Iluka Resources Limited · ASX:ILU
Iluka Resources — BMO 29th Global Metals & Mining Conference 2020
32 slides from Iluka Resources's conference presentation, Feb 25, 2020
Slide 1: Iluka Resources Limited
Iluka Resources Limited BMO 29th Global Metals & Mining Conference Tuesday 25 February 2020 Tom O’Leary, Managing Director
Slide 2: Disclaimer – Forward Looking Statements
Disclaimer – Forward Looking Statements 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 2020
Slide 3: Global Assets and Portfolio
Global Assets and Portfolio 3 60 years experience in mineral sands exploration, project development, mining, processing and marketing AMSTERDAM LONDON ANTWERP NEWCASTLE NULES CINCINNATI CASTELLON VIRGINIA RALEIGH QINGDAO ZHENJIANG SHANGHAI XIAMEN GUJARAT SIERRA LEONE PUTTALAM PORT KLANG SINGAPORE OP
Slide 4: Solid Underlying Results
Solid Underlying Results 4 Over the past two years Iluka has delivered two of its best results in the company’s history Mineral Sands Revenue $1,193 million, Underlying Group EBITDA $616 million, down 4% from 2018 up 3% from 2018 $ million Mineral Sands Revenue Underlying Group EBITDA $ million 1400
Slide 5: Zircon Overview
Zircon Overview 5 Business and consumer confidence in the zircon market continued to be affected by a subdued outlook for global economic growth Iluka zircon sales volumes Result (2019) • Full year zircon sales of 274kt (2018: 379kt) – in line with guidance Concentrate Premium • Full year zircon pro
Slide 6: High Grade Titanium Feedstock Overview
High Grade Titanium Feedstock Overview 6 Market conditions remain positive for high grade titanium feedstocks with Iluka’s sales constrained by production in 2019. Iluka secured take-or-pay offtake agreement with Kronos, providing further revenue certainty. Iluka sales volumes by destination Iluka s
Slide 7: High Grade Titanium Feedstock – Offtake Agreements
High Grade Titanium Feedstock – Offtake Agreements 7 A significant proportion of Iluka’s high grade feedstock production – 70% in 2020 – now underpinned by longer term take-or-pay agreements High Grade Titanium Sales, Production Outlook and Take-or-Pay Contracts kt • Take-or-pay contracts deliver re
Slide 8: Operations and projects
Operations and projects Cataby, Western Australia
Slide 9: Projects Delivered
Projects Delivered Key Features 9 In 2019, Iluka successfully delivered five projects across the portfolio including the commissioning and ramp-up of Cataby and expansion projects at Sierra Leone and SR2 kiln major maintenance outage Total 2019 Capital Expenditure of $198 million Cataby, Gangama Lan
Slide 10: Mineral Sands Operational Outlook
Mineral Sands Operational Outlook 10 Cataby / South West Jacinth-Ambrosia / Mid West Sierra Leone Cataby commissioned and near nameplate capacity Mining moved to Ambrosia deposit Lanti and Gangama expansions completed Kiln refurbished for next 4 year campaign Four mining units operational 2020 Produ
Slide 11: Overview of Growth Projects
Overview of Growth Projects 11 Key Features Iluka is progressing initiatives across its growth projects to extend and expand its existing asset base Atacama, Wimmera, Eneabba Mineral Sands Recovery, South Australia Victoria Western Australia Satellite deposit located 5km from JA operation Significan
Slide 12: Growth Pipeline Summary
Growth Pipeline Summary 12 ASSESS SELECT DEVELOP EXECUTE OPERATE Region Mineral Resource1 Preliminary Feasibility Definitive Feasibility Scoping Study Project execution Operate and maximise Study Study 361Mt @ 4.8% HM for Jacinth- Eucla Basin Atacama 17.4Mt In Situ HM Ambrosia 195Mt @ 17.2% HM for M
Slide 13: Iluka’s commitment to sustainability
Iluka’s commitment to sustainability 13 Iluka Group TRIFR down to 2.9 in 2019 (3.5 in 2018) and ongoing commitment to sustainability Iluka’s Sustainability Approach Female Key Pillars 2.9 representation • Health and Safety Group TRIFR 2019 • People (2018: 3.5) 33% 38% • Social Performance Exec. Mgt.
Slide 14: Outcome of corporate and capital structure review
Outcome of corporate and capital structure review Source: Google Maps – Imagery 2020 CNES / Airbus Maxar Technologies, Imagery CNES / Airbus, Landsat / Copernicus, Maxar Technologies, Map data 2020
Slide 15: Outcome of corporate and capital structure review
Outcome of corporate and capital structure review 15 Iluka’s corporate and capital structure review has concluded that a demerger of Iluka’s royalty business is the optimal structure to deliver sustainable value. Upon demerger, the MAC Royalty would be the cornerstone asset for Australia’s leading A
Slide 16: Overview of Iluka’s two distinct businesses
Overview of Iluka’s two distinct businesses 16 Iluka’s two principal businesses have distinct business characteristics, risk-return profiles and require different and tailored growth strategies. Consequently, a demerger is expected to unlock the full potential of both businesses over time. Mineral S
Slide 17: Introduction to RoyaltyCo
Introduction to RoyaltyCo 17 RoyaltyCo’s vision is to be Australia’s leading resources royalty company, providing shareholders with a cash flow generative and low operational risk investment vehicle with strong growth potential RoyaltyCo overview MAC Royalty is RoyaltyCo’s cornerstone asset • Upon s
Slide 18: MAC Royalty growth profile and revenue potential
MAC Royalty growth profile and revenue potential 18 Considerable growth to underlying Mining Area C production over coming years - MAC Royalty earnings are determined based on sales volumes, iron ore pricing, the ratio of lump to fines, the premium lump attracts over fines and the USD:AUD exchange r
Slide 19: Outlook for 2020 – Summary
Outlook for 2020 – Summary 19 • Q1 zircon sales are typically a seasonal low • The impact on zircon demand of COVID-19 and macroeconomic factors remain uncertain Market outlook • Tight conditions expected to continue in high grade titanium feedstocks • Potential for recovery in zircon market hastene
Slide 20: Supplementary slides
Supplementary slides Sierra Rutile, Sierra Leone
Slide 21: Zircon Applications
Zircon Applications 21 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 30% • Construction industry • Industrial activity Tiles, sanitary
Slide 22: Titanium Dioxide Applications
Titanium Dioxide Applications 22 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 90% 5% • Construction indust
Slide 23: Cash Flow
Cash Flow 23 Iluka reported $140 million of free cash flow in 2019 with strong operating cash flow generated from mineral sands operations and MAC royalty income and investment of $198 million in capital projects Cash flow movements 2019 free cash flow $140 million $ million 600 Key cash flow driver
Slide 24: Inventory
Inventory 24 As at 31 December 2019, Iluka’s inventory balance of $425 million sits within normal working capital levels Inventory balance movements • Iluka’s inventory provides flexibility to release product as market conditions improve • Zircon finished goods inventory is higher due to subdued 201
Slide 25: Balance Sheet
Balance Sheet 25 Iluka has a strong balance sheet with $43 million net cash position (as at 31 Dec 2019), and debt facilities of $519 million Key movements Net Debt, Gearing and Funding Headroom • Net cash position of $43 million as at December 2019 $m Gearing % Total facilities available Net debt (
Slide 26: Jacinth-Ambrosia
Jacinth-Ambrosia 26 In 2019 the move to the Ambrosia deposit was completed on schedule and under budget Historical Production and Unit Cost • Mining and concentrating activities ongoing as planned kt Zircon Rutile (HYTI 90) $/tonne • Improved grades and recoveries in-line with historical levels 400
Slide 27: Cataby
Cataby 27 Ramp-up completed and full feed maintained to sustain synthetic rutile production at SR2 kiln • $270 million development, delivered on schedule and on budget Cataby Rougher Head Feed kt ‒ re-use of refurbished equipment required re-configuration 800 Improving throughput as Cataby • Full fe
Slide 28: Sierra Rutile
Sierra Rutile 28 Improvement initiatives implemented, focus on efficiency • Operational challenges in 2019 impacting runtime and throughput Mining Unit Ore Feed and Rutile Production • Improvement initiatives implemented throughout year Ore feed kt Rutile kt Gangama Lanti Dry 3,000 50 ‒ expert maint
Slide 29: Outlook for 2020 – Group
Outlook for 2020 – Group 29 Key Parameters 2018 2019 20201 Comments Annual production Zircon kt 349 322 2802 Includes ~35kt of ZIC. Higher production outlook from Sierra Rutile Rutile3 kt 163 184 230 and full year of operations at Cataby Synthetic Rutile kt 220 196 225 Full year of kiln operation To
Slide 30: Outlook for 2020 – Group
Outlook for 2020 – Group 30 Key Parameters 2018 2019 20201, 2 Comments Cash costs ($m) Increased costs associated with full year of Cataby Cash costs of production (Z/R/SR) 444 529 580 operations, Ambrosia and full year of synthetic rutile kiln operation Ilmenite concentrate and by-product costs 11
Slide 31: Outlook for 2020 – Sierra Rutile
Outlook for 2020 – Sierra Rutile 31 Key Parameters 2018 2019 20201 Comments Annual production Outlook reflects full year of expanded operations and Rutile kt 122 137 170 implementation of operational improvements Zircon kt 11 9 5 ZIC shipment Total Z/R kt 133 146 175 Ilmenite kt 54 59 70 Annual unit
Slide 32: For more information contact: Melissa Roberts
For more information contact: Melissa Roberts GM – Investor Relations and Commercial Mineral Sands Operations investor.relations@iluka.com +61 (0) 450 398 431
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