Slide 1: 2011 Half Year Results
For personal use only 2011 Half Year Results Iluka Resources Limited 25 August 2011
Slide 2: Disclaimer – Forward Looking Statements
Disclaimer – Forward Looking Statements For personal use only This presentation contains information that is based on projected and/or estimated expectations, assumptions and outcomes. These forward-looking statements are subject to a range of risk factors associated, but not exclusive, with potenti
Slide 3: Half Year Overview
Half Year Overview For personal use only • Improved financial results - enhanced EPS and ROE, strong free cash flow - strengthened balance sheet and increased dividend • Effective marketing strategies - higher prices through value chain improving margins of Iluka and customers • Solid operational pe
Slide 4: Main Features of Half Year Results
Main Features of Half Year Results Comparison with 1st Half 2010 For personal use only Mineral Sands Sales Volumes Z/R/SR sales up 1.1%; zircon sales up 12.7%. SR down 16.9% - idling decision Mineral Sands Revenue 50.6% - higher prices, better mix; partially offset by higher AUD (103.3 vs 89.4 c
Slide 5: Iluka Dividend Payment
Iluka Dividend Payment For personal use only • 20 cents unfranked dividend • Represents: - $83.7 million payment - payout ratio 57% of profit, 50% of free cash flow • Increase in dividend reflects: - strengthening profit and cash flows - preference for distributions to reflect performance - ability
Slide 6: Summary Group Results
Summary Group Results For personal use only $m 1H 2011 1H 2010 % change pcp Mineral Sands Revenue 570.2 378.6 50.6 EBITDA 319.2 115.4 176.6 Depreciation and amortisation (94.6) (101.5) (6.8) EBIT 224.6 13.9 1,515.8 Net interest and financing costs (18.3) (25.6) 28.5 Profit / (Loss) before tax 206.3
Slide 7: EBITDA: 1st Half 2011 versus 1st Half 2010
EBITDA 1st Half 2011 versus 1st Half 2010 For personal use only ILUKA GROUP EBITDA 1H 2011 vs 1H 2010 $m 400 201.8 350 319.2 8.8 3.6 13.5 8.6 300 (6.0) (50.9) 250 200 150 21.5 115.4 2.9 100 50 0 1H 2010 Volume Mix Price FX Ilm & Oth Unit costs Min Sand MAC Corp 1H 2011 Other 7
Slide 8: Mineral Sands EBITDA and Group EBITDA
Mineral Sands EBITDA and Group EBITDA For personal use only $m 350 319.2 304.7 • Positive trend continues 300 250 • 1H 2011 Min Sands EBITDA > 2010 FY - new operations 189.3 200 - higher pricing 286.7 150 - more zircon in sales mix 250.2 115.4 100 154.9 • 2H 2011 expected to be > 1H 2011 - higher mi
Slide 9: Net Profit After Tax
Net Profit After Tax 1st Half 2011 versus 1st Half 2010 For personal use only ILUKA GROUP NPAT 1H 2011 vs 1H 2010 $m 250 201.8 3.6 7.3 8.8 200 13.5 8.6 6.9 (6.0) (50.9) 150 (65.5) 100 145.9 50 21.5 2.9 0 1H 2010 Volume Mix Price FX Ilm & Oth Unit Min Sand D&A MAC Corp Interest Tax 1H 2011 costs Othe
Slide 10: Mining Area C Royalty
Mining Area C Royalty 1st Half 2011 vs 1st Half 2010 For personal use only 1H 2011 1H 2010 % change Annual Production to 30 Jun MDMT 43.1 42.5 1.4 Sales Volume to 30 Jun MDMT 21.8 20.4 6.9 Royalty Income $m 43.5 30.7 41.7 Capacity Payments $m 1.0 5.0 (80.0) Iluka EBIT $m 44.3 35.5 24.8 • Iron ore sa
Slide 11: Operating Cash Flow
Operating Cash Flow For personal use only $m 250 • Positive trend continues 212.7 - increase in realised prices - more zircon in sales mix 200 163.6 • $56m increase in working capital vs Dec 10 150 - inventory build 119.7 (for Murray Basin mine move 1st half 2012) 100 - shipments rolling into 2nd ha
Slide 12: Net Debt Movement
Net Debt Movement For personal use only $m ILUKA GROUP NET DEBT 1H 2011 350 312.6 300 250 200 (33.5) 171.0 (16.3) 7.4 150 (48.7) 1.5 100 (5.0) 212.7 (10.4) (8.9) 50 42.8 0 Opening net Operating MAC royalty Exploration Interest Tax Capex Asset sales Share Dividend FX on debt Closing net debt cash flo
Slide 13: Net Debt and Gearing
Net Debt and Gearing For personal use only Net Debt (A$m ) Gearing (%) 500 35 30 400 25 300 20 15 200 10 100 5 0 0 H1 09 H2 09 H1 10 H2 10 H1 11 Net Debt Gearing 13
Slide 14: Zircon Market Conditions
Zircon Market Conditions For personal use only • Demand greater than supply in 1st half - continuing strong demand in China and developing economies - some signs of weaker business confidence indicators (in Europe particularly) - low inventory levels - supply shortfalls (and prices) encouraging some
Slide 15: Zircon Raw Material Pricing and Customer Profitability
Zircon Raw Material Pricing and Customer Profitability For personal use only Opacifier vs Zircon Price Nominal Price (US$/t, FOB) 3,000 2,744 2,500 2,200 2,000 1,500 1,227 1,000 829 500 0 Nov‐10 Feb‐10 May‐10 Sep‐10 Feb‐11 May‐11 Aug‐10 Oct‐10 Jun‐10 Jun‐11 Apr‐10 Jul‐10 Apr‐11 Jul‐11 Mar‐10 Mar‐11
Slide 16: High Grade Titanium Dioxide Market Conditions
High Grade Titanium Dioxide Market Conditions For personal use only • High grade titanium dioxide supply remains constrained • High grade raw material dynamics strongly influenced by chloride pigment activity - current capacity near fully utilised, healthy margins - production capacity creep a featu
Slide 17: High Grade Titanium Raw Material Pricing and Customer Profitability
High Grade Titanium Raw Material Pricing and Customer Profitability For personal use only Pigment vs Rutile Price Nominal Price (US$/t, FOB) 3,600 3,500 3,000 2,654 2,400 2,061 1,800 1,309 1,200 540 600 718 0 Nov‐10 Feb‐10 Sep‐10 Feb‐11 May‐10 May‐11 Oct‐10 Aug‐10 Jun‐10 Jul‐10 Jun‐11 Jul‐11 Apr‐10
Slide 18: Product and Technical Development
Product and Technical Development For personal use only • Key area of focus in relation to: - monetisation of low value or waste product streams - development of new products to maximise value from existing operations - monitoring and evaluation of new technologies - improvement in throughputs / rec
Slide 19: Production Response Evaluation
Production Response Evaluation For personal use only Principles • Disciplined supply response to favourable market conditions • Judgements based on suitable shareholder value creation metrics (IRR, ROC, payback) Approach • Full time, multi-disciplinary team for up to six months • Moving beyond initi
Slide 20: 2nd Half 2011 Factors
2nd Half 2011 Factors For personal use only • The ‘new Iluka’ is delivering • Decisions will take heed of global volatility and market specific economic conditions • Mineral sands market conditions favourable – but subject to global economic issues • Improved customer profitability despite raw mater
Slide 21: Supplementary Slides
For personal use only Supplementary Slides
Slide 22: Key Physical & Financial Parameters: 2011 Physical Trends
Key Physical & Financial Parameters 2011 Physical Trends (July Update) For personal use only 2010 2011 2011 2011 Commentary Guidance Guidance (February) (July) Production kt Zircon 413 ~500 ~550 Higher production influenced by favourable Murray Basin grades and strong operational performance. Iluka
Slide 23: Key Physical & Financial Parameters: 2011 Financial Trends
Key Physical & Financial Parameters 2011 Financial Trends (July Update) For personal use only 2010 2011 Updated 2011 Commentary Guidance 2011 Guidance (February) (July) Cash Costs A$m Production costs 544 ~540 ~620 Higher total cash costs (as opposed to unit cash costs) reflect a significant increas
Slide 24: Mineral Sands Results
Mineral Sands Results For personal use only $m 1H 2011 1H 2010 % change pcp Mineral Sands Revenue 570.2 378.6 50.6 EBITDA Eucla / Perth Basin 151.6 46.2 228.1 Murray Basin 118.9 39.0 204.9 US Operations 34.2 20.2 69.3 Exploration and Other (18.0) (10.1) (78.2) Total Mineral Sands EBITDA 286.7 95.3 2
Slide 25: 1st Half 2011 Cash Flow and Net Debt
1st Half 2011 Cash Flow and Net Debt For personal use only $m 1H 2011 1H 2010 % change pcp Opening Net Debt (312.6) (382.1) (18.2) Operating Cash Flow 212.7 43.9 384.5 MAC Royalty 42.8 19.8 116.2 Exploration (8.9) (7.6) 17.1 Net Interest (10.4) (12.3) (15.4) Tax (5.0) (1.5) 233.3 Capital Expenditure
Slide 26: Cash Costs of Final Products Produced
Cash Costs of Final Products Produced For personal use only 2011 2010 % change Z/R/SR Production (kt) 566.4 450.3 25.8 Saleable Ilmenite (kt) 228.9 231.0 (0.9) Total Saleable Product Produced (kt) 795.3 681.3 16.7 Total Cash Cost ($m) 311.8 262.5 (18.8) Cash Cost / tonne of Z/R/SR 550.5 582.9 5.6 Ca
Slide 27: Capital and Exploration Expenditure (Cash)
Capital and Exploration Expenditure (Cash) For personal use only $m 1H 2011 1H 2010 % change Capital Expenditure 48.7 94.9 48.7 Exploration 8.9 7.6 17.1 Total 57.6 102.5 43.8 27
Slide 28: Production Volumes
Production Volumes For personal use only (kt) 1H 2011 1H 2010 % change Zircon 276.6 163.2 69.5 Rutile 136.8 113.2 20.8 Synthetic Rutile 153.0 173.9 (12.0) Z/R/SR 566.4 450.3 25.8 Ilmenite - Saleable 228.9 231.0 (0.9) 28
Slide 29: Eucla / Perth Basin Financials
Eucla / Perth Basin For personal use only Financials 1H 2011 1H 2010 % change Sales Revenue $m 319.1 204.2 56.3 Total Cash Production Costs $m (170.9) (161.5) (5.8) Depreciation and Amortisation $m (28.6) (43.0) 33.5 Inventory Movements $m 13.0 18.0 (27.8) Cost of Goods Sold $m (186.5) (186.5) 0.0 1
Slide 30: Murray Basin Financials
Murray Basin For personal use only Financials 1H 2011 1H 2010 % change Sales Revenue $m 193.5 100.9 91.8 Total Cash Production Costs $m (114.3) (77.0) (48.4) Depreciation and Amortisation $m (59.2) (47.5) (24.6) Inventory Movements $m 49.2 21.6 127.8 Cost of Goods Sold $m (124.3) (102.9) (20.8) 1 Ot
Slide 31: US Operations Financials
US Operations For personal use only Financials 1H 2011 1H 2010 % change Sales Revenue $m 57.6 73.5 (21.6) Total Cash Production Costs $m (26.6) (24.0) (10.8) Depreciation and Amortisation $m (5.2) (9.4) 44.7 Inventory Movements $m 3.4 (29.1) N/A Cost of Goods Sold $m (28.4) (62.5) 54.6 1 Other Costs
Slide 32: Iluka Resources Limited
For personal use only Iluka Resources Limited For further information, contact: Robert Porter, General Manager, Investor Relations robert.porter@iluka.com +61 3 9600 0807 +61 (0) 407 391 829 www.iluka.com