Iluka Resources Limited · ASX:ILU
Iluka Resources — Sydney Mining Club (December 2011)
49 slides from Iluka Resources's conference presentation, Dec 1, 2011
Slide 1: Iluka Resources Limited
Iluka Resources Limited David Robb, Managing Director Sydney Mining Club - 1 December 2011
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 US $/t Zircon Pricing Staircase 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 • Iluka zircon contractual and pricing arrangements to 3 month basis • Enhanced logistics, including small lot capabilities to cater for emerging mar
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: Eucla Basin
Eucla Basin ILUKA Western Australia Eucla Legend SQ Mine Site © ~~ Deposit {J tluka Tenements South Australia 0 100 200 300 km AMBROSI, JACINTH (GETEER PEDY PORT AUGUSTA, cy G PORT LINCOLN PORT IRIE ADELAIDE 214302v00_
Slide 8: Murray Basin
Murray Basin ILUKA South Australia @ BROKEN HILL New South Wales HORSHAM Va Heo: 5 Victoria ecHo ete MELBOURNE mHAMILTON MSP
Slide 9: Zircon Demand - China
Zircon Demand - China China Zircon Consumption (kt) “The goal of the Chinese regulators 2,500 is for China to become a moderately prosperous country by 2020. Its goal is to achieve a $US10,000 per capita GDP by the year 2020…Urbanization rate will reach 51.5% by 2015” – China‟s 12th 5 Year Plan Chin
Slide 10: Tile Consumption
Tile Consumption Top Tile Consumers Tile Consumption and GDP Growth Rates 2010 Total = 9.4 billion sqm tile (Top 6 Tile Consumers) Oceania 20% 0% 18% Other Europe Africa 5% 6% 16% 23% 14% EU 5% 12% 10% 5% North Other 10% 9% America Asia Vietnam 8% 4% 65% Central-South 6% Indonesia America 4% 10% Ind
Slide 11: Pigment Demand Intensity
Pigment Demand Intensity Kgs per Capita TiO2 Feedstocks: Intensity of Use 7.0 USA 6.0 5.0 4.0 Europe 3.0 2.0 1.0 China 0.0 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 GDP per Capita (US$; real 1990 terms; at PPP) Europe (1993-2010) China (1993-2010) USA (1993-2010) • Developing countries‟ inte
Slide 12: 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 13: Tier 1 & 2 Discoveries: Australia
Tier 1 & 2 Discoveries: Australia 13
Slide 14: Discovery Rate of Major Mineral Deposits
Discovery Rate of Major Mineral Deposits 14
Slide 15: Mineral Scarcity: Parallels with "Peak Oil"
Mineral Scarcity: Parallels with “Peak Oil” 15
Slide 16: Mineralogical and Energy Intensity Barriers
Mineralogical and Energy Intensity Barriers 16
Slide 17: High Grade Titanium Dioxide Supply/Demand
High Grade '000 6,000 TiO units Titanium Dioxide Supply/Demand 2 ‘000 TiO2 units 6,000 6,000 5,000 • High grade feedstocks expected to remain in tight or short supply into the foreseeable future 5,000 5,000 4,000 • New high grade feedstock sources will in most instances require large capital outlays
Slide 18: Zircon Supply/Demand - Assuming Projects Induced
Zircon Supply/Demand - Assuming Projects Induced Zircon Supply and Demand (including induced projects) ‘000 tonnes Zircon 3,000 '000 tonnes Zircon 3,000 • Persistent supply shortage likely in base 2,500 demand case 2,500 • Only under low case demand scenario (3% 2,000 2,000 pa demand) would the mark
Slide 19: Indicative Zircon Inducement Pricing
Indicative Zircon Inducement Pricing Inducement Price Required to fill Supply Shortage in 2016 US$ Inducement Price • Iluka‟s analysis of prospective projects Theoretical Required shows that sustained higher pricing required 3,500 to rationally induce new supply • To meet a 5% CAGR demand by 2016 an
Slide 20: Exploration Expenditure
Exploration Expenditure A$m Iluka Exploration Expenditure 40 35 30 25 20 15 10 5 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20
Slide 21: Production Potential Options
Production Potential Options Old Aurelian Options in Potential Hickory Springs Mineralisation (US) (US) Eneabba Nepean Atacama Typhoon deposits (MB) (EB) (EB) Options in Mineral Resources2 West Old BEFN Tripitaka Balranald Hickory (MB) (EB) (MB) (US) Tutunup Cataby Yarloop (WA) (WA) (WA) Options in
Slide 22: Production Potential
Production Potential Material Type (Mt HM) JORC 2010* Relationship between EPP Potential Production and JORC Mineral Resources Ore Reserves* 27 and Ore Reserves HM Mt Production Potential 64 Mineral Resources* 114 120 - expansion of existing production 100 - new deposits - sequencing of mine 114 80
Slide 23: Themes
Themes • Leadership and change • Asset and people productivity • Alignment and values 23
Slide 24: Iluka Group Historical NPAT
Iluka Group Historical NPAT NPAT (A$m) A$ : US$ FX Rate 200 1.20 1.00 100 0.80 0.60 - 0.40 0.20 Excluding One-Offs Excluding One-Offs + FX Impacts Avg Annual FX (100) - 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 24
Slide 25: Net Profit After Tax
Net Profit After Tax 1st Half 2011 versus 1st Half 2010 ILUKA GROUP NPAT 1H 2011 vs 1H 2010 $m 250 201.8 3.6 7.3 8.8 200 13.5 8.6 6.9 (6.0) (50.9) 150 (65.5) 100 145.9 50 21.5 2.9 0 1H 2010 Volume Mix Price FX Ilm & Oth Unit Min Sand D&A MAC Corp Interest Tax 1H 2011 costs Other (50) ( 6.6 ) 25
Slide 26: Investor Survey
Investor Survey October 2010 26
Slide 27: Strong Focus on Enhancing Shareholder Wealth
Strong Focus on Enhancing Shareholder Wealth October 2010 27
Slide 28: Themes: Leadership and change
Themes • Leadership and change Asset and people productivity Alignment and values 28
Slide 29: Themes: Asset and people productivity
Themes Leadership and change • Asset and people productivity Alignment and values 29
Slide 30: Asset and People Productivity
Asset and People Productivity People & Processes Volume & Margins PERFORMANCE Costs and Capex TIME 30
Slide 31: Production by Geography
Production by Geography Total Zircon/Rutile/SR Production Volumes 2008 2011 - 2013f WA – Synthetic Rutile WA – Zircon & Rutile US Murray Basin Jacinth-Ambrosia Production estimates for 2011 – 2013 only. Actual production will be dependent on many factors, including global demand and Iluka‟s return o
Slide 32: Production by Product
Production by Product Zircon/Rutile/SR Production Volumes 2008 2011 - 2013f Zircon Rutile Synthetic Rutile Production estimates for 2011 – 2013 only. Actual production will be dependent on many factors, including global demand and Iluka‟s return on capital objectives. Note: excludes ilmenite product
Slide 33: Themes: Alignment and values
Themes Leadership and change Asset and people productivity • Alignment and values 33
Slide 34: Our Objective
Our Objective Create and Deliver Value for Shareholders 34
Slide 35: Our Values
Our Values Commitment Integrity We understand our role, the company, our We expect and show honesty, openness industry and do our best and fairness Create and Deliver Value for Shareholders Responsibility Responsibility We take responsibility for our actions and care for others and the environment 3
Slide 36: Our Focus
Our Focus We drive total shareholder return with PSG Profitability Sustainability Growth P S Total Shareholder Return G Create and Deliver Value for Shareholders Responsibility B C A C Customer Employee Value Achievement We deliver customer value through BCP We enable employee achievement through AC
Slide 37: 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 38: Themes
Themes • Leadership and change • Asset and people productivity • Alignment and values 38
Slide 39: The Long Tail
The Long Tail The New Economics of Culture and Commerce LONG TAIL f How Endless Choice is Creating Unlimited Demand CHRIS ANDERSON ILUKA 39
Slide 40: Volume Under Curve Counts
Volume Under Curve Counts Online music popularity (Rhapsody, Dec. 2005) Downloads 5,000 180,000 oe Songs 1 Songs available available only at Rhapsody 10,000 at Wal-Mart and Rhapsody fe ___. oO 25,000 50,000 100,000 900,000 Titles, ranked by popularity ILUKA 40
Slide 41: 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 41
Slide 42: Iluka Zircon Customers - 2010
Iluka Zircon Customers - 2010 Iluka Global Customer Profile China Customers 2010 Other Customers kt 60 kt 5 50 4 3 40 2 30 1 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 42
Slide 43: 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 43
Slide 44: 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 44
Slide 45: Iluka Internet Sales and Auction Site
Iluka Internet Sales and Auction Site 45
Slide 46: 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 47: 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) 47
Slide 48: Iluka's Emergence & Outlook
Iluka‟s Emergence & Outlook 2011 - New Iluka • Zircon and high grade titanium dioxide markets tight • 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
Slide 49: Closing Slide
Closing Slide Iluka Resources Limited Closing Statement Sydney Mining Club David Robb - 1 December 2011 www.iluka.com