Iluka Resources Limited · ASX:ILU
Iluka Resources — FY2001 Earnings Presentation
37 slides from Iluka Resources's earnings presentation, Feb 27, 2002
Slide 1: Annual Results 2001
Presentation by Richard Tastula, Hamish Bohannan, Mark Hughes and Steve Ward Annual Results 2001
Slide 2: A review of 2001
A review of 2001 • Fourth successive underlying profit increase • Encouraging sales in a weak market • Loss on discontinuing business • Disposal of Koba Tin and Westlime Interests • Unsuccessful bid for CRL • Development of Iluka’s growth program February 2002
Slide 3: Financial results 2001
Financial results 2001 2001 2000 Sales revenue 900.8 826.4 Profit after tax – continuing business 107.8 104.9 Loss after tax – discontinued business (44.1) (14.4) Net profit 63.7 90.5 Earnings per share – continuing business 49.65 cents 47.29 cents Earnings per share - net 29.4 cents 40.8 cents Divi
Slide 4: Disposal of non-core assets
Disposal of non-core assets • Increased focus on value-creation • Deteriorating business environment at Koba Tin • Time to quit at Westlime • The remaining business is strong February 2002
Slide 5: Strategy for growth
Strategy for growth • Targeted cost reduction and improved business efficiency • Increased titanium feedstock production • Improved value from the zircon business • Tapping the potential for new business Development underpinned by exploration success. February 2002
Slide 6: Priorities for 2002
Priorities for 2002 • Appoint a new MD • Introduce cost and business improvement strategy • Increase SR productivity • Increase SR production and expand capacity • Improve Zircon business value • Complete Virginia expansion February 2002
Slide 7: Full Year 2001 Financial Results Tax Effected
Full Year 2001 Financial Results Tax Effected 120 100 3.5 (24.6) 80 36.3 1.8 (29.7) (14.1) A$M 60 90.5 40 63.7 20 0 gs e gs e ns er e ts m ic at os th in in tio Pr lu R O rn rn C Vo ra e s & ng Ea Ea le pe s x Sa ha le Ta t O t Ne Ne Sa c d Ex ue 00 01 in 20 20 nt co is D 1 February 27, 2002 Februar
Slide 8: Mineral Sands Sales
Mineral Sands Sales 2000 2001 % Price (‘000 t) (‘000 t) change trend Ilmenite 740 673 (9%) -- Rutile 189 174 (8%) Synthetic Rutile 413 420 +2% Zircon 372 352 (5%) February 2002
Slide 9: Coal
Coal • Narama Joint Venture (Iluka 50% share) 1999 2000 2001 Prices (indexed) 100 98.7 98.5 Iluka Share of Sales (‘000s t) Contract 980 1032 1027 Spot - 73 168 February 2002
Slide 10: Tax & Other
Tax & Other • Exploration up with additional drilling in the Perth and Murray basins, Madagascar, Mozambique and Sri Lanka • Computer project write-off •Tax benefit from off balance sheet losses $27m February 2002
Slide 11: Cashflow
Cashflow • Net Cashflow before financing of $30m (down $62m from 2000) • Working capital up - Shipping schedule - SR stockpile build • CRL purchase (2001) vs Thalanga sale (2000) February 2002
Slide 12: Balance Sheet
Balance Sheet • Shareholder’s funds increased by $19.5m • Net debt has increased by $14.5m • Gearing ratio of 32.3% (29.7% in 2000) • Interest cover of 8.4 times February 2002
Slide 13: Dividends
Dividends 2000 2001 Final dividend 12c 12c (1c Franked) Interim dividend 10c 10c (1c Franked) Total dividend 22c 22c (2c Franked) February 2002
Slide 14: WA Hedging
WA Hedging 2001 2002 2003 2004 2005 2006 Acquisition Hedging RGC (US$m) 146 110 65 - - - * Accounting Rate 0.64 0.61 0.60 - - - Subsequent Hedging (US$m) - - 54 85 50 36 Cash Rate - - 0.54 0.53 0.53 0.52 * Average Cash rate for RGC from 2001 to 2003 is 0.71c February 2002
Slide 15: Business Improvement Project
Business Improvement Project Business Improvement Initiatives over the next 2 years • Value focussed culture • Maintenance and Engineering - increase planned maintenance - target ~$6m p.a. • Mining Costs - increased fleet & equipment utilisation - target ~$7m p.a. • Support Services - shared service
Slide 16: Production highlights of 2001
Production highlights of 2001 • Overall production up • Virginia expansion advanced • Zircon finishing plants under way • New mining contracts implemented • Mid west and Florida rationalisation progressed February 2002
Slide 17: Group Production Summary
GROUP PRODUCTION SUMMARY Tonnes 2001 2000 Synthetic Rutile 460,100 405,000 Rutile 175,000 201,400 Ilmenite 1,438,500 1,414,900 Zircon 345,400 315,000 Hyti 91 12,500 12,200 Saleable Tin Metal 15,446 10,900 Coal 1,202,000 1,098,000 February 2002
Slide 18: Eneabba Operations - 1997
Eneabba Operations - 1997 O2/O3 Concentrator North O4 Separation Mine Plant 26 Dredge West Secondary Mine Concentrator Zircon Upgrade Plant February 2002
Slide 19: Eneabba Operations - July 2003
Eneabba Operations - July 2003 •3rd Quarter 2002 South Secondary shut •Feb 2003 Newman moves to Depot Hill mine Depot Newman Hill Concentrator Mine O3 South Concentrator Mine February 2002
Slide 20: Eneabba Operations - January 2005
Eneabba Operations - January 2005 •4th qtr 2004 Newman commences move to Cataby •O3 upgraded to 1100tph O3 South Concentrator Mine February 2002
Slide 21: Iluka - Midwest Operations
Iluka - Midwest Operations February 2002
Slide 22: Iluka South West
Iluka South West February 2002
Slide 23: Virginia / North Carolina
Virginia / North Carolina 40 kilometres Ohio RICHMOND Washington West Virginia Delaware Farmville Kentucky VirginiaRichmond PETERSBURG PETERSBURG Blackstone Waverly Raleigh NEWPORT NEWPORT MEWS MEWS North Carolina OLD HICKORY Alberta NORFOLK Virginia Virginia Beach Beach Columbia Atlanta SUFFOLK Sou
Slide 24: Florida
Florida Ohio Pennsylvania Harrisburg I 16 New Jersey I 95 SAVANNAH Washington West Virginia Delaware HINESVILLE Kentucky Virginia Richmond Ludowici Raleigh Everett North Carolina WAYCROSS BRUNSWICK Columbia Atlanta South Carolina Okefenokee Georgia Swamp Georgia Florida JACKSONVILLE Tallahassee Trai
Slide 25: CRL's Operations and Leases
Map 1 CRL’s Operations and Leases Pinkenba ! Processing Plant and Administration ! Wakerley Grinding Mill ! Dunwich BRISBANE Amity Amity Mine Brisbane Rehabilitation Point Lookout Dunwich Yarraman Mine Loading Facility Keyhole Lakes Bayside Mine Mine Offices Lake Kounpee Rehabilitation Moreton Bay B
Slide 26: Murray Basin
February 2002 Murray Basin soooscte dd \ \ peter a NEW SOUTH WALES \
Slide 27: Titanium Minerals in 2001
Titanium Minerals in 2001 • Titanium pigment market at the bottom of the demand cycle - more than 5% less than 2000 • Titanium metal market strong until September 11, then some softening • Welding electrode market steady to firm • Record sales of synthetic rutile with all production capacity operati
Slide 28: Titanium minerals outlook for 2002
Titanium minerals outlook for 2002 • Pleasing outcome of annual negotiations - nearly all minerals are under firm sales contract - new record sales of synthetic rutile - pricing flat - some slight reductions • Early signs of a recovery - some price increases announced • H2 momentum will increase wit
Slide 29: US TiO2 Pigment Monthly Derived Consumption
US TiO, Pigment Monthly Derived Consumption 120,000 - 100,000 4 ” y - ' a c | : 5 i Fk 80,000 J © @— 12 month moving average 60,000 T tT T T is T T T T T 7 T T 7 T T Jan Jan Jan Jan Jan Jan Jan Jan Jan 1985 1987 1989 1991 1993 1995 1997 1999 2001 February 2002
Slide 30: Zircon market in 2001
Zircon market in 2001 • High global demand in H1 • Iluka’s zircon stock’s very low • Some softening in Q4 2001 post September 11, but overall market resilient • Improved demand in new market regions and sectors have offset softening in others affected by global downturn • $US price increase each qua
Slide 31: Zircon market outlook - 2002
Zircon market outlook - 2002 • Market remains robust • US demand returning as economy shows signs of improvement • Iluka’s zircon stocks remain very low • Q1 order book full, pricing steady • Q2 outlook firm • H2 outlook promising, particularly if US recovery gathers pace • One large annual contract
Slide 32: Supply and Demand to 2005
Supply & Demand (‘000s tonnes) Supply and Demand to 2005 February 2002 Na) > RS) , , SS EF FS EF FFE S SF SF [<4 Balance (RHS) ~—"Supply ™="Demand -100 Surplus / deficit (‘000s tonnes)
Slide 33: 10-year forecast
10-year forecast 6,000 The opportunity 1,000,000t 4,000 65 Tonnes 56 % 49 % 2,000 % 51 44 35 % % % 0 1990 2000 2010 Sulphate Chloride February 2002
Slide 34: Iluka Strategy Pyramid
Iluka Strategy Pyramid Major increase in Company Value Develop new business Grow the titanium minerals and zircon business Improve the business foundation February 2002
Slide 35: SR expansion project
SR expansion project Optimise use of existing under utilised assets, by ......... - reduction using a refurbished kiln, and - aeration and finishing at North Capel plant February 2002
Slide 36: The strategy
The strategy • Improve the existing business • Increase production from current plants • Commission SR5 • Confirm primary ilmenite technology • Establish Georgia mines • Develop Murray Basin deposits • Work on new business options February 2002
Slide 37: In summary
In summary • Our earnings continue to improve • Synthetic rutile and zircon are proving winners for Iluka • Growth programs are under way • We’ll be ready for the market recovery in 2003 and 2004. February 2002