Slide 1: 2007 Half Year Results
For personal use only 2007 Half Year Results Iluka Resources Limited David Robb Managing Director David McMahon Chief Financial Officer 23 August 2007 Disclaimer – Forward Looking Statements Much of the information in this presentation is related to Iluka’s current five year business planning proces
Slide 2: Presentational Structure
Presentational Structure For personal use only 1. High Level Summary - Half Year Financial Results 2. Integrated Planning Review 3. South West Business Review 4. Other Operations 5. Eucla Basin 6. Other Areas of Value Generation • Land Management • Exploration 7. Supplementary Information • Key Work
Slide 3: Group Financial Performance
Group Financial Performance (2006 excludes Florida/Georgia losses) For personal use only $m 1H 2007 1H 2006 % Change Sales Revenue 422.7 432.7 (2.3) EBITDA 148.5 136.3 9.0 Depreciation and Amortisation (65.4) (58.8) (11.2) EBIT 83.1 77.5 7.2 Net Interest Expense and Financing Costs (28.8) (19.1) (50
Slide 4: First Half Performance Summary
First Half Performance Summary For personal use only • Total cash production costs of $322.7m vs $303.5m (2006 ex Florida/Georgia) pcp ¾ favourable cost outcome given higher production and resources pressures ¾ high zircon remnant mining in SW & deferral of Waroona commencement ¾ higher Murray Basin
Slide 5: Integrated Plan - Process Followed
For personal use only 2. Integrated Planning Review 9 Integrated Plan - Process Followed Investigate, prioritise and Integrate and Establish five evaluate region develop a long year Regional specific term Iluka Business Plans opportunities Business Plan “Base + “Base Case” Strategies Case” “Integrat
Slide 6: Planning Framework & Priorities
Planning Framework & Priorities For personal use only Objective Value Drivers Corporate Guidelines Profitability Transitional Phase Business Model 2007-2008 Key Components Phase I Growth Sustainability Full Murray Basin of PSG 2009-2010 Priorities Phase II Growth Murray Basin and Growth Eucla Basin
Slide 7: Planning Framework and Progress: Profitability
Planning Framework and Progress Profitability – Key Components and Examples For personal use only Return on capital and cash flows • Reconfigured South West Business • Improved capital efficiency ¾ 2007 capex of ~$180 million (from $230 million) ¾ Narngulu processing of Jacinth-Ambrosia HMC ¾ Georgi
Slide 8: Planning Framework and Progress: Growth
Planning Framework and Progress Growth - Key Components and Examples For personal use only Rigorous opportunity evaluation • Integrated portfolio management approach • Divestments (Narama) • Asset retention decisions (Virginia, MAC) • Non mineral sands exploration Project management • Murray Basin S
Slide 9: Marketing Approach
Marketing Approach For personal use only • Plans to increase rutile sales by ~100% over next 3-4 years • Synthetic rutile production/sales to remain stable/increase through to 2011 • SW kiln review before each major outage • Continue to support existing customer base • Capture new sales in high grow
Slide 10: Production Sources – Rutile
Production Sources – Rutile For personal use only 2006 2011 – 2013 Estimate Eucla CRL 9% US Ops 20% 6% Mid West 52% CRL 42% Murray Basin 44% Mid West 27% 173 k tonnes >350 k tonnes (average per annum) 19 Performance Trends Earnings, Cash Flow and Capex NPAT Trend Free Cash Flow 1 Average 2 Trend Cap
Slide 11: Strengthening Margin Position
Strengthening Margin Position Average Position - 2010 - 2013 For personal use only Cash Margin (per tonne sold) 300% Jacinth-Ambrosia 250% 200% Murray Basin Mid West 150% 100% South West US Operations 50% (Bubble Size = 2010 to 2013 Average Operating Cash Flow ) 0% 50% 100% 150% 200% 250% Cash Cost
Slide 12: Funding Strategy
Funding Strategy For personal use only • Implement “fit for purpose” capital structure via phased approach ¾ increase gearing (55% - 60%) to fund capital projects – 2008/09 ¾ reduce gearing (<50%) as projects come on stream • Logical layered approach – short, medium and long term elements • Extend i
Slide 13: South West Business Model
For personal use only 3. South West Business Review 25 South West Business Model Main Focus of Work • Generate improved performance from South West • Protect and enhance existing value • Adopt an integrated approach to full realisation of shareholder value: ¾ land access ¾ resource development ¾ min
Slide 14: South West Review Process
South West Review Process For personal use only Asset configuration and business Operational and cost model to improve ROC, cash improvements generation and NPV Utilisation Asset Overall Equipment Effectiveness (OEE) Improvements Asset Maintenance Strategy Review Configuration Scenario Capital / Maj
Slide 15: South West Business Model Evolution
South West Business Model Evolution For personal use only Plan Plan Current Mid 2006 End 2006 Plan (August 2007) Mining Concentrators used post 2008 1 3 4 2 Deposits mined 14 11 7 Mining duration to 2026 to 2017 to 2014 Processing North Capel Separation Mill Full to 2024 2 Full to 2012 Full to 2013
Slide 16: South West Main Review Outcomes
South West Main Review Outcomes Processing/upgrading – Synthetic Rutile For personal use only • Analysis demonstrates synthetic rutile (SR) business is competitive with slag ¾ across various scenarios ¾ including high iron prices • Two synthetic rutile kilns (SR-1 & SR-2) • SR-2 significantly lower
Slide 17: South West Review Outcomes: Other Initiatives
South West Review Outcomes Other Initiatives For personal use only • Revised SR ilmenite sourcing strategy: ¾ sourcing arrangements in train (domestic and international) ¾ Eucla Basin and Murray Basin ilmenite being evaluated ¾ other SW supplies may evolve through resource/reserve disposals • Lower
Slide 18: Mid West, Western Australia
Mid West, Western Australia Key Shareholder Value Drivers For personal use only • Focus on increasing both the ROC and operating life of the asset • Eneabba resource to reserve conversion ¾ new long term resource model and mine plan ¾ accelerated resource to reserve conversion targets ¾ land access/
Slide 19: Key Operational Metrics - Mid West
Key Operational Metrics - Mid West For personal use only 06 07-10 Actual Forecast Commentary Average/Annum Production Profile Zircon kt 245 190 to 210 Steady decline with assemblage Rutile kt 90 60 to 100 Offset with zircon assemblage; increases in 09/10 Synthetic Rutile kt 218 250 to 275 Outage in
Slide 20: Murray Basin
Murray Basin 2 Physical Resource Differentials For personal use only Key Physical Parameters Murray Basin Stage 1 Murray Basin Stage 2 (Douglas mining operations) (Kulwin, Dispersion, Woornack) Strip ratio 1:1 4:1 – 6:1 Average HM grade % 16 23 Average - Zircon assemblage % 15 10 - Rutile assemblage
Slide 21: Key Operational Metrics - Murray Basin
Key Operational Metrics - Murray Basin For personal use only 07 08 09-10 Forecast Forecast Forecast Commentary Average/Annum Production Profile Zircon kt 110 115-125 160 to 180 Operation of MB 2 Rutile kt 70 90-100 190 to 220 Capital Expenditure ~$50m ~$140 - $160m $10m to $30m Murray Basin Stage 2
Slide 22: Key Operational Metrics - Virginia
Key Operational Metrics - Virginia For personal use only 06 07-10 Actual Forecast Commentary Average/Annum Production Profile Zircon kt 68 similar to 07 Moderate decline with assemblage change Ilmenite kt 245 similar to 07 Capital Expenditure $9m $2m to $20m Brink capital, expected in 2008 Cash Cost
Slide 23: Eucla Basin: Jacinth–Ambrosia
Eucla Basin Jacinth–Ambrosia For personal use only • Deliver the first Eucla Basin high margin, long-life zircon resource • Extend Iluka’s role as the major supplier of high quality zircon • Implement a capital-efficient brownfield development • Maximise the use of existing Iluka excess processing c
Slide 24: Global Zircon Assemblages
Global Zircon Assemblages For personal use only 3.00 Eucla Basin 1.00 Murray Basin Zr:TiO2 unit 0.80 Namakwa Ticor 0.60 Iluka Midwest Virginia Florida 0.40 Dupont CSL CRL RBM MDL Grande Cote 0.20 Kenmare Iluka Southwest Bemax Tiomin BHP Corridor Tinfos QIT 0.00 0 100 200 300 400 500 600 700 800 900
Slide 25: Jacinth-Ambrosia Schematic Mine Development
Jacinth-Ambrosia Schematic Mine Development For personal use only 49 Development Concept Mining Method • conventional dry mining in large open pit • overburden removal by scraper • dozer trap mining Wet Concentration • MC2 concentrator relocated from Georgia Infrastructure • hyper saline water sourc
Slide 26: Project Milestones
Project Milestones For personal use only • Expected DFS completion and capital approval second quarter 2008 • Project execution status • In-principle Native Title agreement with Far West Coast people reached • Major regulatory approvals in train ¾ miscellaneous purpose leases for borefield, village,
Slide 27: Corporate Overheads and Land Management
Corporate Overheads For personal use only • Ongoing focus on reduction of corporate overheads • 15% reduction in corporate costs 1st half 2007 vs 1st half 2006 ¾ reduction in numbers ¾ tight budget control ¾ reduction in “discretionary” expenditures • Plan to sublease 1 of 3 floors in corporate offi
Slide 28: Land Valuation and Strategies
Land Valuation Strategic Review For personal use only • Engaged Grant Samuel as independent advisors • ~$120 million value on an un-improved basis • Review conducted on a title by title basis ¾ assessed current ‘as-is’ disposal value ¾ categorised holdings in terms of status (e.g. surplus, under reh
Slide 29: Exploration Reserves and Resources
Boyanup (SW) – Transaction in Progress For personal use only Boyanup Land 140 Ha Joshua Brook Development 57 Exploration Reserves and Resources as at 31 December 2006 Million tonnes of HM Reserves 1 28.72 Reserves coverage: 8.7 years Resources 2 151.97 1 Does not include Eucla Basin (Jacinth-Ambrosi
Slide 30: Exploration: Eneabba, Mid West
Exploration Eneabba, Mid West For personal use only • Significant brownfield growth potential • 20+ near mine exploration targets • Focus near Newman concentrator • Previous success - zircon-rich Adamson deposit (1mt HM) • $8m spend over next three years 59 Exploration Newman Concentrator Opportunit
Slide 31: Exploration: Murray Basin and Eucla Basin
Exploration Murray Basin – West Balranald For personal use only • Largest deposit in current Murray Basin inventory (8.2Mt HM) • Analogues = growth opportunities • Tenement holdings ~12,000 sq km • 20 magnetic anomalies tested in 2006/07 • Anomalous zones co-incide with HM strands • Current explorat
Slide 32: Exploration: Eucla Basin Tenements
Exploration Eucla Basin Tenements For personal use only 63 7. Supplementary Information 64 32
Slide 33: EHS Performance Summary
EHS Performance Summary For personal use only 65 Key Work Streams Status 66 33
Slide 34: Key Work Streams Status
Key Work Streams Status First Half 2007 For personal use only Work Stream Progress Bottom up five year regional plans Completed (March-July 2007) Integrated Group Plan Completed (August 2007) Eucla Basin integration study Completed Jacinth-Ambrosia DFS commenced Appropriate corporate overhead Ongoin
Slide 35: Market Outlook and Approach: Zircon
For personal use only Market Outlook and Approach 69 Zircon Market Environment • Strong medium to longer term demand expected ¾ influenced by strong growth in ceramics & sanitary ware consumption ¾ especially in developing economies of China, SE Asia, Middle East • Potential supply deficit post 2010
Slide 36: Zircon Consumption 2006
Zircon Consumption 2006 For personal use only S. America ME & Africa 4% 3% Japan / Korea / Taiwan 8% Europe 31% S & SE Asia 12% N. America 12% China ~1,220k tonnes 30% 71 Chinese Zircon Imports Increase of zircon concentrate imports in 2006 due to supply from Indonesia Chinese Zircon imports Chinese
Slide 37: Indonesian Zircon Concentrate Supply
Indonesian Zircon Concentrate Supply Synopsis For personal use only • Commenced 20 years ago but strong increase since October 2005 • Recovery of zircon concentrates from gold mining in Kalimantan • Opportunistic, artisan based supply; long supply chain • Difficult to assess “resource” potential giv
Slide 38: Zircon Outlook and Titanium Dioxide Feedstocks
Zircon Outlook For personal use only • Historically global zircon demand growth has averaged ~3% per annum • Positive medium to longer term demand outlook ¾ TZMI July 2007 report indicates 4.7% demand growth (2011-2015) • Iluka will play a leadership role based on: ¾ detailed view of market and geog
Slide 39: Pigment Production 2006
Pigment Production 2006 For personal use only C. & S. America Middle East 4% & Africa Japan 3% 5% C. Europe N. America 6% 30% Asia Pacific 11% China 15% W. Europe ~4,965k tonnes 26% 77 Source: TZMI 2007 Global Pigment Consumption Trend 2000 2006 Middle East Middle East C. Europe & Africa C. Europe &
Slide 40: Market Outlook
Market Outlook For personal use only • Iluka positioned to take advantage of: ¾ continuing firm demand for high quality products (e.g. Murray Basin rutile) ¾ niche and specialist market application opportunities ¾ fit for purpose of high value in use end applications ¾ good product suite or higher v
Slide 41: First Half Financial Results and Key Operational Parameters
For personal use only First Half Financial Results and Key Operational Parameters 81 Group EBIT (2006 excludes Florida/Georgia) $m 1H 2007 1H 2006 % Change Sales Revenue 422.7 432.7 (2.3) EBIT Mineral Sands 59.8 67.2 (11.0) Hedging 21.8 12.4 75.8 Mining Area C 10.0 10.2 (2.0) Other Earnings 2.0 - N/
Slide 42: Regional Mineral Sands EBIT
Regional Mineral Sands EBIT (2006 excludes Florida/Georgia) For personal use only $m 1H 2007 1H 2006 % Change Sales Revenue 422.7 432.7 (2.3) EBIT 1 Western Australia (before hedging) 35.5 39.4 (9.9) Murray Basin 3.7 - N/A Virginia 8.4 16.9 (50.3) Florida / Georgia 2.4 - N/A CRL (before hedging)2 9.
Slide 43: Western Australia - Key Operational Parameters
Western Australia - Key Operational Parameters For personal use only 1H 2007 2H 2006 1H 2006 Production (kt) Zircon 139.2 159.6 150.1 Rutile 40.0 50.4 39.5 Synthetic Rutile 261.1 275.9 230.7 Ilmenite 631.2 642.5 612.3 Cash Production Costs $m 219.2 232.6 214.7 Cash Production Cost Breakdown 1H 2007
Slide 44: Murray Basin - Key Operational Parameters
Murray Basin - Key Operational Parameters For personal use only 1H 2007 2H 2006 1H 2006 Production (kt) Zircon 48.6 - - Rutile 22.3 - - Cash Production Costs $m 27.8 19.6 15.0 Cash Production Cost Breakdown 1H 2007 Area % of Total Cash Costs Mining 22 Concentrating 45 Separation 14 Overheads & Other
Slide 45: Virginia - Key Operational Parameters
Key Operational Parameters – Virginia For personal use only 1H 2007 2H 2006 1H 2006 Production (kt) Zircon 32.8 32.7 34.9 Ilmenite 112.9 119.6 125.5 Cash Production Costs $m 30.8 32.2 36.6 Cash Production Cost Breakdown 1H 2007 Area % of Total Cash Costs Mining 37 Concentrating 8 Separation 26 Overh
Slide 46: CRL - Key Operational Parameters
Key Operational Parameters – CRL For personal use only 1H 2007 2H 2006 1H 2006 Production (kt) Zircon 27.9 28.0 25.0 Rutile 34.1 37.0 35.2 Ilmenite 82.4 94.4 82.4 Cash Production Costs $m 39.1 33.7 35.2 Cash Production Cost Breakdown 1H 2007 Area % of Total Cash Costs Dry Mining 7 Dredging 1 Concent
Slide 47: Production & Sales Volume; Capital Expenditure
Production & Sales Volume For personal use only Production & Sales Volume 1H 2007 2H 2006 1H 2006 '000 Tonnes '000 Tonnes '000 Tonnes Zircon - Production 257.1 225.9 219.8 - Sales 203.2 223.1 215.1 Rutile - Production 96.4 88.9 83.8 - Sales 81.4 95.1 75.1 Synthetic Rutile - Production 261.1 275.9 23
Slide 48: Exploration Expenditure; Financing Costs Reconciliation
Exploration Expenditure For personal use only $m 1H 2007 2H 2006 1H 2006 Gross Expenditure Western Australia 2.8 2.6 3.3 Murray Basin 2.1 2.1 1.6 Eucla Basin 2.0 2.7 2.3 United States 1.5 1.6 1.6 Other 1.8 0.8 0.8 Total Gross Expenditure 10.2 9.8 9.6 Exploration Expenditure Written Off 1.1 0.2 0.2 C
Slide 49: Lending Facilities – as at June 2007
Lending Facilities – as at 30 June 2007 For personal use only Facility Drawn % Rate Iluka US$m 1996 Private Placement 60.0 60.0 7.6 2003 Private Placement 100.0 100.0 5.1 Multilateral Bank Facility 130.0 99.3 6.8 Bilateral Bank Facilities 80.0 79.6 7 Receivables Acquisition Facility 60.0 56.2 5.6 Sh