ILUKA RESOURCES LIMITED — AGM Information 2011

Apr 11, 2011

12 April 2011

The Manager Company Announcements Office Australian Securities Exchange

Public Announcement 2011 - Iluka Resources Limited

Please find attached the following documents in relation to Iluka Resources Limited's 2011 Annual General Meeting to be held at 9.30am (EST) on Wednesday, 25 May 2011 in Room 219 at the Melbourne Convention Exhibition Centre, 2 Clarendon Street, Melbourne:

$1.$ Notice of Annual General Meeting;

$2.$ Proxy Form.

Your sincerely,

C. Z Esa

Cameron Wilson Company Secretary

RESOURCES 2011

Notice of Annual General Meeting

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the 56th Annual General Meeting of Shareholders of Iluka Resources Limited ABN 34 008 675 018 (Iluka or Company) will be held in Meeting Room 219 at the Melbourne Convention Exhibition Centre, 2 Clarendon Street, Melbourne on Wednesday, 25 May 2011 commencing at 9.30am (EST).

A map and transport instructions are included with this notice.

An Explanatory Memorandum accompanies and forms part of this Notice of Annual General Meeting. The Explanatory Memorandum describes the various matters to be considered in relation to the business to be conducted at the Annual General Meeting. This Notice of Annual General Meeting should be read in conjunction with the Explanatory Memorandum.

AGENDA

Financial Reports

To receive and consider the annual financial report, Directors' report and auditor's report for the Company and its controlled entities for the year ended 31 December 2010.

Ordinary Resolutions

$\mathbf{1}$ . Re-election of Director - Ms Jennifer Anne Seabrook

To consider and, if thought fit, to pass the following ordinary resolution:

That Jennifer Anne Seabrook who retires in accordance with Article 17.2 of the Company's Constitution and being eligible offers herself for re-election, be re-elected as a Director.

$\overline{2}$ Adoption of Remuneration Report

To consider and, if thought fit, to pass the following ordinary resolution:

That the Remuneration Report of the Company for the year ended 31 December 2010 as set out in the Company's 2010 Annual Report be adopted.

The vote on this Resolution is advisory only and does not bind the Directors or the Company.

$\overline{3}$ . Increase in Non-Executive Directors' Fee Cap

To consider and, if thought fit, to pass the following ordinary resolution:

That, with effect from the day after the conclusion of the 56th Annual General Meeting of Shareholders of Iluka Resources Limited, the remuneration for the services of non-executive Directors of Iluka Resources Limited is increased by \$400,000 to an aggregate maximum sum of \$1.5 million per annum. Such remuneration is to be divided among the non-executive Directors in such proportion and manner as the Directors agree (or, in default of agreement, equally) and to be taken to accrue from day to day.

An explanation of the proposed Resolution is set out in the accompanying Explanatory Memorandum.

Voting exclusion: The Company will disregard any votes cast on Resolution 3 by any Director or any associate of a Director of Iluka, unless:

• the vote is cast as proxy for a person who is entitled to vote, in accordance with directions on the proxy form specifying $(a)$ how the proxy is to vote; or
• $(b)$ the vote is cast by the Chairman of the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.
• $4.$ Grant of Share Rights to Mr David Robb as a long term incentive

To consider and, if thought fit, to pass the following ordinary resolution:

That the grant of 750,000 Share Rights to the Company's Managing Director, Mr David Robb, pursuant to the Company's Directors, Executives and Employees Share Acquisition Plan, as a long term incentive on the terms and conditions set out in the Explanatory Memorandum, be approved.

An explanation of the proposed Resolution is set out in the accompanying Explanatory Memorandum.

1. Approval of Termination Payments Payable to Mr David Robb, Managing Director of the Company

To consider and, if thought fit, to pass the following ordinary resolution:

That the termination payments described in the Explanatory Memorandum to this resolution which may become payable to the Company's Managing Director, Mr David Robb, under the terms of the revised Executive Employment Agreement entered into between Mr Robb and the Company be approved for the purposes of section 200E of the Corporations Act.

An explanation of the proposed Resolution is set out in the accompanying Explanatory Memorandum.

Voting disqualification statement: Under section 200E(2A) of the Corporations Act, a vote must not be cast (in any capacity) on Resolution 5 by the retiree (that is, the person who would receive the benefit in connection with their retirement from office or position of employment) or an associate of the retiree. Accordingly, neither Mr David Robb nor any associate of Mr Robb is entitled to cast a vote on Resolution 5. However, section 200E(2B) of the Corporations Act does not prevent the casting of a vote on Resolution 5 if:

• $\overline{1}$ . the vote is cast as proxy for a person who is entitled to vote, in accordance with directions on the proxy form specifying how the proxy is to vote; and
• $2.$ the vote is not cast on behalf of Mr Robb or an associate of Mr Robb.

PROXY AND VOTING ENTITLEMENT INSTRUCTIONS

Proxy Instructions

Shareholders are entitled to appoint up to two individuals to act as proxies to attend and vote on their behalf. Where more than one proxy is appointed each proxy may be appointed to represent a specific proportion of the Shareholder's voting rights. If the appointment does not specify the proportion or number of votes each proxy may exercise, each proxy may exercise half of the votes.

The proxy form (and the power of attorney or other authority, if any, under which the proxy form is signed) or a copy or facsimile which appears on its face to be an authentic copy of the proxy form (and the power of attorney or other authority) must be deposited at or sent by facsimile transmission to the Company's share registry, Computershare Investor Services Pty Limited, GPO Box 242, Melbourne, Victoria 3001 Australia, facsimile number 1800 783 447 and outside Australia +61 (3) 9473 2555 or to the Company's registered office at Level 23, 140 St George's Terrace, Perth, Western Australia, 6000, facsimile number +61 (8) 9360 4777, at least 48 hours prior to the meeting, or adjourned meeting as the case may be, at which the individual named in the proxy form proposes to vote. Alternatively, you may register your proxy instructions electronically at the Share Registry website www.investorvote.com by 9.30 (EST), Monday, 23 May 2011. For Intermediary Online subscribers only (custodians) please visit www.intermediaryonline.com to submit your voting intentions.

The proxy form must be signed by the Shareholder or his/her attorney duly authorised in writing or, if the Shareholder is a corporation, in a manner permitted by the Corporations Act. The proxy may, but need not, be a Shareholder of the Company.

In the case of shares jointly held by two or more persons, all joint holders must sign the proxy form.

Corporate Representatives

A corporation may elect to appoint an individual to act as its representative in accordance with section 250D of the Corporations Act, in which case the Company will require a certificate of appointment of the corporate representative executed in accordance with the Corporations Act. The certificate of appointment must be lodged with the Company and/or the Company's share registry, Computershare Investor Services, before the Meeting or at the registration desk on the day of the meeting. Certificates of appointment of corporate representative are available at www.computershare.com or on request by contacting Computershare Investor Services on telephone number 1300 557 010 and outside Australia $+61$ (3) 9415 4801.

Voting Entitlement

For the purposes of determining voting entitlements at the Annual General Meeting, shares will be taken to be held by the persons who are registered as holding the shares at the close of business on Monday, 23 May 2011. Accordingly, transactions registered after that time will be disregarded in determining entitlements to attend and vote at the meeting.

PROXY AND VOTING ENTITLEMENT INSTRUCTIONS (contd)

Questions from Shareholders

At the Meeting the Chairman will allow a reasonable opportunity for Iluka Shareholders to ask questions or make comments on the management of the Company and the Remuneration Report.

Mr David Smith of PricewaterhouseCoopers, as the auditor responsible for preparing the auditor's report from the year end 31 December 2010 (or his representative) will attend the meeting. The Chairman will also allow a reasonable opportunity for Shareholders to ask the auditor questions about:

• $(a)$ the conduct of the audit;
• $(b)$ the preparation and content of the auditor's report;
• $(c)$ the accounting policies adopted by the Company in relation to the preparation of financial statements; and
• $(d)$ the independence of the auditor in relation to the conduct of the audit.

As required under section 250PA of the Corporations Act, at the Meeting, the Company will distribute a list setting out the questions directed to the auditor received in writing by Monday, 23 May 2011, being questions which the auditor considers relevant to the content of the auditor's report or the conduct of the audit of the financial report for the year ended 31 December 2010. The Chairman will allow reasonable opportunity to respond to the questions set out on this list.

BY ORDER OF THE BOARD

C. Wilson

CAMERON WILSON Company Secretary

Dated: 11 April 2011

EXPLANATORY MEMORANDUM

This Explanatory Memorandum has been prepared for the information and benefit of Shareholders in relation to the business to be conducted at the Company's Annual General Meeting. The purpose of this Explanatory Memorandum is to provide Shareholders with all information known to the Company which may be material to a decision on how to vote on the Resolutions in the accompanying Notice of Annual General Meeting. This Explanatory Memorandum should be read in conjunction with the Notice of Annual General Meeting.

Unless the context otherwise requires, capitalised terms used in this Explanatory Memorandum have the same meaning given to them in the Glossary set out at Schedule 3 to this Explanatory Memorandum.

All amounts referred to in this Explanatory Memorandum are in Australian dollars unless specified otherwise.

FINANCIAL REPORTS

Iluka's 2010 Annual Report (which includes the annual financial report, Directors' report and auditor's report) has been sent to those Shareholders who requested it. The 2010 Annual Report can be found on the Company's website (www.iluka.com).

During this item, there will be an opportunity for Shareholders to ask questions about, or comment on, the reports and the management and performance of the Company.

ORDINARY RESOLUTIONS

$\overline{1}$ . Re-election of Director - Ms Jennifer Anne Seabrook

Jennifer Anne Seabrook, BCom, FCA, FAICD

Ms Jennifer Seabrook is required to retire under the director rotation provisions of Article 17.2 of the Company's Constitution. Ms Seabrook, being eligible, has offered herself for re-election as a Director.

Ms Seabrook was appointed to the Board in May 2008. She is a Special Advisor to Gresham Partners Limited. She is also a non-executive director of the Bank of Western Australia Limited, M G Kailis Holdings Pty Limited, IRESS Market Technology Ltd and Australia Post. Ms Seabrook is a member of the Takeovers Panel and Financial Advisory Group of the Financial Services Institute of Australia (FINSIA) and a member of ASIC's External Advisory Group. She was formerly a director of West Australian Newspapers Holdings Limited, BWA Managed Investments Limited, St Andrew's Superannuation Services Limited and Western Power. Ms Seabrook is a member of the Audit and Risk Committee and the Remuneration and Nomination Committee.

$2.$ Adoption of Remuneration Report

Pursuant to section 250R(2) of the Corporations Act, a resolution that the Remuneration Report be adopted must be put to vote at the Company's Annual General Meeting.

Shareholders are asked to adopt the Company's Remuneration Report. The Remuneration Report is set out on pages 9 to 21 of the Company's 2010 Annual Report and is also available on the Company's website (www.iluka.com).

The Remuneration Report:

• describes the policies behind, and the structure of, the remuneration arrangements of the Company and link between the remuneration of key management personnel and the Company's performance; and
• sets out the remuneration arrangements in place for each director and for the Managing Director and other key management personnel.

In accordance with section 250R(3) of the Corporations Act, the vote on Resolution 2 is advisory only and does not bind the Directors or the Company. Nevertheless, the discussion in relation to this resolution, and the outcome of the vote, will be taken into consideration by the Board when considering the remuneration arrangements of the Company.

The Directors recommend that Shareholders vote in favour of Resolution 2 to adopt the Remuneration Report.

ORDINARY RESOLUTIONS (contd)

$3.$ Increase in Non-Executive Directors' Fee Cap

Quantum of the increase

At the 2004 AGM, Shareholders approved an increase in the maximum aggregate remuneration of non-executive Directors to \$1.1 million per year.

For the purposes of Article 20.1 of the Company's Constitution and Rule 10.17 of the ASX Listing Rules. Shareholder approval is now sought to increase the non-executive Directors' fee cap by \$400,000 from \$1.1 million to \$1.5 million per year.

Reasons for the increase

The present fee structure for Directors is set out on page 16 of the Annual Report. Effective 1 March 2011, the Board approved a 36.4 per cent increase in the base fee payable to each non-executive Director.

The Board has determined that there will be no further increase to the base fees payable to individual Directors at this time as a result of Shareholder approval of Resolution 3.

However, the Board considers that it is appropriate to seek approval for an increase in the non-executive Directors' fee cap for a number of specific reasons:

To have flexibility to increase the number of non-executive Directors on the Board

A key purpose of the proposed increase is to provide the Board with flexibility to make additional appointments to the Board. While the Board is not currently proposing to increase its size, a circumstance may arise where the Board may wish to appoint additional non-executive Directors.

One such circumstance in which the Board may wish to appoint additional Directors is where a potential candidate would bring complementary skills to the Board. If the Board wished to invite any such candidate to become a Director, the proposed increase in the non-executive Directors' fee cap would provide it with sufficient flexibility to take advantage of the opportunity to do so.

To assist succession planning

Attracting the right Board members and providing effective transition arrangements are fundamental to a high performing board. To facilitate an orderly transfer of responsibilities, new Directors may be appointed prior to the retirement of existing Directors, resulting in a short-term increase in the size of the Board and the total fees payable to the Directors. The proposed increase in the fee cap would enable the Company to facilitate succession planning.

Payments included in the non-executive Directors' fee cap

The non-executive Directors' fee cap includes fees that are paid to Iluka's non-executive Directors for serving on the Board or a committee of the Board, superannuation contributions made by the Company and its controlled entities and any fees a nonexecutive Director sacrifices on a pre-tax basis.

Insofar as they do not fall within any of the items that make up the non-executive Directors' fee cap, as outlined above, the nonexecutive Directors' fee cap does not include payments made on retirement, loss of office or death, or payments made in relation to a Director's involvement in any association, institution, fund, trust or scheme for the benefit of past or present employees or Directors of the Company, a related body corporate or any of their respective predecessors in business or for the benefit of the dependants of any such persons or for the benefit of persons connected with any of those persons.

Amount paid to non-executive Directors in 2010

As set out in the table at page 16 of the 2010 Annual Report, in 2010 a total of \$970,436 was paid to the non-executive Directors in fees and benefits. This amount is in respect of all Directors who served on the Board during 2010 and is inclusive of fees and superannuation contributions.

The total amount paid to non-executive Directors in 2010 was within the current non-executive Directors' fee limit of \$1.1 million.

Board recommendation

As the non-executive Directors have a personal interest in Resolution 3, the Directors make no recommendation as to how Shareholders should vote on this resolution. Shareholders should judge for themselves whether or not the increase in the fee cap should be approved.

$\overline{4}$ Grant of LTID Share Rights to Mr David Robb as a long term incentive

Resolution 4 seeks approval for the grant of 750,000 Share Rights (Long Term Incentive Deferred Share Rights or LTID Share Rights) to Mr David Robb on the terms and conditions summarised in this Explanatory Memorandum pursuant to the Company's Directors, Executives and Employees Share Acquisition Plan (Share Acquisition Plan).

The Board entered into discussions with Mr Robb in December 2010 when his retention share rights (issued in 2008) were about to vest.

The Board is very pleased that Mr Robb has accepted the Company's offer of 750,000 LTID Share Rights as an additional incentive, to be based upon generating absolute shareholder returns over a 3 year period. The LTID Share Rights are subject to vesting conditions as described below. The incentive is focused on continuing the outstanding success Mr Robb has achieved for shareholders.

Purpose of LTID Share Rights

The purpose of the LTID Share Rights is to provide Mr Robb with an appropriate incentive which is "at risk" and which is aligned to the long term growth in absolute Total Shareholder Return (TSR) for Iluka shareholders.

The TSR will be measured using generally accepted TSR methodology as determined by the Board and calculated by an external expert. TSR reflects growth in the share price and other value directly received by a shareholder.

The proposed incentive is considered reasonable and appropriate having regard to the remuneration and incentive arrangements provided to the chief executive officers of comparable sized companies which are performing well.

The LTID Share Rights are subject to performance measured over the periods commencing after release of the annual financial results for the financial years 2010, 2011 and 2012. In any of these financial years for the rights to vest an ROE of at least 12 per cent must be achieved in addition to the hurdle rate TSR.

The proposed grant of LTID Share Rights is in addition to the Share Rights granted to Mr Robb under the Short Term Incentive Plan (STIP) and Long Term Incentive Plan (LTIP) as a regular part of his annual remuneration package, details of which are set in the Remuneration Report contained in the Company's 2010 Annual Report. The LTID Share Rights comprise an additional "long-term incentive payment" for the purposes of Mr Robb's Executive Employment Agreement.

The grant of LTID Share Rights follows the vesting in March 2011 of 1,000,000 Share Rights granted to Mr Robb (as approved by Shareholders in 2008) as a retention incentive. As disclosed in the Remuneration Report, the value of the 1,000,000 Share Rights at the time of their vesting was \$10,660,000.

Key terms of LTID Share Rights

If approved by Shareholders, the LTID Share Rights will be granted on the terms and conditions summarised in Schedule 1 to this Explanatory Memorandum.

The LTID Share Rights, and any Shares acquired on the vesting of Share Rights, will be governed by the Rules of the Company's Share Acquisition Plan. A summary of the Share Acquisition Plan Rules is set out in Schedule 2 to this Explanatory Memorandum.

The LTID Share Rights enable Mr Robb to acquire Shares, subject to the satisfaction of performance and vesting criteria set out in Schedule 1.

Summary of operation of the LTID Share Rights

The LTID Share Rights will be granted in 3 tranches, with each tranche being subject to performance criteria referable to Iluka's Total Shareholder Return (TSR) performance.

There is:

• a base tranche of 150,000 Share Rights per year that requires an absolute TSR of 12.5 per cent compounding over the 3 years;
• a second tranche of 50,000 Share Rights per year that requires absolute TSR of 15 per cent compounding over 3 years; and
• a third tranche of 50,000 Shares Rights per year that requires absolute TSR of 17.5 per cent compounding over 3 years.

The "Performance Periods" for each tranche of Share Rights are as follows:

Year 1 Performance Period 1	Year 2 Performance Period 2	Year 3 Performance Period 3
150,000	150,000	150,000
50,000	50,000	50,000
50.000	50,000	50,000

1 From 4 March 2011 to the date 5 Business Days after announcement of the 2011 annual financial results (the end date will be in late February or early March 2012).

2 From the end of the Year 1 Performance Period to the date 5 Business Days after announcement of the 2012 annual financial results (the end date will be in late February or early March 2013).

3 From the end of the Year 2 Performance Period to the date 5 Business Days after announcement of the 2013 annual financial results (the end date will be in late February or early March 2014).

ORDINARY RESOLUTIONS (contd)

For each tranche of LTID Share Rights there are TSR performance hurdles referable to each Performance Period. The various TSR performance hurdles are stated in the tables in Schedule 1.

At the end of each Performance Period the Company's TSR for the Performance Period will be determined and compared against the TSR performance hurdles for that Performance Period. If the 1st performance hurdle is satisfied the Tranche 1 Share Rights will vest; if the 2nd performance hurdle is satisfied the Tranche 1 and Tranche 2 Share Rights will vest; and if the 3rd performance hurdle is satisfied the Tranche 1, Tranche 2 and Tranche 3 Share Rights will vest.

The Share Rights applicable to a Performance Period will also vest if the TSR performance hurdle is not satisfied at the end of that Performance Period, but the "compound" TSR performance hurdle for the subsequent Performance Period is satisfied. This aspect of the LTID Share Rights is considered appropriate considering the purpose of the LTID is to drive absolute TSR growth over the life of the LTID Share Rights.

The "base" from which Iluka's absolute TSR performance shall be measured over the life of the LTID Share Rights is \$10.66, being the volume weighted average price of Iluka Shares traded over the 5 Business Days following release of the Company's 2010 financial results on 25 February 2011.

When the Board commenced discussions with Mr Robb for the structuring of a long term incentive in December 2010, it was agreed that the appropriate starting price for measuring absolute TSR growth would be the price of Iluka Shares at the time of release of the 2010 financial results.

Maximum entitlement to Shares

Subject to the conditions of the LTID Share Rights as described in Schedule 1, Mr Robb will become entitled to a maximum of 750,000 Shares in March 2015 if the TSR performance of the Company's Shares is determined at the end of the Year 3 Performance Period (i.e. end-March 2014) to be 62.2 per cent above the starting price of \$10.66.

Other relevant vesting requirements

A tranche of Share Rights will not vest unless the relevant vesting conditions applicable to that tranche are satisfied.

Satisfaction of the TSR performance criteria also requires the Company to achieve an annual return on equity (ROE) of at least 12 per cent for each of the 2011, 2012 and 2013 financial years. However, this ROE condition will not apply to any LTID Share Rights that vest early in any one of the circumstances described immediately below.

Subject to satisfaction of the vesting conditions, Share Rights will vest on the day 12 months after the last day of the 3rd Performance Period (i.e. in early 2015), subject to the possibility of earlier vesting, including on a pro rata basis, if a Control Event occurs or if Mr Robb's employment terminates due to his death, illness, injury or disability, redundancy, a material diminution of his position or because the Company gives Mr Robb notice of termination without cause, as set out under his current employment contract. A Control Event includes a person becoming entitled to 50 per cent or more of the total Company Shares on issue by reason of a takeover bid.

On the vesting of Share Rights, Shares will be acquired on Mr Robb's behalf by means of an on-market acquisition of Shares.

Shares acquired pursuant to the vesting of LTID Share Rights will not be subject to any restrictions on disposal after acquisition.

If approved, the LTID Share Rights will be deemed to have been granted on 4 March 2011, being the date which is 5 Business days after the announcement of the full year results for the year ended 31 December 2010.

Reason for seeking Shareholder approval

Shareholder approval of the LTID Share Rights is sought in the interests of good corporate governance.

The grant of the LTID Share Rights will confer a financial benefit on Mr Robb. Shareholder approval is not being sought for the purposes of the related party benefit provisions of the Corporations Act (particularly section 208 of the Corporations Act) on the basis that the benefit is considered to constitute reasonable remuneration and, therefore, the exception in section 211 applies. Section 211 provides that shareholder approval is not required for the purposes of section 208 in circumstances where the benefit constitutes remuneration which would be reasonable given the company's and the related party's circumstances.

Having taken the advice of a remuneration consultant in relation to the remuneration benefits and incentives proposed for Mr Robb, including the LTID Share Rights, and having considered the Company's circumstances and Mr Robb's position as Managing Director, the Board (other than Mr Robb) considers that the financial benefit conferred by the grant of LTID Share Rights is reasonable and, therefore, the exception in section 211 applies.

Shareholder approval of the LTID Share Rights is not required for the purposes of the Listing Rules as the proposed incentive will not involve any issue of new Shares to Mr Robb. Instead, if Mr Robb becomes entitled to Shares on the vesting of LTID Share Rights, those Shares will be acquired on market on Mr Robb's behalf.

Although Shareholder approval is not sought for the purposes of the Corporations Act or the Listing Rules, as the LTID Share Rights constitute a special long term incentive in addition to Mr Robb's other remuneration arrangements and incentives, it is considered appropriate that Shareholder approval be sought.

Managing Director's remuneration structure

Mr Robb is presently entitled to a total fixed remuneration (TFR) amount of \$1,750,000 per annum (inclusive of superannuation). This amount may be increased at the Board's discretion with effect from 1 January each year to take into account general market movements and Mr Robb's performance. The review will include external advice and advice of the Remuneration and Nomination Committee.

Mr Robb's TFR was increased to \$1,750,000 with effect from 1 January 2011 from \$1,500,000 (which it had been since 1 January 2008) following a review of his remuneration arrangements.

Mr Robb is also eligible to participate in Iluka's Performance Incentive Plan on the terms governing that plan from time to time. The Performance Incentive Plan comprises a Short Term Incentive Plan (STIP) and a Long Term Incentive Plan (LTIP). The current operation of the STIP and the LTIP is described in Remuneration Report contained in the Company's 2010 Annual Report.

The maximum incentive Mr Robb may earn for 2011 is 150 per cent of TFR. The target incentive opportunity for the Managing Director under the STIP is 90 per cent of TFR and under the LTIP is 30 per cent of TFR. At stretch levels of performance the incentive opportunity under the STIP increases to 120 per cent.

The current performance components under the STIP for Mr Robb are as follows:

$\bullet$	Profitability (ROC, EBIT and NPAT)	50 per cent
	Sustainability*	10 per cent
$\langle\langle\bullet\rangle\rangle$	Growth (individual objectives)	40 per cent

Sustainability is a measure of total recordable injury frequency rate, severity rate and "level 2" and above environmental incidents.

50 per cent of the STIP entitlements are awarded in cash and 50 per cent in the form of restricted Shares.

The current performance components under the LTIP for Mr Robb are as follows:

٠	Return on equity	50 per cent
	Total shareholder return (TSR)	50 per cent

All LTIP entitlements are awarded in the form of Share Rights.

The LTID Share Rights differ from the Share Rights under the LTIP referred to above in that:

• the entitlement to Shares on the basis of LTID Share Rights involves measuring Iluka's absolute TSR over periods of $\bullet$ time: whereas
• the LTIP arrangements involve measuring Iluka's TSR performance relative to the TSR performance of other comparable companies.

The increase in Mr Robb's TFR, the continuation of Mr Robb's previously established STIP and LTIP entitlements and the proposed grant of 750,000 LTID Share Rights were determined by the Board following a review of the Managing Director's remuneration and entitlements against those of CEO's of a range of similar sized companies which are performing well. This review was undertaken with the assistance of an external remuneration consultant.

Further details of Mr Robb's employment and remuneration arrangements and incentives and entitlements under the STIP and the LTIP, including a description of the offers made to Mr Robb under the STIP and LTIP, are contained in the Remuneration Report of the Company's 2010 Annual Report and Section 5 of this Explanatory Memorandum (in relation to termination benefits).

Recommendation of Directors

The Directors, other than Mr Robb, recommend Shareholders vote in favour of Resolution 4.

The Directors consider that the proposed grant of LTID Share Rights constitutes an appropriate long-term incentive to Mr Robb and constitutes reasonable remuneration given the circumstances of the Company and the circumstances and responsibilities of the Managing Director.

ORDINARY RESOLUTIONS (contd)

1. Approval of termination benefits payable to Mr David Robb, Managing Director

Background

In conjunction with the Company's offer of LTID Share Rights to Mr Robb, the Company and Mr Robb have also agreed revisions to the Executive Employment Agreement entered into between Mr Robb and the Company

The terms of the revised employment agreement are substantially the same as the previous terms of the employment agreement save that the revised employment agreement:

• recognises changes to the incentive arrangements that have been implemented by Iluka for its executives since Mr Robb became Managing Director, and clarifies Mr Robb's entitlement to those incentives on termination of his employment;
• includes changes with respect to annual, personal, carer's and other leave entitlements to reflect the legislative requirements of the Fair Work Act 2009 (Cth); and
• provides for a 12 month notice period for termination by the Company in the event of Mr Robb's illness (in the manner described below) - the previous executive employment agreement provided for a 6 month notice period.

Resolution 5 seeks Shareholder approval for certain termination payments and benefits which Mr Robb which may become entitled to if his employment is terminated. Details of the termination events and the payments and benefits which may be made to Mr Robb are set out below

The termination entitlements and benefits in the revised employment agreement are conditional upon Shareholder approval. The termination entitlements and benefits remain the same as those previously approved by Shareholders at the 2007 AGM, except for:

• the increase in notice period for termination in the event of illness from 6 months to 12 months; and
• the clarification of Mr Robb's entitlement to the total incentive for performance at target under both the STIP and LTIP (including, without limitation, the LTID Share Rights), not just the STIP, pro rata up to the end of the 12 month notice period (except in circumstances of summary termination).

Section 200E of the Corporations Act

Shareholder approval is sought under section 200E of the Corporations Act. Section 200B of the Corporations Act prevents a company from giving a benefit to a director in connection with the director's retirement or removal from office unless the company's shareholders approve that benefit under section 200E or unless the benefit falls within certain exceptions set out in the Corporations Act. A payment or benefit will only fall within the exceptions set out in the Corporations Act if the amount of the payment is less than a prescribed multiple of the director's remuneration and if the nature of the payment falls within one of a number of categories set out in the Corporations Act (for example, a payment by way of damages for breach of contract or a payment for past services).

Mr Robb's termination entitlements under the terms of the revised Executive Employment Agreement may not technically fall within any of the categories of exception set out in the Corporations Act and accordingly Shareholder approval is sought.

Having taken advice from a remuneration consultant with particular expertise in the field of senior executive remuneration packages, the Board has formed the view that the circumstances in which the payments may be made to Mr Robb are appropriate and the amounts of such payments are not excessive or unusual for an executive of the calibre of Mr Robb.

Section 200E of the Corporations Act requires that where shareholders are asked to approve a payment or other benefit to a director that would otherwise be prohibited by section 200B, shareholders must be given details of the amount of the payment or benefit, or, if the amount cannot be ascertained at the time of the disclosure, the manner in which the amount or benefit is to be calculated and any matter, event or circumstance that will, or is likely to affect the calculation of the amount. The amount of any payment or other benefit that may be made to Mr Robb in connection with his retirement or removal from office depends on both his remuneration at the time that he ceases to hold office and the circumstances in which he ceases to hold office.

To inform Shareholders of the manner in which termination payments and benefits may be calculated, the following paragraphs summarise the remuneration and termination provisions of Mr Robb's employment agreement.

Managing Director's remuneration and incentive arrangements

Information about Mr Robb's remuneration arrangements and incentives and entitlements under the Short Term Incentive Plan and the Long Term Incentive Plan, including a description of the offers made to Mr Robb under the STIP and LTIP, is described in section 4 of this Explanatory Memorandum and in Iluka's Remuneration Report for the year ended 31 December 2010, which is set out on pages 9 to 21 of the Company's 2010 Annual Report.

Termination arrangements and entitlements

The termination provisions of the revised Executive Employment Agreement and entitlements of Mr Robb on termination of employment are described below.

Termination with notice by Iluka

Iluka may terminate Mr Robb's employment by giving 12 months notice or paying an equivalent amount of TFR in lieu of notice.

On termination with notice by Iluka, Mr Robb will be entitled to:

• payment of accrued but untaken annual leave; $(a)$
• payment in lieu of pro-rata long service leave on termination after 7 years of continuous service with the Company; $(b)$
• the total incentive for performance at target under the STIP and LTIP, pro rata up to the end of the 12 month notice period; and $(c)$
• all Shares to which Mr Robb is entitled under the LTIP and all Shares pursuant to LTID Share Rights which vest in accordance $(d)$ with the terms of the LTID Share Rights (such LTIP entitlements or LTID Share Rights, as the case may be, will automatically vest and the resulting Shares will be transferred to Mr Robb free of any holding lock or other restriction on dealing).

Termination on the grounds of redundancy, on material diminution or for illness

Iluka may terminate Mr Robb's employment on the ground of redundancy by giving 12 months notice or paying Mr Robb an equivalent amount of TFR in lieu of notice.

Mr Robb may elect to treat his employment as terminated if he suffers a material diminution in his status as Managing Director. and within 2 months of such diminution gives 2 weeks written notice to the Company to treat his employment as being terminated. in which case the Company shall give Mr Robb 12 months notice of termination of employment or shall pay an equivalent amount of TFR in lieu of notice

Iluka may terminate Mr Robb's employment if Mr Robb suffers an illness, accident or other cause which renders him unable to perform his duties for 3 consecutive months, or a period aggregating more than 4 months in any 12 month period, by giving Mr Robb 12 months notice or paying an equivalent amount of TFR in lieu of notice.

On termination for redundancy, material diminution or illness, Mr Robb will be entitled to:

• $(a)$ payment of accrued but untaken annual leave;
• $(b)$ payment in lieu of pro-rata long service leave on termination after 7 years of continuous service with the Company;
• $(c)$ the total incentive for target performance under the STIP and LTIP, pro rata up to the end of the 12 month notice period; and
• $(d)$ all Shares to which Mr Robb is entitled under the LTIP and all Shares pursuant to LTID Share Rights which vest in accordance with the terms of the LTID Share Rights (such LTIP entitlements or LTID Share Rights, as the case may be, will automatically vest and the resulting Shares will be transferred to Mr Robb free of any holding lock or other restriction on dealing).

Resignation by Mr Robb

Mr Robb may terminate his employment at any time by giving six months notice. Iluka may elect to pay Mr Robb an equivalent amount of TFR in lieu of notice.

On termination by resignation, Mr Robb will be entitled to:

• $(a)$ payment of accrued but untaken annual leave: and
• $(b)$ payment in lieu of pro-rata long service leave on termination after 7 years of continuous service with the Company.

On termination by resignation, at the discretion of the Board, Mr Robb may also become entitled to a pro rata component of an award under the Company's executive incentive plans.

Summary termination without notice

Iluka may terminate Mr Robb's employment without notice in the case of misconduct and in certain other circumstances.

In this event, Mr Robb will not be entitled to pro-rata long service leave or any payment or award under the Company's incentive plans, but will be entitled to payment in lieu of accrued but untaken annual leave.

Protection of Company interests

Mr Robb is restrained from engaging in certain activities during his employment, and for a period following termination of his employment, in order to protect Iluka's interests. The revised employment agreement contains provisions relating to the protection of confidential information and intellectual property.

Directors' recommendation

All Directors, other than Mr Robb, recommend that Shareholders vote in favour of Resolution 5. Mr Robb makes no recommendation in light of his personal interest in this Resolution.

TERMS OF DEFERRED LONG TERM INCENTIVE PLAN SHARE RIGHTS FOR MR DAVID ROBB

This schedule summarises the material terms and conditions the Long Term Incentive Deferred (LTID) Share Rights proposed to be granted pursuant to Resolution 4.

• Subject to the approval of Shareholders, a total of 750,000 Share Rights will be granted to Mr David Robb (Managing Director) $\mathbf{1}$ . on these terms.
• $2.$ The LTID Share Rights will be governed by the Directors, Executives and Employees Share Acquisition Plan Rules (Share Plan Rules) and these terms. To the extent of any inconsistency with the Share Plan Rules these terms will prevail.
• The LTID Share Rights will be granted in 3 tranches as follows: $3.$
• Tranche 1 450,000 Share Rights
• Tranche 2 150,000 Share Rights
• Tranche 3 150,000 Share Rights
• 1. The Performance Periods applicable to each tranche of the LTID Share Rights and the number of Share Rights within each tranche which may vest on satisfaction of the applicable vesting conditions are as set out in the following table:

Performance Period	Year 1 Performance Period 1	Year 2 Performance Period 2	Year 3 Performance Period 3
Tranche 1	150.000	150,000	150,000
Tranche 2	50,000	50,000	50,000
Tranche 3	50,000	50,000	50,000

1 From 4 March 2011 to the date 5 Business Days after announcement of the 2011 annual financial results (the end date will be in late February or early March 2012). 2 From the end of the Year 1 Performance Period to the date 5 Business Days after announcement of the 2012 annual financial results (the end date will be in late February or early 2013).

3 From the end of the Year 2 Performance Period to the date 5 Business Days after announcement of the 2013 annual financial results (the end date will be in late February or early 2014).

1. The vesting conditions in respect of each tranche of the LTID Share Rights are as follows:

2. Subject to the conditions set out in this paragraph 5, a proportion of a tranche of LTID Share Rights will vest on the Vesting Date. $(a)$

3. The proportion of each tranche of LTID Share Rights that will vest on the Vesting Date is dependent upon whether the TSR $(b)$ of the Company calculated over the Performance Period for that tranche achieves an "Outcome Hurdle" identified in this paragraph 5 (Outcome Hurdle).
4. If an Outcome Hurdle for a Performance Period in respect of a tranche of LTID Share Rights is not achieved, that tranche of LTID $(c)$ Shares will nevertheless vest if an Outcome Hurdle in a subsequent Performance Period is achieved.
5. $(d)$ The Outcome Hurdles and the number of LTID Share Rights that will vest in respect of each Performance Period if an Outcome Hurdle is achieved are as set out in the following tables:

Year 1 Performance Period:

	Outcome Hurdle A TSR is $\geq$ 12.5%	Outcome Hurdle B TSR is $\geq$ 15.0%	Outcome Hurdle C TSR is $\geq$ 17.5%
Tranche 1	150,000	150,000	150,000
Tranche 2		50,000	50,000
Tranche 3			50,000
Maximum LTID Share Rights that will vest	150,000	200,000	250,000

In respect of the above, "TSR" is the TSR calculated in respect of the Year 1 Performance Period.

Year 2 Performance Period:

	Outcome Hurdle A TSR 1 is $\geq$ 26.6%	Outcome Hurdle B TSR 1 is $\geq$ 32.3%	Outcome Hurdle C TSR 1 is $\geq$ 38.1%
Tranche 1	150,000	150,000	150,000
Tranche 2		50,000	50,000
Tranche 3			50,000
Number of additional LTID Share Rights that will vest	150,000	200,000	250,000
Maximum number of LTID Share Rights that will vest 2	300,000	400,000	500,000

In respect of the above table, "TSR" means the total compound TSR calculated over period commencing from the start of the Year 1 Performance $\mathbf{1}$ Period and ending at the end of the Year 2 Performance Period.

This is the maximum number of LTID Share Rights that will vest if an Outcome Hurdle in respect of Year 2 Performance Period is achieved, including $\overline{2}$ any LTID Share Rights from the Year 1 Performance Period that will also vest.

Year 3 Performance Period:

$(i)$

	Outcome Hurdle A TSR 1 is $\geq 42.4\%$	Outcome Hurdle B TSR 1 is $\ge$ 52.1%	Outcome Hurdle C TSR 1 is $\geq 62.2\%$
Tranche 1	150,000	150,000	150,000
Tranche 2		50,000	50,000
Tranche 3			50,000
Number of additional LTID Share Rights that will vest	150,000	200,000	250,000
Maximum number of LTID Share Rights that will vest 2	400,000	600,000	750,000

$\overline{1}$ In respect of the above table, "TSR" means the total compound TSR calculated over period commencing from the start of the Year 1 Performance Period and ending at the end of the Year 3 Performance Period. $\overline{c}$

This is the maximum number of LTID Share Rights that will vest if an Outcome Hurdle in respect of the Year 3 Performance Period is achieved, including any LTID Share Rights applicable to the Year 1 Performance Period and the Year 2 Performance Period that will also yest

Subject to paragraph 5(g), LTID Share Rights will only vest in respect a Performance Period if the return on equity (ROE) as $(e)$ stated in the financial results given to ASX for the financial year which concludes during a Performance Period is 12.0 per cent or more (ROE Condition).

Satisfaction of the vesting conditions is tested in relation to each Performance Period and each tranche of LTID Share Rights. $(f)$

Notwithstanding anything to the contrary in the Share Plan Rules, and without limiting the discretion of the Board under the $(q)$ Share Plan Rules to provide greater entitlements to the Managing Director:

• if the relevant Outcome Hurdle for a tranche of LTID Share Rights has been satisfied either:
• $(A)$ at the time a Control Event occurs or the Board recommends that Shareholders accept a Takeover Bid; or
• $(B)$ at the time of termination of employment under clause 18.1 (notice by the Company without cause), clause 18.2 (redundancy) or clause 18.3 (material diminution) of the Managing Director's employment contract,

then that tranche of LTID Share Rights will automatically vest on the Vesting Date notwithstanding the tranche is referable to a Performance Period which has not at the relevant time either ended or occurred; for example, if an event of the type described in paragraphs (A) or (B) above occurs during the Year 2 Performance Period and at the time of such event the compound TSR growth (over the period commencing on the start of the Year 1 Performance Period and ending at the relevant time) is 62.2 per cent or more then all 750,000 LTID Share Rights will vest;

• $(ii)$ a tranche of LTID Share Rights which does not vest under paragraph 5(g)(i), including any tranche of LTID Share Rights applicable to the then current or a future Performance Period, must be deemed by the Board to have automatically vested on the Vesting Date if:
• $(A)$ a Control Event occurs or the Board recommends that Shareholders accept a Takeover Bid; and
• $(B)$ the Board acting reasonably determines that, having regard to:
  • $(aa)$ the price of Shares at the time of such determination; or
  • $(bb)$ the consideration being offered for Shares pursuant to the Takeover Bid; or
  • $(cc)$ the consideration being offered pursuant to any other offer by which a Control Event may occur.

the Outcome Hurdle applicable to that tranche of LTID Share Rights would be satisfied assuming the relevant Performance Period had ended or occurred and the Outcome Hurdle was tested at that time;

for example, if an event of the type described in paragraph 5(g)(ii)(A) above occurs during the Year 3 Performance Period and at the time of such event compound TSR growth is less than 62.2 per cent, then all 750,000 LTID Share Rights will nonetheless vest if the consideration being offered for Shares pursuant to the relevant Takeover Bid (or other offer by which a Control Event may occur) is determined by the Board, acting reasonably, to deliver a premium to Shareholders comparable to compound TSR growth of 62.2 per cent or more;

$(iii)$ if the relevant TSR Outcome Hurdle for a tranche of LTID Share Rights has been satisfied before the time the Managing Director dies or ceases to be employed by reason of ill health, injury or disability, then that tranche of LTID Share Rights will automatically vest on the Vesting Date, but only if the Performance Period in respect of that tranche has ended by the time the Managing Director ceases to be employed; for example, in the event the Managing Director ceases to be employed during the Year 2 Performance Period by reason of ill health and the Year 1 Performance Period TSR growth was 17.5 per cent or more, then all of the Year 1 Performance Period tranches (i.e. 250,000 LTID Share Rights) will vest, but no other tranches of LTID Share Rights will vest.

TERMS OF DEFERRED LONG TERM INCENTIVE PLAN SHARE RIGHTS FOR MR DAVID ROBB (contd)

The ROE Condition shall not apply to a vesting determination made pursuant to this paragraph 5(g). That is, a tranche of LTID Share Rights will vest in the circumstances described in this paragraph 5(g) even if ROE is less than 12 per cent for a financial year which concludes during a Performance Period.

Further, any shares that are acquired on vesting of LTID Share Rights in the circumstances contemplated by this paragraph 5(g) will be transferred to the Managing Director free of any holding lock or other restriction on dealing.

• $(h)$ The LTID Share Rights may also vest in the circumstances set out in Rules 7.12 and 7.16 of the Share Plan Rules.
• The Vesting Date is the earlier of: $(i)$
• subject to paragraph 6, the day 12 months after the last day of the Year 3 Performance Period; $(i)$
• $(ii)$ the date a Control Event occurs;
• $(iii)$ the date the Company makes an announcement to the effect that the Board recommends that Shareholders accept a Takeover Bid;
• the date the Managing Director dies or ceases to be employed by reason of ill health, injury or disability; and $(iv)$
• $(V)$ the date of termination of the Managing Director's employment under the notice by the Company without cause (clause 18.1), redundancy (clause 18.2), material diminution (18.3) and illness (clause 18.4) provisions of the Managing Director's employment contract.
• 1. If the Managing Director would be required to pay any income tax or other tax liability arising from the grant of the Share Rights after the TSR of the Company for Year 3 Performance Period has been determined but before the day 12 months after the last day of the Year 3 Performance Period (Tax Liability), the Board and the Managing Director shall in good faith consult and determine the number Shares which the Managing Director would be required to sell on market to provide funds sufficient to satisfy the Tax Liability and as soon as practicable after such determination a corresponding number of Share Rights will automatically vest.
• The TSR of the Company for a Performance Period will be determined within 15 Business Days after the end of the Performance $7.$ Period. The TSR shall be determined on the basis of a Share price at the commencement of the Year 1 Performance Period of \$10.66, being a price which the Company and the Managing Director acknowledge and agree as being the appropriate base from which TSR for the purposes of the LTID Share Rights should be measured.
• 1. For the purposes of the LTID Share Rights, the TSR of the Company is the percentage growth in the price of Shares together with the value of dividends and distributions of share capital, assuming that all of those dividends and distributions are reinvested. TSR will be calculated using such generally accepted methodology for calculation of TSR as the Board may, in its reasonable discretion, and having reasonable regard to the purpose of the LTID and any amendment made to the definition of "TSR" in the Share Plan Rules, determine to use.
• $\overline{Q}$ All Share Rights that have not vested by the Vesting Date will be forfeited:
• $(a)$ in the circumstances set out in Rule 10.2 of the Share Plan Rules; or
• $(b)$ if the employment of the Managing Director is terminated for any of the reasons justifying summary termination under clause 18.7 of his employment contract.
• 1. In the event the grant of the LTID Share Rights is approved by Shareholders, the LTID Share Rights will be deemed to have been granted on the date which is 5 Business days after the announcement of the full year results for the year ending 31 December 2010.

SCHEDULE 2

SUMMARY OF THE RULES OF ILUKA'S SHARE ACQUISITION PLAN (AS APPLICABLE TO THE GRANT OF SHARE RIGHTS)

1. Invitations for Share Rights

The Board may in its discretion invite Senior Managers to apply for Share Rights. An Invitation is not transferable or capable of being acted upon by a person other than the Senior Manager to whom it is addressed.

The Company is not obliged to grant any Share Rights unless and until any Performance Criteria have been satisfied.

$2.$ Nature of Share Rights

A Share Right is a right of a Participant to acquire a Share, subject to the Rules.

The rights of a Participant under the Share Acquisition Plan are purely contractual and personal to the Participant and cannot be transferred, assigned or novated in whole or in part by the Participant.

A Participant does not have a legal or beneficial interest in any Shares by virtue of acquiring or holding a Share Right.

A Share Right does not entitle the holder to any voting rights, to participate in or receive any dividends or to participate in new issues of securities to holders of Shares, unless:

• $(a)$ the Share Right has become a Vested Share Right; and
• $(b)$ a Share has been issued or transferred to the Participant in respect of the Share Right,

before the record date for determining entitlements.

$3.$ Vested Share Rights

A Share Right automatically becomes a Vested Share Right if the vesting conditions set out in the Invitation in respect of those Share Rights have been satisfied

In such circumstances as the Board thinks fit, including if a Control Event occurs, the Board may in its absolute discretion determine that any Performance Criteria and vesting conditions in respect of any Share Rights stated in an Invitation have been satisfied and the Share Rights have become Vested Share Rights, irrespective of non-satisfaction of any Performance Criteria or vesting conditions stated in any Invitation.

If a Control Event occurs then, in respect of any Share Rights stated in an Invitation for which the Performance Period has not completed:

• $(a)$ the Board shall consider the extent to which any Performance Criteria have been satisfied, having regard to the entitlements of the Senior Manager under any terms of employment; and
• to the extent to which any Pe rformance Criteria are considered by the Board to have been satisfied, the Board shall $(b)$ determine that the Performance Criteria and the vesting conditions are deemed to have been satisfied in respect of some or all of the Share Rights stated in the Invitation and have become Vested Share Rights.
• $4.$ Lapse of Share Rights

Unless the Board determines otherwise, a Share Right lapses:

• if the Performance Criteria or vesting conditions can no longer be met; $(a)$
• in specified circumstances on cessation of employment; $(b)$
• $(c)$ in the event of forfeiture; and
• on expiry of 10 years after it is granted. $(d)$

SUMMARY OF THE RULES OF ILUKA'S SHARE ACQUISITION PLAN (AS APPLICABLE TO THE GRANT OF SHARE RIGHTS) (contd)

Cessation of employment by Senior Manager 5.

If a Participant ceases to be employed by a Group Company, he or she:

• $(a)$ shall remain entitled to those Plan Shares held by the Participant; and
• $(b)$ shall be entitled to have issued or transferred to him or her all Shares pursuant to all Vested Share Rights,

and all Share Rights which are not Vested Share Rights shall automatically lapse.

If a Participant ceases to be employed by a Group Company during a Performance Year by reason of:

• ill health, injury, disability, redundancy, retrenchment or death; or $(a)$
• $(b)$ any other reason which the Board in its absolute discretion determines.

the Board may in its absolute discretion determine that the Participant shall be entitled to that number of Shares the subject of any Share Rights stated in the Invitation as may be determined by the Board, notwithstanding the Performance Criteria and the vesting conditions in respect of those Share Rights may not have at that time been satisfied.

6 Restriction on disposal of Plan Shares

A Participant must not Dispose of any Plan Share before the expiration of the Non-Disposal Period in respect of that Share, unless one of the following events occurs before expiry of the Non-Disposal Period:

• $(a)$ a Control Event occurs and the Board makes a declaration concerning the Control Event;
• $(b)$ the Board decides in its absolute discretion that the Share may be disposed of by the Participant; or
• $(c)$ the Participant ceases to be an Employee.

The Board may implement any procedure it considers appropriate, including the application of a holding lock, to restrict a Participant from dealing with any Plan Shares for so long as those Plan Shares are subject to restrictions on disposal.

$7.$ Forfeiture of Share Rights

If in the opinion of the Board:

• $(a)$ a Participant acts unlawfully, fraudulently or dishonestly, or is in serious breach of his or her obligations to any Group Company; or
• an event or circumstance specified in any Invitation issued by the Board as one that could result in the Participant forfeiting $(b)$ Share Rights occurs or arises,

then the Board may, in its absolute discretion, determine the Participant to have forfeited any right or interest and entitlement to all or any of the Share Rights granted to the Participant that are not Vested Share Rights and any other rights or entitlements under the Share Acquisition Plan.

8. Rights attaching to Plan Shares

Voting

Plan Shares carry voting rights in accordance with the Company's Constitution. Unvested Share Rights do not carry any voting rights.

Dividends

A Participant shall be entitled to any dividends declared and distributed by the Company on the Plan Shares held by the Participant, at the record date for determining entitlement to those dividends, are standing to the credit of the Participant.

A Participant is not entitled to be paid any dividend with respect to any Shares the subject of Share Rights prior to the issue or transfer of those Shares to the Participant.

Rights Issues and Bonus Issues

A Participant shall have the same entitlement as any other Shareholder in the Company to participate in any Rights Issue or Bonus Issue in respect of any Plan Shares.

Reconstructions and schemes of arrangement

The number of Plan Shares to which a Participant will be entitled may, at the discretion of the Board (but subject to the Corporations Act and the Listing Rules) be determined to be such number as is appropriate following upon any variation in the share capital of the Company arising from a reconstruction, arrangement, a reduction, subdivision or consolidation of share capital while the Plan Shares remain subject to the Rules.

9. Control Events

If a Control Event occurs, the Board may in its absolute discretion declare that each Participant is entitled to accept any offer in respect of the Participant's Plan Shares.

10. Administration of the Share Acquisition Plan

The Plan will be administered by the Board in accordance with the Rules. Any power or discretion which is conferred on the Board by the Rules must be exercised by the Board in the interests of or for the benefit of the Company. Decisions of the Board are final.

The Board may from time to time suspend the operation of the Share Acquisition Plan and may at any time cancel the Share Acquisition Plan. The suspension or cancellation of the Share Acquisition Plan must not prejudice the existing rights (if any) of Participants under the Share Acquisition Plan.

Notwithstanding any other provision of the Rules or the terms of any Invitation, no Share Rights may be offered or granted and a person may not acquire any Share Rights or Shares under the Share Acquisition Plan, if to do so would contravene the Rules or any law.

The costs and expenses of establishing, managing and administering the Share Acquisition Plan will be borne by, or reimbursed by, the Company.

The Board may at any time and from time to time by resolution amend all or any of the Rules provided the amendment does not affect the beneficial entitlement to any Shares acquired by or on behalf of a Participant, subject to certain exceptions stated in the Rules.

GLOSSARY OF TERMS

Acquisition Date means in relation to a Share acquired pursuant to a Share Right, the date that the Share Right was granted to by a Participant under the Share Acquisition Plan.

Associated Company means a Subsidiary designated by the Board, in its discretion, to be an associated company for the purposes of the Share Acquisition Plan.

ASX means ASX Limited.

Board means the Board of directors of the Company.

Bonus Issue means any issue of bonus Securities by the Company to Shareholders in lieu of distribution of income including (without limitation) any Securities issued under any dividend reinvestment plan or bonus share plan.

Business Day means a business day as defined in the Listing Rules.

Company or Iluka means Iluka Resources Limited ACN 008 675 018.

Control Event means:

• $(a)$ whether pursuant to a takeover bid or otherwise, any person together with their associates acquiring Shares, which when aggregated with Shares already acquired by such person and their associates, comprising at least 50 per cent of the issued Shares of the Company;
• the Board determining that an application is to be made to the court under section 411 of the Corporations Act for a meeting to be $(b)$ held in relation to compromise or arrangement for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with another Company;
• $(c)$ pursuant to an application made to the court under section 411 of the Corporations Act, the court ordering a meeting to be held in relation to a proposed compromise or arrangement for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with another Company;
• any of the following events: $(d)$
• person becomes bound or entitled to acquire Shares in the Company under section 414 or Part 6A of the Corporations Act; $(i)$
• $(ii)$ under section 413 of the Corporations Act the court sanctions a compromise or arrangement proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with another Company; or
• the Company passes a resolution for voluntary winding up or an order is made for the compulsory winding up of the $(iii)$ Company: and
• any other event the Board determines, in its absolute discretion, to be a Control Event. $(e)$

Constitution means the constitution of the Company.

Corporations Act means the Corporations Act 2001 (Cth).

Director means a director of the Company.

Dispose means any sale, transfer, assignment, mortgage, pledge, granting of a lien or options over or other alienation or encumbrance or attempt to alienate or encumber and Disposal shall have a corresponding meaning.

EBIT means earnings before interest and tax.

Employee means a person who is in the permanent full-time or part-time employment of a Group Company.

EST means Eastern Standard Time.

Group means the group of companies that comprises the Company and the Associated Companies and Group Company means the Company or an Associated Company.

Invitation means an invitation issued under the Rules to a Senior Manager for the grant of Share Rights.

Listing Rules means the Listing Rules of ASX.

Meeting means the Annual General Meeting of Shareholders of the Company convened by this Notice.

Non-Disposal Period means a period of 10 years from the Acquisition Date or such other period specified in an Invitation as may be determined by the Board.

Notice or Notice of Meeting means the Notice of Annual General Meeting which accompanies this Explanatory Memorandum.

NPAT means net profit after tax.

Participant means a Senior Manager who has been admitted by the Board as a participating Senior Manager under the Rules and who has not ceased to be a participating Senior Manager and includes the personal representative of a participating Senior Manager.

Performance Criteria means the criteria determined by the Board from time to time.

Plan Share means a Share acquired (whether by subscription or purchase) and held by a Participant under the Share Acquisition Plan.

Resolution means a resolution referred to in the Notice of Meeting.

Rights means any options or other rights to subscribe for Shares or other Securities granted or to be issued by the Company under a Rights Issue.

Rights Issue means an offer or invitation by the Company during the currency of the Share Acquisition Plan made to the holders of Shares (on a pro rata basis) to subscribe for Securities of the Company or of any other corporation (whether by way of renounceable or nonrenounceable rights or otherwise) but does not include a Bonus Issue or an offer or invitation in the nature of a dividend reinvestment scheme.

ROC means return on capital.

ROE means return on equity.

Rules or Share Plan Rules means the Rules of the Share Acquisition Plan as amended from time to time.

Securities includes shares, debentures, notes and any options to subscribe for the same.

Senior Manager means a person whom the Board determines to be in the employment of a Group Company in a senior managerial position.

Share Acquisition Plan means The Iluka Resources Limited Directors, Executives and Employees Share Acquisition Plan established by the Rules.

Share Right means a right to acquire a Share (whether by way of issue or transfer to a Participant) subject to satisfaction of Performance Criteria and vesting conditions.

Shareholder means a registered holder of a share in the Company.

Shares means fully paid ordinary shares in the capital of the Company.

Subsidiary means a subsidiary of the Company within the meaning of section 9 of the Corporations Act.

TSR means the total shareholder return of the Company represented by share capital appreciation plus dividends and distributions (including any buyback payments) paid during a Performance Period, assuming that dividends and distributions are reinvested, and calculated using such generally accepted methodology for calculation of TSR as the Board may, in its reasonable discretion, determine.

Vested Share Right means a Share Right in respect of which vesting conditions have been satisfied, determined by the Board to have been satisfied or waived by the Board in its absolute discretion.

Vesting Condition means any time periods, conditions or circumstances as determined by the Board that must be satisfied or exist before a Participant is beneficially entitled to any Shares pursuant to any Share Rights granted to the Participant.

MEETING VENUE

The 56th Annual General Meeting of Iluka Resources Limited will be held in Meeting Room 219 at the Melbourne Convention Exhibition Centre, 2 Clarendon Street, Melbourne on Wednesday, 25 May 2011 commencing at 9.30am (EST).

Iluka Resources Limited ABN 34 008 675 018 Registered Office: Level 23, 140 St George's Terrace, Perth WA 6000, GPO Box U1988, Perth WA 6845 Telephone: + 61 8 9360 4700 Facsimile: + 61 8 9360 4777

000001 000 ILU
MR SAM SAMPLE FLAT 123
123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

Lodge your vote:

Online: www.investorvote.com.au

$\boxtimes$ By Mail:

Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia

Alternatively you can fax your form to (within Australia) 1800 783 447 (outside Australia) +61 3 9473 2555

For Intermediary Online subscribers only (custodians) www.intermediaryonline.com

For all enquiries call:

(within Australia) 1300 733 043 (outside Australia) +61 3 9415 4801

Proxy Form

让 For your vote to be effective it must be received by 9.30am (EST) Monday 23 May 2011

How to Vote on Items of Business

All your securities will be voted in accordance with your directions.

Appointment of Proxy

Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.

Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.

Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.

A proxy need not be a securityholder of the Company.

Signing Instructions for Postal Forms

Individual: Where the holding is in one name, the securityholder must sign.

Joint Holding: Where the holding is in more than one name, all of the securityholders should sign.

Power of Attorney: If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held. Delete titles as applicable.

Attending the Meeting

Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate "Certificate of Appointment of Corporate Representative" prior to admission. A form of the certificate may be obtained from Computershare or online at www.investorcentre.com under the information tab, "Downloadable Forms".

Comments & Questions: If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form.

FLAT 123	MR SAM SAMPLE THE SAMPLE HILL SAMPLE ESTATE	123 SAMPLE STREET SAMPLEVILLE VIC 3030		Change of address. If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences with 'X') should advise
				your broker of any changes.	I 9999999999		IND
		Proxy Form		Please mark	to indicate your directions
STEP 1			Appoint a Proxy to Vote on Your Behalf				XХ
			I/We being a member/s of Iluka Resources Limited hereby appoint		ゴド		PLEASE NOTE: Leave this box
		the Chairman $\overline{\text{OR}}$ of the Meeting				blank if you have selected the insert your own name(s).	Chairman of the Meeting. Do not
				or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the Annual General Meeting of Iluka Resources Limited to be held in Meeting Room 219, Melbourne Convention and Exhibition Centre, 2 Clarendon Street, Melbourne on Wednesday, 25 May 2011 at 9.30am (EST) and at any adjournment of that meeting.
				Important for Items 3, 4 and 5: If the Chairman of the Meeting is your proxy and you have not directed him/her how to vote on Items 3, 4 and 5 below, please mark the box in this section. If you do not mark this box and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on Items 3, 4 and 5 and your votes will not be counted in computing the required majority if a poll is called on these Items. The Chairman of the Meeting intends to vote undirected proxies in favour of Items 3, 4 and 5 of business. I/We acknowledge that the Chairman of the Meeting may exercise my proxy even if he/she has an interest in the outcome of that Item and that votes cast by him/her, other than as proxy holder, would be disregarded because of that interest.
	STEP 2	Items of Business		PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.
					د٥		Abstain
	Item 1		Re-election of Director - Ms Jennifer Anne Seabrook
	Item 2	Adoption of Remuneration Report
	Item 3		Increase in Non-Executive Directors' Fee Cap
	Item 4		Grant of Share Rights to Mr David Robb as a long term incentive
	Item 5			Approval of Termination Payments Payable to Mr David Robb, Managing Director of the Company

The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.

Individual or Securityholder 1	Securityholder 2		Securityholder 3
Sole Director and Sole Company Secretary	Director		Director/Company Secretary
Contact Name		Contact Daytime Telephone	Date