operations in October 2003 Net Royalty income $m 41.2 28.2 42.6 Annual capacity payments $m - 1.0 n/a $41m Iluka EBITDA $m 4
Slide 24: MAC Royalty Area – New Operations Under Development
MAC Royalty Area – New Operations Under Development 24 South Flank Development Indicative Royalty Sales Volumes with South Flank Development • Approved by BHP Board June 2018 • ~145mtpa (WMT) from combined MAC hub First South Flank production targeted • Quality ore – contributing to increase in BHP’
Slide 25: MAC Royalty Area – Future Potential
MAC Royalty Area – Future Potential 25 Two potential future operations identified by BHP in its long-term BHP’s current operations at North Flank plan, Tandanya and Mudlark, are likely to fall at least partially and South Flank are expected to within the Royalty Area continue until ~2050: “First ore
Slide 26: For more information contact
For more information contact: Melissa Roberts General Manager – Investor Relations and Commercial Mineral Sands Operations investor.relations@iluka.com +61 (0) 450 398 431