Iluka Resources Limited · ASX:ILU
Iluka Resources — Corporate Update (June 2004)
30 slides from Iluka Resources's corporate update, Jun 24, 2004
Slide 1: Murray Basin Final Investment Decision
Murray Basin Final Investment Decision Investor and Financial Media Briefing Melbourne – 24 June 2004
Slide 2: Murray Basin – Strategic Rationale
Murray Basin – Strategic Rationale ¬ Murray Basin underpins Iluka’s strategy to ¬ grow its high-TiO2 feed stock market share and maintain or expand its zircon market share ¬ capitalise on expected market opportunity gaps/pricing upside ¬ Source of competitive advantages in the form of ¬ minimal coun
Slide 3: Initial Investment
Initial Investment ¬ A larger Douglas project has been approved to ¬ provide additional short-to-medium term production ¬ expansion opportunities in the longer-term ¬ maximise returns from Iluka’s suite of R & Z resources ¬ Initial investment of A$270 million to build and commission ¬ the Douglas mi
Slide 4: Development Focus Areas
Development Focus Areas ¬ Up to three R & Z projects planned by 2010 ¬ Douglas committed, first production Q4 2005 ¬ KWR commitment mid-2006, first production Q3 2007 ¬ Euston emerging as 3rd project focus area ¬ low clay content ¬ attractive R&Z assemblage
Slide 5: Investment Profile
Investment Profile ¬ Key elements of A$270 million commitment ¬ 55 tonne per hr MSP - A$130 million ¬ Douglas wet concentrator/mining unit - A$37 million ¬ infrastructure, project management costs and contingency allowance - A$103 million ¬ Key elements of planned A$150-200 million KWR investment ¬
Slide 6: Douglas Development Schedule
Douglas Development Schedule ¬ 2004 ¬ completion of initial road and site earthworks - Q3 ¬ start construction of mine, concentrator and MSP - Q3 ¬ complete water pipeline from Rocklands reservoir - Q4 ¬ start up of mining operations - Q4 ¬ 2005 ¬ start commissioning wet concentrator - Q1 ¬ start co
Slide 7: KWR Development Schedule
KWR Development Schedule ¬ 2004 ¬ Environment effects statement (EES) - underway ¬ test pit construction - Q3 ¬ 2005 ¬ complete PFS - Q3 ¬ 2006 ¬ complete DFS - Q2 ¬ final investment decision - Q2 ¬ finished product available - Q3 ¬ Euston PFS being carried out in parallel to KWR
Slide 8: Douglas Mining/Concentrating Process
Douglas Mining/Concentrating Process ¬ Dry mining earthmoving equipment and MUP owned and operated by a contractor. Nominal MUP capacity 580 t/hr of ore ¬ Iluka WCP uses gravity processes to concentrate the HM and Wet magnetic separation to separate non-magnetic R & Z ¬ Douglas ilmenite initially mi
Slide 9: Mineral Separation Plant
Mineral Separation Plant ¬ MSP HMC feed capacity 55 t/hr ¬ Uses wet gravity, dry magnetic and electrostatic processes to separate saleable products ¬ Waste products and tailings returned for disposal in the mine ¬ On site storage of product ready for contract road transport to storage and ship-loadi
Slide 10: Douglas/KWR Zircon Production
Douglas/KWR Zircon Production 150 100 Tonnes 000's 50 0 2005 2006 2007 2008 2009 2010 ¬ Douglas (2005/06 cumulative) 135,000 tonnes ¬ Douglas and KWR combined (2007 - 2015) average 102,000 tonnes per year
Slide 11: Douglas/KWR Rutile and HyTi Production
Douglas/KWR Rutile and HyTi Production 250 200 Tonnes 000's 150 HyTi 100 Rutile 50 0 2005 2006 2007 2008 2009 2010 ¬ Douglas (2005/06 cumulative) rutile - 98,000 and HyTi - 11,000 tonnes ¬ Douglas/KWR combined (2007 - 2015) average rutile 135,000 and HyTi 11,000 tonnes per year
Slide 12: Douglas In-situ HM Reserves
Douglas In-situ HM Reserves ¬ DFS in-situ HM Douglas reserves revised ¬ current reserves 30% lower than published reserves ¬ Revision due to a combination of ¬ updated DFS cost information, mine planning studies ¬ reclassification of some rutile to leucoxene reserves Comparison of Basin Minerals NL
Slide 13: Douglas Region Reserves Potential
Douglas Region Reserves Potential ¬ Reserves based on ¬ Bondi main deposit ¬ Bondi East and West deposits ¬ Future reserves opportunities near the Douglas mine ¬ Acapulco ¬ Echo ¬ Bondi North
Slide 14: Murray Basin Resource Potential
Murray Basin Resource Potential ¬ Region remains highly prospective ¬ Resource base continuing to expand – up 12 mt in past year In--situ HM Resource by district In In--situ HM Resource by district In 2002 2003 Other, 2 Other, 1 Euston, 4 Euston, Douglas, 14 18 Douglas, 18 Ouyen, 14 Ouyen, 15 Total
Slide 15: Key Douglas Project Risks and Mitigation
Key Douglas Project Risks and Mitigation ¬ Mine water ¬ increased dam capacity, offsite water sources ¬ technology in place to increase re-use of water ¬ Clay and tails management ¬ large scale trials on Murray Basin material ¬ ongoing testing in USA (clay levels > 30%) ¬ Project Execution Delays ¬
Slide 16: Douglas Project Opportunities
Douglas Project Opportunities ¬ Exploration Potential ¬ brown field and green field opportunities ¬ Ilmenite ¬ identify further saleable product or progress opportunities to upgrade product ¬ Productivity and Recovery ¬ opportunities to increase current inputs ¬ potential to exceed name plate capaci
Slide 17: Marketing Strategy
Marketing Strategy ¬ Marketing strategy is based around ¬ Product differentiation with a focus on ¬ profitable growth in high TiO2 feed stocks and chloride ilmenite for chloride pigment production ¬ sulphate ilmenite as an important product ¬ maintain or grow zircon production with focus on high qua
Slide 18: 2003 Global Market Share – Zircon
2003 Global Market Share – Zircon Ticor*** Namakwa 12% 8% DuPont 6% RBM** Others 21% 16% Iluka 37% * Iluka’s market share includes 100% CRL ** RBM - 50% Rio Tinto and 50% BHPB *** Ticor - Tiwest and Ticor SA
Slide 19: Zircon Supply and Demand Outlook
Zircon Supply and Demand Outlook Global Demand 1.4 Zircon outlook 1.2 ¬ Large potential supply deficit developing 1.0 Other ¬ Decreasing production Demand (M tonnes) Refractory from existing suppliers 0.8 Foundry ¬ Strong global demand 0.6 growth in ceramic and zirconium chemicals 0.4 Ceramics ¬ Mod
Slide 20: Zircon Pricing Outlook
Zircon Pricing Outlook Zircon Price ex Australia $1,100 ¬ Continuing tight $1,000 market dynamics $900 forecast $800 $/tonne Real - 2003 $700 ¬ Modest demand Zircon Price $600 growth > supply $500 ¬ Chinese market $400 is major growth $300 area $200 Forecast $100 ¬ Iluka increasing $0 prices in a 19
Slide 21: Murray Basin Zircon Strategic Fit
Murray Basin Zircon Strategic Fit ¬ Murray Basin zircon is of premium quality ¬ suitable for most market sectors ¬ 35% of the zircon production is currently contracted ¬ balance will be sold to existing customers ¬ No other major zircon rich deposits in development pipeline ¬ Murray Basin production
Slide 22: 2003 Global Market Share – Titanium Feedstock
2003 Global Market Share – Titanium Feedstock Total TiO2 Feedstock Chloride TiO2 Feedstock Namakwa Chloride 3% Ticor Ilmenite 3% Others Iluka 60% 40% BHPB Other 7% 45% Synthetic Rutile Rio Others Iluka 21% 44% 56% Iluka Rutile 21% Others Iluka Iluka’s market share includes 100% CRL 62% 38% Rio Tinto
Slide 23: TiO2 Feedstock Supply/Demand
TiO2 Feedstock Supply/Demand Chloride TiO2 Supply Demand Chloride Feedstock TiO2 Units (kt) ¬ Market forecast to 4,500 remain in oversupply 4,000 due to slag production 3,500 3,000 ¬ Demand increasing in 2,500 line with GDP growth 2,000 (pigment demand) 1,500 1,000 ¬ Welding market 500 growth ~ 2% p
Slide 24: Murray Basin Rutile/HyTi Strategic Fit
Murray Basin Rutile/HyTi Strategic Fit ¬ MSP technology produces ¬ a premium quality rutile for sale into the pigment market ¬ HyTi 91 for sale into the welding and pigment markets ¬ Approval gives ‘first confirmed project’ market advantage ¬ major competitors are not planning any major rutile expan
Slide 25: Douglas Project Assumptions
Douglas Project Assumptions ¬ Rutile and zircon are fully sold ¬ No economic contribution from Ilmenite ¬ Price forecasts are consistent with TZMI ¬ Exchange rate assumptions consistent with external long-term forecasts ¬ Conservative approach on resources modelled ¬ Land access will be as expected
Slide 26: Douglas/KWR Capital Expenditure Profile
Douglas/KWR Capital Expenditure Profile 200 ¬ Major expenditure for Douglas in 150 2004-05 ¬ Major A$ Million 100 expenditure for KWR 2006-07 50 ¬ Post-KWR commissioning 10 year average cash flows 0 pre- tax 2004 2005 2006 2007 2008 ~ $100 M pa
Slide 27: Funding Position
Funding Position ¬ Murray Basin capital requirements are well within Iluka’s capacity ¬ Iluka has strong cash flows and is modestly geared ¬ Murray Basin will be financed by a combination of cash flows and available debt facilities ¬ Existing debt maturity profile is long-dated (>5yrs) ¬ Capacity fo
Slide 28: Douglas/KWR Project Revenues, Costs and Earnings
Douglas/KWR Project Revenues, Costs and Earnings ¬ Expected sales revenues ¬ more than A$100 million in 2006 expanding to around A$200 million per year by 2009 ¬ Operating costs ¬ between A$70 to A$80 million per year from 2006 ¬ EBIT ¬ approaches A$100 million within 5 years ¬ MSP utilisation is ke
Slide 29: Contribution to the Victorian Economy
Contribution to the Victorian Economy ¬ Major new capital investment commitment ¬ Upgraded regional infrastructure in south-west Victoria ¬ Direct employment (Douglas mine and MSP) ¬ 250 new construction jobs, 150 new operations jobs ¬ Annual operating expenditure of A$70-A$80 million per year ¬ Exp
Slide 30: Concluding Comments
Concluding Comments ¬ Commitment to Douglas builds on other achievements to date ¬ Iluka now in a unique position with ¬ new fit-for-purpose facilities and dedicated infrastructure ¬ extensive resources in a highly prospective region and up to three high-value rutile and zircon projects ¬ establishe