Iluka Resources Limited · ASX:ILU
Iluka Resources — AJM 13th Annual Mineral Sands Conference 2013
30 slides from Iluka Resources's conference presentation, March 2013
Slide 1: AJM 13th Annual Mineral Sands Conference
AJM 13th Annual Mineral Sands Conference Operational Flexibility in a Changing Global Marketplace Shane Tilka Mine Manager – Jacinth Ambrosia March 2013
Slide 2: Structure
Structure 1. Company Overview 2. Products and Industry 3. Operations and Assets 4. Jacinth-Ambrosia 2
Slide 3: Company Overview
Company Overview • Principal objective: create and deliver value for shareholders • Market capitalisation: ~$4 billion • Approximately 1,000 employees • 10 years reserve life; resources ~3 times reserves • Strong balance sheet, net cash, $800m in facilities • Operations in Australia and United State
Slide 4: Iluka's Position in Mineral Sands
Iluka's Position in Mineral Sands • #1 global producer of zircon • #2 global producer of titanium dioxide • Significant market share position in high value titanium dioxide products − rutile and synthetic rutile Major Zircon and Titanium Dioxide Feedstock Producers Source: Iluka, TZMI Note: Rio Tint
Slide 5: Operations and Assets
Operations and Assets • Mining and processing operations in Australia and USA • Distribution warehouses located within major markets • Zircon and titanium dioxide products supplied to more than 35 countries • Major supplier in emerging and developing markets − China, India, Middle East and South Ame
Slide 6: Australian Operations
Australian Operations ILUKA Australian operations
Slide 7: Australian Operations Integration
Australian Operations Integration Virginia Ilmenite Non magnetics from Tutunup South J-A Eneabba Tutunup South WRP J-A HMC Mine WHIMS Ilmenite J-A HMC Hamilton Ilmenite 7
Slide 8: Scope of Jacinth Operation
Scope of Jacinth Operation • Commissioned in November 2009 • Jacinth deposit – 900m wide by 5 km long – minimal overburden - strip ratio 0.5:1 – ore at average thickness of 20m • Mining unit plant in pit:1300tph • Wet concentrator:1000tph • HMC production:120tph • Fly-in-fly-out from Ceduna / Adelai
Slide 9: Jacinth-Ambrosia Physical Characteristics
Jacinth-Ambrosia Physical Characteristics • HM mineral resources1: 8.19 million tonnes • HM ore reserves2: 6.38 million tonnes • Average ore reserve HM grade: 4.5% • Average HM ore assemblage: 50% zircon / 28% ilmenite / 5% rutile • Development capex: $390 million Production (kt) 2012 2011 Zircon 15
Slide 10: 2012 Safety Performance: Jacinth-Ambrosia
2012 Safety Performance: Jacinth-Ambrosia • Company wide improvement in safety performance in 2012, with year-on-year – TRIFR rate declining by 30% – LTIFR rate declining by 32% • J-A operation currently has the best safety performance with a TRIFR of 4.56 • Underpinned by Safe Production Leadership
Slide 11: Human Resources
Human Resources Iluka Resources • 70 Employees • Local – (51%) Exact Mining Services • 50 employees • Local – (36%) Kalari Transport • 39 Employees • Local – (46%) • Families relocated – 8 • Singles relocated - 10 11
Slide 12: Native Title Agreement
Native Title Agreement Far West Coast (FWC) Native Title Claimants - key objectives • 20% FWC employment target for Iluka – major contractors (EMS, Kalari, ACS) – 20% target surpassed November 2012 with successful employment of our first trainee operator • Develop and implement an education and trai
Slide 13: Project Overview
Project Overview • Ore pushed by dozer into mobile mining unit plant (dozer trap) • 200m x 100m ore blocks • Mining unit capacity up to 1400 tph • Slurry (-10 mm) pumped to wet concentrator Red loam • Secondary screening at concentrator (0.6 mm) White strand 13
Slide 14: Ore Block Cross Section
Ore Block Cross Section Challenge to supply a stable feed grade Southern end of block 3-4.5% HM 10-15% HM 25-40% HM 3-4.5% HM 8-10% HM 100m HM% 15-20% Clay 10-15% Clay 0-5% Clay 100 metres 14
Slide 15: Ore Block Blending Process
Ore Block Blending Process 15
Slide 16: Ore Block
Ore Block Theory in practice Slice - 5 Red Slice - 4 Red Slice - 3 White Grey mix Slice - 2 White Grey Slice - 1 Blending (2 red: 3 white:1 grey) Floor Dozer-1 : push 2 red and 1 white (2 red from slice 4 or 5 and 1 white from slice 3) Dozer-2 : push 2 white and 1 grey (2white from slice 3 and 1 gre
Slide 17: Flexibility of Mine Path
Flexibility of Mine Path Production response to market conditions Option Indicative HMC* (ktpa) 1 800 Base 620 3 550 5 500 8 440 11 350 * Mining schedules as at July 2012 ` approx 3 years mining at this rate from starting in high grade area 17
Slide 18: Zircon - Production Optionality
Zircon - Production Optionality Increase J-A feed to MSP’s (immediate) Max J-A feed to MSP’s and revise J-A mine plan (4-6 weeks) Demand met from 2012 Matching Demand inventory • Low grade J-A • Reduced MSP feed • Expand HMC stockpile capacity Time Demand MSP feed reduced J-A HMC stockpiled Extend J
Slide 19: Sustainability
Sustainability Major Projects Executed 2012 Sealed airstrip & haul road • $10m invested into sealing 90km haul road & air strip • Justified on financial return from reduced logistics expense • Significant benefits for Kalari & community at large • Demonstrates long term commitment to Eucla Basin 19
Slide 20: Jacinth-Ambrosia Brownfields
Jacinth-Ambrosia Brownfields Recent exploration results • Two target styles (within 15km of J-A) – Jacinth style (zircon-rich strands) – Typhoon style (ilmenite dominated strands) • Discovery of Atacama 20111 • Discovery of Sonoran ~9km south east of J-A2 • Atacama Resource increased by 4.3 mt of HM
Slide 21: Mineral Sands Market Conditions - 2012
Mineral Sands Market Conditions - 2012 • Macro economic, country-specific and inventory destocking factors influenced demand • Coincident cyclical weakness in both zircon and high grade titanium dioxide markets • Demand conditions weaker than in 2009 – height of GFC • Weak high grade titanium dioxid
Slide 22: 2012 Financial Characteristics
2012 Financial Characteristics Sound financial characteristics despite challenging market conditions • Mineral Sands revenue of $1,068 million • Minerals Sands EBITDA/revenue of 67.9% • NPAT of $363.2 million • Operating cash flow of $368.7 million; free cash flow of $81.2 million • Return on capita
Slide 23: Zircon – 2013 Outlook
Zircon – 2013 Outlook • Signs of improved demand in China and US, significantly reduced production announced – pre-conditions exist for period of price stability • More favourable demand conditions expected to emerge progressively in 2013 – price stabilisation important to customer confidence and or
Slide 24: High Grade TiO2 – 2013 Outlook
High Grade TiO2 – 2013 Outlook • Pigment plant utilisation continues at historically low rates – 65% to 75% • Indications pigment inventory draw down is now advanced • Pigment industry commentary suggests return to more normal outputs from 2H13 • US and European painting season a key influence • Ilu
Slide 25: Mineral Sands Cycle Characteristics
Mineral Sands Cycle Characteristics “High” cycle point • Ore bodies high-graded • Above trend GDP growth • Assets fully utilised • Strong end use demand • Prices peak • Scarcity fears • Zombie projects return “Mid” cycle • “Normal” mining & processing • Trend GDP growth • Some spare capacity • Avera
Slide 26: Production Response/Cost Reduction Approach
Production Response/Cost Reduction Approach • Iluka has been prepared to reduce production in light of market demand • In combination with other major industry participant actions, production curtailments significant: - ~35% reduction in global zircon production (vs 2011 levels) - ~20% reduction in
Slide 27: Iluka Production Cuts and Cost Reductions
Iluka Production Cuts and Cost Reductions • Eneabba mine (Western Australia) to be idled from April 2013 • SR kiln 3 to remain idled until demand recovers, key staff retained • SR kiln 2 to be idled from May until market demand warrants re-start, key staff retained – high grade SR product demand met
Slide 28: Iluka Production Cuts and Cost Reductions
Iluka Production Cuts and Cost Reductions • Hamilton mineral separation plant operating at 50% utilisation • Woornack, Rownack and Pirro mine output lower • Jacinth-Ambrosia return to standard full face mining – following approvals for increased HMC storage on site – reduces unit cash costs of HMC p
Slide 29: Summary
Summary • Iluka focus on optimising performance of operations based on market conditions • Rapid production response capability as market demand returns • Commitment to exploration and product development • Enhancement to global marketing presence • Pipeline of internal development opportunities (lo
Slide 30: Iluka Resources Limited
Iluka Resources Limited www.iluka.com For more information, contact: Robert Porter, General Manager Investor Relations & Corporate Affairs [email protected] +61 3 9225 5008 / +61 (0) 407 391 829 30
Iluka Resources — AJM 13th Annual Mineral Sands Conference 2013 on 6ix