AJM 14th Annual Mineral Sands Conference

Dan McGrath
Manager Eastern Operations
March 2014
Agenda
1.  Iluka’s Mineral Sands Operations Overview

2.  Exploration Update

3.  Project Development

4.  Competitiveness...
Company Overview
• 

Principal objective: create and deliver value for shareholders

• 

Market capitalisation: ~$4 billio...
2013 Key Industry Features
• 

Low cycle business conditions
–  globally uneven zircon demand
–  pigment industry adjustme...
2013 Key Features
• 

Cash conservation focus
–  lower total cash production costs (reduced 36% year-on-year)
–  low capit...
Production Flex – Zircon & High Grade TiO2

52%
reduction

67%
reduction

6
Cash Conservation Focus

40%
reduction

63%
reduction

Relates to ~ $200m to ~$250m average p.a. sustaining and
growth cap...
Iluka Operational Overview
• 

Production flexibility

• 

Approximately 800 employees

• 

10 years reserve cover; resour...
Mineral Sands Regional Overview
Region (Assets)

Capacity
(rated input)

#Plants/Trains

Rutile / SR
(ktpa)

Zircon
(ktpa)...
Mineral Sands Operational Overview
• 

Market and operational flexibility created through Integration across regions

10
Flexible Production Capability
Production and product optionality through the cycle
Demand
Strong
Re-start SR3
Eucla satel...
Continued Improvement in Safety Performance
Total Recordable Injury Frequency Rate (TRIFR)
16

Lost Time Injury Frequency ...
Iluka’s Approach
• 

Focus on shareholder returns through the cycle

• 

Flex asset operation in line with market demand

...
Exploration – Australia

14
Exploration – a platform for Growth
• 

$22million expenditure in 2013

• 

50 people

• 

66,000 km2 tenements held in Au...
Mineral Sands Project Development
Project

Location

Characteristics

Definitive Feasibility Study
West Balranald

Murray ...
Competitiveness of New Projects
• 

Market Segmentation
–  Assemblage and quality
–  Demand factors

• 

No recent Tier 1 ...
Challenges of New Projects
• 

Ramping Up throughput, quality and recovery
–  On top of our game

• 

Hydrology
–  Shiftin...
Summary

• 

2013 was a challenge for the heavy minerals industry

• 

Flexibility to manage the cycle

• 

Exploration ta...
Iluka Resources Limited
www.iluka.com

For more information, contact:
Robert Porter, General Manager Investor Relations & ...
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Dan McGrath, Iluka Resources Limited - The view from a world leading mineral sands supplier

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Dan McGrath, Manager Eastern Operations, Iluka Resources Limited delivered the presentation at the 2014 Mineral Sands conference.

The Annual Australian Journal Mining's Mineral Sands Conference is the key meeting place for Australia's Mineral Sands industry.

The event gives delegates the chance to hear from industry experts as they share their perspectives on the hot topics for the mineral sands industry. For more information about the event, please visit the website: http://www.informa.com.au/mineralsandsconference

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Dan McGrath, Iluka Resources Limited - The view from a world leading mineral sands supplier

  1. 1. AJM 14th Annual Mineral Sands Conference Dan McGrath Manager Eastern Operations March 2014
  2. 2. Agenda 1.  Iluka’s Mineral Sands Operations Overview 2.  Exploration Update 3.  Project Development 4.  Competitiveness and Challenges of new projects 2
  3. 3. Company Overview •  Principal objective: create and deliver value for shareholders •  Market capitalisation: ~$4 billion •  Strong balance sheet with financial flexibility •  Royalty income from Mining Area C iron ore (BHPB), Western Australia •  Market development continuing through the cycle •  Corporate growth, preparedness to act counter-cyclically 3
  4. 4. 2013 Key Industry Features •  Low cycle business conditions –  globally uneven zircon demand –  pigment industry adjustments flow through to low demand for rutile / synthetic rutile •  Significant year-on-year decline in mineral sand prices, particularly TiO2 products •  Iluka operations flexed –  low capacity utilisation –  42% reduction in Z/R/SR production c/w 2012 –  initial drawdown of Z/R/SR inventories –  build of concentrate and ilmenite inventories 4
  5. 5. 2013 Key Features •  Cash conservation focus –  lower total cash production costs (reduced 36% year-on-year) –  low capital expenditure while preserving project development pathways •  Non-cash adjustments of $41 million (after tax) –  technical success consequence –  old equipment now not required in mine plans –  increase in rehabilitation provisions, based on lower discount rate •  Maintained robust balance sheet (gearing of 11.6% year end; 7.8% 31 Jan 2014) •  2013 dividends of 9 cents, fully franked •  Cumulative payout = 76% of free cash flow since end 2010 •  Broad range of indicators point to demand recovery 5
  6. 6. Production Flex – Zircon & High Grade TiO2 52% reduction 67% reduction 6
  7. 7. Cash Conservation Focus 40% reduction 63% reduction Relates to ~ $200m to ~$250m average p.a. sustaining and growth capital expenditure, which is both an historical average and expectation for the company’s 2014-2018 corporate planning cycle. The $200m level shown on the chart. 7
  8. 8. Iluka Operational Overview •  Production flexibility •  Approximately 800 employees •  10 years reserve cover; resources ≈ 6 times reserves •  Operations in Australia and United States, sales offices globally distributed JORC Status (December 2013) Ore (Mt) HM In-Situ (Mt) Rutile (%) Zircon (%) Ilmenite (%) Reserves – proved 140.8 7.6 6 39 37 Reserved - probable 336.0 20.5 5 11 58 Resources (All) 2590.4 178.8 6 10 59 8
  9. 9. Mineral Sands Regional Overview Region (Assets) Capacity (rated input) #Plants/Trains Rutile / SR (ktpa) Zircon (ktpa) Ilmenite (ktpa) Concentrating 900tph RHF 2 Hamilton MSP 700ktpa HMC 1 2300tph 4 2100ktpa HMC 3 200 790ktpa Ilm 3 440 Idle 330 Idle 2014 Murray Basin 1 Idle 230 200 150 80% Util Perth Basin Concentrating MSP SR Eucla Basin Concentrating Idle 350 600 40% Util 1000tph RHF 1 100% Util 500tph RHF 2 60% Util 430ktpa 1 Altantic Seaboard Concentrating MSP 45 300 50% Util •  Significant mining and processing asset base, low utilisation, short lead time ramp up •  Compliments a substantial resource base 9
  10. 10. Mineral Sands Operational Overview •  Market and operational flexibility created through Integration across regions 10
  11. 11. Flexible Production Capability Production and product optionality through the cycle Demand Strong Re-start SR3 Eucla satellites (SR ilmenite) New rutile source New projects (Eucla Eneabba) EPP Expand J-A capacity +TIO2 High grade JA Maximise MB production +ZIRCON Re-start SR1 Increase MSP feed Draw inventory Time 2018 2017 2016 2015 2014 Draw inventory 2013 2013 Reduce MSP feed Reduce SR2 feed 2014 2015 2016 2017 2018 Time Reduce MSP feed Stockpile J-A HMC Idle SR3 Cease JA operations -TIO2 -ZIRCON Cease MB operations Idle SR2 Defer Balranald Demand Weak 11
  12. 12. Continued Improvement in Safety Performance Total Recordable Injury Frequency Rate (TRIFR) 16 Lost Time Injury Frequency Rate (LTIFR) 15.1 14 Frequency Rate 12 10.5 10 8 4.6 6 4 3.1 1.9 2 0.3 0 2011 •  •  2012 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 63% reduction in TRIFR since 2011 (commencement of Safe Production Leadership) 90% reduction in LTIFR since 2011 12
  13. 13. Iluka’s Approach •  Focus on shareholder returns through the cycle •  Flex asset operation in line with market demand •  Continue market development through the cycle •  Preserve/advance mineral sands growth opportunities •  Maintain a strong balance sheet •  Act counter-cyclically where appropriate 13
  14. 14. Exploration – Australia 14
  15. 15. Exploration – a platform for Growth •  $22million expenditure in 2013 •  50 people •  66,000 km2 tenements held in Australia •  Internal drilling capability •  Australia: –  >30,000m on greenfield targets in Eucla Basin 2013 –  Brownfield drilling around Atacama –  >20,000m greenfield drilling in the Murray Basin –  Exploration effort focused toward N/West Murray Basin, East Gippsland –  >10,000m Canning Basin on 2,500km2 tenement holding 15
  16. 16. Mineral Sands Project Development Project Location Characteristics Definitive Feasibility Study West Balranald Murray Basin, NSW •  •  •  High grade rutile, zircon, ilmenite Next planned mine development in Murray Basin ~ 8 year mine life Cataby Perth Basin, WA •  •  •  Chloride ilmenite with associated zircon Next planned mine development in WA ~ 6 year initial mine life Eucla Basin Satellite Deposits Eucla Basin, SA •  •  •  3 chloride ilmenite with associated zircon deposits Close proximity to Jacinth-Ambrosia infrastructure Mine life extension to ~2027+ Aurelian Springs North Carolina, USA •  •  •  Chloride & sulphate ilmenite with associated zircon Utilisation of Virginia MSP ~ 11 year mine life Scoping / Pre PFS Puttalam Sri Lanka •  Large, long life mainly sulphate resource, re- acquired by Iluka in 2013 Notes: In some cases, particularly the US, projects may be a significant component of the carrying value of the associated assets. 16
  17. 17. Competitiveness of New Projects •  Market Segmentation –  Assemblage and quality –  Demand factors •  No recent Tier 1 resource discoveries –  Reserve depletion of older, formerly high quality ore bodies –  Positioning the new project on the cost curve –  Sensitivity to the cycle •  Australian Factors –  Foreign exchange –  Capital cost escalation –  Value Add –  Ports and logistics 17
  18. 18. Challenges of New Projects •  Ramping Up throughput, quality and recovery –  On top of our game •  Hydrology –  Shifting technical focus for Iluka, –  Productivity and sustainability driven •  Sustainability Outcomes and our “Licence to Operate” –  New operations to meet the embedded management standards –  Meeting the “new” standards –  A dynamic regulatory landscape –  Achieving mutually beneficial outcomes with stakeholders 18
  19. 19. Summary •  2013 was a challenge for the heavy minerals industry •  Flexibility to manage the cycle •  Exploration targets have broadened •  Keeping the project pipeline full •  Positioning projects on the curve 19
  20. 20. Iluka Resources Limited www.iluka.com For more information, contact: Robert Porter, General Manager Investor Relations & Corporate Affairs robert.porter@iluka.com +61 3 9225 5008 / +61 (0) 407 391 829 20

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