Iluka Resources Limited · ASX:ILU
Iluka Resources — WA Mining Club May 2016 Luncheon
34 slides from Iluka Resources's conference presentation, May 26, 2016
Slide 1: Iluka Resources Limited – WA Mining Club
Iluka Resources Limited WA Mining Club May 2016 Luncheon David Robb, Managing Director and CEO, Iluka Resources Limited (ASX: ILU) Perth, 26 May 2016
Slide 2: Disclaimer – Forward Looking Statements
Disclaimer – Forward Looking Statements Forward Looking Statements This presentation contains certain statements which constitute “forward-looking statements”. These statements include, without limitation, estimates of future production and production potential; estimates of future capital expenditu
Slide 3: Mineral Sands – Part of Everyday Life
Mineral Sands – Part of Everyday Life Roof/building/ Home/office Bathroom/ Kitchen/ Automotive Sporting goods/ Healthcare/ Aircraft/ construction lifestyle utilities recreation medicine industry 3
Slide 4: Zircon Applications
Zircon Applications Ceramics Refractory and Foundry Zirconia, Zirconium Chemicals ~50% of demand ~30% of demand and Metal ~20% of demand Zircon is opaque, water, chemical and Zircon is heat resistant and non-reactive Zircon has many unique properties abrasion resistant Uses include steel and glass U
Slide 5: Titanium Applications
Titanium Applications Pigment Titanium Metal Welding (flux) ~90% of demand ~6% of demand ~4% of demand Nanomaterials Growing market Titanium metal has high strength to Titanium dioxide pigment is opaque weight ratio and is corrosion resistant. (white), UV resistant and inert. Uses include aviation,
Slide 6: Diversity in Customer Base
Diversity in Customer Base Combined Sales by Geographic Region Asia EMAI 10% 24% Americas 23% China 43% Zircon Sales by Sector High Grade Titanium Sales by Sector Welding Foundry 6% 2% Others Ti Sponge / Refractories 14% 4% Others Zirconium 2% Ceramics Chemicals 49% 6% Fused Pigment Zirconia 92% 25%
Slide 7: Objective – to create and deliver value for shareholders
Iluka Resources Limited Objective – to create and deliver value for shareholders • ~A$2.4 bn market capitalisation; 6th ranked Australian resource company • Leading position in mineral sands industry ‒ largest producer of zircon – market share ~35% ‒ significant high grade titanium dioxide feedstock
Slide 8: Iluka Activities
Iluka Activities ILUKA eae > Legend © Warehouse and small lot distribution facility @ Mining and processing facility
Slide 9: Sustainable Development
Sustainable Development Land Rehabilitation Jacinth-Ambrosia • Stable LTIFR, increase in TRIFR – minor injuries/first aid – additional focus • Strong safety culture/performance evidenced by exemplary synthetic rutile kiln restart • Excellent land rehabilitation progress – 3rd consecutive year of net
Slide 10: Mineral Sands Value Chain
Mineral Sands Value Chain CAPITAL DISCIPLINE RESOURCE MINING AND MINERAL SANDS SUSTAINABLE CUSTOMER MINERAL SANDS AND BALANCE SHEET DEVELOPMENT PROCESSING PROJECTS/GROWTH DEVELOPMENT FOCUS – PART OF MANAGEMENT OPTIONS EVERYDAY LIFE Focus on return on capital Resource identification, Integrated
Slide 11: Capital Management Discipline
Capital Management Discipline • Iluka’s approach: – maintain a strong balance sheet • Iluka’s distribution framework: – pay a minimum 40% of FCF not required for investing or balance sheet activity – distribute maximum practicable level of available franking credits • Balance sheet 2015 year end: –
Slide 12: Balanced Apportionment of 2015 Cash Flow
Balanced Apportionment of 2015 Cash Flow 2015 Operating Cash Flow Usage ($m) Innovation & Tech Debt $28.0 Reduction Exploration $75.5 $27.7 Tapira Free Cash Flow $2.7 Investment $155m $125m Capex Fully Franked $62.3 Dividends $79.5 Metalysis $4.1 Net cash inflow from operating activities in the 2015
Slide 13: Capital Management Trend
Capital Management Trend • Shareholder focused capital management approach evident since 2007 • 2010 - 2015 cash returned to shareholders >2X cash retained ($715m vs $340m) • Balance sheet strength enhanced in 2015 – additional facilities, longer tenor • Significant funding headroom – ability to act
Slide 14: Game Plan
Iluka Game Plan B CUSTOMER VALUE P P s SHAREHOLDER and Deliver Value for Shareholders c EMPLOYEE ACHIEVEMENT, LEADERSHIP 14
Slide 15: Leadership
Leadership We recognise that leadership at all levels is required to create alignment of purpose which, together with the right resources, is crucial to the achievement of extraordinary performance Leadership Competency Model • describes the behaviours that are required of leaders in our business •
Slide 16: Values
Values Our Values centre on: Commitment, Integrity and Responsibility Commitment • We understand our role, the company, our industry and do our best Integrity • We expect and show honesty, openness and fairness Responsibility • We take responsibility for our actions and care for others and the envir
Slide 17: Everybody Counts
Everybody Counts “Winning companies are convinced that their future rests not on the brilliance of their executives but on the dedication and inventiveness of their middle managers and employees”. HBR “What Really Works” July 2003 (Nitin Nohria, William Joyce and Bruce Roberson) 17
Slide 18: Culture – Employee Engagement
Culture – Employee Engagement 2006 2008 2010 2012 2014 28% 49% 59% 63% 69% Categories Iluka Total 2014 (727) HIGH PERFORMING BENCHMARK 58% AUSTRALIAN MINING & QUARRYING AVERAGE 48% AUSTRALIAN AVERAGE 34% LOW PERFORMING BENCHMARK Total Categories only include benchmarkable items. SUSTAINABILITY EMPLO
Slide 19: Iluka Board Workshop 2007
lluka Board Workshop 2007 Board Workshop Direction and Priorities 2 February 2007 19
Slide 20: Iluka Board Workshop 2007 – Agenda
lluka Board Workshop 2007 Agenda Background Staff communication Management process Direction and priorities Market messages Iluka performance Industry Iluka Consolidated Model Board support 2 February 2007 Board Strategy Workshop 20
Slide 21: Iluka Board Workshop 2007 – Values
lluka Board Workshop 2007 = Teamwork = Commitment = Individual accountability = Having fun = Celebrating success = Modesty Values a = Integrity = Honesty 2 February 2007 Board Strategy Workshop a1
Slide 22: Direction & Priorities
Iluka Board Workshop 2007 | ILUKA Direction & Priorities Luka Objective: to create and deliver value for shareholders Business Model: mineral sands — exploration, project development, operations and marketing may evolve consistent with Objective Value Drivers: Profitability, Sustainability and Growt
Slide 23: Performance Targets
Iluka Board Workshop 2007 ILUKA Performance Targets LZ, Group ILU, Performance ASX 200 Regional EBIT/Capital Performance (ROC) Project Nominal Evaluation after tax 2 February 2007 Board Strategy Workshop nn . @ on oc ke oy UO Cc oO = _ S a = o jas 23
Slide 24: Performance Curves
lluka Board Workshop 2007 Performance Curves People & Processes w Volume & Margins 9 z < = Costs and Capex 2 4 wi a TIME 2 February 2007 Board Strategy Workshop 24
Slide 25: Senior Management Conference 2007
Iluka Senior Management Conference 2007 25
Slide 26: Senior Management Conference 2007
Iluka Senior Management Conference 2007 26
Slide 27: Senior Management Conference 2007
Iluka Senior Management Conference 2007 27
Slide 28: Senior Management Conference 2007
Iluka Senior Management Conference 2007 28
Slide 29: Senior Management Conference 2007
Iluka Senior Management Conference 2007 29
Slide 30: Iluka's Evolution
Iluka’s Evolution 2015/16 – Positioning: Conservative yet Counter Cyclical 2014 – Protecting Cash Flows and Options 2013 – Low Cycle Conditions 2012 – Fresh Challenges 2011 – New Iluka 2010 – Recovery 2009 – Global Economic Crisis 2008 – Growth Commitments 2007 – Alignment 30
Slide 31: Investment Proposition – Medium Term
Investment Proposition – Medium Term CREATE AND DELIVER VALUE FOR SHAREHOLDERS SHAREHOLDER FOCUS Iluka is focussed on shareholder returns through the cycle Favourable medium term demand dynamics vs FAVOURABLE MINERAL SANDS challenging investment and supply outlook DEMAND VS SUPPLY Integrated mining
Slide 32: Iluka – Growth Focus
Iluka – Growth Focus GROWTH FOCUS AREAS FINANCIAL FOCUS Marketing and Projects Exploration Innovation and Other Market Development Mineral Sands Mineral Sands / Technology Options - Direct sales - Internal options Other Commodities - resource - Metalysis, Tapira arrangements advanced commercialisati
Slide 33: Game Plan
Iluka Game Plan B CUSTOMER VALUE Pp P Ss SHAREHOLDER and Deliver Value for Shareholders LEapersHIP EMPLOYEE ACHIEVEMENT 33
Slide 34: Iluka Resources Limited – Contact
Iluka Resources Limited For more information contact: Dr Robert Porter, General Manager Investor Relations robert.porter@iluka.com +61 (0)3 9225 5008 / +61 (0) 407 391 829 www.iluka.com