Iluka Resources Limited · ASX:ILU
Iluka Resources — WA Mining Club, Perth, March 2012
56 slides from Iluka Resources's conference presentation, Mar 29, 2012
Slide 1: Iluka Resources Limited
Iluka Resources Limited WA Mining Club David Robb - 29 March 2012
Slide 2: South African Origins
South African Origins Cecil John Rhodes (1853 - 1902) Charles Rudd (1844 -1916) 2
Slide 3: Australian Origins
Australian Origins George Renison Bell (1890 - 1958) 3
Slide 4: Zircon: Attributes and Applications
Zircon: Attributes and Applications Opacity (whiteness) OPACIFIER IN CERAMICS high refractive index (zircon refracts and reflects white light well) floor & wall tiles | sanitary ware Resistant table ware water, chemical and abrasion resistance of glazes due to hardness of zircon Temperature stable R
Slide 5: Zircon Pricing
Zircon Pricing Zircon Pricing Staircase US $/t 3,200 2,800 2,400 2,000 1,600 1,200 800 400 0 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q2012 • Iluka zircon contractual and pricing arrangements to 3 month basis • Enhanced logistics, including small lot capabilities to cater for
Slide 6: Titanium Dioxide: Attributes and Applications
Titanium Dioxide: Attributes and Applications Opaque, white and bright PIGMENT high refractive index (refracts & reflects white light) paints & coatings | plastics | paper UV protection absorbs UV light energy (transfers to heat) – prevents fading, peeling, cracking Non toxic safe for use in foods,
Slide 7: Balanced Product Revenue Mix
Balanced Product Revenue Mix Zircon vs High Grade TiO2 Revenues 2010 2011 2012 (guidance) 36% 36% 49% 64% 64% 51% Zircon High-grade TiO2 / R / SR • Based on received 2010 and 2011 prices, 2012 sales guidance • Assumes 2012 beginning prices for full year 2012 • Excludes revenue from ilmenite, by-prod
Slide 8: Eucla Basin
Eucla Basin IEUIKA Western Australia South Australia SEER PEDY PORT AUGUSTA
Slide 9: Murray Basin
Murray Basin South Australia New South Wales Victoria MELBOURNE SBHAMILTON MSP
Slide 10: WRP Mine Move
WRP Mine Move ILUKA 10
Slide 11: The Long Tail
The Long Tail ILUKA The New Economics of Culture and Commerce LONG TAIL ¢ How Endless Choice is Creating Unlimited Demand CHRIS ANDERSON 11
Slide 12: Volume Under Curve Counts
Volume Under Curve Counts ILUKA Online music popularity (Rhapsody, Dec. 2005) Downloads 5,000 180,000 nr 10,000 Songs Songs available available only at Rhapsody Rhapsody OSS _ 25,000 50,000 100,000 300,000 Titles, ranked by popularity 12
Slide 13: Marketing and Supply Evolution
Marketing and Supply Evolution Qingdao, China Antwerp, Belgium Zircon Premium Zircon - Premium Castellon, Spain Zircon Premium Shanghai, China Zircon Premium Rutile Malaysia Wilmington, Warehouse/ Delaware distribution hub Zircon Premium Xiamen, China Zircon Premium • Iluka has grown its presence in
Slide 14: Iluka Zircon Customers - 2006
Iluka Zircon Customers - 2006 Iluka Global Customer Profile 2006 kt China Customers Other Customers 60 kt 2 50 40 1 30 0 20 30 35 40 45 50 55 60 65 70 75 80 85 90 Number of Customers 10 0 1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 Number of Customers 14
Slide 15: Iluka Zircon Customers - 2011
Iluka Zircon Customers - 2011 Iluka Customer Global Profile China Customers 2011 Other Customers kt 40 kt 5 4 30 3 2 20 1 0 31 36 41 46 51 56 61 66 71 76 81 86 91 96 101 106 111 116 121 126 131 10 0 1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96 101 106 111 116 121 126 131 Number of Custo
Slide 16: Iluka China Direct Zircon Customers
China Iluka China Direct Zircon Customers 40 100% 35 80% 30 25 60% 20 15 40% 10 20% 5 0 0% 2004 2005 2006 2007 2008 2009 2010 2011 Iluka Direct Customers Iluka % Sales to Direct Customers 16
Slide 17: Indian & Middle Eastern Sales
India and Middle East Indian & Middle Eastern Sales 60,000 50,000 40,000 Tonnes 30,000 20,000 10,000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 17
Slide 18: Iluka Internet Sales and Auction Site
Iluka Internet Sales and Auction Site 18
Slide 19: Zircon Demand - China
Zircon Demand - China “The goal of the Chinese regulators is for China to become a moderately prosperous country by 2020. Its goal is to achieve a $US10,000 per capita GDP by the year 2020…Urbanization rate will reach 51.5% by 2015” – China’s 12th 5 Year Plan China Zircon Consumption China Zircon Co
Slide 20: Tile Consumption
Tile Consumption Top Tile Consumers Tile Consumption and GDP Growth Rates 2010 Total = 9.4 billion sqm tile (Top 6 Tile Consumers) Oceania 20% 0% 18% Other Europe Africa 5% 6% 16% 23% 14% EU 5% 12% 10% 5% North Other 10% 9% America Asia Vietnam 8% 4% 65% Central-South 6% Indonesia America 4% 10% Ind
Slide 21: Ceramic Floor Tile Share of Floor Coverings
Ceramic Floor Tile Share of Floor Coverings % Usage of Ceramics as Flooring Type vs other Flooring Types by Geography 74% 52% 49% 40% 33% 27% 16% 17% 11% 10% 7% World Germany Western Eastern US North Central Japan China Asia Africa Avg Europe Europe America & Sth Pacific Middle America East 21 Sourc
Slide 22: Pigment Demand Intensity
Pigment Demand Intensity Kgs per Capita TiO2 Feedstocks: Intensity of Use 7.0 USA 6.0 5.0 4.0 Europe 3.0 2.0 1.0 China 0.0 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 GDP per Capita (US$; real 1990 terms; at PPP) Europe (1993-2010) China (1993-2010) USA (1993-2010) • Developing countries’ inte
Slide 23: Balanced Geographic Revenue Mix
Balanced Geographic Revenue Mix 2010 2011 2012 (budget) Other Other Other China Asia China China Asia Asia North North America Europe North Europe America Europe America Regional % 2010 2011 2012 (budget) China 25 28 22 North America 25 21 27 Europe 20 29 27 Asia 19 21 23 Other 11 1 1 23
Slide 24: MAC Iron Ore Royalty
MAC Iron Ore Royalty Background Outlook • Mining Area C (MAC) covers a part of BHP • BHP has stated intentions to increase total iron ore output from WA BIlliton’s iron ore mining operations in WA’s to 350mtpa past 2015. MAC is expected to be a significant Pilbara region, operated by BHP (85%) under
Slide 25: Tier 1 & 2 Discoveries: Australia
Tier 1 & 2 Discoveries: Australia 25
Slide 26: Discovery Rate of Major Mineral Deposits
Discovery Rate of Major Mineral Deposits 26
Slide 27: High Grade Titanium Dioxide Supply/Demand
High Grade Titanium Dioxide Supply/Demand ‘000 TiO2 units 6,000 • High grade feedstocks expected to remain in tight or short supply into the foreseeable future 5,000 • New high grade feedstock sources will in most instances require large capital outlays 4,000 for upgrading facilities (smelters or SR
Slide 28: Zircon Supply/Demand - Assuming Projects Induced
Zircon Supply/Demand - Assuming Projects Induced Zircon Supply and Demand (including induced projects) ‘000 tonnes Zircon 3,000 • Persistent supply shortage likely in base 2,500 demand case • Only under low case demand scenario (3% 2,000 pa demand) would the market be in ~10% oversupply if all assum
Slide 29: Exploration Expenditure
Exploration Expenditure A$m Iluka Exploration Expenditure 40 35 30 25 20 15 10 5 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 29
Slide 30: Production Potential Options
Production Potential Options Old Aurelian Options in Potential Hickory Springs Mineralisation (US) (US) Pro ion iture d rat Tec uct & plo pen d Dev hnica Ex .a. ex p Eneabba Nepean Atacama Typhoon elop l men m+ sin deposits (MB) (EB) (EB) ~$1 0 t ~ $30 Ba in ex m+ p pen . uc la as Options in Mineral
Slide 31: Production Potential
Production Potential Material Type (Mt HM) JORC 2010* Ore Reserves* 27 Production Potential 64 Mineral Resources* 114 - expansion of existing production - new deposits - sequencing of mine 114 plans 64 27 31 *Reported in accordance with the ‘Australasian Code for Reporting of Exploration Results, Mi
Slide 32: Themes
Themes • Leadership and change • Asset and people productivity • Alignment and values 32
Slide 33: 2011 – The New Iluka
2011 – The New Iluka • Group EBITDA ~$1.0bn, NPAT and FCF > $0.5bn, ROE > 40% • Balance sheet = net cash • 55 cents final dividend (fully franked); 75 cents for full year • Excellent production performance within cash cost guidance - integrated and flexible production base • Transformational marketi
Slide 34: CCI October 2011
CCI October 2011 Relative strengths and weaknesses 34
Slide 35: CCI October 2011
CCI October 2011 Strong focus on enhancing shareholder wealth 35
Slide 36: CCI October 2011
CCI October 2011 Management predictions come to fruition 36
Slide 37: CCI October 2011
CCI October 2011 Excellence in project execution 37
Slide 38: Themes
Themes • Leadership and change Asset and people productivity Alignment and values 38
Slide 39: Themes
Themes Leadership and change • Asset and people productivity Alignment and values 39
Slide 40: Asset and People Productivity
Asset and People Productivity People & Processes Volume & Margins PERFORMANCE Costs and Capex TIME 40
Slide 41: Themes
Themes Leadership and change Asset and people productivity • Alignment and values 41
Slide 42: Our Objective
Our Objective Create and Deliver Value for Shareholders 42
Slide 43: Our Values
Our Values Commitment Integrity We understand our role, the company, our We expect and show honesty, openness industry and do our best t en and fairness In itm Create te m gr and Deliver m ity Co Value for Shareholders Responsibility Responsibility We take responsibility for our actions and care for
Slide 44: Our Focus
Our Focus We drive total shareholder return with PSG Profitability Sustainability Growth P S Total Shareholder Return G t en Create In itm te and Deliver m gr it m Value for Co y Shareholders Responsibility B C A C Customer Employee Value Achievement We deliver customer value through BCP We enable e
Slide 45: We drive total shareholder return with PSG
We drive total shareholder return with PSG Profitability Strong ROC focus leading to strong cash flows Productivity, costs and margins – best practice Project returns above a risk weighted investment hurdle rate Sustainability High levels of envrionmental, health and safety performance Sound plannin
Slide 46: The Dilemma
The Dilemma MARKET CAPITALISM 46 Source: Capitalism at Risk – Rethinking the Role of Business Joseph L. Bower, Herman B. Leonard and Lynn S. Paine
Slide 47: The Dilemma
The Dilemma Positive Consequences MARKET CAPITALISM Negative Consequences 47 Source: Capitalism at Risk – Rethinking the Role of Business Joseph L. Bower, Herman B. Leonard and Lynn S. Paine
Slide 48: The Dilemma
The Dilemma Positive Consequences MARKET CAPITALISM Negative Consequences Largely Exogenous Forces Disruptive Effects Truly Exogenous Forces 48 Source: Capitalism at Risk – Rethinking the Role of Business Joseph L. Bower, Herman B. Leonard and Lynn S. Paine
Slide 49: The Dilemma
The Dilemma Positive Consequences MARKET Antecedents CAPITALISM Institutions Negative Consequences Social and Political Conditions Largely Exogenous Forces Resources Disruptive Effects Truly Exogenous Forces 49 Source: Capitalism at Risk – Rethinking the Role of Business Joseph L. Bower, Herman B. L
Slide 50: The Dilemma
The Dilemma Equity Markets Capital Markets Debt Markets Intermediate-Goods MARKET Markets CAPITALISM MARKET CAPITALISM Raw-Materials Product Markets Markets High-Skill Labour Markets Low-Skill 50 Source: Capitalism at Risk – Rethinking the Role of Business Joseph L. Bower, Herman B. Leonard and Lynn
Slide 51: The Dilemma
The Dilemma Mediating, Regulating and Participating Institutions Standards and requirements Government : Business press laws and policies and media Regulatory and Industry association other oversight bodies rules and standards MARKET CAPITALISM Legal system of Professional corporate association gove
Slide 52: Themes
Themes • Leadership and change • Asset and people productivity • Alignment and values 52
Slide 53: We drive total shareholder return with PSG
We drive total shareholder return with PSG Profitability Strong ROC focus leading to strong cash flows Productivity, costs and margins – best practice Project returns above a risk weighted investment hurdle rate Sustainability High levels of envrionmental, health and safety performance Sound plannin
Slide 54: Everybody Counts
Everybody Counts “Winning companies are convinced that their future rests not on the brilliance of their executives but on the dedication and inventiveness of their middle managers and employees”. HBR “What Really Works” July 2003 (Nitin Nohria, William Joyce and Bruce Roberson) 54
Slide 55: Iluka's Emergence & Outlook
Iluka’s Emergence & Outlook 2011 - New Iluka • Substantial zircon and TiO2 price increases • Higher margins and stronger free cash flows • Global uncertainties, volatile markets, but medium term industry dynamics favourable • First instalment of company objective delivered 2012 - 2014 • Global volat
Slide 56: Closing Statement
Closing Slide Iluka Resources Limited Closing Statement WA Mining Club David Robb - 29 March 2012