Iluka Resources Limited · ASX:ILU
Iluka Resources — New York Mining Club (March 2019)
24 slides from Iluka Resources's conference presentation, Mar 5, 2019
Slide 1: New York Mining Club Presentation
New York Mining Club Presentation Iluka Resources Limited Tom O’Leary, Managing Director and CEO
Slide 2: Disclaimer – Forward Looking Statements
Disclaimer – Forward Looking Statements 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 fi
Slide 3: Key Messages
Key Messages Supply / Demand • Inventory depletion across zircon and high grade titanium feedstocks Fundamentals • Zircon market viewed to be broadly balanced in 2019 • High grade titanium feedstock market tight with limited feedstock inventory through chain Grade decline and new project • Grade dec
Slide 4: Iluka Resources Limited (ASX:ILU)
Iluka Resources Limited (ASX:ILU) • ASX-listed (ASX:ILU) mineral sands company, ~A$4bn market capitalisation • Largest producer of zircon and leading producer of high-grade titanium dioxide feedstocks • Operations in Australia and Sierra Leone • Royalty asset – BHP Mining Area C, Western Australia •
Slide 5: Asset Profile
Asset Profile Virginia, US Rehabilitation MAC Royalty, Australia (mine closed Dec 2016) BHP’s Mining Area C South Australia Jacinth-Ambrosia mine Sierra Leone Gangama dry mine Lanti dry mine Sembehun deposits Western Australia Sri Lanka Narngulu MSP Puttalam deposit Synthetic rutile kiln Victoria/Ne
Slide 6: Iluka's Approach: Deliver Sustainable Value
Iluka’s Approach DELIVER SUSTAINABLE VALUE Disciplined capital allocation Preserve and advance growth Creation of a sustainable operating opportunities environment Iluka’s capital allocation framework prioritises funds Iluka’s position within the industry and the wider Exhibit leadership and discipl
Slide 7: 2018 Results and Key Features
2018 Results and Key Features Key Features Underlying Group EBITDA of $600 million, up 67% year-on-year (2017: $361 million) Financials NPAT of $304 million (2017: loss of $172 million) Operating cash flow of $594 million Strong cash flow Free cash flow of $304 million Net cash position Achieved net
Slide 8: Industry Context
Industry Context Industry experienced significant pricing volatility at start of decade… Weighted Average Prices US$/t 3,000 • Post-GFC stimulus increased demand for zircon and TiO 2 2,500 Zircon • Zircon prices went from ~US$800/t - US$2,500/t 2,000 Rutile • Zircon was assumed to be price inelastic
Slide 9: Supply-Demand Fundamentals - Zircon
Supply-Demand Fundamentals - Zircon Iluka sees the zircon market as being broadly balanced during 2019… Global Supply Global Demand • Significant inventory depletion in recent years • H2 2018 saw slight easing in tightness ‒ 2016-18 supply = production + inventory ‒ reduced output from Chinese tile
Slide 10: Industry Response
Industry Response • High grade titanium feedstocks - limited response to shortage • Zircon - aside from Iluka, industry response to date limited to Kalimantan swing producers Indonesian Zircon Exports – Total and to China, 2010 to 2018 Zircon sand and concentrate equivalent (kt) Price (US$/t CIF) 14
Slide 11: Iluka's Response
Iluka’s Response Iluka’s response to tight market conditions3 • Guided 2019-2021 zircon production of ~335ktpa4 ‒ Cataby project tonnes available in 2019 Iluka’s Zircon Production and Sales kt 1 ‒ early Ambrosia mine move (smoothing production) 500 Production Zircon sand ZIC ZIC flex Sales ‒ Incl. ~
Slide 12: ZIC Production Potential
ZIC Production Potential1 • Produced by upgrading / blending current and stockpiled MSP byproduct streams • Simple reclaim with minimal processing and low cost Mineral Processing Unit, Narngulu (90ktpa capacity) • Match production / sales to market Iluka’s ZIC sources • US: almost depleted • South w
Slide 13: Supply-Demand Fundamentals – High Grade Titanium Feedstocks
Supply-Demand Fundamentals – High Grade Titanium Feedstocks High grade feedstock supply impacted by production outages… Global Supply Global Demand • Production disruptions reduced supply throughout 2018 • Many pigment plants at high operating rates • Some still unresolved • Reduced pigment prices i
Slide 14: Titanium Pigment Industry Summary
Titanium Pigment Industry Summary Breakdown of Production Technologies Major Chloride Pigment Producers Sulphate pigment Chloride pigment Others Lomon Billions 3% Other 4% 5% North Venator Europe America 8% 11% 22% Chemours 37% Kronos 13% Europe 10% China Tronox 35% Asia 15% 10% Other 7% Cristal 20%
Slide 15: Market Position Strongest in Very High Grade
Market Position Strongest in Very High Grade Total TiO2 Feedstock Chloride Feedstock High Grade Chloride Very High Grade Chloride Chloride & Sulphate (80%+ TiO2) Feedstocks (90%+ TiO2) Feedstocks (2017 ~7.3 Mt) (2017 ~3.6 Mt) (2017 ~2.8 Mt) (2017 ~1.6 Mt) Iluka 8% Iluka Iluka Iluka 16% 17% 28% Other
Slide 16: High Grade Titanium Feedstock Advantage
High Grade Titanium Feedstock Advantage Key Features • Natural rutile and synthetic rutile have a higher titanium grade than other feedstocks • Advantages in pigment production Use in – lower ore tonnes required Chloride or – lower chlorine input cost Feedstock TiO2 % Origin Sulphate pigment – lower
Slide 17: Addressing the Deficit
Addressing the Deficit Iluka Projects
Slide 18: Addressing the Deficit for Customers
Addressing the Deficit for Customers • Zircon market tightness eased toward end H2 2018; underlying structural deficit remains • Iluka can continue to release additional ZIC to assist customers / balance market • Project initiated to scope SR1 re-start to supply high-grade synthetic rutile • Will co
Slide 19: Cataby Development Commissioning
Cataby Development Commissioning Project enters commissioning • Core construction activities complete • Wet commissioning commenced late Q4 2018 • Ore is stockpiled in front of the plant in preparation for commissioning 2019- • Production of HMC expected in Q1 Production Outlook 20221 Zircon ktpa 60
Slide 20: Ambrosia Early Mine Move
Ambrosia Early Mine Move Assisting Iluka to meet Group zircon production targets of ~335 thousand tonnes per annum over the next three years 1 • Iluka Board approved accelerated mine move to Ambrosia in 2018 • The mine move is expected to be completed by October 2019 (previously 2022) • Capital expe
Slide 21: Sierra Rutile Expansion Projects
Sierra Rutile Expansion Projects Lanti dry and Gangama - Expansion Projects • Project to double capacity to 1,000-1,200 tonnes per hour underway at each of Lanti dry and Gangama • Construction of second concentrator at Gangama 40% complete with earth-moving fleet delivered and commissioning schedule
Slide 22: Other Projects
Other Projects Fine Minerals • Zircon and rare earths project Project • PFS commenced in August 2018 with completion of test pit ahead of schedule Murray Basin, • Ore transported for testing and preparation of customer samples Victoria • Industry, competitor and market analysis underway • A drilling
Slide 23: New Project Supply Challenges
New Project Supply Challenges Unconventional deposits requiring technical solutions (eg. fine minerals, depth, product quality) Zircon and rutile typically induced as by-products of ilmenite projects Many projects are evaluated by Iluka Limited high zircon and rutile assemblage projects Disciplined
Slide 24: 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