Iluka Resources Limited · ASX:ILU
Iluka Resources — H1 2022 Earnings Presentation
28 slides from Iluka Resources's earnings presentation, Aug 24, 2022
Slide 1: Iluka Resources 2022 Half Year Results Presentation
1 Iluka Resources 2022 Half Year Results Presentation Tom O’Leary, Managing Director Adele Stratton, Chief Financial Officer and Head of Development
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 includes forward-looking statements reflecting Iluka’s current expectations. These statemen
Slide 3: Iluka’s evolution
Iluka’s evolution 3 Rare earths refinery approved Risk sharing partnership with Australian Government Sierra Leone business demerged Iluka’s future Rare earths business Sierra Rutile listed on ASX A globally competitive source of (ASX: SRX) secure, sustainable rare earths Project pipeline execution
Slide 4: Sustainability outcomes
4 Sustainability outcomes Iluka’s purpose is to deliver sustainable value 22% 32% Representation of women in Australian workforce Decrease in group SPIFR from H2 2021 (Serious Potential Injury Frequency Rate) 37% decrease in SPIFR (excluding SRL) 410ha 0% Increase in level 3 Rehabilitated or greater
Slide 5: H1 highlights
5 H1 22 highlights 01 Financial results 02 Rare earths diversification 03 Australian production base NPAT Strong revenue $369 million Eneabba rare EPCM Sierra Rutile Iluka focused on underpinned by earths refinery contractor demerged and delivering rare price rises in tight Net cash approval appoint
Slide 6: NPAT and net cash
NPAT and net cash 6 NPAT H1 2022 vs H1 2021 $m 450 31 32 11 18 • Demand reflected in higher prices 58 12 (5) 186 ( 11 ) achieved across all of Iluka’s products 26 ( 32 ) ( 49 ) 300 369 • Lower US$ exchange rate (72 cents vs ( 37 ) 77 cents) impacted revenue positively 150 • Higher unit cost of goods
Slide 7: Balance sheet and funding capacity
Balance sheet and funding capacity 7 $m Net debt (cash), total facilities (MOFA) and gearing Gearing % 800 30 600 20 400 10 200 0 0 -200 -10 -400 -20 -600 -800 -30 H1 17 H2 17 H1 18 H2 18 H1 19 H2 19 H1 20 H2 20 H1 21 H2 21 H1 22 Total facilities (MOFA) available Net debt (cash) Gearing* Features MO
Slide 8: Deterra Royalties – delivering strong financial outcomes
Deterra Royalties – delivering strong financial outcomes 8 Key Features Iluka holds a 20% interest in Deterra Royalties (ASX: DRR), an ASX-listed resources royalty company. This provides an additional source of long term financial strength. Deterra’s cornerstone asset is the BHP Mining Area C (MAC)
Slide 9: Markets
Markets Despite a challenging macro environment, demand for Iluka’s products remains strong and supply tight Capel, Western Australia
Slide 10: Markets – zircon
Markets – zircon 10 Demand strong in H1 2022; global macroeconomic and geopolitical uncertainty • H1 2022 sales 191kt (H1 2021: 177kt) US$/t Result Zircon net realised FOB price 1 ‒ Q2 sales of 107kt up 28% on Q1 sales 2,000 1,600 • Q2 2022 weighted average received zircon (premium and standard) pri
Slide 11: Market dynamics – zircon
Market dynamics – zircon 11 Short term Longer term 1. Low inventory through supply chain; 2. increased price of Constrained supply drives zircon market outlook substitutes; 3. Iluka zircon price growth has been gradual 1. Iluka finished goods zircon inventory (kt) 2021 global zircon supply, by opera
Slide 12: Markets – high-grade titanium feedstocks
Markets – high-grade titanium feedstocks 12 Ongoing demand for Iluka’s products; customers prioritising security of supply US$/t Rutile net realised FOB price1 1600 • H1 2022 sales 231kt (H1 2021: 280kt) Result ‒ H1 2022 rutile sales of 95kt, up 7% on H1 2021 1200 800 • H1 2022 rutile price1 of US$1
Slide 13: Market dynamics – high grade titanium feedstocks
Market dynamics – high grade titanium feedstocks 13 Inventory Supply 1. Low inventories through supply chain Security of supply increasingly important as customers look to 2. Some supply additions required to maintain market stability diversify offtake arrangements 1a. Iluka finished goods inventory
Slide 14: Iluka’s inventory at near decade lows
Iluka’s inventory at near decade lows 14 H1 2022 sales exceeded production, further reducing Z/R/SR inventory levels, resulting in minimal finished goods inventory levels kt Finished goods and heavy mineral concentrate (HMC) inventory kt 600 1,800 1,600 500 1,400 400 1,200 1,000 300 800 200 600 400
Slide 15: Operations
Operations Iluka’s operations are configured at maximum settings Narngulu, Western Australia
Slide 16: Mineral sands operations
Mineral sands operations 16 Iluka adjusts the operating settings of its portfolio to optimise production in response to market conditions, optimise costs and improve cash flow. In H1 2022, the company maintained maximum operating settings, improved recoveries and delivered continuous improvement acr
Slide 17: Projects
Projects Iluka’s project portfolio positions the company to lead in response to industry and market conditions, both near and longer term Eneabba stockpile, Western Australia
Slide 18: Project pipeline
Project pipeline 18 … and depth at various stages of execution Breadth across mineral sands and rare earth product suite … High Grade Atacama1 Zircon Titanium Balranald1 Euston1 SR1 kiln South West1 restart Wimmera Eneabba refinery Rare Earths 1. These potential developments will contribute, to a gr
Slide 19: Project pipeline – leveraging technology
Project pipeline – leveraging technology 19 Leveraging technical and development expertise to deliver commercial outcomes for Australian Resources Balranald, New South Wales High grade, rutile rich deposit at depth of ~50 metres Focus: low impact, underground mining method to access deposits at dept
Slide 20: Eneabba rare earths refinery (Phase 3) – status update
Eneabba rare earths refinery (Phase 3) – status update 20 • A fully integrated refinery for the production of separated rare earth oxides Eneabba refinery, Eneabba at Eneabba, Western Australia (Phase 3) ‒ ‘light’ rare earth oxides: neodymium and praseodymium ‒ ‘heavy’ rare earth oxides: dysprosium
Slide 21: Synthetic Rutile Kiln 1 restart – status update
Synthetic Rutile Kiln 1 restart – status update 21 SR1 and SR2, Capel • Located at Capel, Western Australia ─ same site as SR2 kiln • Start-up on-track for Q4 2022 ─ initial ilmenite feedstock for an 18-24 month campaign secured from internal and external sources ─ will produce an additional 110ktpa
Slide 22: Supplementary Information
Supplementary Information Cataby, Western Australia
Slide 23: Results overview
Results overview 23 Units H1 2022 H1 2021 % Change Z/R/SR Production kt 368.8 300.7 22.6 ▲ $505m Z/R/SR Sales kt 421.4 457.6 (7.9) Mineral Sands EBITDA ($299m H1 2021) Mineral sands revenue $m 954.9 735.6 29.8 ▲ Mineral sands EBITDA $m 505.4 299.2 68.9 ▲ Mineral sands EBITDA margin % 52.9 40.7 30.
Slide 24: Supplementary Information – Production, Sales, Costs, Revenue
Supplementary Information – Production, Sales, Costs, Revenue 24 H1 2022 H1 2021 % change Production Zircon kt 156.7 141.9 10.4 Rutile kt 97.7 79.9 22.3 Synthetic rutile kt 114.4 78.9 45.0 Total Z/R/SR production kt 368.8 300.7 22.6 Ilmenite – saleable and upgradeable kt 289.0 235.3 22.8 Monazite co
Slide 25: Supplementary Information - prices
Supplementary Information - prices 25 Weighted Average Received Prices H1 H2 FY Q1 Q2 H1 US$/tonne FOB 2021 2021 2021 2022 2022 2022 Zircon Premium and Standard 1,321 1,531 1,414 1,788 1,910 1,855 Zircon 1,254 1,406 1,330 1,685 1,813 1,757 (all products including zircon in concentrate)1 Rutile 1,224
Slide 26: Supplementary Information – Income Statement (Includes SRL)
Supplementary Information – Income Statement (Includes SRL) 26 $ million H1 2022 H1 2021 % change Z/R/SR revenue 875.1 680.0 28.7 Ilmenite and other revenue 79.8 55.6 43.5 Mineral sands revenue 954.9 735.6 29.8 Cash costs of production (345.8) (242.0) (42.9) Ilmenite concentrate and by-product costs
Slide 27: Supplementary Information – Reconciliation of non-IFRS information
Supplementary Information – Reconciliation of non-IFRS information 27 Reconciliation of non-IFRS financial information to profit before tax SRL Mineral (Discontinued JA/MW C/SW US/MB1 Expl & Oth Sands Corp Operations)2 Group Mineral sands revenue 396.7 391.9 - - 788.6 - 166.3 954.9 AASB 15 freight r
Slide 28: For more information contact
28 For more information contact Luke Woodgate, Group Manager, Investor Relations and Corporate Affairs investor.relations@iluka.com