Iluka Resources Limited · ASX:ILU
Iluka Resources — 2019 Bank of America Merrill Lynch Global Metal, Mining and Steel Conference
21 slides from Iluka Resources's conference presentation, May 15, 2019
Slide 1: 2019 Bank of America Merrill Lynch Global Metal, Mining and Steel Conference
1 2019 Bank of America Merrill Lynch Global Metal, Mining and Steel Conference Tom O’Leary, Managing Director Cataby, Western Australia
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 2019
Slide 3: Sustainability Key Features
Sustainability Key Features 3 2018 Sustainability Results 22% decrease in serious potential incidents 741 hectares of land rehabilitated Iluka’s Sustainability Approach 3.5 TRIFR1 Key pillars of approach: people, health and safety, social performance, environment, economic responsibility and governa
Slide 4: Sustainability Key Features
Sustainability Key Features 4 Tailings storage facilities management Climate Change Approach Active tailings storage facilities in Australia and Support of the Paris Agreement objectives and Sierra Leone IPCC assessment of climate change science No upstream raised tailings containments Commitment to
Slide 5: Key Features: Deliver Sustainable Value
Deliver Key Sustainable Value Features 5 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 6: Iluka's Asset Portfolio
Iluka’s Asset Portfolio 6 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 OPERAT
Slide 7: Key Financial Results in 2018
Strong Key Financial Results in 2018 Features 7 Mineral sands 40% free cash revenue ▲ 22% flow returned to Zircon prices ▲ 41% Rutile prices ▲ 21% shareholders 29 cents full year dividend, fully franked $600m EBITDA ▲ 67% 54% ROC 48% EBITDA margin 32% ROE $304m $2m NPAT Net cash (as at 31 Dec) $304m
Slide 8: Quality Mineral Sands Operations
Quality Key Mineral Sands Operations Features 8 Cataby, Jacinth-Ambrosia, Sierra Rutile, Western Australia South Australia Sierra Leone • Large chloride ilmenite rich deposit • World’s largest zircon mine • Began operations 1960s • 150km north of Perth • Discovered in 2004, mining commenced 2010 • A
Slide 9: Pipeline of Growth Projects
Pipeline Key of Growth Projects Features 9 Ambrosia, Wimmera, Atacama, Eneabba Mineral Sands South Australia Victoria South Australia Recovery, Western Australia Other Mine move to Ambrosia brought Zircon and rare earth project Satellite deposit to existing J-A Zr forward to 2019 to smooth zircon pr
Slide 10: Projects Delivered
Projects Key Delivered Features 10 Cataby, Kiln Major Maintenance Outage, Western Australia Western Australia Major works: Major works: 2 in-pit mining units $265-275m Capex SR2 kiln reline Wet concentrator Completed within budget New rotary cooler shell Power, water, roads, camp and on schedule New
Slide 11: Projects in Execution
Projects Key in Execution Features 11 Lanti and Gangama Expansion, Ambrosia, Sierra Leone South Australia Doubling of capacity at each operation Early mine move To 1,000-1,200 tonnes per hour (ore feed rate) Smooths production to partially offset grade decline • Duplication of existing design • Util
Slide 12: Iluka's Marketing Model of Value Creation
Iluka’s Key Marketing Model of Value Creation Features 12 Focus on delivering sustainable prices Hub and spoke distribution model Prices negotiated with customers based on Warehouses positioned close to key markets value in use and other factors Value in use Global Multilingual / multinational sales
Slide 13: Sustainable Pricing Model
Sustainable Pricing Model 13 Sustainable pricing based on value in use Zircon Pricing Model Titanium Pricing Model Iluka introduced Zircon Reference Price in 2016 Titanium feedstock prices negotiated with each • Provides transparency for customers customer • Actual price paid function of location, q
Slide 14: Zircon Market Structural Deficit
Zircon Key Market Structural Deficit Features 14 Lack of quality mineral sands projects, particularly with high zircon assemblage, and depletion of current operations (which includes Iluka) Global Zircon Supply Outlook kt Market broadly Supply tipping 1500 balanced in point from 2020 Structural defi
Slide 15: Zircon Market Update
Zircon Key Market Update Features 15 • Some slowness in ceramic plant restarts in China following Chinese new year • Improvements in Chinese housing market expected to support demand • Environmental inspections continue with China Customs inspections now also stricter • Cautious buying in European m
Slide 16: High Grade Titanium Pricing Dynamics
HighFeatures Key Grade Titanium Pricing Dynamics 16 Recent decoupling of rutile and pigment prices due to supply tightness in very high grade feedstock market 1. Pigment and rutile prices have historically 2. Pigment price growth eased in 2018 while rutile 3. Rutile market dynamics no longer mimic o
Slide 17: Titanium Market Update
Titanium Key Market Update Features 17 • Pigment demand stable in Q1 2019 ‒ Pigment producers commentary suggests stronger demand in H2 2019 • Pigment producers continue to use high grade feedstocks to increase plant throughput • Minimal inventories through value chain • Outlook for continued growth
Slide 18: Mining Area C Royalty
Mining Area C Royalty 18 • Iluka holds a royalty over iron ore from BHP’s Mining Area C (MAC), Western Australia $56m • Terms of royalty: EBITDA ─ 1.232% of Australian denominated revenue from royalty area; and 2018 ─ one-off payment of A$1 million per million tonne increase in annual capacity • Roy
Slide 19: Mining Area C Royalty Growth
Mining Area C Royalty Growth 19 Historical Royalty EBITDA and Mining Area C Sales Indicative Royalty Sales Volumes (DMT) with South Volumes (DMT) Flank Development 150 First South Flank production targeted by BHP 2021 2019 and 2020 Expanded MAC 100 hub potential assumed in line with recent sales vol
Slide 20: Key Features: Deliver Sustainable Value
Deliver Key Sustainable Value Features 20 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 a
Slide 21: 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