Iluka Resources : Presentation to TZMI Congress 2019 - Singapore

Iluka - Addressing supply in the medium term

Iluka Resources Limited

Matthew Blackwell, Head of Major Projects, Engineering & Innovation 13 November 2019

Move to Ambrosia, South Australia

Disclaimer and Compliance Statement	2

This presentation has been prepared by Iluka Resources Limited (Iluka). By accessing this presentation you acknowledge that you have read and understood the following statement.

This document provides an indicative outlook for the Iluka business in the 2019 financial year. The information is provided to assist sophisticated investors with the modelling of the company, but should not be relied upon as a predictor of future performance. The current outlook parameters supersede all previous key physical and financial parameters.

This information is based on Iluka forecasts and as such is subject to variation related to, but not restricted to, economic, market demand/supply and competitive factors. It is Iluka's approach to modify its production settings based on market demand, and this can have a significant effect on operational parameters and associated physical and financial characteristics of the company.

Forward Looking Statements

This presentation contains certain statements which constitute "forward-looking statements". Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as "may", "will", "expect", "plan", "believes", "estimate", "anticipate", "outlook" and "guidance", or similar expressions, and may include, without limitation, statements regarding plans; strategies and objectives of management; anticipated production and production potential;

estimates of future capital expenditure or construction commencement dates; expected costs or production outputs; estimates of future product supply, demand and consumption; statements regarding future product prices; and statements regarding the expectation of future Mineral Resources and Ore Reserves.

Where Iluka expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and on a reasonable basis. No representation or warranty, express or implied, is made by Iluka that the matters stated in this presentation will in fact be achieved or prove to be correct.

Forward-looking statements are only predictions and are subject to known and unknown risks, uncertainties, assumption and other important factors that could cause the actual results, performances or achievements of Iluka to differ materially from future results, performances or achievements expressed, projected or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. Such risks and factors include, but are not limited to: changes in exchange rate assumptions; changes in product pricing assumptions; major changes in mine plans and/or resources; changes in equipment life or capability; emergence of previously underestimated technical challenges; increased costs and demand for production inputs; and environmental or social factors which may affect a licence to operate, including political risk.

Capital estimates include contingency and risk allowances commensurate with international estimating classification systems.

To the extent permitted by law, Iluka, its officers, employees and advisors expressly disclaim any responsibility for the accuracy or completeness of the material contained in this presentation and exclude all liability whatsoever (including in negligence) for any loss or damage which may be suffered by a person as a consequence of any information in this presentation or any error or omission therefrom. Iluka does not undertake to release publicly any revisions to any forward-looking statement to reflect events or circumstances after the date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

No independent third party has reviewed the reasonableness of the forward looking statements or any underlying assumptions.

Non-IFRS Financial Information

This document contains non-IFRS financial measures including cash production costs, non production costs, Mineral Sands EBITDA, Underlying Group EBITDA, EBIT, free cash flow, and net debt amongst others. Iluka management considers these to be key financial performance indicators of the business and they are defined and/or reconciled in Iluka's annual results materials and/or Annual report. Non-IFRS measures have not been subject to audit or review.

All figures are expressed in Australian dollars unless stated otherwise.

Mineral Resources and Ore Reserves Estimates

As an Australian company with securities listed on the Australian Securities Exchange (ASX), Iluka is subject to Australian disclosure requirements and standards, including the requirements of the Corporations Act and the ASX. Investors should note that it is a requirement of the ASX listing rules that the reporting of ore reserves and mineral resources in Australia comply with the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore

Reserves (the "JORC Code") and that the Ore Reserve and Mineral Resource estimates underpinning the production targets in this presentation have been prepared by a Competent Person in accordance with the JORC Code 2012.

Information that relates to Mineral Resources estimates has been previously announced to ASX on 24 July 2019 in Eneabba Mineral Sands Recovery Project Updated Mineral Resource Estimate, on 20 February 2017 in Updated Mineral Resource and Ore Reserve Statement, on 21 February 2019 in 2018 Annual Report and on 27 February 2018 in 2017 Annual Report, all available at www.iluka.com/investors-media/asx-disclosures. Iluka confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and that all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed. Iluka confirms that

the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcements.

Production outlook

Production outlook and the basis thereof are noted within the relevant disclosure. The outlook included in this presentation is indicative only and should not be construed as guidance. The information is subject to changes in market and operating conditions; political risk; and any significant unplanned operational issues.

Zircon and High Grade Titanium Markets

Zircon Market Outlook	4
Key Features

Global Zircon Supply and Demand Outlook - Existing Operations1

kt										Illustrative	Short term demand softness …
1500										Demand CAGRs
		Demand CAGR						2019-23
							TZMI 2.7%	• Business confidence affected by trade tensions and
		2013-19 ~1.6%
							@ 1.5% CAGR	global economic uncertainty
1200
									@ 0% CAGR	• Destocking of zircon in downstream supply chain
900											… solid long term fundamentals
										Supply CAGR	• Urbanisation and growing middle class in Africa and
600										2019-23
										-3.6%	Asia over next ten years
											• Caution on quantum of demand growth
300											• Zircon will sell based on value in use with new
											technical specifications
0											• Declining supply from existing producers
2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023	• Iluka has project pipeline to maintain supply

	Iluka (sand)		Other operations

1. Illustrative demand CAGRs (2019-23) are indicative only and not Iluka forecasts. 2019 demand forecast of 1.2mt is from TZMI (August 2019). Demand is underlying (net of inventories). Iluka (sand) production forecast is sourced from TZMI and does not represent Iluka's production forecast. In addition to zircon sand, Iluka also produces ZIC which is processed elsewhere and included in 'Other operations'.

Source: TZMI August 2019

Pigment Market Outlook	5

Recent Global Pigment Price Cycles Analysis		Iluka's Pigment Demand Model
	Demand recovery + capacity utilization	•	Uses a range of economic indicators
	increase + inventory decline = Price increase
% chg									•	Forecasts 12 month outlook
qoq									• Indicates pigment demand upturn by mid 2020
10							Restocking +
						flattening demand +	• Consistent with industry forecasts
							higher Chinese
							utilization rates =
							Price levelling
5

0

Destocking + flattening demand + feedstock price increase

-5

+ Chemours contracts = Price /Volume/ Margin Reduction

1Q16

3Q16

1Q17

3Q17

1Q18

3Q18

1Q19

Source: TiPMC and Robert Fry Economics

Long Term Pigment Demand Linked to Industrial Production

Industry consultant TiPMC shows link of pigment demand to industrial production, with some volatility of stocking and destocking cycles.

Source: TiPMC and Robery Fry Economics

High Grade Titanium Supply Outlook	6
Key Features

Global Rutile Supply Outlook

Positive dynamics in high grade titanium market

kt TiO2				Supply tipping
800				point from 2017
							Excludes Iluka's Sembehun
600							and Balranald projects
400
200
0
2013	2014	2015	2016	2017	2018	2019f	2020f	2021f	2022f	2023f

• Long term demand underpinned by pigment market growth and rising living standards
• Rutile and other very high grade feedstocks have unique properties and uses in niche markets as well as ability to increase pigment plant yield
• Increasingly important in reducing pigment plant waste footprint
• Declining supply from existing producers
• Iluka has project pipeline to maintain supply

Source: Iluka and TZMI

Implications for Industry	7

• Economic growth, urbanisation and technology advances support long term demand
• Supply tightness in zircon and high grade titanium market developing / already evident
• • recent mine closures, grade decline and short mine life of operations contribute to supply outlook
• Industry will require reinvestment to maintain supply to markets
• New projects under review (including Iluka's) will likely have higher risk, higher capital or higher costs owing to:
• • distance to infrastructure and processing facilities
  • ore body characteristics
• Iluka has well developed pipeline of quality projects and track record of project delivery

2019 Projects Delivered
Key Features
Zircon / Rutile /	Rutile	Rutile	Zircon / Rutile
Synthetic Rutile
Cataby,	Gangama	Lanti Expansion,	Ambrosia Mine
Western Australia	Expansion,	Sierra Leone	Move,
	Sierra Leone		South Australia

8

Synthetic Rutile

SR2 Kiln Major

Maintenance

Outage,

Western Australia

•	$270m capex budgeted	•	Doubling of capacity	•	Doubling of capacity
•	Construction of new mine and	•	Duplication of existing design	•	Second mining unit and
	infrastructure	•	Delivered on schedule		doubling of concentrator
			capacity
•	Highway upgrade	• Reached design rates end H1
		•	Delivered on schedule
•	Processing plant upgrades
•	Utilises existing processing			• Reached design rates late Q3

and kiln assets

• ~$35m capex in 2019 budgeted
• Commissioning complete - delivered ahead of schedule and under budget
• Smooths zircon production

• ~$35m capex budgeted
• SR2 kiln reline
• New rotary cooler shell and quench tower
• Ramp up rate exceeded expectations

Total 2019 Capital Expenditure of ~$215 million

Pipeline of Growth Projects

Key Features

	Atacama,
	South Australia
Zr	Satellite deposit to existing J-A operation
Pre-feasibility study progressing
	Potential to add material zircon
	production

	Sembehun,
	Sierra Leone
Ti	Expansion to new deposits
Development of next phase at SRL
	Re-scoping development options - focus on
	optimising risk/ return

Wimmera,

Victoria

Zircon and rare earth project

Pre-feasibility study progressing

Test pit completed product samples with

customers

SR1 restart,

Western Australia

Scoping study progressing

Detailed execution planning underway and long

lead time items ordered.

Potential for 110 - 120ktpa of synthetic rutile

Subject to appropriate commercial

arrangements

9

	Eneabba Mineral Sands
	Recovery,
Other	Western Australia
Monazite-rich stockpile from
	historic mining
	Offtake secured, execute phase
	Simple process proposed with low
	capital expenditure
	Balranald,
	New South Wales

Rutile and zircon rich deposits

Development of innovative underground mining method via directional drilling

Pre-mobilisation activities underway to

prepare for 3rd trial

Eucla Basin

Pipeline of Growth Projects	10

2019

Historic Global Zircon and Rutile Supply	Projects	2020-2022*	2022-2024*	2025+*
	Producing

						Cataby
						Ambrosia		Eneabba		Sembehun	Australian near-
						Gangama
							SR1 restart		Atacama	mine deposits
						Lanti
								Balranald	Sierra Rutile
Zircon kt, Rutile kt TiO2										Wimmera	exploration
									potential
1400
										Cataby extensions
1200
1000								Zircon supply outlook
							excluding new projects
800											* Project timing and
											approval remains subject
600											to Iluka Board approval
400								Rutile supply outlook
								excluding new projects
200					Rutile	Zircon
0
2013	2014	2015	2016	2017	2018	2019f	2020f	2021f	2022f	2023f

Source: Iluka and TZMI

Project Funding

Cataby, Western Australia

Strong Balance Sheet Position	12

• Iluka has funded recent projects (including Cataby, Sierra Rutile expansions) and Sierra Rutile acquisition (Dec 2016) from cash flows and debt
• As at end September had modest net debt and gearing (net debt $89 million, 6.9% gearing ratio)
• Retain significant funding headroom (total facilities ~$520 million)

$m																		Gearing %
1000																							40
800																							30
600
																						20
400
																						10
200
																						0
0
				Total facilities available				Net debt (cash)			Gearing*
-200								H2 17						-10
	H1 14	H2 14			H1 15	H2 15	H1 16	H2 16		H1 17	H1 18		H2 18	H1 19
							Q3 19

* Net debt / net debt + equity

Iluka Mineral Sands Business	13
Key Features

Recently announced formal review has commenced to determine most appropriate corporate and capital structure of two principal businesses - Mineral Sands and Mining Area C Royalty

• A number of significant issues to be considered as part of the review and no certainty that it will result in change

Irrespective of outcome, mineral sands business remains strong

• $545 million underlying mineral sands EBITDA 2018
• Broad and valued customer base
• Quality assets producing high quality products
• Committed and experienced workforce
• Pipeline of exciting projects

Well placed to remain in market leading position within zircon

and high grade titanium feedstock markets

Deliver Sustainable Value
Key Features
Strong Market	Quality Mineral Sands
Fundamentals	Assets
Mineral sands demand linked to	Australia and Sierra Leone operations
urbanisation, rising living standards,	Product mix weighted to premium
increasing array of applications
zircon and high grade titanium dioxide
Value Driven Marketing	Capital Discipline
Model	Framework
Direct customer relationships	Strong balance sheet, disciplined
Price driven by value in use	capital allocation
Focus on shareholder returns via
Focussed on sustainable pricing
dividend framework

14

Project Pipeline

Sustaining and growth projects in

Australia and Sierra Leone

World-class Iron Ore

Royalty

Royalty stream from BHP's Mining

Area C hub in Western Australia

Growth from BHP's South Flank

development

Iluka Resources Limited

www.iluka.com

Ore trial at Ambrosia, South Australia