2009 Full Year Financial Results Iluka Resources Limited. 25 February 2010

Transcription

1 2009 Full Year Financial Results Iluka Resources Limited 25 February 2010

2 Disclaimer Forward Looking Statements This presentation contains forward-looking statements that are subject to risk factors associated with exploring for, developing, mining, processing and sale of minerals. These forward-looking statements are subject to a range of risk factors associated, but not exclusive, with potential changes in: exchange rate assumptions product pricing assumptions mine plans and/or resources equipment life or capability current or new technical challenges market conditions management decisions While Iluka has prepared this information based on its current knowledge and understanding and in good faith, there are risks and uncertainties involved which could cause results to differ from projections. Iluka shall not be liable for the correctness and/or accuracy of the information nor any differences between the information provided and actual outcomes, and furthermore reserves the right to change its projections from time to time. Iluka does not undertake to update the projections provided in this document on a regular basis. All currency referred to is Australian denominated unless otherwise indicated. 2

3 Main Features of

4 2009 Characteristics $108.6 million reported loss Includes $158.2 million (pre tax) cash and non cash costs associated with GEC response Net debt of $382.1 million; 25.9% gearing Weak demand resulting from global economic crisis ( GEC ) Partial demand recovery evident in 2 nd half Iluka s response: - curtail lower margin production in matching supply with lower sales - reduce costs - protect delivery of new long life, high quality asset base Total cash production costs lowered Higher average prices across products achieved New asset base delivered within total budgeted capex Flexibility to capitalise on demand recovery and emerging supply tightness 4

5 Full Year Results Comparison with 2008 Mineral Sands Sales Volumes* (Z/R/SR) 37% lower - reflecting weak demand, industry destocking & SR idling - 55% reduction in zircon sales USD Product Pricing Higher TiO 2 (5-7%) and zircon pricing (10-15%) - zircon price erosion in 2 nd half Revenue* (pre-hedging) 35.6 % to $576 million revenue 33% / 67%, 1 st half / 2 nd half weighted Currency Hedging* 32.4% - ($42.9) million Cash production Costs* 19.6% - underlying $453.6 million vs $564.3 million - excludes restructuring and idle capacity costs of $50.1m of which $41.7m in 2 nd half Unit Cash Production Costs* 12.2% excluding restructure and idle capacity costs, directly attributable to actions to reduce production D&A* 21.3% to $176.2 million includes $32.8 million depreciation of non productive assets and reflects Virginia (Brink) commencement Impairment Charges* $67.6 million pre tax write-off of fair value on low margin ore bodies removed from plan Loss from Continuing Operations (excluding CRL) $131.7 million loss vs profit $37.7 million Reported Earnings $108.6 million loss after tax * Excludes CRL 5

6 Group Results $m H H YoY % change Revenue (pre hedging) (35.6) EBITDA Mineral Sands (59.4) Hedging (32.4) (45.9) 3.0 (42.9) N/A Mining Area C (11.0) Foreign Exchange Gains/(Losses) (1.5) 5.0 N/A Corporate Costs (25.1) (16.7) (9.3) (26.0) (3.6) Total EBITDA (68.4) Depreciation & Amortisation (145.2) (83.5) (92.7) (176.2) (21.3) Total EBIT (before significant items) 50.6 (41.6) (72.7) (114.3) N/A Mineral Sands EBITDA/ Revenue Margin 21% 34% 2% 13% (37.0) Capital Employed 1, , , , Excludes CRL Mineral sands EBITDA 1 st half and 2 nd half 2009 difference reflects: - average exchange rate 1 st half cents vs 2 nd half cents - some 1 st half sales made from 2008 stockpiles which were at a lower unit cost 6

7 Cash Flow and Net Debt $m 1H08 2H08 1H09 2H09 Opening Net Debt (598.1) (199.6) (215.7) (309.4) Receipts from Customers Operating Payments (422.3) (372.1) (426.8) (234.2) MAC and Other Exploration (8.7) (12.2) (10.2) (9.8) Net Interest (17.0) (8.9) (6.0) (6.5) Tax (12.1) 16.2 (6.8) 2.4 Payments for Property, Plant & Equipment (68.0) (130.4) (234.3) (287.3) Asset Sales Dividends Paid to Minorities (7.9) (2.6) (1.8) - Proceeds from Equity Raising (net of costs) (1.1) Purchase of Shares - (14.3) - - CRL Net Debt Eliminated on Sale Exchange Revaluation of Net US Debt 11.7 (39.5) (Increase)/Decrease in Net Debt (16.1) (93.7) (72.7) Closing Net Debt (199.6) (215.7) (309.4) (382.1) Lower 2H09 operating payments reflect lower operating expenses in large part associated with GEC production response 7

8 2009 Balance Sheet Factors Total 2009 cash capex of $522 million - 89% related to new growth projects Funding initiatives - $113 million institutional placement - $84 million proceeds from sale of 51% interest in CRL As at 31 December - net debt of $382.1 million; gearing of 25.9% - cash at bank of $86 million - total undrawn facilities of ~$185.9 million 8

9 Cash & Non Cash Cost Trends $m H09 2H Comments Cash Costs of Production nd half benefit of cost reduction activities Idling and Restructure Cash Costs Asset reconfiguration and retrenchments Other Cash Costs Refer P&L for details Corporate & Support Costs Includes $7.7m in restructuring costs & Downer dispute fees Total Group Cash Costs Depreciation & Amortisation Includes $32.8 m in depreciation of idled assets Rehabilitation & Restoration Accretion & Other Finance Costs Total Cash & Non Cash Costs Costs include: Marketing and Selling, Government Royalties, Product and Technical Development, and Exploration 9 Excludes CRL

10 Mineral Sands Market Conditions & Iluka s Response 10

11 Mineral Sands Market Conditions 2009 Indicators of Demand 10 % US and EU Construction Sectors Annual Growth 20 % Industrial Production Annual Growth EU Construction US Home Starts Jan-08 May-08 Sep-08 Jan-09 May-09 Sep US Europe China Jan-08 May-08 Sep-08 Jan-09 May-09 Sep % China Floor Space Under Construction Annual Growth Key leading indicators for zircon and titanium end use industries showed signs of recovery in construction sectors influencing titanium pigment and ceramic tile demand industrial production indicator of manufacturing output - link to zircon and titanium applications -40 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep Source: US Bureau of Census, US Federal Reserve, Eurostat, UBS, ANZ

12 Mineral Sands Market Conditions Global Zircon Demand 2009 global demand reduced by an estimated 25% - ~900 kt down from ~1,200 kt in 2008 Largest annual decline ever recorded Destocking and draw down of inventory built in late 2008 China consumption weak in 1 st half China recovery in 2 nd half - half of 2009 imports in December quarter - total 2009 consumption estimated at 350 kt (85% of 2008 and 90% of 2007 levels) - China imports now above pre GEC levels European consumption declined most markedly - severe retraction in Italian and Spanish tile output - re-ordering not evident until December 12

13 Mineral Sands Market Conditions Zircon in China kt 2009 China Monthly Zircon Imports (Cumulative) Other Indonesia South Africa Australia China s zircon demand recovery evident in 2009 Annual import volumes similar to those recorded in Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Iluka analysis of China import data 13

14 Mineral Sands Market Conditions Global Zircon Supply Iluka led response to reduce supply in line with demand No evidence of any new supply (ex Iluka) Announced reductions of supply - Exxaro announced decision not to proceed with Fairbreeze deposit, effectively ending KZN Sands operations in 2012 (zircon production ~30 ktpa) - new producer, Australian Zircon, entered administration in 2009 Globally few quality, high zircon assemblage deposits evident 14

15 Mineral Sands Market Conditions High Grade Titanium Dioxide Global Demand Consumption of high grade titanium feedstocks estimated to have fallen by ~20% in 2009 Key influences on weaker demand included: - lower construction sector activity in US and Europe - durable goods and automotive purchases declined affecting demand for specialty and high grade coatings and pigments - delivery delays for new Boeing and Airbus aircraft slowed titanium metal market - Japanese shipbuilding activity at record low levels, impacting high grade welding rod demand Signs of recovery in latter half of 2009 Rebuilding of inventories expected in

16 Mineral Sands Market Conditions High Grade Titanium Dioxide Global Supply Major mineral sands producers reduced production in response to weak demand Global high grade titanium feedstock production volumes estimated to be down by ~10% Iluka idled two synthetic rutile kilns and reduced Murray Basin rutile production - high grade feedstock output down 12% - minimal closing 2009 stocks Rio Tinto s full year results reported 25% titanium feedstock volume decline over the year Exxaro Resources brought forward maintenance at Namakwa Sands - announced decision not to develop KZN Sands extension, production expected to cease 2012 (titanium slag capacity 250 ktpa) 16

17 Reconfiguration Activities Main features Western Australian production capacity reduced by ~50% - Eneabba mining operations idled - South West ilmenite mining ceased, as planned - South West zircon production transported to Narngulu Two of four SR kilns idled - 3 rd kiln in Mid West to be idled 2 nd half - future 2 kiln business planned Changes to mine plans led to write-off of marginal deposits - Murray Basin and WA Roster changes and plant idling in Virginia / Murray Basin reduced output and costs Sales in 2 nd half exceeded production Final reconfiguration activities planned for Mid West mining in 2010 associated with ramp up of Murray Basin Stage 2 and Jacinth-Ambrosia Total workforce reduced from 1,400 to 1,000 Corporate overheads (ex one-offs) reduced by ~25% 17

18 Iluka Production and Sales Supply Matched to Annual Demand Production k tonnes 1H H Total Variance from 2008 Zircon (122) Rutile (13) Synthetic Rutile (62) Total (197) Sales Volumes k tonnes 1H H Total Variance from 2008 Zircon (260) Rutile (21) Synthetic Rutile (110) Total (391) Excludes CRL 18

19 Destination of Iluka Sales - Zircon kt 300 Zircon Sales China increasingly important to zircon sales volumes European market slow to recover over Asia China Europe Americas Other 1H H H H 2009 Change (2H 2008 to 2H 2009) Sales Volumes k tonnes 1H H H H 2009 Change (2H 2008 to 2H 2009) Asia (ex. China) (5) China Europe (81) Americas (13) Other Total (73) 19 Excludes CRL

20 Destination of Iluka Sales Rutile and Synthetic Rutile kt 400 Rutile and Synthetic Rutile Sales Small growth in most markets, second half 2009 versus second half 2008 European markets remained down on previous year Asia China Europe Americas Other 1H H H H 2009 Change (2H 2008 to 2H 2009) Sales Volumes k tonnes 1H H H H 2009 Change (2H 2008 to 2H 2009) Asia (ex. China) China Europe (56) Americas Other (1) Total (11) 20 Excludes CRL

21 Destination of Sales Increasing Importance of China China s consumption of zircon and pigment expected to continue to grow based on a combination of rising per capita income and urbanisation Chinese Government s stated goal of quadrupling per capita GDP by 2020 (on 2000 levels) McKinsey Consultants forecast, by 2025: - urban population to reach 926 million people - floor space built per year to rise to 3.06 billion square metres (up from 1.18 billion sqm in 2005) Both factors are positive for titanium and zircon as demand linked to GDP per capita and construction titanium largest end use as a white pigment in paints and coatings (including architectural paints) zircon s largest end use is in ceramic tiles usage of both increases with rising incomes People (Millions) 254 China s Urban Population Source: McKinsey Consultants China s Urban Floor Space Square Metres (Billions) Source: McKinsey Consultants & BHP 21

22 Iluka 2009 Pricing Trends Zircon Initial 2009 bulk zircon prices above US$900/t (FOB) (2008 average: US$780/t) Full year 2009 average prices ~US$850/t Recovery in China demand associated with continued weak demand in Europe led major suppliers to direct volumes to China - 2 nd half softening in prices 22

23 Iluka 2009 Pricing Trends Rutile and Synthetic Rutile Iluka s 2009 planned production contracted 2009 prices increased relative to 2008 Rutile ~US$550/tonne Synthetic rutile ~US$450/tonne (depending on specifications) Iluka ended 2009 with minimal inventories of rutile or SR 23

24 Portfolio Transformation 24

25 Project Execution Murray Basin Stage 2 1 st HMC production October 2009 Delayed commencement due to regulatory delays, fabrication and wet weather issues Slower than expected commissioning and ramp up, resulting from: - equipment reliability - water quality impact on wet concentrator performance at Kulwin - initial product recovery levels at mineral separation plant in Hamilton Lower than initially budgeted 2010 production, now forecast: - ~180k tonnes of rutile vs 220kt previous expectation - ~140k tonnes of zircon vs 145kt previous expectation Capex of $240 million excluding commissioning (approved budget $209 million) 25

26 Murray Basin Stage 2 Mining Unit Plant being fed ore by Dozer 26

27 Murray Basin Stage 2 View Processing Facilities 27

28 Project Execution Jacinth-Ambrosia 1 st HMC production achieved in November - 3 months ahead of schedule Six months ramp up - appropriate given possible commissioning issues associated with new production Mining and concentrating operations performing well - operated at 90% nameplate capacity in January k tonnes of HMC produced Narngulu mineral processing plant commissioning - first trial efficiency below expectations Representative product samples planned to be sent to key customers in March estimated 2 months turnaround Expected 2010 production levels: - ~150k tonnes of zircon - ~20k tonnes of rutile Capex of ~$390 million including commissioning (approved budget $420 million) 28

29 Jacinth-Ambrosia Mine Pit 29

30 Jacinth-Ambrosia Process Plant Site Area 30

31 Key Factors Influencing

32 2010 Factors Progressive restoration in product demand expected during 2010 (but further shocks possible) Mid West mining operations idled - restructuring costs (expected ~$10 - $15 million) J-A 1 st half ramp up - sales contribution in 2 nd half Murray Basin Stage 2 - ramp up in 1 st half; lower production than previously planned 1st half sales from higher cost inventory and WA production - revenue and cash generation but minimal EBIT contribution Higher D&A with commencement of new production Initial 2010 bulk zircon prices above US$800/t (2009 average ~US$850/t) - Iluka zircon pricing to remain short dated/spot Higher 2010 rutile and SR prices negotiated - Iluka s remaining rutile cap and collar arrangements end in 2010 Capital expenditure ~$100 million - predominantly remaining expenditure for Jacinth-Ambrosia, Murray Basin Stronger year-on-year operating cash flow 32

33 Favourable Market and Portfolio Characteristics This following contains forward-looking statements that are subject to risk factors associated with exploring for, developing, mining, processing and sale of minerals. These forward-looking statements are subject to a range of risk factors associated, but not exclusive, with potential changes in: exchange rate assumptions product pricing assumptions mine plans and/or resources equipment life or capability current or new technical challenges market conditions management decisions While Iluka has prepared this information based on its current knowledge and understanding and in good faith, there are risks and uncertainties involved which could cause results to differ from projections. Iluka shall not be liable for the correctness and/or accuracy of the information nor any differences between the information provided and actual outcomes, and furthermore reserves the right to change its projections from time to time. Iluka does not undertake to update the projections provided in this document on a regular basis. 33

34 Mineral Sands Supply Main Characteristics Iluka undertakes inducement analysis of all known mineral sands projects Inducement of New Supply Project Ranking Illustrative Inducement Analysis Analysis suggests prices would need to be significantly higher to warrant support for all but a very limited number of projects Investment in upgrading capacity (controlled by majors) not supported at current prices Resources projects have long lead times and often take longer than expected to reach capacity Rutile Price (% Change) Limited new, high quality supply (ex Iluka s and other major brownfield projects) - most new capacity is ilmenite based - does not compete with Iluka's key products Iluka is logical producer of incremental zircon and high grade TiO2 supply faster, cheaper and at lower risk to customers Zircon Price (% Change) Lines represent specific projects Axis intercepts illustrate price movement required (not quantified externally) for assumed target project returns to be met 34

35 Zircon Supply Supply Peak Near Term Unless Substantial Price Increases Few material new zircon sources - primary contribution from existing suppliers Even with advent of Jacinth-Ambrosia, relative industry zircon:ti02 production ratio remains stable at ~0.2 (over period ) Majority of mooted / planned TiO2 projects have low zircon assemblage Given zircon typically a co-product in mineral sands developments, higher TiO2 prices also required to realise associated zircon production Given zircon demand growth historically greater than TiO2, zircon availability may come under further pressure if projected TiO2 volumes do not materialise Even with advent of 50% price increase, zircon supply to 2015 increases only marginally relative to 2011 levels; significantly higher pricing required to support new supply Zircon Supply Induced New Projects at 0%, 25% and 50% Zircon price rises (on 2008 levels) ktpa Current Producers No price rise 25% price rise 50% price rise Iluka s analysis of mineral sands supply is based on inducement analysis of known projects, at varying zircon and Ti02 prices, with a risk weighting applied based on: sovereign, environmental, regulatory approval, funding and technical risks Source: Iluka analysis of company announcements 35

36 High Grade Titanium Dioxide Supply Supply Peak Near Term Unless Substantial Price Increases Significant price increases required to induce supply Even with 50% price increase annual supply growth may not meet historical demand growth (~3.5% p.a.) Rutile in short supply in medium term Energy cost increases in South Africa likely to result in slag Ti02 production cost rises of over US$200/t (>50% of current price level) over next three years High Grade Titanium Dioxide Supply Induced New Projects at 0%, 25% and 50% Rutile price rises (on 2008 levels) ktpa Current Producers No price rise 25% price rise 50% price rise Any price increase as a result of South African situation should be reflected in comparable TiO2 products (including rutile and synthetic rutile) Chloride high grade titanium = rutile, synthetic rutile, chloride slag and upgraded slag Iluka s analysis of mineral sands supply is based on inducement analysis of known projects, at varying zircon and Ti02 prices, with a risk weighting applied based on: sovereign, environmental, regulatory approval, funding and technical risks Source: Iluka analysis of company announcements 36

37 Capital Expenditure, Cash Flow and Debt Profile High Level Summary $m (annual average) (annual average) Capital Expenditure ~100 ~75 Operating Cash Flow Net Debt Gearing (net debt/debt+equity) % = increase relative to = decrease relative to

38 Competitive Revenue:Cash Cost Position Iluka s Portfolio Transformed with New Production Base Iluka SA Iluka MB Industry Revenue to Cash Cost Ratio* First Quartile Second Quartile Third Quartile Fourth Quartile Iluka US Iluka WA Iluka Other Iluka Avg = 1.8 Ratio Iluka Avg = % TiO2 + Zr (kt) Revenue to cash cost ratio is measure of competitiveness Ratio highly dependent on product price relativities Iluka well placed with Jacinth-Ambrosia and Murray Basin operations forecast to be in the first quartile for the industry A significant number of existing operations forecast to have cash negative margin positions * Based on constant 2008 exchange rates; Iluka pricing, production and industry cost forecasts 38

39 End Use Demand Trends Steel Production vs Zircon Demand, China and Rest of World Chinese zircon demand impact may be following similar path to steel Steel Produced (Mt) Steel World CAGR = 6.3% Rest of World CAGR = 3.0% China % of total % 15% 15% 15% 15% 14% 16% 18% 21% 25% 30% 33% 36% 35% 47% China CAGR = 17.5% 1500 Zircon demand (kt) Zircon World CAGR = 3.8% 1000 Rest of World CAGR = 1.1% China % of total % 14% 13% 13% 14% 17% 19% 20% 21% 24% 26% 30% 31% 36% 41% China CAGR = 14.4% 39 Source: World Steel Association, TZMI, Iluka analysis

40 Portfolio Characteristics Improved Margin Structure from Two Main Assets Murray Basin and Jacinth-Ambrosia will contribute most of Iluka s production from % of zircon and rutile production Higher EBITDA margin structure than historical assets Lower company capex requirements and favourable industry demand / supply outlook Indicative Asset Characteristics average p.a. Production kt Jacinth-Ambrosia Murray Basin Zircon ~300 ~130 Rutile ~45 ~180 Ilmenite - saleable ~175 ~130 1 Total Production Cash Costs p.a. $m ~160 ~150 Non Cash Costs p.a. $m ~50 ~70 1 A significant proportion of the Murray Basin ilmenite is expected to be utilised in synthetic rutile production 40

41 Emerging Characteristics of Iluka Company / asset base transformation largely complete Shape of 2010 financial year dependent on pace of global / demand recovery Project execution risk reducing, but commissioning/ramp up phase not yet complete Further global shocks cannot be ruled out Financial characteristics of company should markedly improve 2011 onwards higher margin production lower capex balance sheet flexibility Positive supply / demand dynamics remain in mineral sands Iluka maintains a favourable market position in zircon and high grade TiO2 41

42 Supplementary Slides

43 Trends in the Business

44 Physical Characteristics High Level Summary - Production Production k tonnes (annual average) (annual average) Sales Commentary Zircon ~400 ~500 1 Sales expected to match production as a minimum but, depending on demand, could grow by ~10% given internal capacity and starting inventory Rutile ~240 ~250 Sales expected to match production depending on demand Synthetic Rutile ~300 ~290 2 Sales expected to match production, depending on demand Saleable Ilmenite ~290 ~300 Lower sales than historical levels given focus upon ilmenite for internal upgrading to synthetic rutile 1 Zircon production 90% Australia / 10% United States 2 Based on 2 SR kilns operating; one kiln operation would equate to kt of SR production 44

45 Cash Costs of Production High Level Summary Cash Cost Trends (average p.a.) Total Cash Production Costs $m Trend Relative to Commentary 585 N/A Excludes Consolidated Rutile Limited cash costs Higher unit cash costs of production associated with lower production in response to the GEC Initial costs for MB Stage 2 and J-A ramp up, with residual Mid West mining and production, partially offset by reduction in costs in WA (average p.a.) 1 Includes some external ilmenite purchases = decrease relative to = increase relative to ~510 1 Production mainly from MB and J-A. Higher production and lower total cash costs improves unit cost position while revenue / tonne expansion also expected 45

46 Other Cash Costs (Non Production Costs) $m 2006 (average) 2007 (average) 2008* (average) 2009* Average p.a. Marketing & Selling Government Royalties Technical Support & Major Projects Exploration & Evaluation (expensed) Corporate & Other Total Non Cash Costs Rehabilitation & Restoration Accretion Expenses & Other Finance Costs Historical non production costs do not necessarily provide a guide to future cost levels. In addition, categorisation of these costs may vary in future. Iluka will continue to report on these cost elements in its financial results and will make comment on any significant variances. * Excludes CRL 46

47 Explanatory Comments - Other Cash Costs Non Production Cash Costs Marketing and selling - marketing development costs, wharf and shipping costs etc. Government royalties - Iluka is required to pay government royalties on revenue earned from the sale of mineral product (excluding synthetic rutile), with the exception of the United States. Royalty rates are determined by, administered by and are payable to various Australian State Governments. Iluka can provide details on royalty rates on request. Royalties paid to landowners are included within cash costs of production. Technical support and major projects - R&D expenditures, costs associated with new project evaluation where production has not yet commenced. Exploration and evaluation - expensed exploration expenditure - Iluka s policy is to expense exploration expenditure unless the criteria for carry forward set out in accounting policy note 1(n), which incorporates the JORC principles, are satisfied. During the period , Iluka s gross annual average expenditure on exploration was $20.5m. The table on the previous page shows the expensed exploration and evaluation expenditure. Corporate and Other - represents the costs incurred in the administration of the group. Rehabilitation and restoration accretion expense (non cash cost) - rehabilitation and restoration costs are carried at the present value of estimated future costs. The unwind of the discount is charged to the P&L as a non cash finance charge. Future developments such as new mines will give rise to new rehabilitation obligations. At the commencement of mining an equal and opposite asset and liability is recognised, reflecting the NPV of the rehabilitation cash flows based on the level of disturbance at the time. The asset depreciates over the life of the mine and the discount unwinds over the period to which the cash flows are made, which may post-date mining. Ongoing reassessments of present obligations are made with adjustments to the asset and liability at balance date in accordance with accounting standards. 47

48 Depreciation & Amortisation High Level Summary D&A Trends Split of Group D&A (average p.a.) D&A $m 127 Virginia 8% Australia 92% ~ (average p.a.) ~175 Higher 2010 D&A reflects: commencement of depreciation for Murray Basin Stage 2 and Jacinth-Ambrosia Lower trend relative to 2010 reflects: reduction in depreciation for Western Australia, mainly associated with planned idling of Mid West mining operations lower Murray Basin depreciation following high depreciation for Kulwin mine establishment costs during 2010 and

49 2009 Financials 49

50 Group Results $m % change Revenue (pre hedging) (35.6) EBITDA (68.4) Depreciation & Amortisation (145.2) (176.2) (21.3) EBIT 50.6 (114.3) N/A Net Interest & Financing Costs (34.2) (22.7) 33.6 Impairment Charges 5.5 (67.6) N/A Profit (Loss) Before Tax 21.9 (204.6) N/A Tax Benefit Profit from Discontinued Operations (51.6) Minority Interests (7.5) 0.2 N/A Net Profit After Tax 77.5 (108.6) N/A Average A$:US$ exchange rate (7.0) Financial Ratios EPS cents per share 22.4 (26.8) N/A Interest Cover (EBITDA / net interest expense) times Return on Equity % (annualised) 7.9 (9.9) N/A Gearing (net debt / debt + equity)%

51 Full Year Earnings 2009 NPAT vs $m (66.2) 14.3 (9.1) (10.6) (26.3) (21.7) (4.3) (3.1) (7.9) -60 (108.6) (51.2) NPAT Sales vol Sales mix Sales price Sales costs Restructure D&A Other MAC Tax & Int FX Signif CRL & Narama (16.7) 2009 NPAT 51

52 Mineral Sands Results $m % change Revenue (pre hedging) (35.6) EBITDA Western Australia (54.2) Murray Basin (79.2) US Operations (13.0) Non Operating Regions (16.9) (16.2) 4.1 Total Mineral Sands EBITDA (Pre hedging) (59.4) Depreciation & Amortisation (145.2) (176.2) (21.3) Mineral Sands EBIT (Pre hedging) 41.2 (100.6) N/A Hedging losses were $42.9 million (2008: $32.4 million ) 52

53 Calculation of Underlying 2009 Results 1H H Total $m Pre-Tax Tax NPAT / Loss Pre-Tax Tax NPAT / Loss Pre-Tax Tax NPAT / Loss Item Impairment - Ore Bodies (67.6) - (67.6) Mineral Sands Restructuring and Idle Capacity Costs (16.1) (34.0) (50.1) Mineral Sands Idle Capacity D&A / Asset Write-Off Costs - (32.8) (32.8) Corporate Restructure & Other One-Off Costs - (7.7) (7.7) Totals (83.7) 25.1 (58.6) (74.5) 22.4 (52.2) (158.2) 47.5 (110.7) Loss from Continuing Operations (ex CRL) (78.9) (52.8) (131.7) Underlying Loss 1 (20.3) (0.6) (21.0) 1 Refer Appendix 4E for details of various components 53

54 Capital Expenditure (Cash) $m % change Western Australia (81.6) Murray Basin US Operations Murray Basin Stage Eucla Basin (Jacinth-Ambrosia) Other (70.2) Total Includes capitalised commissioning costs 54

55 2009 Physical Information Refer Following Slide for Explanatory Information Murray Basin Perth Basin WA Virginia Group Total Overburden Moved kbcm 1,188 3,787-4,975 Ore Mined mt Ore Grade HM % VHM Grade % HMC Produced kt ,464 VHM Produced kt ,240 VHM in HMC kt ,178 Assemblage - Zircon % Rutile % Ilmenite % HMC Processed kt 290 1, ,820 Finished Production - Zircon kt Rutile kt Ilmenite (saleable/upgradeable) kt Other/by-products kt Synthetic Rutile Produced kt

56 Physical Trends 2009 Explanatory Terms: Ore Grade % refers to percentage of heavy mineral found in a deposit. In the case of Murray Basin it excludes grade attributable to low quality, unsaleable ilmenite which is returned to the mine. VHM Grade % refers to percentage of valuable heavy mineral (titanium dioxide rutile and ilmenite, and zircon) found in a deposit. HMC produced refers to heavy mineral concentrate which includes the valuable mineral concentrate (zircon, rutile, ilmenite) as well as other non valuable minerals (gangue). VHM in HMC refers to an estimate of valuable heavy mineral expected to be processed. VHM produced and the VHM assemblage - provided to enable an indication of the valuable heavy mineral component in HMC. HMC processed - material emanating from each operation to be processed. Finished production - finished production attributable to the VHM in HMC production streams. Finished product levels are subject to recovery factors which can vary. The difference between the VHM produced and finished product reflects the recovery level by operation, as well as processing of finished material/concentrate in inventory. Ultimate finished product production (rutile, ilmenite, zircon) is subject to recovery loss at the processing stage Ilmenite is produced for either sale or as SR feedstock. Typically 1 tonne of upgradeable ilmenite will produce between 0.58 to 0.62 tonnes of SR. Iluka does not disclose levels of external ilmenite purchases. Notes: Part of the Western Australian production base (particularly SR) involved the processing of significant opening stocks of HMC during the year. Operational responses to reduced demand led to changes in roster arrangements, temporarily idling of some processing equipment as well as lower than usual throughput associated with the project execution phase of delivery of new projects such as Brink (Virginia) and Murray Basin Stage 2. While Jacinth-Ambrosia commenced mining and concentrating operations, with HMC produced, given final product for sale was not produced in 2009, Jacinth-Ambrosia is excluded. In future, Jacinth-Ambrosia (Eucla Basin) HMC will be processed in Western Australia (Perth Basin). 56

57 Mining Area C Royalty % change Annual Production to 30 June MDMT Sales Volume to 31 December MDMT Royalty Income $m (16.1) Capacity Payments $m Iluka EBIT $m (11.0) Higher one-off capacity payments; $8 million vs $6 million 10% higher iron ore sales volumes 57

58 Regional Information Iluka will not replicate the following form of reporting in future, as the company will move to a single cash generating unit basis of reporting for Western Australia (to be referred to the Perth Basin) and Jacinth-Ambrosia (to be referred to as the Eucla Basin). This segment (Perth/Eucla Basin) reflects the fact that Jacinth-Ambrosia will not produce finished product, but heavy mineral concentrate, which will be processed predominantly at the Narngulu mineral processing plant in Western Australia. South West HMC is also expected to be processed through Narngulu. Murray Basin and the Virginia operation will be reported separately. Iluka indicated in its December Quarter Production and Development Report a template (refer Investor Relations and Media home page on for production reporting, while the company also intends to provide additional information which will enable modelling of the company from an asset or operating level. 58

59 Western Australia Financials $m % change Sales Revenue (pre-hedging) (34.3) Total Cash Production Costs (399.3) (316.9) 20.6 Depreciation & Amortisation (103.3) (127.2) (23.1) Inventory Movements (45.2) 23.6 N/A Cost of Goods Sold (547.8) (420.5) 23.2 Other Costs 1 (38.4) (44.4) (15.6) EBIT (pre-hedging and significant items) 1.1 (79.3) N/A EBITDA (pre hedging) (54.1) EBIT / Sales (%) 0.2 (21) N/A EBITDA / Sales (%) (30.1) 1 Marketing, Technical Costs & Restructure and Idle Capacity Costs 59

60 Western Australia - Key Operational Parameters % change Production (kt) Zircon (22.6) Rutile (17.5) Synthetic Rutile (13.3) Ilmenite - saleable (57.8) Ilmenite - upgraded to synthetic rutile (22.5) Hyti (43.4) Cash Production Costs $m Cash Production Cost Breakdown 2009 Area % of Total Cash Costs Mining 18 Concentrating 7 Separation 21 Synthetic Rutile 35 Overheads & Other 19 1 Excludes restructuring and idle capacity costs 60

61 Murray Basin Financials $m % change Sales Revenue (pre-hedging) (37.6) Total Cash Production Costs (89.9) (87.6) 2.6 Depreciation & Amortisation (28.3) (31.7) (12.0) Inventory Movements (35.4) (5.7) 83.9 Cost of Goods Sold (153.6) (125.0) 18.6 Other Costs 1 (11.1) (18.3) (64.9) EBIT (pre-hedging and significant items) 35.2 (18.5) N/A EBITDA (pre hedging) (79.2) EBIT / Sales (%) 18 (15) N/A EBITDA / Sales (%) (66.7) 1 Marketing, Technical Costs & Restructure and Idle Capacity Costs 61

62 Murray Basin - Key Operational Parameters % change Production (kt) Zircon (38.0) Rutile (0.2) Leucoxene Ilmenite N/A Cash Production Costs $m Cash Production Cost Breakdown 2009 Area % of Total Cash Costs Mining 22 Concentrating & Transport 27 Separation 33 Overheads & Other 18 62

63 US Operations Financials $m % change Sales Revenue (pre-hedging) (39.0) Total Cash Production Costs (75.1) (49.1) 34.6 Depreciation & Amortisation (13.6) (17.3) (27.2) Inventory Movements (355.9) Cost of Goods Sold (85.3) (50.9) 40.3 Other Costs 1 (0.6) (1.3) (116.7) EBIT (pre-hedging and significant items) (38.2) EBITDA (pre hedging) (13.0) EBIT / Sales (%) (1.3) EBITDA / Sales (%) Marketing, Technical Costs & Restructure and Idle Capacity Costs 63

64 US Operations - Key Operational Parameters % change Production (kt) Zircon (49.7) Ilmenite (23.5) Cash Production Costs $m (34.6) Cash Production Cost Breakdown 2009 Area % of Total Cash Costs Mining 38 Concentrating 19 Separation 23 Overheads & Other 20 64

65 Currency Hedging Arrangements as at 31 December 2009 Period Instrument Type Face Value US$m Average Rate January June 2010 Forward FX Contracts Purchased Options July December 2010 Forward FX Contracts Purchased Options

66 Closing Slide Iluka Resources Limited Closing Statement For further information, contact: Robert Porter, General Manager, Investor Relations Iluka s website